FHA Resource

Is Transunion Right?

2011-06-01T17:02:00.000-07:00

Transunion did a study recently that revealed some pretty interesting facts. There were many who just defaulted on their mortgage only, which gives us some insight into how people think. Those who had mortgage debt only still defaulted, but they were still considered less of a risk than those who had credit card debt. Those who had mortgage and revolving debt were considered more of a risk than those who didn’t. Those who defaulted on the mortgage only were a better risk for banks, because that is all they had open.

The Numbers on Delinquencies

There are several levels of delinquency when it comes to debt in general. There are those who are 30 days late, 60 days late, and 90 days late and then even worse, those who are more than 90 days late. The sooner you try and get your credit corrected, the better off you are. The sooner you get your credit fixed you can get approved, and with a reasonable explanation. Don’t assume that because you fell on hard times that the bank will approve you, but it’s worth a shot. You can learn more about what is required when you go to www.fhaloansnow.net.

Those Who Plan a Strategic Default

2011-05-22T05:17:00.000-07:00

Because the prices of homes are falling along with the values, those who were considering selling might have planned to walk away. Those who discovered that they are underwater and see no end in sight, may also very well a prime candidate to plan a strategic default too. Many times, couples learn that they can rent for less, which saves them a substantial amount of money. Joblessness is at an all time high, and if both spouses and partners were working, it changes everything when the household goes down to one income. It is not out of reason to believe that when parents look at their children and have to decide who eats that they would have to come up with some alternatives.

Reasons That Borrowers Plan a Strategic Default

Those who know that they can get into a home or apartment for less than what they are paying know that they can put money away that they wouldn’t have otherwise. Being able to cut costs is important and necessary, especially in today’s tough economic times.

The best option is to try and get a modification on your mortgage first to see what the bank can do for you. It will take some time, but they are limited on the amount of time they can spend on getting it together for you. Be sure that they understand everything that you are going through, and anything that they ask for give it to them. They are there to help you, and they can’t fully do their job with missing information.

If you need more information on how to get started buying a home or refinancing your current home, you can visit www.fhaloansnow.net. You will find a wealth of information there including the requirements for an FHA loan.

Defining a Strategic Default

2011-05-22T05:14:00.000-07:00

A strategic default is when a homeowner knowingly walks away from their home, and completely abandons it while living elsewhere. They don’t notify the lender, and they don’t make any payments or arrangements at all. They simply leave the home without warning, not planning to take any responsibility for what is owed, and allow it to go into foreclosure even though they can afford the payments.

Options to Consider

This may seem okay to do in the borrower’s minds, but it really isn’t the right thing to do at all. In fact, it seems odd for those who can afford their payments, and those who have never been late, to run right into a 90 day late mortgage. There are options to consider even though you are frustrated; don’t let the market get the best of your emotions and make a hasty decision that will ruin your credit and your chances to refinance your loan or worse to buy a different home in the future.

To find out more about how you can get the help you need, you can go to www.fhaloansnow.net. You can find valuable information and learn more about buying smart with FHA.

Reverse Mortgage Performance is Good Despite the Rumors

2011-05-21T20:40:00.000-07:00

While many reports have not shined favorably on the mortgage industry, there is some good news coming forth regarding reverse mortgages. They are doing well, in fact the final numbers rolled out earlier this month from the end of 2010. Believe it or not, there was more than $3 trillion in home equity loans being held by seniors, age 62 and up. When you look at the country’s overall financial picture, it really isn’t all that hard to understand, but it’s sad that seniors are carrying that burden. However, the good part is how the reverse loans are structured, giving them money back in exchange for the property.

Seniors Make a Sacrifice, but They do Better Financially

Reverse mortgages enable senior citizens to let go of their home in the end, in return for signing up for a mortgage that makes payments to them. While values are a bone of contention in real estate circles, seniors have fared well in getting these loans closed. There is plenty of counseling upfront to ensure that they understand what is involved, and their family members or caretakers are encouraged to learn about the programs as well so that they can be of assistance should the need arise. While the children might fear they won’t get the property, in some cases it might be the best thing for their parents. This is especially true at a time when values are going down, and there may not be much of a profit regardless on the home. Making the equity work for them is what it’s all about, and it’s doing well.

Equifax Says Credit is Growing!

2011-05-21T14:19:00.000-07:00

In the month of March, the report from Equifax showed that credit was growing and on the rise. This is great news, and tells us that people are being more money savvy than they have been in the past. The trend absolutely shows new growth in credit, and those who got back into the game by repairing their credit are thrilled and ready to move forward and buy a home or refinance for a better rate before the changes come. Home equity loans are growing, auto loans are growing, and consumer finance in general is growing too.

