Month: January 2011

LO Compensation Guidance Gets 11th Hour Treatment by Federal Reserve, by Nationalmortgageprofessional.com

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The Board of Governors of the Federal Reserve System has announced the release of its “Compliance Guide to Small Entities” regarding Regulation Z: Loan Originator Compensation and Steering. The Compliance Guide summarizes and explains rules adopted by the Board, but is not a substitute for the final rule itself, which will be enforced come April 1, 2011. Regulation Z; Docket No. R-1366, Truth-in-Lending was originally published in the Federal Register on Sept. 24, 2010, and as mandated by the Small Business Regulatory Enforcement Fairness Act (SBREFA) Section 212(a) (3), an agency is required to publish a compliance guide on the same date as the date of publication of the final rule (in this case, Sept. 24, 2010), or as soon as possible after that date and no later than the date on which the requirements of the rule become effective (April 1, 2011). 

The rule prohibits a loan originator from steering a consumer to enter into a loan that provides the loan originator with greater compensation, as compared to other transactions the loan originator offered or could have offered to the consumer, unless the loan is in the consumer’s interest.

The “Compliance Guide” states that “the regulation applies to all persons who originate loans, including mortgage brokers and their employees, as well as (as defined by the Federal Reserve) mortgage loan officers employed by depository institutions and other lenders. The rule does not apply to payments received by a creditor when selling the loan to a secondary market investor. When a mortgage brokerage firm originates a loan, it is not exempt under the final rule unless it is also a creditor that funds the loan from its own resources, such as its own line of credit.”

According to the Compliance Guide: “To be within the safe harbor, the loan originator must obtain loan options from a significant number of the creditors with which the originator regularly does business. The loan originator can present fewer than three loans and satisfy the safe harbor, if the loan(s) presented to the consumer otherwise meet the criteria in the rule.”

“The National Association of Mortgage Brokers (NAMB) believes that this does not satisfy the requirement as written,” said NAMB Government Affairs Committee Chair Michael Anderson, CRMS. “NAMB is reviewing the Compliance Guide and will taking appropriate action.” 

Click here to view “Compliance Guide to Small Entities” regarding Regulation Z: Loan Originator Compensation and Steering.

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9 Commonly Forgotten Tax Deductions, by Gobankingrates.com

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It is that time of year again. Now that the ball has dropped on 2011, it’s time to celebrate the beginning of tax season. In order to help get you organized and prepared for the grueling task of filing your taxes, here are some tax deductions that are often overlooked. By taking advantage of them, you have the potential to save hundreds or thousands of dollars.

1. Sales and Income Tax Many filers forget to include state sales and income tax as deductions. If you live in a state that doesn’t impose an income tax, adding up all the tax you’ve paid on personal and household items can really mount up. On the other hand, if your state does have an income tax, it’s usually a better strategy to claim that as a deduction for more savings unless you made some high-ticket purchases such as a car or boat.

2. Dividends If your investments have earned you a return this year, you can save money if you take advantage of special tax breaks. If you reinvest your dividends to purchase more shares rather than taking the income they’ve generated, you’ve reduced your current tax liability. This is one deduction a lot of investors miss.

3. Demutualization If your insurance company switched its status from being a mutual insurer and began offering stock to stockholders, this process of demutualization will save you money if you sold your shares based on what the share were worth when they were distributed to you as a former policyholder.

4. Charitable Donations Out-of-pocket charitable contributions are often overlooked, especially if they were in the form of many small donations rather than a few large ones. If you’ve covered the cost of postage, baked cookies for fundraisers or given rides to the clients of nonprofit organizations, save your receipts. If they total more than $250, you can deduct the amount if you have documentation from your favorite nonprofit. If you provided rides or did other significant driving, claim 14 cents per mile for this deduction.

5. Childcare If you’re a working parent and your kids spend part of the day with a sitter or in child care, claim those expenses as a tax credit. If you have childcare reimbursement through your place of work, you can easily overlook the additional costs you incur beyond the $5,000 or $6,000 allocated by these accounts. Don’t miss out on significant savings; save the receipts for sitters and after-school care. If your children are older and in college, don’t forget to deduct the interest you’ve paid on their student loans throughout the year.

6. Job Search Job losses and career changes aren’t all bad. If you were looking for a job in your previous field; had business cards printed; mailed out resumes; drove to an interview; paid for meals, lodging, and parking for an overnight trip or paid for advertising or employment agency fees, you can deduct those costs up to 2 percent of your adjusted gross income.

