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Ted Rood
Senior Loan Officer , MB Financial Bank
on Thu Nov 20 2014, 5:36 PM
Funny Mr. Watt would mention 5% down loans as an upcoming option. Both Fannie and Freddie allow them now (with Fannie even allowing the 5% to be gifted for well qualified borrowers), and the 5% down option is a great alternative to FHA. Hopefully, DU/LP will be tweaked to be slightly less conservative for these loans, I've had qualified buyers turned down by underwriting engines due to the low down payments.
Frank Ceizyk
Mortgage Industry Consumer Advocate,
on Tue Nov 18 2014, 12:03 AM
the 'regulatory scheme' is only hi-liting the lack of leadership and a lack of confidence and conviction that housing is really on the mend. One week foreclosures are down. Next week they are up. One week values are up. The next week they are down. Lenders are asked to meet certain homeownership goals, but aren't trusted to do the job with integrity. Guidelines are too tight, but the regulatory consequences of 'over-loosening' are severe. Investors in MBS want an ironclad Treasury guaranteed return on investment without risk. Something's gotta give. The system is broken. Trust has been broken. Yet we do the same thing, and expect different results.
Frank Ceizyk
Mortgage Industry Consumer Advocate,
on Sun Nov 9 2014, 2:25 AM
William--you keep going back to the "Capacity" constant so quickly--but you have to ask yourself--what went so catastrophically wrong with the pricing of homes that a 20% escape hatch would not be enough? Why didn't we reduce LTVs when appreciation rates were exceeding historical norms by double digits year after year? I would love to see the statistical data too...but let's add the recently popular term 'skin in the game' to the conversation. Who likely has the means to keep paying on time in the future: the homeowner who already managed 10% skin in the game with a demonstrated history of managing credit to the tune of 720 scores, or the homeowner with no money in the game, with a history of having difficulty managing credit evidenced by a 640 credit score. I'm not sure you'd need a statistical analysis to figure that one out, but it would be interesting nonetheless.
on Sat Nov 8 2014, 5:27 PM
Frank- I agree with you that the 100% ltv borrower is underwater the minute he closes, but I don't think that, in and of itself, makes a loan more risky. The "equity" escape hatch you mention proved to be a fiction when the bust hit. Folks with 20% down payments (and sometimes more) were wiped out, and lost homes when they could not sell them, and could not afford the payments in order to keep them. In a crisis market, "collateral" is the least helpful of the 4 C's.....where as "Capacity" is a constant. You can ride out a down market if you can afford your house payment- unless you chose to strategically default, which is an entirely different conversation! Again, Bryan's comment implied that he thinks higher debt ratios are less risky than higher LTVs. I would disagree, and would love to see some statistics to compare numbers either way.
Frank Ceizyk
Mortgage Industry Consumer Advocate,
on Sat Nov 8 2014, 12:08 AM
I think it's simpler than that, Thomas. The mortgage industry needs an image makeover. There is no fearless leader, trumpeting the built in protections of mortgage lending. If one doesn't emerge soon, I fear the mortgage industry will become commoditized, and that crazy Australian accented green lizard will be advertising how you could save 15% by calling the new mortgage service he is endorsing....
Frank Ceizyk
Mortgage Industry Consumer Advocate,
on Sat Nov 8 2014, 12:00 AM
William--the 90% LTV buyer has a built in potential escape hatch if something goes wrong job or otherwise and she needs to sell the house: 10% starting equity. Assuming the market at least appreciates 1 to 3% they have a better chance of selling--rather than any of the default options like short sale, modification or foreclosure. The 100% ltv guy is already about 107% upside down from a resale value the minute he moves in. If he falls on hard times--default is more likely. If you want to give the 100% LTV guy a 6% appreciation guarantee--then lend away. If not, higher LTVs for lower FICOs with unpredictable value trends sounds like doing the same old thing and expecting different results.
on Fri Nov 7 2014, 7:33 PM
Bryan, are you saying that you feel that a loan at 90% ltv or a 720+ score, but with a 50% back end debt ratio is inherently LESS risky than a loan at 100% ltv, 640 score, but 39% back end? If so, why?
on Fri Nov 7 2014, 1:48 PM
Do you like Frank-Dodds rules? What would you change? Was life less complicated without them?
on Thu Nov 6 2014, 7:32 PM
I feel like the regulatory scheme is cutting the legs out of the market - with fewer first time buyers, the market's foundation is being eroded.
on Mon Nov 3 2014, 10:34 AM
Great article! Not quite what I was expecting to hear, but boomers are a special breed (me being one). Good to know I will be able to sell my ranch on an acre to a fellow boomer, when I put my plan into effect!
