I've been the preferred lender in BridgeView Tower for awhile. It's a Brooklyn condo building with amazing Manhattan views.
To see the building's website click here
To check out a couple of listings in this building, click here
Sunday, December 23, 2007
Sunday, October 14, 2007
Cash in the Bank
Fannie and Freddie aren't as interested in post-closing reserves, but with a jumbo mortgage (over Fannie and Freddie's loan limit of $417K), you'll need plenty of money left after you close. That's just how it is nowadays.
Some jumbo mortgages require as much as 18 months of the monthly payment be held in reserves after the closing. Post-closing reserves isn't money that is spent, or even drawn on in any way, it's money that is shown to the underwriter in order to prove that a borrower has enough cash after the closing to pay the payment even in the event of income loss. This reserve could be made up of IRA accounts, 401K accounts, cash value of life insurance policies, CDs, checking, savings, pretty much anything that is liquid. Equity in the property doesn't count, nor do non-liquid assets such as jewelry, cars and boats.
At a minimum, jumbo mortgages are requiring 12 months of the payment in reserves in order to qualify. In this mortgage market, cash is king.
Some jumbo mortgages require as much as 18 months of the monthly payment be held in reserves after the closing. Post-closing reserves isn't money that is spent, or even drawn on in any way, it's money that is shown to the underwriter in order to prove that a borrower has enough cash after the closing to pay the payment even in the event of income loss. This reserve could be made up of IRA accounts, 401K accounts, cash value of life insurance policies, CDs, checking, savings, pretty much anything that is liquid. Equity in the property doesn't count, nor do non-liquid assets such as jewelry, cars and boats.
At a minimum, jumbo mortgages are requiring 12 months of the payment in reserves in order to qualify. In this mortgage market, cash is king.
Friday, September 21, 2007
Fed Rate Cut, Why Not My Rate?
The recent Fed rate cut to 4.75% is more directly related to the interest of Home Equity Lines of Credit as they are generally tied to Prime (currently 7.75%). Since Prime floats 3% above the Fed Rate there is a direct relationship between the two.
Counter-intuitive though is why the 30 conforming (Fannie and Freddie) fixed mortgage interest rate has gone up a bit since the most recent Fed rate cut. The bellwether for the conforming fixed rate is the 10 year treasury bond yield. That has been increasing as investors have been selling off bonds the last few days. The reason for the sell-off is that investors worry that the Fed rate cut might kick-start inflationary pressures.
So, despite people's wish for the opposite, the Fed rate cut has negatively impacted mortgage rates for the short term.
Counter-intuitive though is why the 30 conforming (Fannie and Freddie) fixed mortgage interest rate has gone up a bit since the most recent Fed rate cut. The bellwether for the conforming fixed rate is the 10 year treasury bond yield. That has been increasing as investors have been selling off bonds the last few days. The reason for the sell-off is that investors worry that the Fed rate cut might kick-start inflationary pressures.
So, despite people's wish for the opposite, the Fed rate cut has negatively impacted mortgage rates for the short term.
Wednesday, September 19, 2007
Dodos and Edsels
No Doc and No Ratio mortgages are becoming harder and harder to come by. Chase has eliminated both of these documentation types. These loans do not perform. That means these loans were being used to put borrowers into homes with payments they could not and do not pay. Banks don't like to loan money to people who don't pay their payments, so these mortgages are gone. No Income Verification and Stated Income / Stated Asset Alt A mortgages still exist.
Thursday, September 13, 2007
Johnny Cash, Nine Inch Nails and David Bowie
Watching YouTube the other day, it dawned on me that the artists who created the videos I watched are mostly self employed. We've all been hearing about daily, hourly, minute by minute guideline changes by lenders lately, so I thought I'd chime in.
Now all No Income Verification loans are only available for the truly self employed. If you are salaried at your job, then this isn't the mortgage program for you. Also No Ratio, No Doc, and other Alt A lending programs are going to be limited to homeowners only. If you are a first time home buyer, you will probably not qualify for this programs either.
Credit score is King these days too. An excellent credit score will still enable home buyers to qualify for most of the programs out there, those will less than perfect scores should be prepared to apply for full documentation mortgages, thus limiting them to buying properties they can really afford.
Now all No Income Verification loans are only available for the truly self employed. If you are salaried at your job, then this isn't the mortgage program for you. Also No Ratio, No Doc, and other Alt A lending programs are going to be limited to homeowners only. If you are a first time home buyer, you will probably not qualify for this programs either.
Credit score is King these days too. An excellent credit score will still enable home buyers to qualify for most of the programs out there, those will less than perfect scores should be prepared to apply for full documentation mortgages, thus limiting them to buying properties they can really afford.
Saturday, August 18, 2007
Fed Cuts Discount Rate to Save Countrywide?
National Mortgage News writer, Paul Muolo, says in an article that there was a run on a Countrywide branch in Pasadena, CA the other day. He goes on further stating that Bernanke & Co. cut the discount rate to give a hand to Countrywide with its 16% market share through its $1.4 trillion mortgage servicing portfolio (8.9 million homeowners). Countrywide also owns a thrift with $60 billion in liabilities.
I guess the thinking is that Countrywide needs the rate slash to borrow money to continue it's operations as it's downfall would be a psychological blow that Americans won't be able to handle.
I guess the thinking is that Countrywide needs the rate slash to borrow money to continue it's operations as it's downfall would be a psychological blow that Americans won't be able to handle.
Friday, August 10, 2007
Mortgage Market Craziness
The feds are trying to provide some liquidity to the mortgage market (maybe even accepting those pesky mortgage backed securities as collateral) while the market has priced a 55% change of a rate cut into it. Meanwhile, Homebanc files for bankruptcy, Washington Mutual and Countrywide are on the ropes, and all bank stocks are dropping on fears of everything from mortgage market illiquidity to dwindling investment banking fees.
