That Didn’t Take Very Long

Jan 18, 2010 | Buying Real Estate, Mortgage Lenders, News, Realtors

The Washing Post, LA Times and other sources are reporting an increased account of the use of borrower loan “worksheets.” In an effort to avoid being bound by newly implemented RESPA (Real Estate Procedures Act) regulations governing real estate mortgage consumer Good Faith Estimates and Settlement Statements, some mortgage lenders have been providing potential borrowers with worksheets that estimate what their loan might cost. These “worksheets” are completely unregulated and were not at all anticipated under the recent RESPA reform.

The loan scenario-forms/worksheets have no requirement for accuracy and loan officers are not bound by any sort of disclosure. Ultimately, the lender still must provide a regulatory Good Faith Estimate and the Settlement Statement (HUD Form 1) must conform to it, but right now the average consumer is not aware of that fact. Once the loan shopper is “satisfied” with what was “disclosed” on the worksheet, and only days before closing, the consumer is presented with the obligatory GFE.

Loan officers and lenders claim the worksheets are necessary to remain competitive and that the new regulation is too strict to be a practical benefit to the consumer. The regulatory demand for 90% accuracy is overbearing say some mortgage professionals.

A HUD official said that they will continue to monitor the practice and update the reform accordingly.

In the mean time mortgage shoppers should be certain that they are working with experienced, trustworthy lenders and loan officers.  If you need the name of a local trustworthy loan officer – call me anytime and I will introduce you to one of my finest lender clients.

Early Signs of Recovery

Jan 8, 2010 | Buying Real Estate, Mortgage Lenders, News, Realtors

Reporting on all forms of payment, including cash, retail sales rose 3.6% from November 1 through December 24, according to a top credit reporter. Internet sales popped up 18%, consumer electronics rose 5.9% and jewelry sales climbed 5.6%. Major economists had anticipated overall retail sales to remain unchanged. They were mistaken.

Initial claims for unemployment benefits fell by 22,000 to 432,000 in the week ending December 26. It was the lowest pace since July 2008. Continuing claims for the week ending December 19 fell by 57,000 to 4.98 million, the lowest level since February 2009.

Freddie Mac reported Thursday that after four straight weeks of increases, 30-year fixed-mortgage rates dropped to an average of 5.09% this week, reducing real estate mortgage costs for home buyers.

Last week the rate averaged 5.1%; last year at this time the rate was 5.01%. The average 15-year fixed mortgage rate dipped 0.4% to 4.5%, and the average five-year adjustable-rate mortgage remained flat. The average one-year ARM edged down 0.03% to 4.31%.

The Federal Government now holds $909 billion of mortgage-backed securities. Since the beginning of 2009 it has purchased 73% of the mortgages that government-backed Fannie Mae, Freddie Mac and Ginnie Mae have turned into securities.

If mortgage rates spike up or the economy weakens, economist speculate, that the central bank might need to keep buying mortgage-backed-securities. However, with the economy improving and the mortgage market already heavily dependent on government, officials are eager to leave the business of purchasing MBS’s.

After expiration of the current, extended, home buyer tax credit the U.S. real estate market may be left to stand on its own. That will be the true test of the recovery.