Obama And The Mortgage Industry

Last night I watched a few minutes of the President's State of The Union Address. To be honest, I have never watched a State of the Union speech before and for the most part I am not interested in politics...but.. What I found interesting is that in the few minutes that I watched President Obama talk he was addressing the big changes that have happened in the mortgage industry... My industry.... This change is the biggest change in the mortgage lending business in 30 years and everyone is going crazy.... As one lender put it to me - leave it to the government to "simplify" a document - by making it 3 pages rather than the 1 page it was..

What President Obama stated in his Union Address is that buyers needs to know the fees that they are paying.... I completely agree with that statement but..... the form could be better.... the impact on lenders and brokers could be less drastic.... This is what is happening today with the NEW and Improved HUD - Department of Housing and Urban Development and NEW and Improved RESPA- Real Estate Settlement Procedure Act.

As of January 1st of this year - there is a new Good Faith Estimate - this is a form that outlines the fees you may pay to obtain a new mortgage loan... Before this year the form was 1 page - it had a list of services and the prices that are associated with a particular service... An ethical loan officer (all mine are) would fill out the form as close to the costs as possible - in most instances - my officer would quote high... and at the end of the day - if the fees were lower my loan officer would be a hero..

Now the form is a little confusing - after taking three classes to understand it - I got it but... it really isn't fair to the broker.... Basically what happens is this: If the broker (me) under quotes a fee - whether it be my fee... the lender's fee... escrow or title's fee... or a fee that was added by the lender after the fact..... Not only that - if the loan is a purchase - we must disclose some of the seller's cost - which in all fairness has NOTHING TO DO with the borrower's loan... This is new and if we mess up - there is NO TOLERANCE and the broker eats the difference...

Webster's Definition of Estimate is:

Main Entry: ¹es·ti·mate

Pronunciation: \ˈes-tə-ˌmāt\

Function: transitive verb

Inflected Form(s): es·ti·mat·ed; es·ti·mat·ing

Etymology: Latin aestimatus, past participle of aestimare to value, estimate

Date: circa 1532

1 archaic a : esteem b : appraise
2 a : to judge tentatively or approximately the value, worth, or significance of b : to determine roughly the size, extent, or nature of c : to produce a statement of the approximate cost of

Estimate is just that an estimate not an exact fee - with interest rates and the cost of a particular rate changing daily... at times by the minute - it is very difficult to quote an exact rate. The way lenders and brokers work is going to be much different... Many of my officers are afraid to quote due to the fact - they may be wrong and end up paying to close a loan rather than make an income... My submissions to the lender is lower than it has been in years - why? because my loan officers are afraid to mess up...

The government needs to realize that not all - lenders and brokers are bad people... I have been in this business for 23 years and I have always maintained high ethical standards... and so have my loan officers... I believe instead of penalizing the entire industry - penalize the lenders who have proven themselves to be abusers of the system... It would be much easier to have a monitoring system for fees on the government side vs having everybody adhere to strict and unforgiving guidelines....

It's a New World.... It's a New Day..... It's a New Government....

Take Charge Of Your Credit!

I have been in the mortgage business since 1986. I started off as a Realtor but soon discovered that serious buyers were not interested in working with a wet behind the ears twenty-one (21) year old kid.... So I went into the loan side and I have never looked back.... Today I own a pretty busy contract loan processing business....

Over the years, I have run across many different types of borrowers - young adults buying their first home - that is so very exciting to me - to be a part of a life changing event. Borrowers who want to refinance their home for a better program. Borrowers who wants to refinance their home to payoff debt - get cash out to pay for their daughter's wedding - or take that vacation they have been meaning to take... There are a gazillion different reasons people choose to get loans on their homes.....

Lately I have been running across a lot of credit problems.. People who have over extended themselves by over charging on their credit cards... I have been seeing a lot of late payments and deteriorating credit scores.. People utilizing credit lines that they once would never consider... A lot of my clients are unaware how this behavior is affecting their existing credit life... One thing that I have learned it's very difficult to bring up bad credit but very easy to bring good credit down. We must be wise and know exactly where we are... There are many companies that can keep you posted on how you are doing.

Last week - I received a file to process - the borrowers wanted to refinance their home and take advantage of today's great rates - they had good paying jobs, money in the bank, and their home was worth a good amount...and I could not do this loan because there was a $21,960 collection on their credit report and they had to get rid of it or pay it off. The borrower said it wasn't theirs - after investigating it further - it was in deed theirs - a collection from several years ago that compounded fees and interest.. It went from $689 to over $20,000 and they did not have a clue!!!

We need to take charge of our credit - we need to know what's going on - who is checking it.. what charges are on it - has someone taken over my cards - Many years ago when the check/debit cards just came out - I received a call from Bank of America asking me if I had been to Mexico lately... I replied I had not - someone had created a card with my number (I had my card) and withdrawn $5000 out of our checking and savings accounts... One of the purchases was a one way ticket to Africa and another was a $1200 bar tab at a dance club in Tijuana... crazy.. It took us over six (6) months to get that money back... I don't know about you but $5000 missing out my accounts hurt....

On my side bar there are a couple of companies that can help protect you. Identity Truth is a company that provides Identity theft protection. Ovation Law will help you clean your credit. My Fico and Equifax gives you a Birdseye of your credit and helps you to be on top of your credit score. Please check them out - even if you don't purchase anything - they may give you some good ideas...