Ted Rood
Senior Loan Officer , MB Financial Bank
on Sat Nov 1 2014, 2:23 AM
I recently read that US home ownership rates were now the lowest in 40 years. Can't blame the decline completely on the mortgage meltdown 6 years later, dramatically stricter lending standards certainly play a role as well.
on Fri Oct 31 2014, 9:10 PM
The strict DTI requirements A) Make NO sense, and B) Are killing many good, quality loans. What do the regulators think we need? Relaxed guidelines on LTV's and FICO scores - exactly what we DON'T need.
Frank Ceizyk
Mortgage Industry Consumer Advocate,
on Thu Oct 23 2014, 11:16 AM
Most of all, it's time to change the dialogue of distrust to a dialogue of confidence."--the leap from distrust to confidence has to start with a dialogue about WHY consumers can trust the mortgage industry. Until that happens, confidence can't be built.
Matthew Graham
Chief Operating Officer, Mortgage News Daily / MBS Live
on Thu Oct 16 2014, 4:47 PM
Thanks Frank. Pretty crazy day.
Frank Ceizyk
Mortgage Industry Consumer Advocate,
on Thu Oct 16 2014, 1:23 AM
Amazing. The MBS alerts I got on my phone and then showed to customers coming to visit helped seal the app deal on several loans today. Thanks as always for what you do. This information is invaluable to truly being able to offer the best rate and terms available in a given day...or in the case of today, in a given hour.
Frank Ceizyk
Mortgage Industry Consumer Advocate,
on Wed Oct 15 2014, 12:31 AM
.In developing new rules and regulations coming out of the crisis, legislators and regulators, albeit with good intentions, upended the delicate balance between consumer protection and access to credit. I have to wonder when this 'balance' existed and why it was so delicate. There was nothing 'consumer protective' about the housing boom, mostly because no attention was paid to the 'investment value' of the houses that were being purchased during this time. I've met as many people who defaulted on mortgage loans that had 30 year fixed rates as had subprime loans over the past 7 years. The reason the subprime loans got the most attention was because the abuse was so media worthy. The abuses in selling practices (i.e. the myth perpetuated that house values never go down) hasn't really been regulated. Financed loans may have to adhere to stringent valuing guidelines, but no such guideline exists for all cash purchases. Kind of interesting that reports are showing a pull back in investor buying around the same time housing values/prices seem to be tapering off. The cash sales still ended up being closed sales didn't they, even if a third party HVCC trained appraiser didn't validate the value? Some of the fear of defaults and buybacks perhaps comes from a lack of faith in the housing recovery, doesn't it? If we are in a true recovery, then housing appreciation should make default less likely, because home owners can simply sell their houses if they fall on hard times and at least break even if not net a few thousand dollars and call it a day. Unfortunately the hyper sensitive regulatory infrastructure doesn't have much power to protect home buyers from paying too high a price for house because they are so focused on every component of how financed home purchases are made. It reminds me of the scene in Die Hard when the FBI and police on the ground shine the spotlights on the bad guys who have taken the Nakatomi building by force. A few minutes later, gunfire erupts. When the authorities try to assess what's happening, the only common sense police officer on the ground points out the obvious: "They're shooting out the lights." Sometimes the guys on the inside of the building trying to save the day can see the obvious, while the army outside trying to break in is following a regulatory path that is only going to lead to embarrassment and not ultimately help save any of the people inside. I'll let you guess which housing...
Frank Ceizyk
Mortgage Industry Consumer Advocate,
on Sun Oct 12 2014, 12:18 AM
Hmm. No comments from any small businesses, so the proposed rules haven't had a big impact? Curious what study is done to assess the impact of implemented rules on the cost of mortgage credit for housing consumers....
