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Snets
Nitroglycerin


Joined: 12 Nov 2008
Posts: 875
Location: Palm Beach County

Re: FHA changes requirements
PostPosted: Sat Sep 19, 2009 1:16 pm Reply with quoteBack to top

All good points, however will the conduits come to realize that it is just too risky to continue with TPO? That is the $64,000 question. Also, look for stricter adherence to <40% back end. I think we are going to see an over-reaction here and it will be reflected in even lower housing prices. There will be political ramifications to this and with congressional elections not that far off - it may settle down a bit.
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louis9999
Dud?


Joined: 19 Sep 2009
Posts: 3
Location: Schaumburg, IL

Plenty of FHA business? I think not!
PostPosted: Sat Sep 19, 2009 3:20 pm Reply with quoteBack to top

Listen to real estate agents nationwide tell you how many deals they lost because of HVCC then throw FHA in with HVCC and you have even less deals.

To say there be plenty of FHA deals when guidelines are stricter than ever, is just ridiculous. Now add in the high unemployment numbers and you expect people not only to put up more for down payments but somehow come to the conclusion there be lots of loans to do?

I've been running my own shop since 1993 and I've been through the ups and downs repeatedly over the years. I've also busted my ass for almost 2 decades while watching many Reps make a killing doing almost nothing. Seeing some people thrown out is the silver lining but it is at the cost of all of us. And that just sucks.

And it does seem like it's the end of TPO's.
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itiswhatitis
Dyn-o-mite!


Joined: 19 Jul 2008
Posts: 312
Location: Raleigh, NC

Re: FHA changes requirements
PostPosted: Sat Sep 19, 2009 4:36 pm Reply with quoteBack to top

We all have to get used to the "new normal" which means lower volumes, tighter underwriting, more disclosure, and IMO more professionalism.

FHA will change and guess what? Everything will change. We need to accept that fact. We need to let go of the past way of doing business and focus on how to succeed in the environment we now have. There is no other way.

I still contend that if you are a TPO who is financially strong because you were conservative and prudent in the past, AND, you have always done business the right way, ethically, and without allowing even a hint of fraud, then there will be lenders who want to do business with you and in fact will seek you out. It's simply the new way of generating profits albeit perhaps at a lower level than in the past. More sustainable though IMHO.

Will it be tougher? Heck Yes. That's the new normal.

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ClulessDad
Dyn-o-mite!


Joined: 17 Jul 2009
Posts: 224
Location: SoCal

Re: FHA changes requirements
PostPosted: Sat Sep 19, 2009 4:46 pm Reply with quoteBack to top

We all listen or read about the TPO portion of our business having 2 or 3 or 4 times the default rate as the retail side.
Where can I find the statistics that drills down even further to break out the reasons for this? How many Broker defaults? How many Correspondent defaults, Retail defaults? How many were low credit scores when they were approved? How many were the result of income (job) losses? How many just walked away when there house depreciated so much? How many were fraud?
These stats have to exist. I know we all have our opinions, but I would love to know the facts. At least i would want to see them to evaluate risk if I were running the show. Anyone know where to find them?

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catherine
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Joined: 24 Oct 2007
Posts: 3202
Location: FLORIDA

Re: FHA changes requirements
PostPosted: Sat Sep 19, 2009 7:54 pm Reply with quoteBack to top

ClulessDad wrote:
We all listen or read about the TPO portion of our business having 2 or 3 or 4 times the default rate as the retail side.
Where can I find the statistics that drills down even further to break out the reasons for this? How many Broker defaults? How many Correspondent defaults, Retail defaults? How many were low credit scores when they were approved? How many were the result of income (job) losses? How many just walked away when there house depreciated so much? How many were fraud?
These stats have to exist. I know we all have our opinions, but I would love to know the facts. At least i would want to see them to evaluate risk if I were running the show. Anyone know where to find them?


SO SO SAD

face it, TPOs DID MOST OF THE LOANS THAT THEY ARE EVALUATING FOR FRAUD RIGHT NOW

SO THEY HAVE LOTS AND LOTS OF OUR LOANS TO EXAMINE

AND SINCE UNEMPLOYMENT AND VALUES HAVE CAUSED THIS PROBLEM (I KNOW THE INVESTMENT BANKS STARTED THIS BUT MY POINT IS NOW IT IS RAMPING ALL THE WAY DOWN THE RABBIT HOLE BECAUSE OF VALUES AND JOB LOSSES)

AND SINCE THOSE TPO'S DID THE MAJORITY OF THE LOANS FOR YEARS,

(THAT IS WHY THEY USED US BECAUSE THEY COULDN'T KEEP UP WITH THE VOLUME)

