Premiere Mortgage Services Inc. - Dana Bain

http://www.telegram.com/article/20120126/COLUMN69/120129842/1002/business#.TyFXHb09pMs.facebook

On appraisals, follow the money? By Kenneth R. Harney THE NATION'S HOUSING   Thursday, January 26, 2012 WASHINGTON — The new Consumer Financial Protection Bureau is working on a real estate issue that gets to the core of the agency's purpose: Bringing clarity and better disclosures about the often opaque and costly fees that homebuyers, sellers and refinancers are hit with at closings. One of the disclosures now under review might surprise you: appraisal charges. Why do they need clarifying? Doesn't just about everybody who applies for a mortgage, whether it's to buy a house or refinance, have to pay $450 to $600 -- sometimes more -- to find out what the property is worth? Correct. But the reality is a bit more complicated. Start with the fact that in three out of every four purchases or refinancings, according to industry estimates, the person who visits, inspects, measures and puts a market value on your property is receiving only a fraction of the money you are paying. Some are being paid less than half of the fee, while the balance flows to an enterprise you've never heard of -- an appraisal management company -- that assigns the job to the appraiser. That management company, in turn, may be wholly owned by or in a joint venture or affiliate relationship with your lender, which in turn may be pocketing a significant portion of your appraisal dollars. Current federal settlement disclosures give you no hint of where that money is really going. There is just a single line item for appraisal charges on the standard HUD-1 settlement statement. Say you're charged $550. There is no hint that the appraiser gets $250 and the rest goes to the management company and the lender. The CFPB is considering whether to shed light on this by mandating two disclosures -- what the appraiser is paid and what the management company is taking. Should you care about this? Absolutely. Although banks and mortgage lenders maintain there is no need for additional disclosure, appraisers, builders, realty brokers and others say the costs of appraisals to consumers have increased in the past two years, while the quality and accuracy of the work have declined. In a poll of its members last year, the National Association of Realtors found that 70 percent reported consumers were being charged higher appraisal fees at closing -- sometimes $100 or more than was the typical charge previously. At the same time, appraiser members reported sharp reductions in their own compensation by 40 percent to 50 percent per assignment. Many of the Realtors polled said they saw significant increases in the number of appraisers who were unfamiliar with local market conditions because they were from another geographic area. The same poll also found a growing incidence of sales transactions being derailed by appraisals that came in below the contract price agreed upon between the seller and the buyer. Critics say the drops in fees to appraisers combined with higher charges to consumers are byproducts of the rapid spread of management companies, whose growth during the post-boom years has been fueled by rules from Fannie Mae, Freddie Mac and Congress aimed at ensuring "appraiser independence." Frank Gregoire, a past chairman of the Florida Real Estate Appraisal Board, which oversees and regulates the industry in that state, says that while appraiser independence is an important goal, banks and their affiliated management firms are raising the costs of appraisals to consumers without improving services. "The borrower receives no benefit from the (appraisal management) 'service,'" he said in an email. "The lender is able to outsource a significant responsibility" -- the selection of an appraiser -- "to an affiliated subsidiary, and profit from that task by making the consumer and the appraiser pay for the privilege. (This) business arrangement is concealed from the consumer/borrower, and the charge is misrepresented as an 'appraisal fee' on the HUD-1. This is dishonest, deceitful and unfair." Industry defenders of management firms, such as Donald E. Kelly, executive director of the Real Estate Valuation Advocacy Association, strongly disagree. Kelly says management firms perform the "back office" functions -- including reviews and quality control -- "that in the past were done by lender staff and employees." In other words, they earn the money they get. And there's no pressing need for consumers to see additional disclosures. They just need to know the bottom line. Which brings the matter back to the Consumer Financial Protection Bureau. Though it can't comment on pending rules, the agency has a statutory deadline in July to produce an improved version of the HUD-1 settlement form. How it comes down on real estate appraisal fee disclosures -- more transparency for consumers or not -- will be a revealing early test.

Don't be caught off guard by unwittingly becoming a trigger lead.

Say you decide to buy a home and get a mortgage. So, you call a mortgage broker recommended to you by your Realtor, a family member or a friend. Maybe this is a reputable mortgage lender with whom you've done business in the past. You complete a loan application and receive a letter of preapproval.

Then, out of the clear blue, a different mortgage lender calls you. The lender might say they are affiliated with a credit bureau or give some other red-flag reason for calling. Your suspicions are aroused. You wonder, how did they know you were getting a mortgage and why are they calling you?

When you apply for a loan, your mortgage professional pulls a copy of your credit report. This triggers an inquiry. The credit bureau then turns around and sells your name to other mortgage companies. It's not against the law for credit bureaus to sell your information to third-party vendors. This is called a trigger lead.

Stopping Trigger Leads

You're about to enter into one of the biggest transactions of your life, and the last thing you need is a loan rep calling you and offering up phony interest rates. Deal with a trusted professional, not some telemarketer. Don't ever buy anything over the phone.

