Tuesday, December 28, 2010

FHA Condo Approval Expiration Dates

12/28-2010 FHA Announces New Staggered Dates for Condo Approval Expiration

• Approved 1972-1980: Expire 12/31/10

• Approved 1981-1985: Expire 12/31/10

• Approved 1986-1990: Expire 05/31/11

• Approved 1991-1995: Expire 07/31/11

• Approved 1996-2000: Expire 08/31/11

• Approved 2001-2005: Expire 09/30/11

• Approved 2006-2008 (Sept): Expire 03/31/11

Click here: https://entp.hud.gov/idapp/html/condo1.cfm to look up the expiration date of the FHA approval of a specific condominium project.

The requirements and process for recertification are set forth in HUD Mortgagee Letter 2009-46 B. There are two approval process options: the HUD Review and Approval Process (HRAP) and the Direct Endorsement Lender Review and Approval Process (DELRAP), which can only be used by lenders who have unconditional Direct Endorsement authority from the FHA and staff with knowledge and expertise in reviewing and approving condominium projects.

12/27/2010 FHA Mortgagee Review Board Censures 2 Lenders - Mortgage Originator

HUD Fines WR Starkey, Seeks $750,000 Reimbursement

Its Mortgagee Review Board has fined WR Starkey Mortgage $223,000 for violations of Federal Housing Administration lending requirements, according to the Department of Housing and Urban Development.

12/27/2010 - FHA Takes Action against Cambridge Home Capital

In the new era following the subprime-lending disaster most mortgage lenders are looking more carefully at the implementation of their underwriting and quality control criteria including the Federal Housing Administration. Citing "serious" underwriting standard violations the FHA Mortgagee Review Board has permanently withdrawn FHA approval of Cambridge Home Capital LLC and is also seeking a monetary penalty of $182,000.

FHFA's Backwards Looks at Rates Shows how low Rates Went

Washington, DC – The Federal Housing Finance Agency today reported that the

National Average Contract Mortgage Rate for the Purchase of Previously Occupied Homes by Combined Lenders, used as an index in some ARM contracts, was 4.42 percent based on loans closed in November. This is a decrease of 0.07 percent from the previous month. This Contract Rate series can be found at http://www.fhfa.gov/Default.aspx?Page=251

FTC Launches Website and Blog for National Consumer Protection Week 2011.

On December 21, the Federal Trade Commission (FTC) announced the launch of a website and blog for National Consumer Protection Week 2011, which will be held March 6-12. The annual event is hosted by the FTC and approximately 30 other government agencies, consumer groups, and national organizations. The new National Consumer Protection Week website, which can be found at www.ncpw.gov, offers information and resources to help consumers protect their privacy interests, manage credit and debt, avoid identity theft, understand mortgages, and recognize frauds and scams.

Wednesday, December 1, 2010

Loan Officer Selling: I HATE Cold-Calling

My Marketing Plan - Week 2 - Is there a way I can avoid cold calling?

You know the drill.  You pick up the phone and start calling agents, CPAs or builders. You don't get through.  You get voicemail.  Or, worse, you get your prospect on the phone and they don't want to talk to you.  "Tom, thanks for the call.  But I already have a loan officer.  (Click)."  And that's a civil one.  A few rejections like that, and I start to question what I am doing.  In my mind, before I even dial I am getting rejected. 

Boy.  That's what I want to do today.... NOT!

Triggering Call Reluctance

What I just did was trigger my own call reluctance.  Now I am afraid or unwilling to make further calls, even though I know that this is the ONLY way I will start creating new relationships.  We are told we HAVE to push out of our comfort zone.  Most people I know, including myself, don't want to do this and will avoid it.  The result is predictable - sales failure.

Comfort Zone Selling

The key to pushing out of your comfort zone is to take small steps to creating new comfort zones around your prospects.  For me the first step in getting over call reluctance with new prospects is to NOT MAKE COLD CALLS.  Instead, I make "follow-up" calls.  I send my prospect a very short letter saying I think I have something to offer them.  Then I tell them that I will follow up with them within the next couple of weeks. 