It's an interesting time to be a loan officer out there looking to build his book of business. I think this is an excellent time to establish myself and someone who is still in the game, who works for a lender who can close and fund (very important) the loan. It's a time to gear up and make those calls to possible referral sources that I've been putting off. To work with developers whose preferred mortgage broker may not be able to close the jumbo loan.
I think I'll be able to increase my book of business during this shake out.
It's an interesting time to be a loan officer out there looking to build his book of business. I think this is an excellent time to establish myself and someone who is still in the game, who works for a lender who can close and fund (very important) the loan. It's a time to gear up and make those calls to possible referral sources that I've been putting off. To work with developers whose preferred mortgage broker may not be able to close the jumbo loan.
I think I'll be able to increase my book of business during this shake out.
Saturday, August 04, 2007
No Longer a Mortgage Broker
Now that I work for JPMorgan Chase Bank, N.A. I'm no longer a mortgage broker.
I just made the move a week ago, so I've been watching the news with interest as American Home Mortgage locks out it's employees (heard they did that, don't know for sure) and then shuts down completely laying off 7000 people.
Also Greenpoint Mortgage has stopped originating Jumbo (loans over the conforming limit of $417K) ARMS. That is a major part of my book of business here in Manhattan. Wells Fargo slashes it's Alt A programs, as does Wachovia. Wells Fargo's Alt A cutback only affects Mortgage Brokers, while Wachovia ditches Alt A lending altogether. Alt A mortgages are those in which the borrower falls between prime and subprime, but the borrower are closer to Prime borrowers, so this really hurts the homebuyer, who might be a small businessman, shop owners and the like.
Accredited's clean bill of health is pending.
Top brass at Bear Stearns says the secondary debt market is the most volatile it has been in 22 years. While Indymac's Chief Executive emailed people saying the mortgage-backed bond market is "very panicked and illiquid", driving Indymac's stock price down.
This next few months are going to be a roller coaster ride for us in the mortgage business, especially those of us on the front lines as we find out hour by hour what types of loans we can originate and what types are no longer available.
I just made the move a week ago, so I've been watching the news with interest as American Home Mortgage locks out it's employees (heard they did that, don't know for sure) and then shuts down completely laying off 7000 people.
Also Greenpoint Mortgage has stopped originating Jumbo (loans over the conforming limit of $417K) ARMS. That is a major part of my book of business here in Manhattan. Wells Fargo slashes it's Alt A programs, as does Wachovia. Wells Fargo's Alt A cutback only affects Mortgage Brokers, while Wachovia ditches Alt A lending altogether. Alt A mortgages are those in which the borrower falls between prime and subprime, but the borrower are closer to Prime borrowers, so this really hurts the homebuyer, who might be a small businessman, shop owners and the like.
Accredited's clean bill of health is pending.
Top brass at Bear Stearns says the secondary debt market is the most volatile it has been in 22 years. While Indymac's Chief Executive emailed people saying the mortgage-backed bond market is "very panicked and illiquid", driving Indymac's stock price down.
This next few months are going to be a roller coaster ride for us in the mortgage business, especially those of us on the front lines as we find out hour by hour what types of loans we can originate and what types are no longer available.
Tuesday, July 10, 2007
Culpepper v. Inland Mortgage Corp. YSP is still legal
The manner in which mortgage brokers are paid by lenders is called Yield Spread Premium. A ruling by the 11th Circuit Court of Appeals has reaffirmed its position in a 12-year-old legal battle that lender-paid fees to mortgage brokers are proper unless consumers can prove the amount is excessive.
Here's the court documents from the 1989 case.
Here's the court documents from the 1989 case.
Monday, July 02, 2007
Fed Rate to Stay the Same?
Some 20 economists recently surveyed by Securities Industry and Financial Markets Association, believe short-term rates will hold steady at 5.25% for the next seven quarters. Some of these same economists also believe oil is going to be at $50 a barrel next year. (currently $70 a barrel.)
Wednesday, June 27, 2007
Once again Mortgage Brokers are the culprit
Andrew Cuomo, the New York State Attorney General is probing the appraisers to find if they are the root cause of the subprime disaster. Two big Manhattan based appraisers signed statements saying they were improperly pressured by mortgage lenders and brokers. The pressure was based on them not getting any more business from that lender if they were didn't inflate the value of the property.
Why would anyone want to work with someone who wants them to act unethically? Now appraisers want to point the finger at other parties. In effect cutting a deal with the AG's office. Also in the Bloomberg article, Y. David Scharf, the attorney for Mitchell, Maxwell and Jackson (my favorite appraiser) dropped the word "lender" from his statement to focus entirely on the little guy - mortgage brokers. He emailed this statement for the Bloomberg article, "It is clear to me that the targets of the investigation are mortgage brokers along with anyone else who exerts any form of economic pressure on appraisers." He wouldn't want to upset big bad, powerful lenders would he?
I guess the next step is for mortgage brokers to point the finger at the real estate professionals, who will point the finger at their buyers, who will point the finger at the developers, who will point the finger at investors, who will point the finger at....blah, blah, blah.
Of course there a mortgage brokers AND lender loan officers AND appraisers AND real estate brokers AND the consumers themselves who have a vested interest in the rising values of real estate the past few years. To keep these people out of the real estate industry is a must. Those who engage in unethical behavior should be warned, those who commit crimes should be punished. There's no question about that.
What gets me about the statements that these two appraisers is their implied complicity while covering their asses while pointing the finger elsewhere. That's what needs to stop.