If you are a first-time job seeker, you can’t claim those deductions, but you can claim your moving expenses if the new job is more than 50 miles from your old place of residence. You can claim the costs of moving your belongings to the new site, plus 16.5 cents for driving your vehicle there as well as parking and toll fees.

7. Mortgage Interest and Remodeling If you’re a homeowner, you’re luck continues. If you remodeled your existing home, deduct state sales tax for building materials if you’re itemizing. If you bought your house, be sure to claim the interest paid on the points on your mortgage. If you’ve refinanced, you have to distribute the points interest over the life of the mortgage. If you’ve made your home more energy-efficient, you can get a 30 percent credit of the purchase price, up to $1,500.

8. Military Travel If you are a member of the National Guard or are a military reservist, part of your travel expenses for attending meetings or drills more than 100 miles from home and overnight stay are deductible even if you don’t itemize. You can write off all your lodging cost and half your meal expenses, as well as mileage and tolls if you drove your own vehicle. Mileage is reimbursed at 50 cents per mile.

9. Self-Employment With widespread job loss, many Americans have switched to self-employment. This freedom comes at a price. These workers not only have to buy their own health insurance, they also pay a hefty self-employment tax. Make sure to deduct the cost of health insurance premiums you pay for yourself and your family. This reduces your self-employment tax. You’re going to have to dig a bit through Schedule SE. Your health insurance figure from Line 29 is subtracted from your calculated self-employment tax on Line 3.

What other commonly overlooked tax deductions can you think of?

This article was written by Bob who runs ChristianPF.com, a personal finance blog tackling the topic using Biblical principles.

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Would-be buyers face even more hurdles on home front, by Mary Ellen Podmolik, Chicago Tribune

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The drumbeat from the housing community was loud and clear in 2010: There was never a better time to buy a home.

For most of the past 12 months, home prices tumbled, mortgage rates ticked downward, and the inventory of available traditional and distressed homes was plentiful.

But would-be buyers, even if they were able to overcome job worries, found that the hurdles to obtain a loan were formidable. They remained on the sidelines, and housing analysts opined that if the broader economy improved and unemployment fell, pent-up demand would be unleashed, credit guidelines would ease and home sales would improve.

As the new year begins, that guarded optimism has turned into uncertainty, thanks to a combination of rising mortgage rates, tighter underwriting guidelines and sweeping government regulation. As a result, it’s unlikely to get any easier and may, in fact, get much more difficult to buy a home in 2011.

“From a credit standpoint, I tend to think we’re toward the bottom of that cycle,” said Bob Walters, chief economist for Quicken Loans Inc. “The bad news is, I don’t think it’s going to get a lot better in 2011. You’ll hear a lot more noise pressuring the industry to ease guidelines, and you’ll hear from the industry that we don’t want a redo of what’s happened.”

Risky practices

Looming large over the mortgage market are provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act that have yet to be finalized. Among them is a requirement that mortgage lenders maintain some “skin” in the game on the mortgages they originate by holding at least 5 percent of the credit risk rather than bundling the loans and selling them off entirely.

The goal is to discourage a repeat of risky past practices, but the legislation makes an exception to the risk-retention standard for what is labeled a “qualified residential mortgage.” It is the still-unspecified definition of what’s become the industry’s latest acronym to digest, QRM, that has lenders in an uproar.

If a very strict definition is applied by regulators, and a final rule isn’t expected until the spring, it could become more difficult, and more costly, for homebuyers to secure mortgage financing.

“People have some very different ideas of how to define this,” said Michael Fratantoni, vice president of research and economics at the Mortgage Bankers Association. “Some would say if it doesn’t have a 30 percent down payment, it’s not a QRM. For a first-time homebuyer, that would really be eye-opening. It definitely has the potential to turn the market upside down.

“This could dramatically tighten underwriting much more than what the lenders have already done. It’s going to make it even tougher to work through the (housing) overhang.”

Wells Fargo has told regulators it supports exempting mortgages with a 30 percent down payment. Community banks worry such a strict definition would curtail home mortgage lending.

“If you have to have 30 percent down, the American dream would become the American fantasy,” said Nick Parisi, a senior vice president at Standard Bank and Trust Co. in Hickory Hills, Ill.

Less competition

Additional regulation on mortgage bankers will mean a thinning of their ranks, weeding out the unscrupulous players. But it also will lessen consumers’ ability to comparison-shop widely for the best home mortgage product.

“That means less competition, and generally, less competition is not good for the consumer,” said Quicken’s Walters. “It might mean that your interest rate over time is a little higher. A less competitive industry has to work less hard.”

Tighter lending requirements already have steered 40 percent of buyers to secure Federal Housing Administration-backed loans, which carry their own set of fees. FHA-backed loans are exempt from the Dodd-Frank provision.