Beating the Odds is Always Favored

It’s always good to beat the odds, and although many were sure that they wouldn’t be able to sustain the changes, it has made Americans stronger and more determined than ever to clean up their credit and create a whole new portfolio of spending power. This time around, borrowers are wiser and smarter, and they know what it takes to earn that buying power. Hats off to those of you who have worked so hard to make changes and make things happen, you will find out very soon that it was well worth all the hard work and effort you put into it.

Choosing the Cheap Appraiser is Out

2011-05-21T04:54:00.000-07:00

Well, there is good news for homeowners in terms of appraisers and no it’s not that appraisals are no longer required! Appraisals will always be required to determine fair market value, but now lenders are required to pay appraisal fees. The reason for this is good; it keeps lenders from using appraisers that aren’t up to par, and it keeps the borrower out of the mix on choosing their own appraiser and paying for it. Even though it might seem that the appraiser would work in favor of the lender, they simply can’t blow out values, and that’s just what we need.

Why Lenders Have to Pay Appraisers

Lenders making payment to appraiser’s means that they are now going to look at things more closely when they evaluate the creditworthiness of a borrower. This means that the bank is less likely to handle a borrower’s loan in a non-chalant way. This is probably what should have happened a long time ago, but it used to be that it was viewed in the interest of the lender being able to blow out a loan. There are plenty of things that are not so great, that we can take and use for good; this is one of those things.

More Modifications and Principal Reductions in 2011

2011-05-17T04:50:00.000-07:00

Those of you who do not know what a mortgage modification is are going to get a crash course today. They are simply a reassessment of a homeowner’s mortgage, in which their loan is evaluated against their income and other debts, to see where they fall and if any changes can be made to make it more affordable. The benefits of this are twofold: 1) it helps homeowners keep their homes, and 2) it helps homeowners avoid considering a foreclosure or even a short sale.

With anything there is a risk, or possibly a shortcoming, and in this case the shortcoming is that modifications don’t always work. Ideally, they are looking to get someone’s debt to income ratio to at least 31% total, but with the level of debt most Americans have, that isn’t always possible. In fact, only 9% of modifications are approved, which leaves a large percentage of people out there looking for other options.

The Purpose of Principal Reductions

Principal reductions are certainly helpful in an economic downturn, where the values of homes are falling and taxes are going up. A principal reduction is beneficial for those who aren’t struggling with their payments, because its benefits are two-fold as well. The reduction in principal means that not only would the principal balance go down, but those who are upside down in their mortgage would nearly breakeven, or in some cases they would be on benefit from owing less even though they are in the positive right now on value.

Either way, these changes would be good for our economy, and great for the homeowner. It almost seems that it would make us look stronger as a whole across the country, but naturally nothing is free and there are always concerns with any changes that are drastic.

You can find out more about getting a better loan, or a purchase loan by going to www.fhaloansnow.net. You will get the help you deserve with a professional mortgage banker and a realtor.

-Mayer Dallal

First Time Homebuyer Purchases are Best Done FHA

2011-05-03T19:33:00.000-07:00

The best way to go when buying a home for the first time is FHA. FHA purchases are great for many families because they provide low down payments of 3.5%, and up to 6% in seller concessions. This can work out great for a lot of reasons. Low down payment is one reason, and the keeping your overall mortgage payments low is another. Those who wish to take advantage of this option need a credit score of a 640 or higher, and those with a lower score may need to put down more but are still considered.

FHA is also good when you are worried about getting qualified for a new loan. FHA does not guarantee loans based on all credit, but they do look at your current pay histories. Paying more than 30 days late on debts isn’t favorable, and those who have failed to re-establish credit after a bankruptcy are frowned upon. They want to help, but with any good thing there are limitations. These are simply guidelines and with a little help you can improve your financial picture for the better.

-Mayer Dallal

www.fhaloansnow.net

Considerations When Refinancing and Assessing Your Debt

2011-05-03T19:27:00.000-07:00

When trying to determine what current obligations you have, be sure to include any existing mortgages on the home, so this mean you’re first and second. In addition, consider any other debts you have outside of that. If you have a line of credit that was used for any other purposes other than repairs or appraisals, then this loan won’t be eligible to pay off.

Keep in mind that when you are looking at your payoff amount, the actual pay off is going to include any unpaid interest until the end of the month, and it will also include any early payment penalties. If you aren’t sure what that is and you just want to ask, be sure to call the servicer of your current mortgage and they would be glad to help you.

If you are looking to get cash out loan, then you can take up to 85% of your home’s value. That will allow you to even borrow on a property that you have owned for a year provided you don’t go over that 85%. Just keep these factors in mind so that you have a realistic expectation of what is going to happen during the process and what you will walk away with at closing.

-Mayer Dallal

www.fhaloansnow.net

What to Consider When Buying Your Home

2011-05-03T19:23:00.000-07:00

So many of my clients want to know if the pricing they are seeing for a home is fair. My answer to this is yes. The prices on homes have dropped nearly 60% and maybe a little less it just depends upon the area that you are looking in. The key to buying a home is just focusing on what is important for you and your family. As a family with small children you will want to consider moving to an area where there are other families raising children, and a good school system. When moving a family, you may have to be more “future-minded”, meaning you plan to stay and let your children graduate from those schools too. Moving too often isn’t good for young children because they need a place to call home. There is no better time to buy than now if you want to make a home for your family.