Frank Ceizyk
Mortgage Industry Consumer Advocate,
on Sat Oct 11 2014, 9:25 AM
"we will need to see lending regulations strike a better balance between the current defensive underwriting posture and common sense." This statement is so true, yet is so vague. What is common sense lending nowadays? When you have CSI style forensic underwriting going on, and perpetual fear of buybacks, how can you even begin to build a platform for common sense style lending that won't be deemed as predatory by our new regulatory agency? Maybe the lack of a push for common sense lending reform comes from a lack of confidence in this housing recovery. With so many neighborhoods experiencing price increases, and rates staying at historical lows, and more ability to repay restrictions than ever, it seems that the risk of future defaults would be really low. Or is it? Is the buyback fear the result of a lack of confidence that this recent uptick in values has any staying power? Is the defensive underwriting posture coming from a place of inside knowledge that another downturn in prices is eminent, putting customers into no equity or negative equity positions again in the not to distant future? I hope not.
Ted Rood
Senior Loan Officer , MB Financial Bank
on Mon Oct 6 2014, 4:04 PM
Between QM, dramatically increased FHA MIP, reduced number of loans that are HARP eligible, and rates up from historic lows, it's no wonder that loan lives are up from the past couple of years. Good news for borrowers who got in at the bottom, not so great news for mortgage originators!
on Mon Oct 6 2014, 10:23 AM
Rob, Titan is a moon of Saturn. A forgivable oversight. The mortgage industry out there hasn't yet seen the effects of the economic recovery; something about the speed of light. Lol
on Sat Oct 4 2014, 2:14 AM
Yes, I agree there are too many injured people left out in the cold who only received approximately $1000. This is so inhuman, because millions of people invested their lives in their homes and lost everything. I was one of those people who lived in my home since 1998 and lost it. Why, because CitiMorgage loan modification department did not do my loan correctly. So, I lost my home in foreclosure and CitiMortgage approved a short-sell which benefit them. I got nothing from the sale of my home. I feel like I was cut in half and left for dead. Wounded for life........
on Fri Oct 3 2014, 6:23 PM
You'd think he would have known to handle the refi BEFORE he gave up the salaried job.
on Fri Oct 3 2014, 5:46 PM
This is a no brainer. The only Xfactor for the mortgage companies was the number of people that would qualify for a reimbursement. Once they learned the number of qualified people in January of 13 they simply struck a deal saying we will pay the people with close review on our own and the home owner is screwed again. 80% received less than $1,000.00
on Wed Oct 1 2014, 5:56 PM
Hello Jann: You once published a list of questions addressing mortgage lending risk in 2014. I want to cite your article for the use of your material. Can you kindly send me the title of that article and the exact date that you published it. I'm honored to use your material since I'm a consistent reader of your pieces. Thanks--yaw
on Wed Oct 1 2014, 8:02 AM
I SECOND that! It only took the government 6 years and so many lost their homes for the exact same thing. Not only Flagstar but many, many companies that we still use and believe benefit us today.
on Tue Sep 30 2014, 7:24 PM
Could someone please tell me how CoreLogic came up with the percentages that are shown in the chart. When I did my own math (and I am certainly not a mathematician), I could not get anywhere near the percentages they did. For example, to get NJ's negative equity share I took NJ's Negative Equity Amount of 238,327 and divided it into the total US Negative Equity Amount of 5,309,383 and came up with 4.5% (they show 12.8%). Also, when you add all the percentages up in the Negative Equity Share, it is way over 100%. Could someone enlighten me?
on Tue Sep 30 2014, 3:34 PM
About time!
Ted Rood
Senior Loan Officer , MB Financial Bank
on Tue Sep 30 2014, 12:41 AM
Nice to see our gains last all day today. Now if we can nurse them through to NFP on Friday, maybe we can continue our downward trend channel for rates!
on Sun Sep 28 2014, 12:39 PM
"Black Knight' the old Lender Processing Services, who were found by the U.S. Department of Justice to have submitted over one million forged, fraudulent documents into our county recording offices. Black Knight, like Core Logic, enable illegal foreclosures with their "document creation" services for banksters and their stooge attorneys. Both companies are continuing criminal enterprises...any doubts?
on Tue Sep 23 2014, 6:05 PM
"Fannie Mae's economists are painting a much improved picture for the economy in the coming months"....gee... is that because they are stealing homes across the country through fraudulent foreclosures by forging mortgage notes and then submitting them to the courts as evidence? I wonder if that could be why. I'm curious, does Fannie Mae know this is taking place or are the so called lawyers who are the substitute trustees for them doing this without Fannie's knowledge? It's funny how Fannie stops using certain law firms and then the same lawyers from those law firms just show up with another law firm and the forgeries continue.
 

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