Another new wrinkle to the mortgage market is that beginning in March, Freddie Mac will raise fees for mortgages sold to Freddie that carry higher loan-to-value ratios.

Fannie Mae in late December announced its own series of considerable loan-level price adjustments, effective April 1, for mortgages with greater than a 60 percent loan-to-value that will apply even to consumers with credit scores above 700.

Loan fees aren’t the only item going up: So is the cost of money itself. The average rate on 30-year, fixed-rate mortgages has been below 5 percent since early May, but economists predict those days are nearing an end.

General guidance on mortgage rates for a 30-year, fixed-rate mortgage call for them to stay under 6 percent for the year, likely falling somewhere between 4.75 percent and 5.5 percent. Still, that could be a jolt to buyers on the sidelines who watched rates drop to as low as 4.2 percent in the fall.

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OregonLandSalesContract.com: New Real Estate and Home Buyer Listings

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New Listings on OregonLandSalesContract in both the Real Estate listings and buyer listings sections. OregonLandSalesContract is a web site dedicated to marketing real estate in which the seller is offering terms and buyers that are looking for seller financing opportunities.

OregonLandSalesContract.com
http://oregonlandsalescontract.com

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Wells Fargo closed nearly 500,000 Loans in 3rd Quarter, Thetruthaboutmortgage.com

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I recently noted that Wells Fargo was the top residential mortgage lender based on volume for the fourth consecutive quarter, ending in the third quarter, according to data fromMortgagestats.com.

Well, as you may have suspected, the San Francisco-based bank and mortgage lender was also tops with respect to total number of loans closed.

During the third quarter, the company closed 469,914 home loans, up five percent from the 446,403 loans closed a year earlier.

In the second quarter, the bank closed less than 400,000 loans, but closed a staggering 581,961 in the second quarter of 2009, when the refinance boom got its legs, thanks to those record low mortgage rates.

That, along with the reduced staff, may explain why it took so long to get an underwritingdecision on your loan.

Gone are the days of same-day or 24-hour underwriting – now it’s a couple of weeks, if you’re lucky.

Of course, loan origination volume is expected to slow this year, so maybe it’ll be easier to get that decision from the bank a little quicker.

Check out the rest of the leaders in total residential home loans closed, along with their market share and year-over-year change.

Quicken Loans was the biggest gainer (+65%), while Bank of America saw a more than 25 percent decline, but still held on to the second spot.

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FHA Loan Requirements: Can FHA’s New Loan Requirements Be The US Housing Market’s Lifesaver?, by Stockmarketsreview.com