Why would anyone want to work with someone who wants them to act unethically? Now appraisers want to point the finger at other parties. In effect cutting a deal with the AG's office. Also in the Bloomberg article, Y. David Scharf, the attorney for Mitchell, Maxwell and Jackson (my favorite appraiser) dropped the word "lender" from his statement to focus entirely on the little guy - mortgage brokers. He emailed this statement for the Bloomberg article, "It is clear to me that the targets of the investigation are mortgage brokers along with anyone else who exerts any form of economic pressure on appraisers." He wouldn't want to upset big bad, powerful lenders would he?
I guess the next step is for mortgage brokers to point the finger at the real estate professionals, who will point the finger at their buyers, who will point the finger at the developers, who will point the finger at investors, who will point the finger at....blah, blah, blah.
Of course there a mortgage brokers AND lender loan officers AND appraisers AND real estate brokers AND the consumers themselves who have a vested interest in the rising values of real estate the past few years. To keep these people out of the real estate industry is a must. Those who engage in unethical behavior should be warned, those who commit crimes should be punished. There's no question about that.
What gets me about the statements that these two appraisers is their implied complicity while covering their asses while pointing the finger elsewhere. That's what needs to stop.
Sunday, June 17, 2007
Our Name on Toast
Recently I've been working on forming my own mortgage brokerage and real estate brokerage with my business partner. It's called The Metropolitan Group.
Check out our name on toast.
Get your name on toast at Your Name on Toast
Friday, June 15, 2007
Keep Your Life In Balance, Ethics Will Follow
A 2007 Deloitte and Touche USA LLP Ethics and Workplace survey shows a strong relationship between having an excellent life/work balance and positive ethical behavior. Additionally it showed that management and supervisors who offer positive reinforcement for ethical behavior have a major impact on their employees as well.
If you are dependent on your job for all of your psychological needs you may be leading yourself to a dangerous place regarding your self worth, and where you fit in the world at large. This can become especially dangerous and lead to unethical behavior with there is an ethical dilemma that has a major impact at work. Those whose entire lives are tied up into what the position on their business card reads, may not make the most ethical decision or take the most ethical action, if they think it will result in a negative at work.
There is also an interesting note on job dissatisfaction. The survey found that 60% of those surveyed believe that job dissatisfaction is a leading reason why people make unethical decisions at work.
If you are dependent on your job for all of your psychological needs you may be leading yourself to a dangerous place regarding your self worth, and where you fit in the world at large. This can become especially dangerous and lead to unethical behavior with there is an ethical dilemma that has a major impact at work. Those whose entire lives are tied up into what the position on their business card reads, may not make the most ethical decision or take the most ethical action, if they think it will result in a negative at work.
There is also an interesting note on job dissatisfaction. The survey found that 60% of those surveyed believe that job dissatisfaction is a leading reason why people make unethical decisions at work.
Wednesday, June 06, 2007
Disclose, Disclose and Re-disclose
Federal Reserve Chairman Ben Bernanke recently addressed a Federal Reserve Bank of Chicago Conference focusing his comments primarily on the sub-prime mortgage market. Chairman Bernanke said "in my judgment, effective disclosures should be the first line of defense against improper lending. If consumers are well informed, they are in a much better position to make decisions in their own best interest." The Chairman also noted that he does not expect significant spillovers from the sub-prime market to affect the rest of the economy or the financial system. To view Chairman Bernanke's speech, click here http://www.federalreserve.gov/boarddocs/speeches/2007/20070517/default.htm
Those Troubling State Income Mortgages
In a recent statement, Comptroller of the Currency John C. Dugan said he is increasingly troubled by the growing use of unverified "stated income" in sub-prime lending. Dugan argued that stated income (1) presents too great a temptation for misrepresentation and, in its most extreme form, outright fraud; (2) undermines transparency; and (3) is not a safe and sound underwriting practice. Dugan also said that he believes the federal agencies should address this practice in their pending guidance. To view the OCC press release, here http://www.occ.treas.gov/ftp/release/2007-48.htm or to view Dugan's remarks, click here http://www.occ.treas.gov/ftp/release/2007-48a.pdf
Reverse Mortgages for Purchases
Generally thought of as a refinance only transaction, reverse mortgages are also available to qualified borrowers for a purchase transaction. This can be very handy for those who are age appropriate and want to downsize or relocate. No mortgage payments on a new house isn't a bad thing.
Tuesday, June 05, 2007
AmTrust Mortgage Eyeballing Coop Loans
AmTrust Mortgage (formerly Ohio Savings Bank) is looking to make a play for the New York City cooperative mortgage market. They have been FNMA approved to lend against coops for a long time, but only recently decided to try to wrap their heads around getting into this line of lending.
They've hired a top dog who formed Citibank's coop lending and asked Jonathon Miller to push out some numbers on the size of the market (about 5 Billion USD), so perhaps they are getting comfortable with this property type.
Interesting for those of us who have been doing coop mortgages for years to see a lender making baby steps into this robust market.
They've hired a top dog who formed Citibank's coop lending and asked Jonathon Miller to push out some numbers on the size of the market (about 5 Billion USD), so perhaps they are getting comfortable with this property type.
Interesting for those of us who have been doing coop mortgages for years to see a lender making baby steps into this robust market.
Tuesday, May 29, 2007
Reverse Mortgages for Coops
Bank of New York Mortgage (owned by Everbank now since Chase and BNY did an asset swap) has introduced a jumbo reverse mortgage product for coops. They are one of 2 lenders offering this niche product. The other is Indymac's Financial Freedom (though I couldn't find any information about that on their site).
Tomorrow I attend a workshop about reverse mortgages on coops, so I will know more about them and how they work.
One thing that comes to my mind with these mortgages is: Is there really that much liquidity in the market that institutional investors are willing to just sit on a loan for x number of years without collecting any payments until the loan is due? That's incredible to me.
Tomorrow I attend a workshop about reverse mortgages on coops, so I will know more about them and how they work.