Here are three ways to stop trigger lead harassment:

· Put your name and phone number on the National Do Not Call Registry. You can register your cell phone number as well. Do this at least a month before you apply for a loan because it takes 31 days to become effective. Make a note to re-register every five years because the order expires at the end of five years.

· To prevent mortgage lenders from sending you direct mail, you will need to register with the Direct Mail Association. Whether you register online or through mail, it will cost you $1.00, which can be charged to your credit card. Register early because the DMA distributes its lists quarterly, so it could take a while to become effective. This registration is good for five years.

· Sign up for OptOutPrescreen. This will stop the four credit bureaus from selling your name as a trigger lead. They are: Equifax, Experian, Innovis and TransUnion. The Fair Credit Reporting Act allows the sale of your name, but opting out puts a stop to trigger leads for five years.

Lenders tell me that by opting out, you can add 10 to 15 points to your credit score! For permanent restraint, you will need to mail in your registration, which is also available on the OptOut Web site.

New Refi Rules May Offer Help to Underwater Borrowers

http://bucks.blogs.nytimes.com/2011/10/24/new-refi-rules-offer-help-to-more-underwater-borrowers/

The federal government on Monday announced changes that could make it easier for many borrowers who owed more on their home loans than their houses were worth to refinance into lower-cost mortgages.

The changes are aimed at helping homeowners who are current on their loans, but who have been unable to take advantage of historically low interest rates by refinancing because they are “underwater” on their mortgages. Ultimately, the government hopes the move will help stabilize the housing market, which has been stagnant due to falling prices and foreclosures.

Previously, to refinance under the two-year-old Home Affordable Refinance Program, or HARP, borrowers could owe no more than 125 percent of their home’s value. But the Federal Housing Finance Agency is eliminating that cap, making the program available to many more underwater homeowners. Other changes include eliminating the need for most appraisals and scrapping many refinance fees.

Lenders are expected to get detailed information on the changes by Nov. 15; some could begin offering refinancing under the new rules as soon as December. Borrowers who owe more than 125 percent of their home’s value, however, likely will have to wait until early 2012, according to the housing agency.

As of Aug. 31, about 894,000 borrowers had refinanced under HARP; at least that many are expected to be able to refinance under the updated program, the agency said.

To qualify, your home loan must be owned or guaranteed by either Freddie Mac or Fannie Mae, the quasi-governmental mortgage outfits; you can check this here for Freddie and here for Fannie. I found the Fannie site a bit frustrating to use, so another option is simply to call: 800-7FANNIE , or 800-FREDDIE. (Freddie and Fannie own or guarantee roughly half of all home loans in the United States).

Here’s some other details:

• Your loan must have been sold to Freddie or Fannie before May 31, 2009.

• You must be up-to-date on your mortgage payments, with no more than one late payment in the prior 12 months.

• Your current loan-to-value ratio (the amount of your loan, divided by the value of your home) must be greater than 80 percent.

Think the new rules will help you refinance your home? Or is this just the latest federal mortgage effort that will fall short of its goals?

---------------------------------------------------------------------------------------------

Will New Lending Program Raise Rates?

http://blogs.smartmoney.com/advice/2011/10/24/will-new-lending-program-raise-rates/?link=SM_hp_ls4e

A new financing program unveiled today is aimed at helping millions of Americans whose homes have plunged in value, but experts say it may cause some collateral damage — rising mortgage rates.

Federal regulators this morning released details of a major overhaul that will allow borrowers to refinance regardless of how far their homes have fallen in values; previously there were limits. That could let another 20 million who until now couldn’t refinance to do so.

But while the plan is expected to remove other hurdles from the refinancing process, such as appraisals and some underwriting requirements, experts say the likely boost in demand for refinancing could lead to higher mortgage rates and longer waiting periods for homeowners. “It’s going to be a problem to some degree,” says Keith Gumbinger, vice president at mortgage-data firm HSH Associates.

Housing experts say there are two ways interest rates may play out. If mortgage rates fall between now and Dec. 1, when the plan will be rolled out, there will be a spike in mortgage applications as well as a rush of borrowers to refinance under the new plan, says Gumbinger. In that situation, lenders may take advantage of the extra demand by choosing to offer rates that are higher than the lowest available, he says.

Many lenders have already been charging higher mortgage rates. Earlier this month, the lowest rate offered by LendingTree’s network of mortgage lenders was 3.5% on a 30-year mortgage, while the average rate actually given to borrowers was 4.28%. That spread has narrowed since then to 61 basis points (3.88% being the lowest rate vs. 4.49% the actual average rate given) in part because demand for mortgages dropped.

To be sure, for most of these borrowers, the new mortgage rates will be lower than the rates they’re currently paying, since many bought their homes years ago when rates were well above 5%.

And if rates continue to slowly rise between now and the rollout of the plan, the spread between the lowest rates available and the average rates may not change, say experts, since the drop in demand for mortgages will be made up for by the influx of refinancers.

Along with the possibility of higher mortgage rates, it may take longer for borrowers to refinance, analysts say. In a healthy housing market, the process usually doesn’t take more than 30 days, but it’s now taking about 45 days, says Gumbinger. With more borrowers jumping in to refinance that period could increase even more.