What Buying a Home Can Do for You

The second benefit I share with families I work with is this; buying now puts you into a good position. You get a great home, for a great value, and when the market begins to recover you will be able to look at the equity that you have built up in your home over time. This puts a family into a great position, so that if they do end up having to relocate for a job or for some other reason than they can take pride in knowing that the investment they put into the home paid them a return. This keeps the housing market healthy with families being able to go into another home with a more solid down payment than before buy making some money on the first property they owned.

-Mayer Dallal

Pending Home Sales Rise in March

2011-05-03T19:18:00.000-07:00

Pending home sales did go up in March by 5.1%, and this was released by the National Association of Realtors. This was a welcome change after watching the bouncing up and down, and left feelings of uncertainty as the level of contracts out there were rising unevenly or slowly at the least. February was low, but that is no surprise due to the holidays and the fact that consumers had spent their money and weren’t quite ready to buy. So, is the rise in pending home sales just simply a trend that occurs each year?

An Overall Gain on Pending Home Sales

Overall, pending home sales did increase nearly 24%, and while that sounds good we aren’t quite there yet. Right now, I am encouraging everyone I know to buy before the rates go up and while the prices of homes are low. This won’t happen again, so if you are on the fence it’s time to get off the fence and get busy. Don’t thing that someone else can do it for you because they can’t. Only you can take that first step to buy your first home, or make a radical decision to buy another one. Go to www.fhaloansnow.net for more information, and to get connected the right professionals.

-Mayer Dallal

Slow Go on Remodeling Matches Up With Industry Numbers

2011-05-03T12:10:00.000-07:00

It doesn’t really surprise me all that much that more and more remodeling companies are getting phone calls about remodeling more than builders are getting phone calls on building new homes. The challenge? Staying busy due to the economy because no one is for sure where the money is coming from tomorrow. Many are not cautious about spending money because they feel it’s too much, but because if they lose their job where will the next dollar come from? Joblessness is still the real issue behind what is happening, and if that doesn’t change the market will remain on the downturn.

Remodelers Busy Due to Tax Returns

Remodelers report that they are busy right now which is great, but they just feel that people are slow to commit. Obtaining loans to build new is one thing, while spending money on repairs or remodeling is another. Many also believe that what spurred the market for remodeling is income tax returns so once that dries up, they are feeling that the need for repairs will too. Many are seeking to rent once they have been foreclosed upon, simply because it’s not just about paying less if they can, but not having to worry about home repairs and the other expense of upkeep of landscaping.

-Mayer Dallal

Who Spends Too Much Money on Rent

2011-04-30T12:37:00.001-07:00

In all my life I never thought I would hear that there are people spending more than half their income on rent and utilities. This could be in part because there are some folks now receiving unemployment. Call me crazy, but that is a high number. Think about it; I am telling you that spending more than half your income on rent and utilities isn’t good, and we had families in loans that were nearly 55% of their income. We still have all these people who have to spend more money on their rent, so there are still many things that need to change.

Will the American Budget Crisis Change Rent?

Our country is a financial crisis, and it makes me wonder if knowing where we are right now with rents increasing, will that change the face of the way rent is being charged? We have got to find a way to get things down and streamline all of our financial obligations to the point where we change as a nation. Given the budget crisis, we need to find better ways to maintain our properties better with minimal cost, and be able to accommodate those who need to trim down what they pay to live.

Why Buyers Have Been Feeling Angry

2011-04-28T04:38:00.000-07:00

Those who are looking to buy have been sharing opinions on what it has been like to find a home. The opinions of many of these buyers have been heated, and the debate hasn’t been the increase in insurance premiums on FHA loans either. The challenge and debate has been over the number of homes in inventory that are attractive, and apparently there hasn’t been enough of that going around. I recently read about an interview that CEO of Redfin Corporation had with a customer in California. While she works in the television industry, she is blighted by the fact that there hasn’t been much to pick from for less than $500,000 since the 90’s. How does that factor in right now?

The Challenge of Being Outbid

This buyer’s challenge in California was not always the inventory in the price range, but the fact that so many homes were being snatched up by investors without her getting the chance to fairly bid on them. It seems that debate has been hot, and while there are plenty of homes to choose from it has posed a bit of a problem for many. I am not sure that there is a happy medium here, because depending on what shape the house is in, there are buyers who aren’t ready or willing to put money into the home upfront. I can understand that because with everyone watching every penny, including those who do have a significant down payment, after moving who wants to keep working around the clock on a new home?