One thing that comes to my mind with these mortgages is: Is there really that much liquidity in the market that institutional investors are willing to just sit on a loan for x number of years without collecting any payments until the loan is due? That's incredible to me.
Wednesday, May 23, 2007
Pay mortgage payments with your credit card
American Express announced that you can now pay your mortgage payments with your American Express card. They've teamed up with RBC Mortgage (owned by Royal Bank of Canada) and American Home Mortgage to have your mortgage charged directly to your credit card, once they've originated it.
I'm sure this is just one of many partnerships to pay your mortgage this way. I think Citibank also does the same thing with its credit cards too.
Go get those miles and take a trip, or wallow in more debt at a higher interest rate, the choice is yours Ms. American Consumer.
I'm sure this is just one of many partnerships to pay your mortgage this way. I think Citibank also does the same thing with its credit cards too.
Go get those miles and take a trip, or wallow in more debt at a higher interest rate, the choice is yours Ms. American Consumer.
Thursday, May 17, 2007
What 2007 is shaping up to be
The Cooperator has some ideas on what 2007 will bring. Only one surprise- housing prices will rise nationally while NYC housing prices decline. Seems that everyone here in New York City is expecting the good times to keep on roaring ahead, so this prediction by Davis Stiff, Fiserv’s chief economist, will come as a shock, and probably piss some people off.
For more on this check it out here.
For more on this check it out here.
Wednesday, May 16, 2007
Deal Killing Mortgage Broker
Helping a friend sell an apartment (I'm a licensed RE Broker as well as a Loan Officer) in the Riverdale section of The Bronx has been interesting.
By interesting, I have an opportunity to hear what my competition is telling their clients. Today was interesting. I had an appointment with a prospective buyer to show her the apartment in the listing below. She called today and canceled. The Washington Mutual loan officer with whom she is working told her that a 20% down payment was too much.
Perhaps the prospect doesn't have the money. That would be understandable, one needs about $66,000 to buy this apartment ($44,000 down payment and $22,000 in post-closing reserves). That's a lot of money.
But if the loan officer actually did tell her that putting 20% down on a property is foolish, then the mortgage industry has not learned from their mistakes. Since when is it a problem to actually have some equity in your home?
By interesting, I have an opportunity to hear what my competition is telling their clients. Today was interesting. I had an appointment with a prospective buyer to show her the apartment in the listing below. She called today and canceled. The Washington Mutual loan officer with whom she is working told her that a 20% down payment was too much.
Perhaps the prospect doesn't have the money. That would be understandable, one needs about $66,000 to buy this apartment ($44,000 down payment and $22,000 in post-closing reserves). That's a lot of money.
But if the loan officer actually did tell her that putting 20% down on a property is foolish, then the mortgage industry has not learned from their mistakes. Since when is it a problem to actually have some equity in your home?
Sunday, May 13, 2007
1 BR Riverdale Coop for Sale
Check out the walk-through here.
Check out the listing here.
And of course, for financing on this purchase, click here.
Location: Riverdale
Check out the listing here.
And of course, for financing on this purchase, click here.
Sun-filled Riverdale 1 Bedroom
This delightful coop on the river side of Henry Hudson Parkway is on a high floor, offering gorgeous Riverdale views and lots of light from windows to the north and south. The Windsor offers a full time doorman, gym, parking, in-building laundry, outdoor swimming pool, storage, bike room and express bus service to the subway and the Metro North. The apartment offers many windows, a dining area, great closet space, windowed kitchen, a balcony facing south for all day sunlight in a quiet well maintained building. Southern & Northern Exposure for All Day Light
Balcony with Sweeping City Views Lots of Closet Space 24 Hour Doorman
Outdoor Swimming Pool In-Building Parking Available (no waiting list) Windowed Kitchen Dishwasher
Balcony with Sweeping City Views Lots of Closet Space 24 Hour Doorman
Outdoor Swimming Pool In-Building Parking Available (no waiting list) Windowed Kitchen Dishwasher
Photo Gallery
Information
Contact Information
Pricing
Asking Price: $220,000.00
Flexibility: Negotiable
Additional Pricing Information: 80% Financing$658 Maintenance (42% Deductible)
Homeowner Dues: $658
Property Location
4705 Henry Hudson Parkway
Bronx, NY 10471
Bronx, NY 10471
Features
Bedrooms: 1
Bathrooms: 1
Parking: In-Building
Year Built: 1960s
Located on Floor #: 9
Floors in Bldg: 14
Square Footage: 700 approx
Agent Name: Jeffrey Loyd
Broker: Hydra Property Group
MLS #: 4705 Henry Hudson Parkway 9F
Attributes
Appliances
Range/Oven
Full Refrigerator
Dishwasher
Microwave
Building Amenities
Exercise Room
Powered by vFlyer.com
Equal Housing Opportunity
VFLYER ID: 866308
Friday, May 11, 2007
100 Applications for the Freelancer
I looked through this list from Codswallop and found many useful applications that are web-based. I'd like to move to a completely web-based application environment, or at least not have to pay for software anymore.
Check it out here.
Check it out here.
Thursday, May 03, 2007
Fiduciary Duty for Mortgage Brokers
If Mortgage Brokers want to rise above the fray and become professionals along side Doctors, Lawyers, Accountants and other professions, then the bar to entry must be raised. Additionally Mortgage Brokers must embrace fiduciary responsibilities to their clients.