SO IT IS NO SURPRISE WE HAVE A HIGH NUMBER OF FRAUD CASES because we did so many of the loans

so they can skewer the numbers easily to look like TPOs were wild west greedy dealers and show proof AND FORCE TPOs out the door..............

but that isn't why TPOs will go away...........

they will use that greed and fraud story because the public can understand the story

BUT THE PROBLEM IS THE BIG BOYS ARE BROKE

AND THE BIG BOYS NEED MONEY AND HOW DO THEY MAKE MORE MONEY - BY MAKING TPO'S (PIECE OF THE PIE) JUST GO AWAY, JUST DISAPPEAR..........THEN THEY HAVE A BIGGER PIECE OF THE PIE,

I mean the borrowers are sheep and will have to go where the money is, right?

SO IT IS POWER AND THEY HAVE IT

AND DON'T BET YOUR FUTURE ON IGNORING THAT YOU BEING GONE IS THEIR GOAL..........

but if this is any consolation..............

in a couple years THOSE BIG LENDERS WILL BE CUT OUT OF THIS BY GOVERNMENT - CAUSE THE GOVERNMENT WILL WANT THE WHOLE PIE AND THEY WILL HAVE THE POWER

AND THEY WILL BE JUST AS UGLY TO THE LENDERS THAT GUTTED TPOs as the lenders were to the TPOs

but no gladness here, it is just the eventual bleed-out of this mess
and itttttt


""""" ALWAYS GOES AROUND""""""
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1 More Thing
Wrecking crew


Joined: 19 Jul 2007
Posts: 1610

Re: FHA changes requirements
PostPosted: Sat Sep 19, 2009 8:21 pm Reply with quoteBack to top

GAME OVER!

Quote:
The Federal Housing Administration announced today that it will make a series of policy changes in reaction to its capital reserve ratio falling below the congressionally-mandated two percent minimum.

WOW!!!!!!!!!!!!!!!

Effective January 1, the FHA will require supervised mortgagees to submit audited financial statements to ensure such entities are adequately capitalized.

The FHA may also up the net-worth requirement of mortgagees, from the current $250,000 to $1,000,000, which would likely lead to consolidation in the industry.

WHO WILL BE LEFT?????



The FHA will also revise procedures for streamlined refinance transactions, establishing new requirements for seasoning, payment history, income verification, collection of credit score, and so on.

“These revisions bring documentation standards for streamline refinance transactions in line with other FHA loan origination guidelines, ensures the borrower’s capacity to repay the new mortgage, and prohibits the dangerous practice of loan churning, where borrowers raise cash through successive cash-out refinancings that put them further in debt.”

New appraisal guidelines will also come into effect; the appraisal validity period will be reduced to four months from six for all properties, though appraisal portability rules (transferring an appraisal from one lender to another) will ease.

The FHA will also adopt the language of the Home Valuation Code of Conduct (HVCC), meaning brokers will be prohibited from ordering appraisals.



OMG...Those doing FHA Loans today.....many will not be on January 1st!
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ClulessDad
Dyn-o-mite!


Joined: 17 Jul 2009
Posts: 224
Location: SoCal

Re: FHA changes requirements
PostPosted: Sat Sep 19, 2009 9:37 pm Reply with quoteBack to top

Catherine-it may eventually get where the govt will exercise its eminent domain power, take back all the land and make us pay a lease payment on the house. Mexico here we come. It doesn't seem too far fetched, after all, the govt owns the banks, the insurance company, the car makers, and now real estate.

Funny how the real solution to the housing crisis and this recession is creating jobs. How can they say we are getting out of this recession, if we can't get the 7MM people who have lost their jobs back to work? We are only losing fewer jobs every month. Only Healthcare jobs are growing, but that will soon stop because the govt will start doing wage controls on all health care employees to control costs. We are nowhere close to really creating jobs. Avg work week is not growing. Federal govt jobs are being created by the new Obamanation, but bankrupt states are losing them and cutting hours. Where will the job growth come from? Small business? Good luck. They can't get financing, they can't buy a house. Ironic isn't it that the engine of the economy, the small business owner, who probably legally writes off a ton of expenses, can't buy a house, but their employees can get one?

Someone tuned me into a great story here in CA about how our govt works. The San Jaoquin Valley produces almost 25% of US food. They are saying that thousands of acres of food production is dying and with it 60-80K jobs because the water is not being given to the farmers. That is right! 60,000 jobs are being lost. And you know why? To protect a 2 inch minnow in the Sacramento Delta. I am not kidding. I read about it and couldn't believe it. Just Google San Jaoquin and minnow. All they have to do is open a valve to restore 60K worth of jobs. Really. (Just to throw out why they are protecting the minnow, it is salmon food, and the other side is that the environmentalists say that 2600 jobs will be lost in the salmon industry if the water goes to the farmer.) I know there are pros and cons to both sides, but is this really the right decision right now?