For more information on how to get the expertise and help you need in buying your new home, you can visit my website by going to www.fhaloansnow.net, or you can call me right now at 310-498-2700. I have a strategic alliance of realtors I work with and other experts that can help us get further along than you ever imagined.

-Mayer Dallal

The Dilemma for the CEO of Freddie Mac

2011-04-28T04:25:00.000-07:00

With talk of shutting down Freddie Mac, there is a lot of pressure on their employees. The CEO has a lot on his plate, and that is not a position that I would want to be in. With 6,000 employees that is a lot of job loss, and the feeling that it gives Americans is one of uneasiness. Why? Because Freddie Mac has been blamed as a big cause of default in the mortgage industry. CEO, Charles Haldeman Jr. says that the true default rate of those mortgages funded by Freddie Mac is only 3.8%, which pales in comparison to the larger numbers flashed out there in the industry.

Has Freddie Mac Been Profitable?

Haldeman says that Freddie Mac was profitable in the third quarter, but it did play dividends on the money that it received from the government. This is referring to the bailout money which sent torrents of opinions and critical statements among Americans. So, while there is talk about shutting Freddie Mac down, it goes about its business each day, and everyone waits with anxiety about what is going to happen to their jobs. As always, I am still looking for the positive in all of this.

For more information on how to get your FHA loan today, you can go to my website at www.fhaloansnow.net, or you can call me at 310-498-2700.

-Mayer Dallal

Recent Drop in FHA Applications

2011-04-28T03:59:00.000-07:00

While it was expected that mortgage applications would fall due to an increase in the FHA premiums, it wasn’t expected to drop nearly 30%. This is why I had urged many to get their applications in for their purchase loans rather than waiting. Anytime that you know that it is going to cost you more in the future, you need to make it a point to get busy and move on. It’s important that you heed to your experts that provide you with knowledge, but it is only in your best interest; of course that is if you are ready to do so.

What’s Next for FHA?

While the insurance premiums increased, there aren’t any other changes right now which is good. Any changes that would occur I would believe to be for the better, but I can’t predict the future. I can say that an increase was expected in premiums due to the economy, but it could have been worse. I would urge anyone who is on the fence regarding buying a home to get moving before there are any more changes. Rates are going to go up, so I am telling you now to make decisions and get moving. Why pay more than you have to? Don't wait another minute, go to www.fhaloansnow.net to apply for your FHA loan today!

-Mayer Dallal

The Demands of Rent Increase, and So Does the Price

2011-04-27T19:55:00.000-07:00

The new wave is renting, and that is because of the level of foreclosures. I am sad to say that it seems our housing market is working opposite of what it should be. The sad part? Those who were unable to stay in their homes are now going to be paying someone else’s mortgage rather than their own, and they aren’t going to be saving a heck of a whole lot. The demand on renting is going up and therefore the affordability of renting is going down.

Why Rent is Going Up

Rent is going up for complexes and for those who are renting out houses, simply because they know they can increase the prices and many are seeking shelter now that they can no longer stay with their relatives. Houses are getting cramped with family members taking people in, and as modifications don’t get approved. Families have been planning to look for apartments as they see their foreclosure under way, meaning they had to go and start looking quickly, so they could get everything moved out. Renting will be more expensive than in the past, but with so many foreclosures being lined up families just don’t have a choice.

Government Foreclosure Program Ideas ?

2011-04-26T18:41:00.000-07:00

It is amazing that after all that our country has been through, and everything that we have seen that we are now hearing about a program that was established long ago and is effective! So, what is this program called? The Pennsylvania Homeowners Emergency Mortgage Assistance Program was established in 1984, and the way it is structured makes sense. The program creates bridge loans for those who have lost their jobs, and there is no interest accruing until they are once again gainfully employed. Hmmm, so what now?

Our Books Show That Pennsylvania Program Works Smarter not Harder

Isn’t working smarter the whole idea with anything in life? You bet it is, and this is how the Pennsylvania program works. Yes, it is effective, and yes it costs much less than our $30 billion dollar program! The Home Affordable Modification Program has not been so successful, in fact it has been shown that only 9% of those who apply get approved. Those numbers aren’t strong, so maybe we can follow the Penn state model? I am thinking that it sounds like it is worth a shot at least. What are your thoughts? The numbers speak; Pennsylvania had the 26^th highest unemployment rate, but yet the 37^th highest foreclosure rating. I think Pennsylvania might be onto something folks.

-Mayer Dallal

What the FHFA Has to Say Now About Housing Prices

2011-04-25T07:48:00.000-07:00

Those of you who are not familiar with the FHFA should know that they are not the same as FHA. FHFA stands for Federal Housing Finance Agency, which is close but somewhat different. This agency reports on timely information as it relates to the housing market, and recently released some interesting information. Their most recent observation is that home prices are down 18.6% since April of 2007. This isn’t great news, but it would be untruthful to say that it wasn’t expected.

What is Next Regarding Housing Prices?