I like the following paragraph from an article from the Ethical Lending Foundation to more clearly define fiduciary responsibility:
The industry of mortgage lending is at a historical crossroads. It can either become a professional group with fiduciary standards or it can remain a retail establishment in which most of the burden of information is with consumers. Yet, they can no longer have it both ways. Yet, let us be clear that mortgage loan originators working at all types of lending institutions can owe fiduciary duties without representing to consumers that they are finding them the “best loan” or getting them the “best result.” A fiduciary standard simply would not put this burden on loan originators. By way of analogy let’s clarify. Medical doctors, lawyers, and Realtors do not have to promise that they will get their clients/patients the best surgical results, the best legal results, or the best deal on the house in order to discharge their clear fiduciary duties. Instead, they are promising to do the best job they can; to fully inform their clients of all relevant information and risks; and to carefully make sure that their clients have been provided with the necessary tools and understanding to make a fully-informed decision. Mortgage brokers, bankers, lenders, and consumer finance companies could easily adopt a fiduciary standard for their loan originators if they chose to, and it would be both practicable and fair.
It only makes sense to lead the way, and let the Mortgage Bankers and Lenders languish in the netherworld of non-disclosure similar to their hiding their fees and compensation.
I like the following paragraph from an article from the Ethical Lending Foundation to more clearly define fiduciary responsibility:
The industry of mortgage lending is at a historical crossroads. It can either become a professional group with fiduciary standards or it can remain a retail establishment in which most of the burden of information is with consumers. Yet, they can no longer have it both ways. Yet, let us be clear that mortgage loan originators working at all types of lending institutions can owe fiduciary duties without representing to consumers that they are finding them the “best loan” or getting them the “best result.” A fiduciary standard simply would not put this burden on loan originators. By way of analogy let’s clarify. Medical doctors, lawyers, and Realtors do not have to promise that they will get their clients/patients the best surgical results, the best legal results, or the best deal on the house in order to discharge their clear fiduciary duties. Instead, they are promising to do the best job they can; to fully inform their clients of all relevant information and risks; and to carefully make sure that their clients have been provided with the necessary tools and understanding to make a fully-informed decision. Mortgage brokers, bankers, lenders, and consumer finance companies could easily adopt a fiduciary standard for their loan originators if they chose to, and it would be both practicable and fair.
It only makes sense to lead the way, and let the Mortgage Bankers and Lenders languish in the netherworld of non-disclosure similar to their hiding their fees and compensation.
Tuesday, May 01, 2007
Friday, April 27, 2007
Cuomo Subpoenaing New York Mortgage Companies
Apparently the New York Attorney General is interested in learning more about the industry and how mortgage brokers get paid. When he was with HUD he wanted more strict disclosures about lender payments to mortgage brokers, called Yield Spread Premiums (YSP). I'm unable to find which companies have received subpoenas, but I'm very interested to know. I'd to see if there's a general target like subprime loans, or emerging market loans.
Wednesday, April 18, 2007
Supreme Court Tells States: Hands Offa That Bank
It a Supreme Court ruling that came down yesterday with Ruth Bader Ginsburg writing the opinion, the high court decided that under the National Banking Act (NBA), federally chartered banks and their subsidiaries were not regulated by the states, and are, in fact, immune from state legislation.
So this moves the mortgage lending arms of national banks out of the reach of the individual states and into the loving arms of the Feds.
The New York Times has the story here.
I don't know what this means for borrowers who are losing their homes due to foreclosure. Where's Willie Nelson when he's needed? Who going to put together the rock concert to bail out homeowners? Come on Hollywood, flex those money muscles.
So this moves the mortgage lending arms of national banks out of the reach of the individual states and into the loving arms of the Feds.
The New York Times has the story here.
I don't know what this means for borrowers who are losing their homes due to foreclosure. Where's Willie Nelson when he's needed? Who going to put together the rock concert to bail out homeowners? Come on Hollywood, flex those money muscles.
Thursday, April 12, 2007
Housing v. Human Rights
Yesterday I attended a New York State Banking Department conference on Abusive Lending called HALT.
It was an interesting educational conference for me, though it seemed as though many attendees wanted a forum to air their grievances with the subprime foreclosures throughout the state.
A couple of thoughts about the conference:
First off, is this a human rights issue? I can see that shelter is a human rights issue, but is home ownership? There are most likely some discrimination issues afoot. From the data it seems as though minorities have been placed into subprime mortgage products far more, particularly African-Americans and Hispanics who appear to make up the bulk of the subprime borrowers. There might have been other products for some of these borrowers.
I don't think this is a human rights issue up there with hunger, shelter, false imprisonment and other basic human rights. I'm not trying to lessen the impact, nor mitigate the blame, I just don't think it falls under this category.
The other issue that I heard frequently is a 6 month moratorium on foreclosures. Even Senator Clinton is calling for this in Congress. I don't know if this is a solution either. There are some borrowers who have taken out loans that they cannot repay, if this is the case, these loans should result in foreclosure. I don't know if it's the lender's fault for loaning the money to them. There are others who are victims of fraudulent colusion between real estate brokers, mortgage loan originators and appraisers who may have originally overpaid for their property (how they didn't check on the internet for comparable sales is beyond me), these homeowners should certainly seek some relief until a solution is found for them either dealing directly with the lenders or with a regulatory agency.
It was an interesting educational conference for me, though it seemed as though many attendees wanted a forum to air their grievances with the subprime foreclosures throughout the state.
A couple of thoughts about the conference:
First off, is this a human rights issue? I can see that shelter is a human rights issue, but is home ownership? There are most likely some discrimination issues afoot. From the data it seems as though minorities have been placed into subprime mortgage products far more, particularly African-Americans and Hispanics who appear to make up the bulk of the subprime borrowers. There might have been other products for some of these borrowers.
I don't think this is a human rights issue up there with hunger, shelter, false imprisonment and other basic human rights. I'm not trying to lessen the impact, nor mitigate the blame, I just don't think it falls under this category.