But in saying all this....................

I am not getting out of this industry. I am a one man shop, and IMHO I provide sound financial advice to my client base. I only need one closing a month to make ends meet. I can tell people the truth about their deals. If they want to go to a 22 year old kid at a bank, who has no clue about how to solve some of the complex issues on a mortgage and real estate transaction, let them go. Let the BofA's lie to them, with their loan originators on a quota system. I won't go work at a bank, or Ditech or anywhere. (My son's friend worked at Ditech for awhile and I heard all the stories about the lies they tell people just to get them in process. OMG! The DRE would cut off my ***** if I were to do that. ) They can limit the compensation with YSP eliminated, but how can they prevent lies and fraud at the retail level, if they are on a quota? How can I with my 1-2 deals a month, influence an appraiser on a value? They dont care, it is only about the big boys.

But you are right. It is all about the big boys. Two more banks were seized by Sheila "The banks are just fine" Bair. Doesn't that make 92? I guess we can believe that Obamanation is on its way to recovery. Well at least in their own minds.

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Snets
Nitroglycerin


Joined: 12 Nov 2008
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Location: Palm Beach County

Re: FHA changes requirements
PostPosted: Sat Sep 19, 2009 10:14 pm Reply with quoteBack to top

Clueless - I am also a small boutique operation and I have been in business for many years - and its true - we don't need a lot to keep us going however - 1. if they eliminate commissions period - i.e. only allow us to charge some kind of hourly rate 2. if there are limited or greatly reduced wholesaler's to sell to 3. if FHA is restricted to only retail channels 4. if the government and big banks manage to paint us with an even more evil brush - it will make it much more difficult to earn a living.
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ClulessDad
Dyn-o-mite!


Joined: 17 Jul 2009
Posts: 224
Location: SoCal

Re: FHA changes requirements
PostPosted: Sat Sep 19, 2009 10:54 pm Reply with quoteBack to top

Snets wrote:
Clueless - I am also a small boutique operation and I have been in business for many years - and its true - we don't need a lot to keep us going however - 1. if they eliminate commissions period - i.e. only allow us to charge some kind of hourly rate 2. if there are limited or greatly reduced wholesaler's to sell to 3. if FHA is restricted to only retail channels 4. if the government and big banks manage to paint us with an even more evil brush - it will make it much more difficult to earn a living.


1) We will probably make more with an hourly rate, with how much time we are spending on each loan. lol So we will have to submit a timecard into escrow to get paid? LOL They can't trust lawyers to not beef up time, why would they trust us?
2) The wholesalers won't go away-they are more like banks. If they will not giving away YSP to us, they will be making more. The quality of the loans going thru the wholesalers now is really the best it has ever been, so the only downside they have with all the checks and balances is if the borrower loses their job, or just decided that they want to walk away with equity depreciation.
3) Eventually it probably will go away-Although they won't just eliminate it, they will just make it more difficult. Higher Fico's, lower DTI's, maybe 5% down, MOST probably a higher % on UFMIP and monthly MIP. After all this is not about being fair. That is why I would love to see the drill down of the foreclosure stats. Anything for the big banks!
4) And they have and will do that. We have already been tried and convicted in the court of public opinion. But if you have done right by your clients, they will keep coming back. You will survive.

Get involved with some private money deals to supplement what you are doing. The govt is forcing the "guidos" into more deals nowadays. Plenty of people out there with money and want to invest into something other than the stock market. Lots of rejected loans out there for you to look at. We can aand will whether the storm and feed our families. Won't make much, but then again we don't need much. But when they finally realize the folly of their mistakes, we will be in a great position. It may be few years for that though.

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Snets
Nitroglycerin


Joined: 12 Nov 2008
Posts: 875
Location: Palm Beach County

Re: FHA changes requirements
PostPosted: Sat Sep 19, 2009 11:15 pm Reply with quoteBack to top

well - I understand the YSP isn't going away for the time being unless this new legislation completely outlaws it. It will be the same for bank LO's also - there is some talk about eliminating any incentive to charge higher interest rates. So bank LO's wouldn't get any kind of commission either - before these announcements - we were going to be able to make YSP just credit it to the customer so the net affect would be no different than what it is now - it would just disclose the YSP even louder than what we are doing now. However if they legislate that there can be no compensation based on a different interest rate - who knows what TPO will look like and how will we be competitive? I don't understand how the entire mortgage industry can change this quickly without chaos. Anyway you shake it - it will be a brave new world out there.
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