PRESTO!  No cold-calls!  When I pick up the phone and call to try and get a face to face meeting, I am following up on the letter I sent. 

The intro letter is just the first in a series of between 6 and 10 letters I'll send designed to allow me to follow up.  

The next step?  Making the calls! 

These are part of the value package I have at my use in The Loan Officer's Practical Guide to Marketing

Tuesday, November 23, 2010

11/23 - Some Banks Flush with Cash - Others Just Flushing: FDIC Report

FDIC-Insured Institutions Earned $14.5 Billion in the Third Quarter of 2010, Up from $2 Billion a Year Ago
Lower Loan-Loss Provisions Were Key Factor in the Year-Over-Year Improvement - FDIC

November 3, 2010, the United State Department of Agriculture (USDA) provided an update on its Rural Development Single Family Housing Guaranteed Loan Program; Funding is now available for fiscal year 2011. Purchase type loans will be subject to a 3.5 percent upfront guarantee fee and refinance type loans will be subject to a one percent upfront guarantee fee. Prior to the supplemental bill, the fee was two percent for purchase type loans and 0.5 percent for refinance type loans. Source: Mortgage Bankers Association

Freddie Mac to Raise Fees on Riskier Loans
Washington Post (11/23/10) P. A12
Freddie Mac will hike fees for lenders selling riskier home loans starting March 1. It plans to raise some upfront fees by as much as 0.75 percent of loan balances and add costs for consumers using additional mortgages as part of their borrowing. The changes will help ensure that Freddie Mac is adequately compensated for providing liquidity to the mortgage market and is able to support affordable lending, according to the firm's Patricia McClung.

"Foreclosure detectives" are in growing demand. They sift through loan documents for errors that could compel banks to buy back shaky loans - and pay back investors the difference between the loan's original value and the amount recovered in foreclosure. Banks are resisting detectives' efforts, and many loan disputes wind up locked in stalemate.

Cambridge Chronicle: The Cambridge, Mass., city council passed a policy order Monday that called for a moratorium on new banks.

The Federal Reserve Board on Tuesday announced the execution of the following enforcement actions:

America's Community Bank (35 KB PDF), Blue Springs, Missouri
Written Agreement dated November 17, 2010

Cadence Financial Corporation (26 KB PDF), Starkville, Mississippi
Written Agreement dated November 17, 2010

Orient Bancorporation and Bank of the Orient (46 KB PDF), San Francisco, California
Written Agreement dated November 16, 2010

Viking Financial Services Corporation (24 KB PDF), Seattle, Washington
Written Agreement dated November 19, 2010

Monday, November 22, 2010

11/22/10 - News Flash - Borrowers HATE Loan Originators

2010 U.S. Primary Mortgage Origination Satisfaction Study
Mortgage borrowers are less satisfied with the origination process, according to the J.D. Power and Associates Among the findings from the report were that new compliance requirements are making the loan process take longer, more applications are being submitted online and fewer borrowers ever meet their loan officers.Responses from 3,401 new borrowers were used in the report.www.mortgagedaily.com/OriginationSurvey111910.asp
HUD Thinking Warehouse Lending is Subject to RESPA

On November 16, HUD posted a notice on its website soliciting comments regarding changes in warehouse lending structures that have occurred since HUD's previous regulations on table funding and secondary market transactions were issued in 1994. Comments will be due not later than 30 days after the notice is published in the Federal Register, which is still pending. For a copy of the notice, please see http://www.hud.gov/offices/hsg/rmra/res/warehouselending.pdf.