The other issue that I heard frequently is a 6 month moratorium on foreclosures. Even Senator Clinton is calling for this in Congress. I don't know if this is a solution either. There are some borrowers who have taken out loans that they cannot repay, if this is the case, these loans should result in foreclosure. I don't know if it's the lender's fault for loaning the money to them. There are others who are victims of fraudulent colusion between real estate brokers, mortgage loan originators and appraisers who may have originally overpaid for their property (how they didn't check on the internet for comparable sales is beyond me), these homeowners should certainly seek some relief until a solution is found for them either dealing directly with the lenders or with a regulatory agency.
Thursday, March 29, 2007
Pointing Fingers
Interesting how no one wants to take responsibility. It's all "pass the buck" all the time. I read an article in the Post that Mayor Bloomberg laid some of the blame for the rise in New York foreclosures on the borrowers themselves for taking out loans they knew they could not pay. Housing and consumer advocates say the Mayor is wrong, that the lenders are to blame.
So if the disclosures are confusing to consumers, and they don't understand the Good Faith Estimate and the Truth-In-Lending Disclosure, is more of the same the answer? Wouldn't it be a better response to try to simplify a document that at more than one closing I've attended has been described by the borrower's attorney as "it's confusing, just sign it."
I guess it's one of the those cases of "it's going to get worse before it gets better."
So if the disclosures are confusing to consumers, and they don't understand the Good Faith Estimate and the Truth-In-Lending Disclosure, is more of the same the answer? Wouldn't it be a better response to try to simplify a document that at more than one closing I've attended has been described by the borrower's attorney as "it's confusing, just sign it."
I guess it's one of the those cases of "it's going to get worse before it gets better."
Monday, March 26, 2007
Condo Conversion Update
Well one thing I could do is get the current mortgage holder to allow the conversion and move the lien to the condo still owned by the original owner of the 2 family.
They are keeping one of the units as their home. Currently they have 2 mortgages totaling more than the value of the remaining condo that they own. However if they payoff the Home Equity Line of Credit the proceeds from the sale of the other side of the house they are making a condo, then the existing first mortgage is less than 75% of the value of the condo they are continuing to live in. Confused yet?
So if I can get the existing lien holder to allow the change in property type and transfer the lien to just one of the units instead of the whole building, that might be a solution. There are, however, complications. First off, the mortgage is being serviced by a different company that the original lender, so that means dealing with 2 entities on the issue.
Also a change a property type effectively puts the mortgage in default and the lender could call in the whole note forcing the payment of the entire mortgage, which is a significant amount of money. More than the sale.
They are keeping one of the units as their home. Currently they have 2 mortgages totaling more than the value of the remaining condo that they own. However if they payoff the Home Equity Line of Credit the proceeds from the sale of the other side of the house they are making a condo, then the existing first mortgage is less than 75% of the value of the condo they are continuing to live in. Confused yet?
So if I can get the existing lien holder to allow the change in property type and transfer the lien to just one of the units instead of the whole building, that might be a solution. There are, however, complications. First off, the mortgage is being serviced by a different company that the original lender, so that means dealing with 2 entities on the issue.
Also a change a property type effectively puts the mortgage in default and the lender could call in the whole note forcing the payment of the entire mortgage, which is a significant amount of money. More than the sale.
Thursday, March 22, 2007
2 units converted to condos in Nantucket
Here's an interesting deal.
A client of mine bought a side by side duplex last year on Nantucket Island where he lives and works. It was a great rental property. Now he has changed the property type to 2 condos and sold one of them for $510,000.
That's less than he owes in total against the house, but the appraisal on the other half, which includes a separate studio/ workshop (meaning, no heat) is $750,000.
Here's the deal. Refinance the half that he still owns keeping the mortgage high enough that he can pocket most of the proceeds from the sale, while paying off the first mortgage (5/1 Interest Only) and the Home Equity Line of Credit against the whole property.
It gets trickier...the borrower's credit score has dropped from 698 to 648 in the last few months.
As a Mortgage Broker who works with investors, this is exactly the kind of deal that turns me on and lights me up.
I'll blog the solution as soon as it's approved, don't want to jinx it.
A client of mine bought a side by side duplex last year on Nantucket Island where he lives and works. It was a great rental property. Now he has changed the property type to 2 condos and sold one of them for $510,000.
That's less than he owes in total against the house, but the appraisal on the other half, which includes a separate studio/ workshop (meaning, no heat) is $750,000.
Here's the deal. Refinance the half that he still owns keeping the mortgage high enough that he can pocket most of the proceeds from the sale, while paying off the first mortgage (5/1 Interest Only) and the Home Equity Line of Credit against the whole property.
It gets trickier...the borrower's credit score has dropped from 698 to 648 in the last few months.
As a Mortgage Broker who works with investors, this is exactly the kind of deal that turns me on and lights me up.
I'll blog the solution as soon as it's approved, don't want to jinx it.
Thursday, March 15, 2007
30 Year Fixed Rate Interest Only
The subprime market is imploding or exploding, depending on which side of the fence you are standing. The rumors circulating among homebuyers are that all interest only mortgages are risky and should be avoided. In many cases that may be true, but I think, more true, is a confusion among buyers about mortgage programs in general.An interest only mortgage is not a subprime mortgage necessarily. In fact, it's generally an option for only the most qualified buyers. It even makes sense for those who plan on prepaying the balance of their mortgage on their own. Why? Payment recast.With a 30 year interest only mortgage, the payment due each month is an interest only payment. So on a $400,000 mortgage at 6%, the monthly interest only payment is $2000, rather than the principal and interest payment of $2398.20, where $2000 is the interest payment and $398.20 is paying back the loan each month at the same 6% interest rate.If a well-qualified, disciplined borrower chooses the interest only option, and continues to pay the same payment as the fully amortizing payment, her payment will be reduced based on the new principal balance each month.Here's an example:Keiko, buys a $500,000 coop here in New York City. The coop requires a 20% down payment, so her mortgage is $400,000. She decides on a 30 year fixed rate interest only mortgage. Her first month's payment is $2000, but she pays $2398, indicating that the additional amount goes directly toward principal on her statement when she mails her payment. The next month, her payment is reduced to $1998.01 based on the new loan balance of $399,601.80. If she continues to pay $398 in addition to the interest only payment each month, at the end of the first year, her interest only payment will be reduced to $1976.11. If she chooses, she may elect to pay the interest only payment giving her the freedom to spend the difference in another manner (hopefully paying down credit card debt that's more expensive).Her payment is reduced to reflect the lower principal balance offering her immediate gratification for her discipline. A well disciplined borrower may welcome the freedom of being to either pay down the principal or put the money to use elsewhere on a month to month basis while having the security of a fixed rate for the life of the loan.