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With the new, recently announced changes to FHA Loan Requirements, homeowners are expected to overwhelm FHA Lenders, in the new year, hoping to see if they qualify for the new program. As a government home loans program designed specifically to give renewed hope to those residing in “underwater” properties, homeowners are rallying to see if they qualify. Both the Making Home Affordable program and the FHA’s refinancing programs will be nuanced to allow FHA lenders to provide FHA mortgage loans that will potentially forgive at least 10% of the existing mortgage’s principal balance. These newly generated FHA Loan Requirements are creating quite a buzz amongst homeowners worried they could lose their homes down the road. It’s critical to understand that these mortgages are for property owners currently paying down a subprime or conventional mortgage loan. The property must have a current valuation that’s lower than the property owners current loan(s). Approved applicants must owe a minimum of 15% more on the residence than its current market value. You may wish to get out your loan calculator and see where you stand. These new FHA mortgage programs provide aid to those who qualify with a potential 10% reduction on their home loan(s). But, these programs are only available to those who are still current on their home payments. Given the thousands of homeowners who were advised to become delinquent so that they would be considered for a loan modification by their lender, the pool of candidates who might make the cut is the big question. In addition to these stringent qualification requirements, the borrower must currently show a credit score of at least 500 and the property must be the homeowner’s primary residence. Yet, another potential obstacle is that these FHA Mortgages featuring these FHA Loan Requirements are to be offered to those not already holding an FHA loan. Again, only those with non FHA subprime or conventional mortgages will be seriously considered as applicants. The program is being offered for a limited time only and ends December 31st, 2012. How Homeowners with FHA Loans Must Be Proactive If They Believe They Might Default. Preventing Foreclosure or Short Sale Requires Immediate Interaction With FHA Counselors. Know that once you acquire an FHA mortgage, that the rules regarding homeowners who have defaulted are much stricter than a non-FHA home loan. Once you’ve missed a payment on an FHA mortgage, given the FHA’s Loan Requirements, it’s critical to initiate contact with your lender immediately. Once certain deadlines are missed, there is nothing either your lender or the FHA can do to stop you losing your home to foreclosure. The rules regarding loan forbearance are completely different for FHA mortgage holders. As soon you become even one day late on your mortgage, this time line kicks in. The FHA has laid out very specific steps that are important for the homeowner, to initiate, to successfully stop foreclosure. As mentioned, you should immediately contact your lender. It’s also a critical to contact the nearest FHA/HUD counselor. Negotiating your situation within the FHA’s default regulations could help give you a better shot at keeping your home, in spite of the late of missed mortgage payments. Taking action is the most important thing a homeowner who has fallen behind, can do. Thousands of homeowners have thrown up their hands and resorted to wishing. But, problems will simply not resolve themselves on their own. This can result in a disastrous result. The minute you know you’ve got a problem, contact your FHA counselor and your lender. Being aggressive has never meant more. An FHA mortgage holder who has missed the first payment wait. Contacting an FHA housing counselor can definitely help prevent the situation from worsening. FHA/HUD housing counselors can be sourced using the HUD Government Website. Once an FHA home mortgage loan holder has missed four or more payments, the clock may have run out regarding their ability to work out a foreclosure avoidance strategy with their lender, regardless of having an FHA/HUD counselor’s assistance. If nothing has been negotiated by the time the 4th mortgage payment is late or unpaid (Or, if the homeowner has been sent a Demand Letter, that deadline has already passed,) the property is assigned to the lender’s legal department and the foreclosure process is initiated. Many homeowners are fairly confused about the rules regarding repossession laws and repo houses, given the rapid changes in the laws over the last few years. Furthermore, the homeowner is responsible for all the fees related to the delinquency and foreclosure process and may find bankruptcy to be their only remaining source of debt relief. As many property owners have found, the process, regardless of foreclosure moratoriums or investigations by government officials, often ends up with their home sold at auction. Some are fortunate to receive a cash for homes or “Cash For Keys” offer from their lenders. (Another incentivized government program.) Others merely find themselves escorted from their homes by U.S. Marshalls, willing to use deadly force to insure their removal. Norma J. Wheeler is a realty, foreclosure and short sale specialist who writes about programs designed to help struggling homeowners. She is a contributing editor at http://savemyhousenow.net/ as well as an avid blogger. Check out her recent article regarding FHA Loan Requirements for struggling homeowners at: http://www.scribd.com/doc/456534/Fha-Loan-Requirements-New-Loan-Requirements-Fha

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Mortgage Applications in U.S. Increase From 12-Month Low on Refinancing, by Bob Willis, Bloomberg.com

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Mortgage applications in the U.S. rose last week from a 12-month low as refinancing increased for the first time since early November.

The Mortgage Bankers Association’s index of loan applications increased 2.3 percent after dropping 3.9 percent in the prior week to the lowest level since December 2009. The group’s refinancing gauge rose from the lowest level since Jan. 1, while the purchase index declined.

Home-purchase applications fell 31 percent at the end of the year from a 2010 high in April, while an increase in mortgage rates hampers refinancing. Declining home prices, mounting foreclosures and unemployment hovering near 10 percent mean any recovery in housing, the industry that triggered the recession, will probably take years.

“It doesn’t look good,” Brian Bethune, chief financial economist at IHS Global Insight in Lexington, Massachusetts, said before the report. “With rates moving up, it’s going to be a tough hurdle.” On purchases, “we’re still in this sideways, choppy situation.”

The group’s refinancing gauge rose 3.9 percent after dropping 7.2 percent. The purchase index fell 0.8 percent last week after rising 3.1 percent.

The average rate on a 30-year fixed loan dropped to 4.82 percent last week from 4.93 percent the prior week, which was the highest since May, the group said. The rate reached 4.21 percent in October, the lowest since the group’s records began in 1990.

Borrowing Costs

At the current 30-year rate, monthly borrowing costs for each $100,000 of a loan would be $525.87, or about $22 less than the same week the prior year.

The share of applicants seeking to refinance a loan rose to 71 percent last week from 70.3 percent the prior week.

Hovnanian Enterprises Inc., the largest homebuilder in New Jersey, on Dec. 22 reported a fourth-quarter loss bigger than analysts expected as revenue fell 19 percent.

“The year can generally be described as one where we and the industry were bouncing along the bottom,” Chief Executive Officer Ara Hovnanian said on a conference call.

The Washington-based Mortgage Bankers Association’s loan survey, compiled every week, covers about half of all U.S. retail residential mortgage originations.