FTC Issues Final Mortgage Assistance Relief Services (MARS) Rule.
On November 19, the Federal Trade Commission (FTC) issued a final version of its Mortgage Assistance Relief Services (MARS) Rule to regulate mortgage relief companies. Chiefly, the new rule prohibits mortgage relief companies from collecting fees until they have provided consumers with both (i) a written offer from their lender or servicer that the consumer deems acceptable and (ii) a written document from the lender or servicer describing the key changes to the mortgage that would result if the consumer accepts the offer. Additionally, the rule restricts the advertising practices of mortgage relief companies, requiring them to disclose in all advertisements and communications directed at consumers that (i) they are not associated with the government, (ii) their services have not been approved by the government or the consumer's lender, (iii) the lender may not agree to change the consumer's loan, and (iv) if the company advises the consumer to stop paying on the mortgage, they could lose their home and damage their credit rating. The rule also mandates that mortgage relief companies provide disclosures explaining the total fees the companies will charge and that the consumer will not pay a fee unless they accept an offer from their mortgage company/servicer. Finally, the rule prohibits mortgage relief companies from making certain false or misleading claims. All provisions of the rule except the advance-fee ban will become effective December 29, 2010. The advance-fee ban provisions will become effective January 31, 2011. For a copy of the rule, please see http://www.ftc.gov/os/2010/11/R911003mars.pdf.

FTC Cracks Down on Mortgage Relief Operations. Recently, the Federal Trade Commission (FTC) announced that two fraudulent mortgage relief operations posing as government programs had been shut down and that seventeen marketers were banned from selling mortgage modification and foreclosure relief services. With respect to the two mortgage relief operations, the FTC shut them down for claiming they were part of a "Government Mortgage Relief Program" that could, in return for a large up front fee, reduce consumers' monthly mortgage payments and lower their interest rates. The FTC alleged that consumers would pay a fee without receiving anything in return and would not get refunds. The companies failed to respond to calls or emails and eventually changed the name of their business. The FTC also announced settlements with a number of companies charged with similar practices in 2009. For a copy of the announcement, please see http://www.ftc.gov/opa/2010/11/mortgage.shtm.

Two New Jersey Defendants Plead Guilty to Conspiracy to Commit Mortgage Fraud.
On November 15, 2010, Edivaldo dos Santos and Rosa Damasceno pleaded guilty in federal court to conspiracy to commit wire fraud, and admitted that they forged and attempted to use false documentation and information to obtain a loan on a client's behalf. The defendants admitted to providing false income information in support of an application for a loan intended to return money to the buyer at closing, and to creating fraudulent W-2 forms. Charges against dos Santos and Damasceno were originally brought as part of the prosecution of 28 defendants accused of mortgage fraud schemes in New Jersey in a joint prosecution involving the Financial Fraud Enforcement Task Force. The defendants face up to 30 years in prison and a fine of $1 million, or twice the gain or loss from the conspiracy, at sentencing. For a copy of the press release, please see http://www.stopfraud.gov/news/news-11152010.html.

Inflation fears rekindled
The Times' Floyd Norris writes that fears of deflation were rekindled as the core rate of inflation fell to a record low in the U.S. last month. "Since the collapse of the housing market in the United States and the beginning of the global financial crisis, the Federal Reserve has made avoiding deflation a major priority, recalling the experience of Japan after its bubble burst in the early 1990s. The Fed has set an annual inflation target of 2 percent or a little lower, but is not getting it."

Three more small banks failed Friday, bringing the tally of seized depositories for the year to 149.

Friday, November 19, 2010

11/19 - Conforming Limits to Remain Unchanged

FROM HUD - New Mortgagee Letter Clarifying Eligibility
Mortgagee Eligibility Requirements and Clarification of FHA’s Electronic Annual Certification Requirements and Procedures 11/19 - http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/

11/17 - Home Values Continue to Decline - Offset by Declining Defaults

CoreLogic: Home Values Continue to Decline

Home prices fell 1.1% in September after falling 1.2% in August, according to the just released CoreLogic house price index. Mortgage Originator 11/17/2010

Defaults Continue Decline
It has been nearly a year since monthly mortgage delinquency has risen. www.mortgagedaily.com/Delinquency111610.asp

Housing Starts Fall to a Near Record Low, Multifamily Hurt Too

Single-family housing starts fell to an annualized rate of 436,000 units in October, a near low that comes despite rock bottom mortgage rates. - Mortgage Originator 11/17/2010