If that occurs, experts say borrowers may want to consider locking in their mortgage rate so that the rate they’re initially approved for stays the same even if market rates move higher. Locking in for up to 45 days typically doesn’t come with a fee; at most, borrowers would have to make a small payment that could be credited to their closing costs or refunded. But locking in a rate beyond 45 days might require paying a fee that’s 0.25% to 0.50% of the mortgage. Borrowers have to consider whether paying this fee is worth protecting against the possibility of rising rates, say experts.

Many of the obstacles borrowers will face could come down to an issue of timing, say housing analyts. In general, December is a slow time for mortgages. Borrowers who want to try to avoid the crowds at their lender could benefit by taking a few steps over the next few weeks. That includes getting all their documentation, including proof of income, together and checking their credit report. Once plan details are announced, they should contact their mortgage lender to work on beginning the refinancing process.

----------------------------------------------------------------------------

Lenders are expected to get detailed information on the changes by Nov. 15; some could begin offering refinancing under the new rules as soon as December.

Check back with Premiere Mortgage Services Inc. Dana Bain & Robin Dunbar Bain 978-422-2311 www.BainMortgage.com

http://homebuying.about.com/od/marketfactstrends/qt/10-Ways-To-Know-If-The-Housing-Market-Is-Improving.htm

To know if the housing market in any given year is improving, you've got to compare activity not only month-over-month but also year-over-year. Real estate markets move in cycles. Sometimes the market is up and sometimes the market dips. The mortgage meltdown of 2007 taught us in a big way that real estate prices do not continually rise. The housing market can crash. That 2007 crisis shattered dreams and threw the housing market into a panic.

Through sheer tenacity, I've managed to survive many volatile real estate markets from the past. During the late 1970s, interest rates were 18% and many first-time home buyers were priced out of the market. In the mid-80s, the tax reform act of 1986 had a seriously negative affect on the real estate market. We'll never forget the fall of the housing market that began at the end of summer in 2005.

Based on my experiences, here are my top 10 ways to know if the housing market is improving:

#1 Sign Housing Market is Improving: The Job Market Recovers

When you hear your neighbor's car pulling out of the garage in the wee hours of the morning after months of no activity, you'll know that your neighbor got a job. When the unemployment rate drops and people return to work, the housing market is recovering.

#2 Sign Housing Market is Improving: For Sale Signs in the Neighborhood Vanish

Too many for sale signs in your neighborhood means there are too many homes for sale and generally not enough buyers to buy them. Excess inventory pushes down sales prices.

#3 Sign Housing Market is Improving: Median Sales Prices Stop Falling

It doesn't matter whether you track home sales by per-square-foot price, average or median prices, when the market is depressed, they all fall. Compare median sales prices this year to median prices last year. Steady increases mean the market is improving.

#4 Sign Housing Market is Improving: Starter Homes Sell Faster

When demand is on the rise, homes sell quickly and the days on market are reduced. A starter home that is attractively priced in good condition and a desirable location should typically sell within 30 to 60 days.

#5 Sign Housing Market is Improving: Closed Businesses Reopen

Little shows more faith in a budding economy than when entrepreneurs strike out and open a new neighborhood business. When you spot the boards coming off of a closed up shop and a new sign goes on the building, it means a recovery is underway.

#6 Sign Housing Market is Improving: Distressed Sales Disappear

When you no longer have to ask if the home for sale is a foreclosure or a short sale, the market is turning around. When traditional sellers feel the market is stable enough, they will put their homes on the market because those sellers will have equity.

#7 Sign Housing Market is Improving: Real Estate Companies Hire Agents

In down real estate markets, real estate agents tend to leave the business in droves and real estate companies downsize. When business is improving, real estate companies expand and hire more agents because their phones are ringing with Floor calls from buyers.

#8 Sign Housing Market is Improving: Interest Rates are Attractive

When financing is scarce, the cost of lending that money goes up. When plenty of money is available to lend, interest rates fall. Lower interest rates equal a higher purchasing power for buyers and stimulate the housing market.

#9 Sign Housing Market is Improving: More Buyers are in the Market

The National Association of REALTORS' Housing Affordability Index tracks the percentage of buyers who can afford to buy a home. The higher the percentage, the lower the income that is required to qualify for a mortgage.

#10 Sign Housing Market is Improving: Sellers Buy Move-Up Homes

During troubled times, typically the only sellers who sell a home are those who must due to circumstances beyond their control such as a job transfer, divorce or they can't afford to make their mortgage payment. Many of those sellers do not buy another home. The move-up market becomes stagnant. In a more balanced market, it's not only a good time to sell but also a good time to buy a home.

http://www.youtube.com/watch?v=hYqoFIiXhOc

Homeownership is down and it needs to increase

http://blog.hsh.com/index.php/2011/07/homeownership-is-down-and-it-needs-to-increase/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+hsh+%28blog.hsh.com%29

Fewer and fewer of us are buying homes.