Minority Borrowers

Minority borrowers will exceed 50% of all mortgage borrowers in the next 10 years, according to Mark Fogarty, Editor At Large, at National Mortgage News.  I had dinner with Mark last week and he shared several statistical analysis’ that support his supposition.  Mark also believes that the minority market, defined cumulatively as Blacks, Hispanics and Asians, will be primarily an entry level market.  Mark advocates a lowering of lending criteria to best serve this emerging borrower segment of the home buying public. He cites a conflict of agenda’s between the Executive Office calling for expanded lending practices and the Federal regulatory agencies tightening credit criteria, as well as failing to adequately explain penalty triggers in their new regulations that can be very costly to Lenders if inadvertently misapplied.  I agree with Mark that we are currently in a “catch 22”.  We need to step up our communication with our legislators through avenues like the MBA’s Mortgage Action Alliance and make our voice heard.

I started in this business way before FICO scores and Automated Underwriting Systems.  I long for the days when my Underwriter and  I would pull out the FHA 4155 or the Fannie Mae Guide and make a credit decision.  For the days that our decision was honored by those who purchased our loans and for the days that my risk of penalty and repurchase was limited to my or the borrower committing fraud.  Now I am being second guessed by AUS systems and live and die by FICO scores. In this mandated environment, I am subject to buy backs, fines and penalties at the whim of the investor and/or an untold number of federal agencies.  I am fully ready to expand my minority lending.  I know how to do it.  I am a Hispanic American, for crying out loud. And I will, just as soon as I see some sanity and consistency come back into the mortgage landscape.  

National Mortgage News & Frost Mortgage Win Mortgage Finance Authority Awards

The New Mexico Mortgage Finance Authority recently held its biennial New Mexico Housing Summit in Albuquerque.  The National Mortgage News was honored with the Media Partner award for its coverage on affordable housing in New Mexico.  This was the fourth award the National Mortgage News has won for its coverage on affordable housing in the last two years.  Congratulations NMN!

At the same awards ceremony, which the National Mortgage News also happened to cover, they wrote this:

"Frost Mortgage Group in Albuquerque, N.M., won the MFA's Lender of the Year award for closing more than 200 MFA mortgages last year, the most of any lender in the state. Its president, Greg Frost Sr., who accepted the award, is a well-known national top originator and mortgage trainer."

I am honored to have received this award on behalf of Frost Mortgage.  Helping New Mexico's citizens across the spectrum of borrowers achieve their dream of owning a home is a joy and pleasure.

Read the full NMN article here

Regulated Loan Docs Are Growing Out Of Control!

I just reviewed a loan package and counted 238 printed pages stuck in a bulging manila file folder. I admit that 97 pages were tax returns but the remaining 141 pages were standard  loan application, addendums/borrower documentation/verification and disclosure forms for a VA, self-employed borrower loan. And all the while I thought that we were now in a paperless lending environment.  In ’72, when I took my first loan application, I recall 9 pieces of paper in a loan file and 1 of them was the 2 sided, long legal appraisal. Are we nuts?  Do the regulatory agencies really think that the Borrowers are any better “informed” today than they were back in ’72?

Fee Mistakes And "Right To Cure"

The big QM question about creating a method of curing fee mistakes, that exceed the allowable maximum, under QM regulations, is coming to the table.  The Mortgage Bankers Association and American Bankers Association have jointly asked the CFPB to allow a little more time for input, discussion and compromise.  Lenders have high hopes that they will come away with a regulation allowing a 180 day “right to cure” from the time the over charge is identified via any number of audits.

Currently, there is no method of curing such mistakes.  Lenders are now required, by regulation, to re-purchase the mortgage and re-originate it in a conforming manner. This is a draconian way to handle, what could be as little as a $150 miscalculation in closing costs.  The ability to cure would be fair to the consumer as well as limit borrowing costs, which would surely rise, as a hedge against the certainty of mortgage buybacks.  The right to cure will be a fair and equitable economic response that is more in line with the spirit of the regulation. 

Military Personnel Not Utilizing VA Financing

There are over 14m Vets and active duty military personnel who have not taken advantage of VA financing. VA notes changes on the horizon that could change that.  In an effort to overcome hesitancies by Realtors, Builders and Mortgage Originators to promote/accept the VA product on their transactions, the Veterans Administration is responding by:

1) Stepping up Appraiser approval processes to overcome appraisal time delays.  More VA appraisers are being approved every month.

