Archive for January, 2007
It’s not that I want to keep beating the mortgage fraud drum, it just keeps falling into my lap.
Furthermore, I figured that as a mortgage broker with almost two decades of experience, I could easily steer clear of trouble. After all, if I can’t recognize mortgage fraud, who can?
But today I learned a double lesson. Mortgage brokers and FSBO sellers are both at risk of getting caught up in mortgage fraud. Without even knowing.
What happened?
This morning, a woman called in and asked to speak with “the broker”. Hmmm….sounds like trouble. Although reluctant at first to explain, she finally spilled the beans. Here’s what unfolded.
read comments (3)Purchasing Sacramento Short Sales–A Waste of Time?
I am frequently asked these days about buying short-sales. It sure seems like a good buying opportunity. But after what happened this week, Im not so sure anymore.
Nearly everyone knows what a short-sale is by now. But just in case, a short-sale is a home listed for sale that, when sold, will not yield enough to pay all the costs of the sale and pay off the existing mortgage(s) completely. So the lender is asked to accept less than the amount owed. If they agree, a short sale results. Sacramento area homes have fallen enough in value that short-sales are becoming commonplace.
Now, there are several reasons why a short-sale seems like is a great opportunity to buy a home cheap.
Sacramento Mortgage Rate Update
The benchmark 30 year fixed rate mortgage climbed higher again this week, ending at 6.125% with 1 point.
Behind the Numbers
The week was a bag of mostly positive economic news, further eroding hopes of a Fed rate cut anytime soon. After briefly crossing 4.9% for the first time since August, the 10–year Note yield closed at 4.879%, up from last week’s close of 4.773%. (bad for rates)
The week’s news led off with an increase in the index of leading economic indicators, a sign that the economy may be picking up steam (again, bad for rates).
Thursday, existing homes sales dropped slightly, but that news was overshadowed by a median price figure that held its own and a drop of nearly 8% in existing home inventories. This prompted Davi Lereah, chief economist for the NAR to comment, “It appears we have established a bottom.” (not great for rates)
Sacramento Short Sales: A Response from Freddie Mac
What effect will short sales have on a borrowers credit and ability to secure another home loan? Without the public Notice of Default that precedes a foreclosure and notifies the credit bureaus, will short sales slip under the radar? Are they less onerous than a completed foreclosure as many people suggest?
Yesterday, I received this answer from Freddie Mac about the way Loan Prospector, its automated underwriting system, will react to the typical short sale comments found on a borrowers credit report. The answer was obtained for me by Scott St. John, an officer of American Pacific Mortgage who serves on the advisory board for Freddie Mac.
Nice to see a lender take such pro-active measures to help borrowers avoid going into default. I’ve been waiting to see how various lenders would respond to this market. You would have to call this the most enlightened response yet. From the Sacramento Bee this morning:
Lender counsels those in trouble
NovaStar Financial helps its borrowers find jobs, avoid mortgage foreclosure.
By Mark Davis – McClatchy Newspapers
Last Updated 7:01 am PST Monday, January 22, 2007
The payoff comes when customers find work and keep their homes. Bissett said she got a lot of thanks-filled e-mails this Christmas.
When customers accept help, the coaches try just about everything.
Lewis-Coates approved paying one borrower’s electric bill because the power was about to be shut off. LaunchPoint bought a cell phone with prepaid minutes for an unemployed customer who was losing phone service. Prospective employers needed to be able call back.
One borrower was walking to work because public buses didn’t run during the shift he had been switched to. Lewis-Coates said she mentioned it at a meeting and a NovaStar employee donated a bicycle, which worked until the borrower found transportation.
Sacramento Mortgage Rate Update
The benchmark 30 year fixed rate rose slightly to 6.00% with 1 point.
Behind the Changes
It’s been an active week in the bond market, with a number of significant economic reports. All pointed toward a stronger economy, eroding hope for a Fed Rate cut this Spring. The closely watched 10 year Note ended the week at 4.773%.
December PPI, CPI, Housing Starts, and Housing Permits were all higher, and this morning’s University of Michigan Consumer Sentiment leaped to a 3 year high.
Here are the actuals vs. the expected:
Mortgage fraud is no longer the playground of two bit, school yard con artists. The pros are in the game If he were here today, Vito Corleone might have found it irresistible. I find it frightening.
Apparently, there was an FBI conference in Las Vegas on the subject in December. I ran into this yesterday from National Mortgage News Online….
Fraud Stats Confirm Fears
LAS VEGAS–The latest statistics from the Federal Bureau of Investigation confirm that mortgage fraud is on the upswing.
“We can’t find a chart that doesn’t show up in a big way,” special agent Bill Stern said at the Mortgage Fraud Conference here last week.
Rachel Dollar is Santa Rosa attorney and Certified Mortgage Banker who handles fraud recovery and litigation for lenders and capital market investors. She is current President of the Sonoma County Bar and in 2005 was voted one of the 100 most influential people in real estate.
However, she is probably best known—at least to industry bloggers and those who commit loan fraud—for her highly popular Mortgage Fraud Blog, a must-read for those interested in the mortgage industry’s dirtiest laundry. If you want to see how ugly this fraud thing is getting, check it out.
So first, it was announced last December that Rachel had joined the law firm of Lanahan & Reilley LLP as a partner to chair their Mortgage Banking Group. Second, her Mortgage Fraud Blog recently won 2nd place in the best overall real estate blog category in the 2007 REBAs at HousingWire, another excellent mortgage blogsite.
Great job Rachel! I just wanted to say thanks.
Okay, in our effort to create affordable payments, we laid a foundation with the 15 and 30 year fixed rate loans in Part I. We stretched the repayment term out to 40 and 50 year loans in Part II, and then looked at shorter term intermediate arms—the 3/1, 5/1 and 7/1–-in Part III. In Part IV, we looked at interest-only loans that eliminate the principal portion of payments entirely.
Now, let’s pull the cover off the Pay Option ARM and see what lies beneath. Is this controversial creation a useful tool or a dangerous weapon? Will it solve a unique challenge or insinuate itself into your life like a Trojan Horse only to destroy your dream of home ownership from within? Opinions on Pay Option ARMs tend to come in black and white. But nothing in life is that simple, is it?
To begin, let’s get something clear. There is no such thing as a 1% mortgage. That should go without saying. But I am continually amazed at all the smart people who believe in ghosts. We’re all guilty of wishful thinking, but if you really believe you could get a 1% rate when all your friends were getting 6%, then perhaps you deserve a surprise. As my financial planner says about foolish investing, money tends to be returned to its rightful owner.
Sacramento Mortgage Rate Update
The conforming 30 year fixed rate ended the week around 6%.
Reacting to a string of better-than-expected data reports, the benchmark 10 year Note closed at its highest yield since October. Both December retail sales and import prices reported in higher than expected on Friday, re-igniting inflation concerns and eroding hopes for a Fed rate cut anytime soon.
Shorter term fixed rates—the so called 3/1, 5/1, and 7/1 arms continue to offer rates at or even slightly higher than the 30 year rates, so for now, I’m recommending the 30 year fixed over anything else.
