Archive for the 'Lending' Category

The Foreclosure Timeline

Published
by
kevin
on December 15, 2008
in Banks, Government and Lending
. 0 Comments

Starting September 8, 2008, California has a special foreclosure timeline for loans originated between 2003 and 2007, which are secured by owner-occupied residences.  Loans involved in short sales are likely to be owner-occupied loans from the years 2003 to 2007, which was the heyday for sub-prime lending.  The special foreclosure timeline does not apply if the borrower has filed for bankruptcy, surrendered the property, or contracted with a person or entity whose primary business is advising people, who have decided to leave their homes, on how to extend the foreclosure process and avoid their contractual obligations.  The special foreclosure timeline will remain in effect until January 1, 2013.


Day 1: Lender Contacts Borrower


For owner-occupied loans from 2003 to 2007, a lender initiating the foreclosure process must generally contact the borrower by phone or in person to assess the borrower’s financial situation and explore options for avoiding foreclosure.  During the conversation, the lender must inform the borrower of the right to meet with the lender within 14 days.  The lender must also give the borrower the toll-free number for finding a HUD-certified housing counseling agency.


Day 31: Filing of Notice of Default


For owner-occupied loans from 2003 to 2007, the lender may file a notice of default 30 days after contacting the borrower to explore options for avoiding foreclosure.  The notice of default must be filed in the county where the property is located and a copy must be mailed within 10 business days after recordation to the borrower and all other persons who have requested such notice.  The notice of default informs the borrower of the default.  It must also include the lender’s declaration that it has contacted the borrower to explore options for avoiding foreclosure, attempted to contact the borrower, or the borrower has surrendered the property.


Day 121: Filing of Notice of Trustee’s Sale


Three months after the filing of the notice of default, the lender may record a notice of trustee’s sale setting forth the date, time, and place of the upcoming trustee’s sale. The notice of trustee’s sale must be recorded, posted, mailed to the borrower and others, as well as published once a week for three consecutive weeks in a newspaper of general circulation.


Day 145: Deadline to Cure Default


Up to five business days before the trustee’s sale, the borrower may reinstate the loan by curing the default or paying the missed payments plus allowable costs.  After the reinstatement period expires, the borrower still has the right to redeem the property by paying the entire debt, plus interest and costs (not just the arrearage), before the bidding begins at the trustee’s sale.


Although California law allows a trustee’s sale to take place 20 days after the posting of the notice of trustee’s sale, lenders customarily wait at least 31 days instead to help protect against federal tax liens.  At the trustee’s sale, the property is sold through a public auction to the highest bidder.

Contact a qualified REALTOR® EARLY on in this process (ideally before missing a payment) to ensure all options for avoiding foreclosure are identified.

Kevin

Conforming Loan Limit Adjustment

Published
by
kevin
on November 11, 2008
in Banks and Lending
. 1 Comment

Before this year, one conforming loan limit applied to the entire country. The amount was $417,000 for a single family unit (since 2006). When Congress allowed for the increase in February of this year, it was done so based on 125% of an areas median home price. The floor was set to $417,000 and the ceiling to $729,750. This temporary increase was to sunset at the end of 2008.

In July the law became permanent, but the formula was changed. It became 115% of an area’s median home price with a floor set by the government and the ceiling equal to 150% of the floor. Last Friday, the Housing Finance Agency said the floor would remain $417 for 2009 which would then put the ceiling at $625,500.

The conforming limit for Monterey County has been set to $483,000 for 2009. In contrast, the Oakland / San Francisco Market have a limit of $625,500 as does Los Angeles, Santa Cruz and Watsonville. What will this do to the already struggling market in Monterey County? For those looking to take advantage of a traditional conforming loan, a down-payment of 35% on a $750,000 purchase would be needed, significantly impacting the pool of buyers positioned to purchase.