Housing prices have been on an interesting trend, from good to bad, and then even worse. I won’t tell you that it has all been halos and good times because that just isn’t the truth. The truth is also that we can something bad and make it turn out for the better. There are plenty of homes in inventory that can be purchased when people find the right professionals. I am a professional, and my goal is to get you into a home and have a piece of the American dream. Investors are buying and rehabbing homes, and the market is primed for first time homebuyers, or those that have been renting for years on end.

Are We Facing the End of the Mortgage Interest Tax Deduction?

2011-04-23T06:36:00.000-07:00

This issue came up awhile back, but then it quieted down and we didn’t hear anymore about it. Now, the issue has come up again and everyone is arguing about it. Economists have said that our mortgage interest tax deduction doesn’t work properly, but what do the American people say about this? Naturally, more than 60% of Americans don’t agree with that opinion, and what is also worth noting is that most Americans were reluctant to agree with any tax deductions; period.

Who Truly Benefits from the Tax Deductions Anyhow?

The battle behind the tax deductions is that it only benefits high income earners, and that by eliminating we can reduce the overall tax rate. The way it works, is that if you are in the 35% tax bracket, then you only get $35 back for every $100 that you paid in mortgage interest. When you are in the 15% tax bracket, then you save only $15 per $100 of mortgage interest. This is the truth which is hard to contest, but there are people that look forward to getting a tax return because they are in need of money. It’s hard to take something away from those who don’t have anything else right now. I can tell you that this year; there were many people who were counting on their return to get them through for just a short while before the next moment of desperation hit.

New Construction is on the Rise

2011-04-20T16:06:00.000-07:00

Some new figures were released which make me feel good; the figures on new construction. This is not necessarily in regards to construction loans, but in regards to new homes being built all around. Some of these numbers may be a big developer and others might be from homes built on spec by contractors. There hasn’t been a lot of building going on, and for some time things were just dragging along. Building a home was more costly because it could be custom, unless of course it was part of a development and was already done.

The number of new homes being built went up 7.2% in the month of March, and the number of units that went up was around 540,000. This is significant in a time when housing prices have dropped. There are different dynamics when it comes to determining the number of new homes being built, because there are some people who believe that is the only way to get a home they love. There are plenty of homes in the inventory to choose from now, and it gives homebuyers the chance to find a majority of the features they love, while having some room to customize their home or add on later.

There was also an increase in the number of permits that went out; an increase of 11% from February to March. That is significant and show progress from last year as well. Builders were folding, and everything was getting stagnant, but look how far it has come. This should be a sign of better things to come. We remain hopeful-always.

-Mayer Dallal

Mortgage Applications Drop

2011-04-17T07:53:00.000-07:00

Mortgage applications did in fact drop again, by 6.7% from the previous week. The refinance index also decreased by more than 7 %, shaking things up a bit and changing our market for a moment. Why does this happen? It could be any number of reasons really. It could be the increase in unemployment, or it could just be that the American people weren’t feeling so confident since the end of February. The challenge with the unemployment number is that it changes when people stop receiving their benefits.

The Change in the Purchase Index

The purchase index dropped nearly 5% just from week to week, but compared to last year it dropped more than 11%. This is no time for people to be afraid to buy, and I will encourage them to buy, especially right now. There isn’t a reason not to buy, and the market is prime for it. Prices are low, rates are still low, and people should jump at the chance before this all changes. Inflation is on the rise, and once it really gets moving, don’t expect it slow down. If you have income, a credit score of 640 or better, and some assets, let’s talk.

-Mayer Dallal

Who Owns Your Loan?

2011-04-10T16:45:00.001-07:00

This question has been burning on the ears of many borrowers for years, especially since the time of mortgage backed securities became the way to keep money turning over. These mortgage backed securities have caused many problems for homeowners and are still a growing problem. The problem? These mortgages were transferred so many times, that as foreclosures are being filed the banks discovered that they cannot find the original paperwork.

So, who is to blame for this problem? Many fingers are being pointed at those on Wall Street with absolute disgust for the simple fact that in all the business to make money and turn over profit, paperwork was pushed to the side. No matter what, this paperwork is important and those on Wall Street should treat it that way. The bigger problem is now that these banks relented to forgery, signing these papers now that nothing can be found.

When the chain of title has been lost this can cause problems for the homeowner and banks better figure it out quickly. Not producing the proper paper trail is a problem for those who are self-employed as far as taxes are concerned, but licensing is too. Not to mention that in general, wouldn’t it be smart to keep track of your documentation for everything; just in case?

-Mayer Dallal

AMI Has it Right

2011-04-03T13:57:00.001-07:00

AMI, the Association of Mortgage Investors, definitely has it right by trying to get bank bailouts to stop. There is nothing worse than bailing out a big bank when it has responsibilities and plenty of explanations that it could be making for its actions. However, what I think really doesn’t matter to anyone who is making the decisions right now. Looking back, what did those big bank bailouts really do? They certainly didn’t turn our economy around as the banks were begging for big money, did they? Did they do right by the consumers that were suffering?

