More Changes Coming in the Mortgage Industry! An FYI for Portland, OR Buyers & Sellers!

Janeese Jackson — Sun, 27 Dec 2009 00:02:22 +0000

Again, more changes coming in the mortgage industry! This time it involves “Good Faith Estimates” for potential buyers. In order to compare “apples to apples” you must compare a combination of elements when interviewing Mortgage Brokers to partner with you on your next real estate transaction. One of the first is to speak with other friends or trusted advisors (such as your Real Estate Broker) to get the names of mortgage brokers they have found reliable and referred. The 2nd step has always been to ask for a “Good Faith Estimate” or GFE. A GFE has always been a list of closing costs to acquire the loan plus the most appropriate interest rate available from the lenders available to that Broker and, finally, the monthly PITI (principal, interest, taxes, insurance). Beginning January 1st, 2010 we will see some changes in the industry. Now a GFE will be more akin to a “Truth-in-Lending” document that was formerly provided during the loan process and, again, with the closing papers. Truth-in-lending gave you the APR or annual percentage rate (the full cost of the loan including closing costs) and the total of your payments over the life of the loan (never a pretty sight). Now GFEs will look more like truth-in-lending and the other information, such as closing costs and PITI will be in a summary sheet provided by each mortgage brokerage house. Another big change is the new requirement for getting a GFE from a mortgage broker or lender and that will include pulling a credit report. Thus, receiving this document will take a bit more time!

Other changes include that the “Owners Title Policy” (usually a seller paid cost) will show up on the buyer’s GFE (and will be very confusing for buyers…just know to subtract that amount, but it must now be disclosed). Also, the escrow officer in charge of preparing the documents for signing and recording must now compare the original GFE to the final HUD closing document to make sure they are in line.

Just know that you will want to compare both the GFE and the summary to get a true picture of which loan would fit your needs. This is simply another example of the pendulum swinging (and, perhaps, occasionally “over-swinging”) to compensate for the former “loosey-goosey” lending practices that helped propel us into this new era of real estate. Sighhhhhhhhhhhhhhhhhhhhhhh! However, the good news is these new regulations will force marginal Mortgage Brokers to stay the course on fees.

And, We Wonder Why We Have a Banking Crisis???

Janeese Jackson — Tue, 06 Oct 2009 21:57:51 +0000

After this posting, I might have to rename my site from “Portland Real Estate Update” to “Portland Real Estate Rant”! But, my recent short sale experience should make us all “mad as hell and we’re not going to take it any more”!!! So, here’s my current short-sale story. Due to the unfortunate circumstances of a job loss, my client had to sell her home. After researching the market, we realized that we would be forced to negotiate with the 1st and 2nd lenders to accept less than was owed on the home. In other words, we would “sell short”. We began the long and arduous process of collecting the stacks of information needed by the lenders to review in order for them to agree to sell short. We also began the marketing process to find that sweet spot in the pricing continuum and the buyer willing and able to purchase. On a good day, it takes a VERY patient buyer to want to play that “waiting game” (with no definitive closing date and no assurance of the eventual acceptance of their offer). Plus, the buyer makes an offer and during the wait there is the opportunity for other competing offers to be submitted and to be outbid! So, the buyer attrition rate is HUGE! Buyers continue to look for houses while waiting for an answer, ANY ANSWER, from the lenders and will often eventually just tire of the suspense and withdraw. Well, in my current short sale case, the buyers patiently waiting and really wanted the house. The 1st lender agreed to the short sale and offered the Freddie Mac “standard for the industry” (which is 10% of the amount owed) to the 2nd lender (who actually has no power in the transaction other than the ability to say no). US Bank holds the 2nd mortgage in the amount of $25,000, thus the 1st lender was offering them $2,500. US Bank said “they would disapprove the sale unless they received $5000″. Provident Bank, the first lender, said “their hands were tied as Freddie Mac (the secondary market banks) only allow 10%”. The Real Estate companies involved were willing to contribute via their commissions, even the buyers were willing to come to closing with the extra $2,500 and neither bank would budge. I can almost forgive Provident as Freddie Mac does control the buying of packaged loans on the secondary market, but US Bank IS the problem!! Not to mention my associate (who helps me with the short-sale process) last phone conversation involved the US Bank loss mitigation rep saying that the only answer was for someone to mail them $2,500. If money is exchanged in a real estate transaction, isn’t it “mortgage fraud” if it’s done outside of escrow and not acknowledged on the final HUD-1 statement? This stubborn nonsense will force Provident to go through a costly foreclosure process and US Bank will get nothing!! But, they don’t care. My seller will now have a foreclosure on her record, the buyers don’t get the home they wanted and several real estate agents worked for months for nothing. What kind of “kinder, gentler, wiser, more diligent” banking system is this????

Portland Real Estate Update by Janeese Jackson » mortgage fraud

More Changes Coming in the Mortgage Industry! An FYI for Portland, OR Buyers & Sellers!

And, We Wonder Why We Have a Banking Crisis???