Fort Thomas, KY Mortgage Specialist: February 2012

FHA MORTGAGE INSURANCE PREMIUM INCREASE COMING IN APRIL

I can remember going years without FHA MI changes. FHA continues to struggle with defaults. Although the loans originated in the last two years have lower default levels, FHA still is not in a good place financially due to foreclosures. They announced the following change today.  There was a period of time when the low monthly mortgage insurance made a lot of sense for a borrower to go FHA. It will not be so based on this change.

FHA Mortgage Increase Premium Announcement

FHA Proposes Changes to Seller Paid Contributions

WHY IS THE CFPB COMPELLED TO CHANGE MORTGAGE FORMS?

Well, the short answer is Dodd Frank. The consumer finance protection agency is charged with rule making based on the 400 rules in Dodd Frank. The CFPB was given the authority to complicate things.

I was looking at one of the latest "changes" they are working on, the goal supposedly to make the process simpler and easier to understand. I've seen different forms ranging from combining a good faith estimate and truth in lending to a revised settlement statement.

What is so amazing to me is that before all the "rules", the good faith estimate was one sheet. It had all the costs broken out line by line and extremely easy to read. Looking at that one sheet told a borrower what the costs were, who was paying for them, what the house payment would be and how much money needed to come to closing. . . . . . Now the good faith estimate is 4 pages, including the disclosure of service providers, 5 pages if you count the fee sheet.

Prior to the "rules" the truth in lending was one page, easy to read and the only thing that was difficult for borrowers to grasp was the term APR. . . . . Now the truth in lending is two pages.

The settlement sheet (HUD1) was two pages before the "rules". . . . .Now it is 3 pages, more fees are combined vs being line by line, and looks like it is growing!

THE CFPB has on their website a "new and improved" HUD1. Less straight forward, more complicated to read and understand.  Looks like it is stacking up to be 6 pages. They even have a disclosure on their website about how it may appear to be more complicated. LOL

Apparently coming soon is a standardization of mortgage statements! Really!

What is going on here? Is the CFPB attempting to show the rest of us how intelligent or good with numbers the hundreds of individuals are they have hired. Are they trying to justify the half billion dollars they are spending? What possible logical explanation is there for making it HARDER for a borrower to see what they are signing on to? If forms too difficult to understand were a big contributor to the housing meltdown, then these new forms are not the answer.

Give us back a one page good faith estimate, a one page truth in lending form and the two page HUD1 and we're good.

FHA MORTGAGE INSURANCE RISING AGAIN

I just received a communication from one of my lenders Obama has submitted his budget to Congress. Included in this budge are two rate increases for FHA. They are as follows:

Is AMC Tax Evasion Another Consequence of HVCC?

One has to wonder how our country dove headfirst into the HVCC method of operation with what appears to be no foresight as to the outcome.

Below is a quick read of another potential consequence of HVCC.

Damage to the borrower with higher fees, appraisers who've lost businesses, failed tranactions due to unqualified appraisers, higher interest rates due to longer lead tmes, borrowers paying for multiple appraisals, damage to housing recovery, loss of experienced appraisers. We continue to struggle with these issues with no end in sight and now are AMC's skipping paying taxes?

This article makes one question how something that was supposed to be the cure for appraisal problems continues to be the problem. And, then, I think, well,  HVCC was implemented with no foresight for the consequences. It is very clear to me assigning the authority to a third party to engage appraisers from thousands of miles away would be challenging.  Why was this not considered before HVCC was instituted?

http://www.thenichereport.com/breaking-news-2/naihp-exposes-amc-tax-evasion-respa-violations/

When we are anxiously awaiting the recovery of housing, appraisals continue to dog it. The results are more than adequate to show HVCC is a complete and utter failure.

Now, we can only hope the AMC's are not avoiding state taxes that are due when states already are struggling with less revenue.

IF HOME BUYERS ARE SO SMART, THEN WHY AREN'T THEY GETTING PRE QUALIFIED?

No doubt most buyers are getting smarter all the time. With listings available on the Internet, most people have access to a computer and it is said most shopping for a home starts online, then it can be assumed home buyers really are getting more savvy.

Having said that, however, it befuddles me that the message to get pre qualified, to research loan programs available, to understand the buying process does not take place before a contract is written. Of my recent inquiries for a home purchase 2/3 wrote contracts before contacting a lender. Further, who are these Realtors writing offers for these people?

It can be costly to not get pre qualified. Along with qualifying home buyers I educate them about selecting a real estate agent to work with, what pitfalls to look for such as what properties can't be financed besides the loan process itself. Doing the prep work up front is so valuable I wish all home buyers would take that step to get pre qualified first. There are times it works out just fine to do things in reverse, but it can sure add some unnecessary angst.

Home buyers need to be smart and get pre qualified. My website has a lot of information for the Kentucky home buyer www.dagriffinfinancial.com.  Rather than spend a lot of time there, I am always happy to break it down in a phone conversation and supply a top list of mistakes made by home buyers as well as steps to take before buying a home.

MY LOAN IS BEING HELD HOSTAGE

The first email I opened this morning was from an Appraisal Managment Company advising me the first panel appraiser for the appraisal I ordered yesterday requested an additional $50.00 to complete the assignment.

I EQUATE THIS TO HOLDING MY LOAN HOSTAGE.

As a mortgage broker I must quote a borrower accurate fees for their loan.  I am not allowed to help this borrower out by paying the $50 for them even if I wanted to with the new loan officer compensation rules.

I've worked with this AMC for some time and I'm sure the appraiser did request additional funds, but I wonder about the real reason for the requested increase.  Is it likely because the AMC is taking 90 days to pay the appraiser? The property is located in a heavily populated area, immediately off the expressway and there are multiple comps for the same style and age home.

I find it infuriating that consumers are continually being asked to ante up more money for appraisals that are ordered through AMC companies. An appraisal like this would have cost the borrower $300 prior to HVCC/AIR. The cost has been $400 for about 6 months, and now the AMC wants $450. Delivery used to be within a week, now it is weeks. When are the powers that be going to wake up and realize how detrimental this process is to the economy and housing recovery!

Appraisers cry out to have their fees returned to the norm (prior to HVCC/AIR), but the only way this is going to happen is by the borrower paying a much higher fee to keep AMC's in the process. I feel sorry for appraisers who are working harder and being paid less, but I feel equally sorry for the home owner who is paying more for less. 

It is not fair, nor reasonable that every home owner is paying more and getting worse service because of those who were fixing appraisals not being prosecuted. Instead of prosecuting the wrong doers, rules were enacted affecting every appraisal. This seems to be the rule of the road these days - punish everyone.