Tuesday, March 13, 2007
Condo Buyers: The Stats
CondoDomain.com did a 2 month study on internet condo buyers in 33 markets in the US and Canada and found:
46% are young professionals, 20% are first time home buyers
78% are looking for a home for themselves (primary residence), 12% are looking for a second home
45% want to buy in a high rise building, 27% want to purchase in a low rise building
73% want to pay under $450,000, although 1% is willing to pay over $3,000,000 for their home
It seems that the luxury buyers were unwilling to register for this survey, and may be under-counted.
It's not so different than I might have expected, but it's nice to look over the data and establish a marketing plan.
46% are young professionals, 20% are first time home buyers
78% are looking for a home for themselves (primary residence), 12% are looking for a second home
45% want to buy in a high rise building, 27% want to purchase in a low rise building
73% want to pay under $450,000, although 1% is willing to pay over $3,000,000 for their home
It seems that the luxury buyers were unwilling to register for this survey, and may be under-counted.
It's not so different than I might have expected, but it's nice to look over the data and establish a marketing plan.
Monday, March 12, 2007
This is what card I am
You are The High Priestess
Science, Wisdom, Knowledge, Education.
The High Priestess is the card of knowledge, instinctual, supernatural, secret knowledge. She holds scrolls of arcane information that she might, or might not reveal to you. The moon crown on her head as well as the crescent by her foot indicates her willingness to illuminate what you otherwise might not see, reveal the secrets you need to know. The High Priestess is also associated with the moon however and can also indicate change or fluxuation, particularily when it comes to your moods.
What Tarot Card are You?
Take the Test to Find Out.
Deductions Explained
Straight from the IRS:
Home acquisition debt is a mortgage you took out after October 13, 1987, to buy, build, or substantially improve a qualified home (your main or second home). It also must be secured by that home.
If the amount of your mortgage is more than the cost of the home plus the cost of any substantial improvements, only the debt that is not more than the cost of the home plus improvements qualifies as home acquisition debt. The additional debt may qualify as home equity debt (discussed later).
Home acquisition debt limit. The total amount you can treat as home acquisition debt at any time on your main home and second home cannot be more than $1 million ($500,000 if married filing separately). This limit is reduced (but not below zero) by the amount of your grandfathered debt (discussed later). Debt over this limit may qualify as home equity debt (also discussed later).
Refinanced home acquisition debt. Any secured debt you use to refinance home acquisition debt is treated as home acquisition debt. However, the new debt will qualify as home acquisition debt only up to the amount of the balance of the old mortgage principal just before the refinancing. Any additional debt is not home acquisition debt, but may qualify as home equity debt (discussed later).
Mortgage that qualifies later. A mortgage that does not qualify as home acquisition debt because it does not meet all the requirements may qualify at a later time. For example, a debt that you use to buy your home may not qualify as home acquisition debt because it is not secured by the home. However, if the debt is later secured by the home, it may qualify as home acquisition debt after that time. Similarly, a debt that you use to buy property may not qualify because the property is not a qualified home. However, if the property later becomes a qualified home, the debt may qualify after that time.
Mortgage treated as used to buy, build, or improve home. A mortgage secured by a qualified home may be treated as home acquisition debt, even if you do not actually use the proceeds to buy, build, or substantially improve the home. This applies in the following situations. -
You buy your home within 90 days before or after the date you take out the mortgage. The home acquisition debt is limited to the home's cost, plus the cost of any substantial improvements within the limit described below in (2) or (3). (See Example 1.)
-
You build or improve your home and take out the mortgage before the work is completed. The home acquisition debt is limited to the amount of the expenses incurred within 24 months before the date of the mortgage.
-
You build or improve your home and take out the mortgage within 90 days after the work is completed. The home acquisition debt is limited to the amount of the expenses incurred within the period beginning 24 months before the work is completed and ending on the date of the mortgage.
Friday, March 02, 2007
19% of B and C mortgage in delinquency
Not being an originator of subprime mortgages, I enjoy reading the news about the implosion of the subprime lenders. I just saw an article that Countrywide is saying that 19% of their B and C mortgages are in some sort of delinquency. That's almost 1 in 5 loans that aren't being paid back. That's gonna leave a mark.
Wednesday, February 21, 2007
NAR Against Banks Owning Real Estate Brokerages
On one level it's no surprise that the National Association of Realtors is against banks owning real estate brokerages, and on the other hand what does the organization itself stand to lose?
Their bullet points are:
1. The same large-scale consolidation that has taken place in the banking industry itself would likely occur in the real estate business.
Fewer entities conducting real estate brokerage would mean less competition. The result: fewer choices and higher costs for consumers.
2. An additional effect of the proposed regulations would be pressure on bank-affiliated real estate brokers and agents to market and sell other financial products such as insurance, securities and credit cards.
3. Banks could share private consumer data obtained in real estate transactions with their affiliates and other third parties business entities.
4. Banking conglomerates would have unfair competitive advantages. These financial institutions that could operate real estate brokerages under the proposed regulations would benefit from access to capital at lower rates – thanks to federally insured deposits. That benefit is not available to local real estate companies.