This past week while all the big boys were arguing about foreclosure settlements and more, AMI was there to just say, listen; what we want to see happen is those who messed up need to be punished, but those who didn’t do anything shouldn’t have to suffer. Not all investors did wrong, so why should everyone get punished? It’s like the few kids in the class who were caught talking in class, and so now the whole class has to write sentences over and over; “I WILL NOT TALK IN CLASS”.

As sad as it, I get it; I know that we are in trouble, and while people are looking to buy before rates go up and more changes occur, there just aren’t enough hours in the day. I am here to help those who are looking for a better loan; an FHA loan. This means not only will the loan be insured for the bank, but this means that FHA is there to help you keep your home should a problem arise. Maybe if there were more FHA loans or loans that were done in the best interest of the borrower, these banks wouldn’t have to worry about their bailouts in the first place.

-Mayer Dallal

New Mortgage Qualifiers Limit Borrowers

2011-04-03T13:45:00.000-07:00

While I was hoping for some sort of reform in the way that loans were being done, I wasn’t expecting what we are getting now. The regulators were trying to find a way to tame down the losses going forward on residential mortgages, and of course now we are wondering where their thoughts are headed. I want to see borrowers make more of an investment in the home upfront, but I am not so sure they came up with a good answer.

Qualified Residential Mortgages

The new terms for a qualified residential mortgage are 20% down for a home purchase, but the surprise is in the rest of the terms too that aren’t much better. Borrowers will need to put down 25% of if they are going to refinance the mortgage and 30% if they wish to do cash out refinance. The only loans that won’t be affected by these changes are FHA loans and any other federally funded loans. As you know, I am an FHA specialist so I am pro the FHA loan programs. The FHA programs are structured differently to begin with, and while they offer low down payments to first time homebuyers, they also are designed to keep the borrowers in the home; not on the streets. I am all for reform, but there is such a thing as being so strict that we close off the opportunity to bounce back.

-Mayer Dallal

Broker Business Drops, Banks Increase

2011-04-02T05:44:00.000-07:00

It seems that with all this loan officer compensation reform, the broker side is really suffering. I am a banker not a broker, and yes there is a difference. Brokers have several commission sources, whereas bankers have a few. This is why broker’s fees always seem to be higher; because they are, and the shadow that follows them around is the same shadow that follows car salesmen around. There isn’t anything wrong with selling cars, but because of a few bad ones, we all get a bad rap. The same is true in the mortgage business.

Broker business has fallen nearly 60% since 2005, and it’s no surprise. This is when I could see things changing, although slow I could see we were headed for a real problem. I remember going to Las Vegas and talking with a cab driver and when he told me that he had all these investment properties that was a problem. People were being put into loans because they wanted them, not because they qualified for them. I can understand and respect why changes were expected and even mandated, however I think things can be too stringent. Change is good, but when we tighten it so much that it doesn’t make sense than we need to go back to the drawing board.

Everyone should be able to make a decent living, by charging a fee for the service they provide, but as always it’s all about balance.

-Mayer Dallal

Loan Payment Reforms Could Mean Trouble

2011-03-30T13:38:00.000-07:00

I couldn’t help reading more about the issues that have been presented about how loan officers make their money, and how things are being disclosed. The challenge? These mortgage companies are going to have to let people go, and become a one man operation. While it isn’t conducive to anyone’s sanity during a busy time, it certainly spells trouble for everyone in terms of job loss and being able to run an office efficiently.

I know personally what that must feel like for loan officers across the board, but I work for myself and I know that when I get busy I wish I had more hands. I certainly hope that those who run a one man office are able to keep a processor because I know how hard that can be.

I guess my bigger issue is, I don’t have a problem paying anyone for a service that they provide, and even though some were unethical in their business practice that doesn’t mean that I was, and I have to make a living. I work hard, and while I do believe I work harder than most I just don’t see how cutting back on compensation helps anyone. The regulators are much better off by ensuring that buyers and homeowners get educated before borrowing money, and that they get what they need when they take out a mortgage loan.

Whether a current homeowner wishes to refinance, or someone else is looking to buy, the real problem was making sure that borrowers were actually getting loans that they needed and that were of benefit to them. That was the real issue, and before the regulators spend too much time on the wrong things, they need to get really involved in how these modifications are going and how they are being handled, along with the foreclosures.

-Mayer Dallal

Are Securities Really Secure ?

2011-03-30T04:25:00.000-07:00

Moving forward banks will be forced to take some of the risks that are associated with these securities. In the past they weren’t hold the risk, but now it is essential in order for our economy to move forward; at least that is what everyone is saying now. Banks will also be enabled to determine for themselves what risk they wish to take on and what they plan to get dish out to someone else.