2) The VA will soon offer guidelines clarifying negotiable fees to the seller, an area long criticized by the real estate community as non- competitive, by making sellers bear a substantial list of closing costs that are normally negotiable.

3) Increased communication to the real estate and mortgage industries allowing input from the marketplace in an effort to increase utilization of the product. VA is pledging much more back and forth dialogue.

The VA insured a record 629,300 mortgages in 2013.  $20m VA guarantees were issued in the first quarter of 2014.  As the consumer costs rise at Fannie, Freddie and FHA, there is an opportunity for the VA product to become more competitive and more utilized.

FHFA and G Fees

The Federal Housing Finance Administration (FHFA) extended its deadline for industry comments on G fees that are charged by Fannie Mae and Freddie Mac  on loans sold to them.  The MBA and 19 other trade associations, including Homebuilders, Realtors, The National Urban League, National Housing Resource Center etc., have presented their comments and calculations showing how many buyer/borrowers are excluded from home ownership because of the record high fees currently being charged, as well as their, proposed increases.

G Fee Increase

Are you aware that the President saddled new home buyers with a ½ point G fee increase last year, to run for 10 years, in order to cover Treasury revenue shortfalls during the government shutdown? He discovered this brand new “G fee honey bucket” and now wants to dip into it, once again.  He plans for homebuyers to provide extra funds to the Treasury, via increased G fee charges, that will only be paid by those who buy or refinance a home with a FNMAE/FHLMC loan until 2023.  Didn't our forefathers go to war with England because of “taxation w/o representation”.  Were you ever asked if you were willing to pay an extra $1000 a year on your $200,000 FNMAE/FHLMC loan for this purpose?  You realize that this extra government funding will only be collected from, and paid by, those who obtain a FNMAE/FHLMC home loan until 2023.  That’s a very small % of total “citizens”, and a very large % of those that the President and his team keep telling us they are trying to protect, with all their new mortgage regulations, who will affected.  Those citizens, who do not purchase a home with a FNMAE/FHLMC loan between now and 2023, won’t be paying for any of it.  So, the government is doing all it can, via new mortgage regulations, to “protect” the citizen/borrower, but first, let’s charge them more for their mortgage loan.  More than ever before.

Hedge Funds And Walgreens

It was reported that several hedge funds lost big when Walgreens decided not to re-incorporate in a foreign country in an effort to dramatically lower their U.S. taxes. They were consulting Walgreens to leave the U.S., were betting on a positive bump in the stock after the announcement, and were stunned by Walgreens reversal.  Gee, don’t you just feel terrible for those Wall Street vipers?  I guess there will be no remodeling of their East Hampton beach houses this year.

Who Benefits From Lawsuits Against The Big Banks?

Bank of America agreed to pay $17b in fines to the Justice Department over mortgage misdeeds at Merrill Lynch and Countrywide, most of which took place prior to B of A’s purchase. They bought the 2 dogs and got the fleas. This adds to the $60b they have already paid and should about wrap up their “mortgage crises” penalty liability.  Here’s my question: Who is the beneficiary of all this money?  Are the consumers, who were sold these toxic mortgages, getting reductions in their mortgage balances or lower interest rates or monthly payments?  Hell no, these settlements, that are touted to show that your government is protecting you, are fines and penalties imposed by federal regulatory agencies via law suits brought on behalf of the national and international investment companies who purchased these toxic mortgage products from Merrill and Countrywide.  The federal agencies aren’t looking out for Mr. and Mrs. Homebuyer…I suggest that they’re collecting fines and penalties to fund their federal agency first, and possibly to recompense investment banks and/or hedge funds for their losses.  The consumer is way down the food chain on all of this and those, who by some miracle, have managed to hold on to their homes, as their monthly payments skyrocketed, will get little or no relief.  Wonderful, just wonderful.

Defaulted FHA Loans

Did you know that co-borrowers on defaulted FHA loans are not being noted and listed?  In some instances co-borrowers, on previously defaulted FHA loans, have been granted new FHA insured loans, as the primary borrower within days of foreclosure.  This is an interesting glitch in FHA’s CAIVRS system which provides lenders with qualification data on potential borrowers on FHA loans in process. 