5. According to a J.D. Power survey, 28 percent of home buyers had problems with their lenders. Those problems included errors in closing documents, miscommunication of loan terms and unavailable or unresponsive loan consultants or mortgage brokers. That means almost one in three home buyers did not get adequate customer service just during the loan process. How will they be better served by banks during the much more complex process of buying or selling a home?
Of course, it piques me to read #5 on their list. I'm not saying it's not correct, it just always bothers me that lenders aren't doing their jobs to the best of their capabilities.
As a Mortgage Broker who doesn't work for a huge company and works hard to compete in the marketplace, I agree that banks owning real estate companies is a mess. However, there has been an erosion of the seperation of banking institutions and commercial activity for some time (thanks to Sandy Weill & Citigroup when they purchased Traveler's Insurance) and it looks like it's going to continue.
I love the independents. And thankfully here in New York's wacky real estate market there seems to be some room for them...for now.
For the rest of this article, click here.
Their bullet points are:
1. The same large-scale consolidation that has taken place in the banking industry itself would likely occur in the real estate business.
Fewer entities conducting real estate brokerage would mean less competition. The result: fewer choices and higher costs for consumers.
2. An additional effect of the proposed regulations would be pressure on bank-affiliated real estate brokers and agents to market and sell other financial products such as insurance, securities and credit cards.
3. Banks could share private consumer data obtained in real estate transactions with their affiliates and other third parties business entities.
4. Banking conglomerates would have unfair competitive advantages. These financial institutions that could operate real estate brokerages under the proposed regulations would benefit from access to capital at lower rates – thanks to federally insured deposits. That benefit is not available to local real estate companies.
5. According to a J.D. Power survey, 28 percent of home buyers had problems with their lenders. Those problems included errors in closing documents, miscommunication of loan terms and unavailable or unresponsive loan consultants or mortgage brokers. That means almost one in three home buyers did not get adequate customer service just during the loan process. How will they be better served by banks during the much more complex process of buying or selling a home?
Of course, it piques me to read #5 on their list. I'm not saying it's not correct, it just always bothers me that lenders aren't doing their jobs to the best of their capabilities.
As a Mortgage Broker who doesn't work for a huge company and works hard to compete in the marketplace, I agree that banks owning real estate companies is a mess. However, there has been an erosion of the seperation of banking institutions and commercial activity for some time (thanks to Sandy Weill & Citigroup when they purchased Traveler's Insurance) and it looks like it's going to continue.
I love the independents. And thankfully here in New York's wacky real estate market there seems to be some room for them...for now.
For the rest of this article, click here.
Monday, February 19, 2007
Low down payment financing on a 2 family house
Without getting a subprime mortgage, a borrower can obtain 95% financing on a 2 family home. These loans can be structured in many ways, but the most common is probably an 80% first mortgage and a 15% second mortgage or Home Equity Line of Credit. This can also be done when the purchase price is more than $1,000,000 which is common here in New York City. With these properties, sometimes the first mortgage will be at a better rate if the first mortgage is less than $1,000,000 and the rest is a second mortgage.
Friday, February 09, 2007
Decade High On Default Rate
One thing that is a blessing about focusing on the Manhattan coop market is that the board approval process and the down payment requirements don't create a market for subprime mortgages. I've avoided the subprime market for this simple reason, and I'm glad when I read that the default rate has risen to 10% of the mortgages sold to investors. That's up from 6.62% according to a report by investment bank Friedman Billings Ramsey & Co. I saw this report in REALTOR Magazine's Daily News.
Wednesday, January 24, 2007
Run for the Hills
According to the January issue of The Real Deal, many local lenders are going out of business and the industry could shed as much as 25% of it's New York workforce in 2007. That's not necessarily bad news. Mortgage Brokers should be focused on the local real estate market, know the players and the nuances of the local property types.
There are still many people in the mortgage business who are more interested in collecting high fees, than getting the deal done. Still too many order takers, who are little more than telemarketers. By focusing on a sub market, and knowing everything one can about their chosen area of expertise, whether it's new construction, coops, condos or mixed use buildings, one can develop a mortgage business that will be profitable and productive.
There are still many people in the mortgage business who are more interested in collecting high fees, than getting the deal done. Still too many order takers, who are little more than telemarketers. By focusing on a sub market, and knowing everything one can about their chosen area of expertise, whether it's new construction, coops, condos or mixed use buildings, one can develop a mortgage business that will be profitable and productive.
Sunday, January 07, 2007
Buildings on Leased Land
Generally speaking, you should have no problems getting a mortgage in a building that sits on leased land. Here in New York City, some of the finest buildings are on leased land, whether they are cooperatives or condos like in Battery Park.
Generally speaking, if the lease on the land runs longer than the term of the mortgage, there shouldn't be any problems. Often these leases are for many years, such as a 99 year term. Best to get a copy of the lease, read the terms, calculate any rent increases during the term of the lease and find out the expiration date.
It's not the most common type of building, but it's common enough to finance.
Generally speaking, if the lease on the land runs longer than the term of the mortgage, there shouldn't be any problems. Often these leases are for many years, such as a 99 year term. Best to get a copy of the lease, read the terms, calculate any rent increases during the term of the lease and find out the expiration date.
It's not the most common type of building, but it's common enough to finance.
Wednesday, January 03, 2007
MLN out of business as a lender
Recently I've received 2 faxes from a lender, MLN, which stands for Mortgage Lenders Network. The first one said that they were no longer lending in New York, and the second said that they were working on a solution for the loans that were currently in the works with them.
I've never done any business with them. And don't have the skinny on why they are shutting down exactly, but I found it interesting.
I've never done any business with them. And don't have the skinny on why they are shutting down exactly, but I found it interesting.
Monday, January 01, 2007
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