Major banks asked that the government call all their loans qualified residential loans, but will that really happen? Bank regulators certainly wanted to jump in and say that they only wanted to take responsibility for the most conservative mortgages. Shouldn’t the banks take responsibility for everything they do?

The Dodd-Frank Act was final with only requiring them to hold onto 5% of the risk for only qualified residential mortgages. Bankers know that when business isn’t properly defined, that many borrowers wouldn’t qualify to get loans, which will do anything but stimulate the economy. Banks did get regulators to agree to limiting the risk they would have to take.

Mortgages were being sold in order to act as collateral for existing debts, which caused the banks to go down faster. At the time, everyone thought this was a great idea, because these mortgages were deemed as the least likely to default. I am not sure how that was possible, but I think we know better now. I would say that not only should these mortgages be monitored more closely, but I would also agree that yes, banks should take more responsibility as well.

-Mayer Dallal

Principal Reduction in Mortgages

2011-03-28T18:18:00.000-07:00

Foreclosures are being filed left and right and are killing the country. The “robo-signing” issue is still being discussed and no one can seem to find a good way of making sense of it all and settling things down. Everyone has thoughts on how to help correct it, but no one has come up with a good answer yet. While we all keep thinking, it seems that we can’t think fast enough.

A group of attorneys decided to confide in one of their friends from Iowa, Attorney General Tom Miller. What these state attorneys asked for was nothing more than to review in fairness what could be done to tone down the foreclosure issues by reducing the principal on these loans. Could principal be reduced enough so that families won’t lose their homes?

The focus initially isn’t on the process itself, but on principal reduction. If the principal reduction actually makes a difference than they should do it, but if we are only getting the principal reduced and still foreclosing on these families what is the real benefit? The primary argument is that if the modifications aren’t done, then we will continue to see the prices of homes go down and have too many homes with negative equity in them. The other dilemma is that you have a group of people that believe that by doing this, that those who haven’t paid are getting rewarded.

I don’t know I would call it a reward, but there plenty of reasons why modifications are good. I would say that the good outweighs the bad, and we just have to look at the situation for what it is. Everyone was greedy; brokers, lenders, banks and borrowers. However, what we need to do now is admit what we did to screw it all up and move on. Let’s fix what we can, and accept what we cannot change.

-Mayer Dallal

Rates Are Going Up

2011-03-28T16:49:00.000-07:00

It is no secret that interest rates are going up, and they are going up steadily. Freddie Mac does a periodic survey in which it was proven that the interest rates were in fact going up and getting closer to the 5% mark. Naturally, the fluctuation in interest rates is affected by what is happening around the world, and political concerns are never really all that far from home.

To give you an idea of how the rates on the 30 year fixed mortgage have been fairing, let’s take a look at the most recent changes. The week prior to the tsunami, rates were hovering at around 4.76% on the 30 year fixed, and now they are hovering at 4.81%. It doesn’t sound like a lot, but this time last year they were at 4.99%, and the market has been nothing but a yo-yo ever since.

Mortgage rates are still somewhat low, but over time that is going to change. I know I keep saying that, but ultimately it’s the truth. There is no way that the market can stay where it is with everything that is going on in the world. Everything that is happening in Japan and Libya ultimately affects our country, but so few realize this.

The housing market did experience a setback, but we can continue to look forward to new and better things as we move forward.

-Mayer Dallal

New LO Compensation

2011-03-25T18:23:00.001-07:00

In case you haven’t heard, LO compensation is being tracked a little differently. I am sure you do know by now, because everybody has been talking about it since it first came up. CompEditor is the new tool that was chosen in order to help lenders maintain LO compensation. Regulation Z has had its day, and now compensation has taken its lick.

Compensation no doubt has been a topic of discussion and a sore one at that, but steps have been taken to make sure that every detail of the transaction has been recorded. The compensation on the records must be the same as it was when the interest rate was agreed upon for the loan transaction. The records must be retained for two years once the mortgage has closed.

While I do know that many borrowers were being charged too much, they were also receiving the wrong loan which is the real issue at hand. Not only that, but you had many who were getting into the business as loan officers just to see if they could make a quick buck. You had those who really knew the business and cared about the borrowers working hard and making money because they knew the programs and they knew the laws.

While compensation should be controlled, it doesn’t really resolve any issues other than careful paperwork. There isn’t anything wrong with someone being paid for a service that they provide, but again the truth is if the goal is to resolve the lending issues we have been dealing with then we still have much more to do than worry about what loan officers are being paid.

-Mayer Dallal

Are Second Mortgages Important?

2011-03-22T04:59:00.000-07:00

Sound like a crazy question? Well, inquiring minds want to know, because there has been some contention over what happens in a foreclosure, or even in the case of a home mortgage modification. It is better not to have a second mortgage if you can avoid it, and cash is king, but let’s face it so many people have them; it used to be the thing to do. So, with that being said here is why I am even mentioning it.