Part of the benefit of MCAR membership is the opportunity to take advantage of market professionals who truly understand the dynamics associated with their field of expertise. This week, I was fortunate enough to be able to discuss this issue in great depth with one of our members, Linda Guy. Given the constant fluctuation of the market throughout the country, it seemed to make sense to establish a national conforming limit, high enough to meet the needs of the higher priced communities and counties in the nation, while providing a more accurate model for monitoring success annually. This in turn would eliminate the need for limits established regionally or by area, a formula that is certainly prone to dysfunction as we’ve seen illustrated above.

Buyers would need to qualify under typical lending qualifications and property would appraise locally, establishing an accurate market value.

There are rumblings in Congress that an extension of the $729,750 conforming rate is being contemplated for 2009. Whether or not this comes to fruition by years end is anyone’s guess. A legislative adjustment that would establish a singular national conforming loan limit is needed.

Your input is desired and appreciated as we pursue a dialogue with those in Congress. Please let us know your thoughts by utilizing the MCAR Blog.

Kevin

Voters Inspired

Published
by
kevin
on November 5, 2008
in Lending and Uncategorized
. 0 Comments

I am sure many of you have heard of the campaign to “Get Out The Vote” or GOTV - it is a reference to each political party’s attempts to energize their voting base through various activities. Republican or Democrat, no doubt there was a GOTV effort in your city or town.

GOTV efforts produced results not seen in a very long time. There are many different reasons why educated and even passionate people fail to make it to the polls for each election. Some say low voter turnout represents a lack of trust in government. However, this year, this Presidential Election, it can be said unequivocally that voters were inspired and ready to see this Nation move in a new direction.

In the past few years we’ve seen a special election to unseat a Governor, a contentious Presidential race, major bond campaigns and raucous political infighting. At some point, voters reached maximum exposure and decided it was time to do something about it. Casting votes in droves, Republicans and Democrats alike took advantage of the very right which makes this country so special, they voted.

It turns out that the economy was the driving factor of importance in this year’s election. Given the current economic situation in the country and here locally, it’s no wonder why this issue played such a large role in how citizens cast their vote. As the excitement and drama associated with this historic Presidential Campaign begins to subside, the reality associated with the task at hand for our new President-Elect and Congress will become ever clearer. The new voting demographic will be watching closely as this country, under new leadership, begins pursuing policies for the future.

The tide on voter apathy has changed course. Regardless of party affiliation, every American should feel a sense of great pride for the turnout enjoyed on November 4th.

Kevin

Was Anyone Listening???

Published
by
sandy
on September 29, 2008
in Government, Lending and sub prime mortgage
. 2 Comments

By Sandy Haney

CEO, MCAR

Below is a letter written by one of our REALTOR® members and former MCAR Director, Eugene Ferris.  Eugene wrote of his concerns regarding the loose lending practices in January, 2005 and sent it to three of our local newspapers. His prediction was six months prior to when the market started its downturn.  Like many of our members, Eugene saw the train wreck about to happen and tried to send out the warning.  MCAR did the same.  We saw and heard horror stories regarding lender fraud, over inflated fees, loans being made to buyers who certainly would not be able to keep their homes.  We shared that information with regulatory agencies, law enforcement offices and anyone else we hoped would be able to correct the direction in which we were headed.  Unfortunately, due process is much longer than the loan process!

Letter from Eugene, January 2005

As I read the reference to Salinas in last week’s Wall Street journal article on housing affordability, it struck me that blind trust in the short term real estate value and some mortgage lenders’ practices are going to hurt a lot of people throughout our country.

In 1849 the word went out that gold, and therefore fortune, was readily available for those brave souls who reached California. Some, very few, indeed prospered from their time spent stooping on a river bank in the Sierras. But most who toiled in summer heat and winter frost went broke and scores stayed broke for many years. The people made rich by the gold rush were those selling the dream of the fortune, mineral rights dealers, and supply brokers of simple shovels, pans and goods. It’s now important to look at the period with vision clarified by time, and then apply those lessons to our local housing train chugging down the tracks in the fog.