Analysts: Low Mortgage Rates Sustain Historic Home Affordability

Historically low mortgage rates are a crucial component of record affordability for home buyers, but lack of confidence in the market and fear of further price declines are challenges that are outweighing that factor, Credit Suisse analysts wrote Wednesday. Mortgage Originator 11/17/2010

Expected Loan Limit Drop Could Fuel New Nonagency Business

An expected drop in the conforming loan limit could make new nonagency mortgages more compelling, according to executives at Invesco Mortgage Capital Inc. Mortgage Originator 11/17/2010

Rates Jump, Apps Down

An 18 basis point rise in rates for 30-year fixed-rate mortgages resulted in a decline in mortgage application volume of 14.4% last week on a seasonally adjusted basis, according to new figures released by the Mortgage Bankers Association. The data was not adjusted for Veterans Day. Mortgage Originator 11/17/2010

Slate writer Bethany McLean examines the home-appraisal industry for the online magazine.

McLean is skeptical that either the Dodd-Frank Act's provisions on appraisal practices or the Fed rule implementing them will effectively shield appraisers from bullying lenders' demands that they inflate valuations. "If appraisal independence wasn't enforced the last time around, why should we believe it will be enforced this time?" She notes that when New York Attorney General Andrew Cuomo proposed the Home Valuation Code of Conduct in 2008, federal regulators protested that the issue of appraiser independence was already "adequately addressed." 11/17 US Banker

Acting OTS Chief Attacks Dodd-Frank Law as Burdensome, Ineffective
WASHINGTON — John Bowman, the acting director of the Office of Thrift Supervision, lashed out Wednesday at the Dodd-Frank Act, arguing it made his agency the scapegoat for the financial crisis and could spell doom for the thrift charter. 11/17 American Banker

FDIC Conducting 50 Investigations at Failed Banks

The Federal Deposit Insurance Corp (FDIC) is conducting about 50 criminal investigations at U.S. banks that have failed since the start of the financial crisis, the Wall Street Journal said. The FDIC, which is responsible for dealing with bank failures, is probing former executives, directors and employees at failed U.S. banks and is taking efforts to punish alleged recklessness, fraud and other criminal behavior, the Journal said. Compliance Exchange 11/17

CSBS Adds New Credit Report Functionality to NMLS

On November 1, the Conference of State Bank Supervisors (CSBS) announced that the Nationwide Mortgage Licensing System and Registry (NMLS) now can process credit histories for individual mortgage loan originators (MLOs) and that, effective immediately, all licensed residential MLOs participating in the NMLS must complete a credit authorization process, regardless of prior state requirements. 11/17 - InfoBytes Buckley and Sandler

Cutting Losses on Loan Defaults
A growing number of borrowers with negative equity are opting to abandon their mortgage obligations, though a Wharton professor has a possible solution for such strategic defaulters. But for those loans that cannot be saved, an expanding array of service providers promise to make the disposition process more efficient and less costly.

In an article entitled Home is Where the Money Is: A New Incentive Program Aims to Slow Rising Mortgage Defaults, Wharton finance professor Alex Edmans claims that an incentive program could prevent strategic defaults for borrowers with negative equity. Dubbed "responsible homeowner reward," the incentive provides a "sizeable cash reward" for borrowers who repay their entire mortgages.

FHA DPA Losses Could Exceed $13 Billion
Losses on loans where the seller provided down payment assistance are ultimately expected to exceed $13 billion at the Federal Housing Administration. Had such programs been banned, FHA asserts, its capital reserve ratio would be in compliance with congressional mandates.