To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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Unemployment Mortgage Assistance And Foreclosure Alternatives–Can Jobless, by Turina Evelyn, PressReleasemag.com

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In these cases, where federal or proprietary home loan modifications are unavailable or unhelpful, unemployed homeowners may be able to participate in foreclosure alternatives programs which allow homeowners to surrender or sell their home and essentially be forgiven of their remaining mortgage debt. Short sale options, which have typically been used by homeowners in an underwater mortgage situation, and deed in lieu of foreclosure plans may be available to homeowners who have shown a previous ability to make the mortgage payment but, due to factors like unemployment, are simply unable to continue making home loan payments.

 

Foreclosure Prevention

The Federal Housing Finance Agency (FHFA) released its Third Quarter 2010 Foreclosure Prevention Refinance Report on the status of loan modifications at both Freddie Mac and Fannie Mae. Loan modifications through the Home Affordable Modification Program (HAMP) reportedly increased 16 percent in the quarter, although the overall volume of loan modifications and the pace of HAMP modifications declined from previous periods.

HAMP

The Home Affordable Modification Program (HAMP) was started in 2009 by the Obama Administration to bring forth a program to bring back financial stability to homeowners all over the country. The program addresses the major housing hardships that have been hurting our country, but like with sponsored programs, it has its flaws. HAMP was supposed to be designed to help lower homeowner’s payments by lowering their interest rate, changing the loan’s terms, and/or extending the length of the loan. However, now a year and a half into the program, we have observed failure much beyond what many expected.

 

Short Sale Program

Obviously, homeowners may still have to work with their mortgage servicer in some cases, but there or certain programs which offer grant-like assistance options to homeowners, borrowing opportunities for loans at 0% interest which may be forgiven, or even foreclosure alternative programs for homeowners who are simply in a situation where these assistants plans may not be beneficial. While homeowners may still contact their mortgage servicer to inquire about assistance, state housing agencies also have information regarding these state-specific programs which could be beneficial to homeowners in areas that are facing a greater than average number of home loan hardships.

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Robo-Signing Woman Kept Signing Docs- 13 Years After Her Death, by Housingdoom.com

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Who says that just because you’re dead you can’t keep on working? In what is certainly the most blatant case of robo-signing I’ve seen to date, one company had a woman signing hundreds of documents- for thirteen years after her death. [Hat tip Freedoms Phoenix.]

How, may you ask, can a woman who has been dead since 1995 sign documents more than a decade later? Normally, one would hazard to guess that stamps with her signature on them were still in use (this is more common than you would think in foreclosure land). That would be plenty troubling.

But this little account comes from the debt collection realm, a cesspool of bad practices. Here, the credit card company Providian (acquired by WaMu in 2005) had employees signing affidavits in the name of Martha Kunkle for over a decade. Debt collection agencies continued to use these bogus affidavits.
According to the Wall St. Journal:
Questions about Martha Kunkle first popped up in 2008 after her name appeared in thousands of affidavits generated by a unit of Providian National Corp. The credit-card issuer sold an undisclosed number of delinquent account balances to Portfolio Recovery Associates and other debt collectors, which then sued the borrowers to collect the debt…..

Concerns about Ms. Kunkle’s affidavits were raised in 2008 by lawyers for Jeanie Cole, one of thousands of Montana residents sued by Portfolio Recovery Associates to collect debts. After failing to locate Ms. Kunkle, lawyers for Ms. Cole interviewed her daughter, who worked at Providian in a document-processing division.

The daughter testified in a deposition that other Providian employees used the name Martha Kunkle when signing affidavits. Along with other employees, the daughter was responsible for signing affidavits. After countersuing Portfolio Recovery Associates for alleged violations of the Fair Debt Collection Practices Act, Ms. Cole was the lead plaintiff in a 2008 federal-court suit in Montana alleging the company targeted 16,000 borrowers using “false and misleading” affidavits.
These dodgy documents were for debt collections, not foreclosures. However, this does show how sloppy and overly automated the lending industry has become.
Some judges say robo-signing, in which affidavits are signed without fully reviewing underlying documentation, is more common in debt-collection cases than foreclosures. In July, the Federal Trade Commission recommended that state regulators require the disclosure of “more information” by debt collectors and buyers, concluding that they might be relying on erroneous or incomplete paperwork when suing to recover money.

“I’ve watched and wanted to tell defendants in these suits to demand proof of the underlying debt because that proof is so often flimsy,” said Jeffrey Lipman, a magistrate judge in Polk County, Iowa, which includes Des Moines, the state’s capital. Court rules give him little leeway to instruct borrowers in court.
Borrowers, beware.

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