Owning a home changes everything; options for the future immediately expand, the vision of retirement becomes considerably clearer, education options for your children broaden and provide generational improvements, not to mention the huge benefit it has for growth in a participating society that has a vested interest, and our revenue basis. But it is so important that buying a house is in fact, building equity and a future. Paying interest only on a home loan is gambling three ways against the odds: A) That your home value goes up; B) That your personal income goes up; and C) That the prevailing interest rates stay low. A and B may go your way, but the obvious news is that sooner or later interest rates are going to rise. As referenced in the WSJ, 60% of home buyers in Salinas during 2004 have interest-only loans.

The secondary market that buys mortgages and dictates the terms of lending policies may well reel in financial pain if the move in interest rates is up and quick. But the real sufferers of such a move will be the thousands of new home owners left financially marooned, and a real estate market left wounded for years. The secondary market must create home ownership options that provide stability and affordability, such as longer term loans with no prepayment penalties. The government authorities should compliment such home ownership opportunities by sensible planning for generations to own their own homes, easing zoning and arduous building processes.

Like man of the mineral rights dealers and supply brokers of the 49ers, the mortgage lenders of today know that what they sell to dreamers for home ownership probably won’t deliver. Worse still, their tools are going to cause big trouble to some home owners if A, B or C don’t happen. Some mortgage lenders may have a lot to answer for in the coming years. Are they doing anything illegal? No. Do they have an obligation to look out for the interests of their clients? Yes, and I know some that do that every day, every client. But others have a churn and burn production mentality that will crush the dream of many and hurt all of us in the long run.

Eugene Ferris

A Money Line

Published
by
galencall
on September 11, 2008
in Banks, Government and Lending
. 5 Comments

  I read with great interest, an article in the New York Times yesterday, reviewing the government’s takeover of Fannie Mae and Freddie Mac. A little over a year after the credit crisis formally began, I was struck again by the enormity of the problem facing our country. Historically, from an economic stand point I find that what is happening to be absolutely incredible, exciting in the overall scale of size, and compelling to stay alert to change. I was equally struck how it reminded me of being back in college and overwhelmed with multiple courses trying to keep them sorted by information, meeting deadlines or due dates on exams, labs or presentations it is no small coincidence that we have a college student living at home. Focusing on course and curriculum for a college student is similar to a working adults task in the mortgage business today of sorting through the barrage of current day information and subsequent timelines so as to adequately and efficiently deliver needed education to community and clients. The governments Treasury Department takeover, on top of the newly released Housing and Economic Recovery Act of 2008 (July 2008) and the critical provisions in HR 321combined, can only keep one on their toes or suggest not getting out of bed in the morning less there be more information to digest. The purpose of the legislation is to stimulate activity in three areas: One, to stimulate additional buying activity, particularly at the entry level or first-time home buyer market. Two, is to provide relief to current homeowners experiencing difficulty or who are in foreclosure. Third, is to enact legislation and standards that are aimed at the lending business; Federal licensing requirements are coming that are aimed at taking the villains off the street.

 The implications, the timelines, the mere “change is in the wind concept” is exhausting, daunting to sort through and at minimum confusing to those who might not be watching and teaching it day in and day out.  There are so many varied changes happening at light speed; loan limits, tax implications, down payment options, reverse mortgages can say goodbye to Fannie Mae’s home keeper program, HUD counseling cost issues, 1st time home buyer tax credit, mortgage insurance, changes effective October 1, November 1 and January 1, 2009 and more.

To teach, to educate and instill hope in the future is one of the hallmarks of today’s mortgage originator. Substance will outperform style.  For example, did you know that today 2 out of every 3 FHA loans includes seller funded DPA (down payment assistance)? Fannie Mae has already removed this option from the table moving forward after October 1, but there is a ground swell lobbying to keep it and this effort may well prove to be successful. Stay tuned as the changes are constant. Mortgagee letters are the benchmarks for underwriting decisions and as the letters are published the facts can hit the streets. It will be a fall season packed full of change!

Galen Call, CMPS®
Mortgage Planner
Treehouse Mortgage Group
451 Washington Street
Monterey, CA. 93940
direct: 831.645.1164
fax: 831.643.1161

 

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