The ruling as of now is that the first lien holder takes priority, which is why they are in first place. The second lien holder not so much; they get whatever is left. This is why so many companies have gone sour on the second mortgage programs, requiring hefty credit scores and reserves in order to grant them. I can’t say I blame them; you can only lose so many times before the game changes and you have to be strategic.

However, there are some that want a second mortgage to be wiped out completely before a modification is ever done. Is this right or wrong? The challenge is the settlement form, and being 100% truthful when we fill it out. Should the second lien holder be listed or not? This is something that many people differ on, but if there is a second lien on the home why wouldn’t it be listed? Banks are getting enough gifting of people’s money that it’s time for it to end.

The new settlements will ensure that mortgage servicers are being held to a higher standard, but it’s still unclear as to how this will all go down. A lot of it is really confusing, and once it is done we still may not understand it. The idea is to create guidelines for banks, not to give them special permissions.

Either the second will be completely wiped out so that a modification can be done on the first, or whether or not a second should be listed on a foreclosure. The facts are that the largest banks hold more than half of those second liens out there. What does that tell you?

-Mayer Dallal

The Rules on Getting Mortgage Debt Forgiven

2011-03-15T18:53:00.000-07:00

There are so many homeowners that faced hard decisions this year regarding getting a load modification on their home, to allow the home to be foreclosed upon, or to try and negotiate a short sale. When in doubt, be sure to check with the IRS regarding what the rules really are regarding your taxes. There isn’t a lot of negotiating you can do with them, but there are some things you need to know regarding what happens when your mortgage debt is considered “forgiven”.

The word was in the beginning that homeowners were able to get special tax treatment because they were doing a short sale, but there is a fine line there. Initially the only way for someone to be able to get a short sale negotiated on the home was if they had been in the home for more than a year. Those who had just recently purchased a home were not good candidates because they wouldn’t have been in a program that put them underwater like those who had purchased within the past five years.

The idea that bankers had in their head is that those who had purchased within the past several years were slaves to the subprime market, and were more than likely in loans that weren’t really a benefit to the borrower, nor were they loans that were affordable. The challenge is that many borrowers were defaulting on loans no matter what loan they were in. The other catch? The money that was forgiven must have been included in the effort to improve the home. How often did this happen?

Nine times out of ten, borrowers were looking to pay off other debt when they refinanced; not looking to do an addition to the home. So, this means that the population by which these standards are met is so limited.

-Mayer Dallal

AARP Sues HUD

2011-03-14T13:59:00.000-07:00

Foreclosing on those who are widows or widowers sounds pretty cruel, but it happened when HUD foreclosed on surviving spouses. The case was made due to the fact that there were rules that were established long ago regarding foreclosing on those who had lost their spouses. Isn’t the idea to keep them in their home and not kicking them out of it?

The choice of defense is AARP’s department of litigation, and in this case the HUD secretary is the defendant. The central issue of the case is in fact that there are long standing rules that state that it is illegal to foreclose on surviving spouses. The deeper issue is that those who would typically have an interest in the property can’t even make a dent in buying the home because the values are so skewed.

With homes losing value, and sales slowing down, it doesn’t leave anyone in a good position. This situation is really hard to overcome, but not all foreclosure cases are created equal. There are still many cases in which no one wants to take on the property regardless simply because it is more of a chore than a benefit.

Hopefully, these individuals will be able to stay in their homes as a result of the final ruling, but there is no way to know for sure. With so many homes underwater, it could justify these individuals keeping their homes simply because reverse mortgages were designed specifically for those age 62 and over, and this situation doesn’t add up to what the program really is all about. No wonder so many are confused about what is happening.

-Mayer Dallal

The Word From Jay Gould

2011-03-12T05:36:00.000-08:00

Jay Gould may not be a familiar term to you, but he was a former SEC attorney. The SEC stands for the Security Exchange Commission, and this organization dealt with securities exchanges and investment advisors. Gould recently made a statement that resonated with many of us who are bankers.

What Gould had to say was tough to hear, but he was telling his truth against the untruths of many others. His statement was simply this; ‘you can’t throw people in jail for being brokers or bankers because they did these loans according to the guidelines.’ (my paraphrase).

The reason I paraphrased that is because I can’t remember the exact statement, but that was the sentiment behind it. It isn’t tricky, and it isn’t hard to believe either. It is simply that I understand what he is saying, and although I realize that there were many bankers out there telling people to sign for loans they couldn’t afford, there were still so many that didn’t operate in that manner.

I have built my business on the belief that I can truly help people; help families and I love it. I never set out to write a mortgage loan with the intent for a family to end up in bankruptcy. When I worked with families it was all about helping them understand the process, and educating the borrower.

I don’t have any regrets for any financing that I ever offered, however I do regret that we are in this position as a country, and that there are so many who were targeted because the broker felt that they weren’t savvy enough to figure it out.

-Mayer Dallal