States Pushing Loan Mods:

The Journal said a probe by state attorneys general of foreclosure problems has expanded to include other things, like the fees servicers charge. The states want banks to modify mortgages in instances where doing so would result in a cash flow from the borrower that is greater than the likely proceeds of a foreclosure sale, Iowa Attorney General Tom Miller told the paper. The Post said the states are pushing lenders to create a nationwide fund to compensate borrowers who can prove they lost their home to a faulty foreclosure. "Among the most contentious issues, besides how much each lender would contribute, are the time period to be included and who would decide which homeowners deserved access to the fund." Wall Street Journal, Washington Post 11/17 - US Banker

Tuesday, November 16, 2010

Loan Officer Selling: My Marketing Plan - Week 1 - Choosing Prospects

My Marketing Plan - Week 1 - Choosing Prospects

Choosing prospects is one of the most important elements in developing a marketing plan.  Once I identified how many loans I needed, I knew how many referral sources I needed.  Too few prospects and I am not active enough.  Too many and I cannot possibly reach them all. 

Unqualified prospects

When I don't know what that prospect would want from me, I have no business reaching out to that person.  It shows I don't really understand what I have to offer.  I need to think it through because every prospect should have a need that I can fulfill.  More on this later. 

The Math

I decided I needed 6 or 7 loans a month to earn my desired income.  Based on average production sources producing one referral a month, I need 7 referral sources.  How many prospects will I need  to source to get to 7?

Statistics say that you will go through 40 prospects to generate 1 referral source.  Can that be right? I need to call 280 people to get to 7 referral sources?  Now you know why it takes so long to get up to speed as a loan originator.  I have to make a large number of calls, but they also must be to good prospects.  How do I manage this?

First, I have to figure out how many people can I meaningfully follow up with in the course of a week.  Is it 280?  No WAY.  What about 5?  I can do that in a day.  Maybe even 6 or 7.  When you get down to it and start actually calling you will realize that these 5 calls are a lot of work.  You have to plan the call, make the call and then do the follow up.  Then there are other things I have to do, like go to meetings, fill out paperwork, and pick up the kids.  Also, if I set myself up to do an unreasonable number of calls, I will become disenchanted with the process.  

If I call on 5 people a day, that's 25 people a week.  My initial prospect list is 25. 

You have heard the adage, 80% of sales happen after the 5th call, but most people don't even get to the 2nd call.   I have to call the prospect at least 6 times, because the sale will happen AFTER the 5th call.  I do this because I have to give people a chance to be my customer. 

How long will this take?

Following this system I should get my first full time referral source between week 6 and week 12,  because I will have moved completely through 50 prospects.  I should pick up my second full time referral source within the next 6 week cycle (75 prospects).  I hope I am doing better at choosing more suitable prospects, and also doing better at closing them by this point.  But if not, I am going to continue working through this cycle and the next customer should come within the next two 6 week cycles. (125 Prospects) ..

Under the worst-case, where I am having to really churn through prospects, it has taken me about 6 months to get 3 full time referral sources.  I AM HALFWAY TO MY GOAL!!  Assuming I am not improving any techniques or choosing any better prospects initially, I will reach my final goal of 6 referral sources in about 13-14 months. 

Thursday, January 7, 2010

Mortgagee Letter 2011-02 - Quality Control - Much Ado About Nothing

BULLETIN - Detailed treatment to follow

We reviewed the mortgagee letter over and over to look for what was actually "NEW" in this mortgagee letter, relative to what we have been telling people to do all along.  Everything listed is currently in effect, so there is nothing "NEW".  Perhaps this is emphasis that lenders must take certain responsibilities more seriously 

TPO QC Reviews

Since brokers aren't being approved anymore, HUD has stated that sponsors of brokers must review brokered loans in the same way that direct originations are reviewed. 
  • If you wholesale, you must establish sampling methodology for brokers
  • Example: 10% to include one from each originator/MLO that submits a loan per review period (week, month or quarter) or other statistical model.
All Lenders must
  • QC all early payment defaults
  • QC a sampling of denials, and should QC all denials for Fair Housing Compliance
  • Report Loan Sales and Servicing Transfers
  • Report all fraud and material deficiencies to your HOC immediately
For our QC Customers, the only thing that changes is you must reflect your sampling method for your brokers if you wholesale.