Foreclosure Inventory

Core Logic reports that 4.4% of all home loans in America were seriously delinquent in May, however, this number is down 23.9% from May, 2013. 660,000 homes are currently in foreclosure, down from a million in 2013. The reduction of foreclosure inventory is most evident in states with non-judicial foreclosure laws. Foreclosure inventory in these states, as a percentage of total mortgages in place, is half of what it is in states that require a judicial foreclosure process.

Foreclosures Down, Still Long Way To Go

Foreclosures stood at 47,000 in May, down for the 31st straight month and at their lowest level since 2007. While things are certainly moving in the right direction, it is sobering to note that prior to 2006 the average foreclosures per month were 21,000, so we still have a long way to go.   

The Cost Of FHA

The cost of a seat at the table to originate FHA loans has increased, once again.  Mortgage Bankers who wish to originate FHA product must keep a cumulative net worth equal to the sum of net worth requirements for each FHA loan type they wish to originate.  For example the net worth requirement for a lender wanting to originate standard Single Family and Reverse Mortgages (HMBS) will need a minimum net worth of $7.5m.  Once upon a time you only needed $1m net worth to get in the game.  Not so these days. Industry consolidation is well under way.  

On HUD Being Vilified

I just read an article the other day, which vilified the mortgage industry because the Fed had to invest $1.7b in HUD to maintain its’ reserves (said investment will be fully repaid to the Fed by HUD by November). This Fed loan was typified in the article as a terrible thing. My concern is with the tone and presumption of negativity with which these articles are regularly written.  I wonder why an investment in housing the citizens of the U.S. is so demonized?  What is so bad about the government, from time to time, making a temporary investment in housing its citizens?  Why must HUD be vilified for needing this temporary help?  What else in government pays its’ way, like housing? Why is the spending of a hundred million here or a hundred million there on remodeling government office buildings (CFPB headquarters), or a billion on a new airplane or cruiser or new regulatory agency (CFBP) not put under the same microscope?

Here HUD functions for 80 years, quite well I might add, stimulating the housing and real estate industry, and along with it the economy by making home ownership a reality for millions of Americans and once, during the 80 years, the Fed is asked for temporary funds to help HUD get past a rough spot and Congress and the President scream, at the top of their lungs, that the American people must be protected from any future malfeasance by HUD and the mortgage industry.

This just doesn’t make any sense.  How about Congress protecting us from ongoing Wall Street corruption, from the perennial billions spent on social engineering around the world, from the ongoing billions spent on getting us into unnecessary wars, from the billions lost to the devaluation of our currency, from the inequity of taxation, the ridiculous IRS system, the intrusion into our private lives under the guise of protecting us etc., etc.  The mortgage industry has contributed, for more than 80 years, to the housing of America.  Congress and the President need to stop this irrational, negative posturing and let us get back to our business.  There’s a reason why fewer Americans are buying homes than ever before and it’s not the mortgage industry.

More Mortgage Company Mergers On The Horizon

Look for more mergers of mortgage companies as the rising costs and increasing liabilities of the compliance monster, along with continued pressure on existing earnings models makes “going it alone” an unattainable option. In addition net worth requirements, to keep a seat at the investor table, continue to rise. Once upon a time, the mortgage banking industry was a private practice between mortgage lenders, bank and insurance company investors and the GSE’s.  Now, the proverbial government gloppity, glop regulation machine, under the premise of protecting its' citizens, has, once again, overreacted to what was a temporary aberration of excess. A blip which occurred, but once, in the 80 year history of the mortgage industry.  I maintain that over compliance has caused more strife and put more costs on the consumer than the value of problems it has resolved.  Wouldn’t it have just been easier to put Angelo and his Wall Street cronies, who devised, marketed and sold those toxic mortgage programs, in jail?  Then, after replacing those avarice driven CEO’s of the GSE’s and withdrawn their golden parachutes for cause, we could have gone back to the mortgage industry as it was and had been. A noble partnership between the private and public sector, which housed this country.

Helen Mirabal Is One Of A Kind

“Helen is amazing!  She exceeded every expectation by a factor of 10!  She went above and beyond to make our buyers dream come true. There were a lot of obstacles in this transaction and Helen addressed every one of them with diligence.  Helen is one of a kind!", says Jen Cody Martin with Rhino Realty.  

Excellent!

“Luke Gutierrez provided timely and good updates on the status of the Buyer’s loan. The overall experience was great.” says Listing Agent Veronica Gonzales. 

Buyer/Borrower Jason Pearcey agreed and ranked Luke’s effort as “excellent”.