Real Estate Professionals

CFPB & your regulators makng life easier?

February 21, 2012 By Jeff Heib

This will be a big help in your business. Read the latest salvo.

FOR IMMEDIATE RELEASE:

February 21, 2012

CONTACT:

Office of Public Affairs

Tel: (202) 435-7170

CONSUMER FINANCIAL PROTECTION BUREAU CONVENES SMALL BUSINESS PANEL FOR KNOW BEFORE YOU OWE MORTGAGE DISCLOSURES

Panel is Bureau’s First Under Small Business Regulatory Enforcement Fairness Act

WASHINGTON, D.C. — The Consumer Financial Protection Bureau (CFPB) is announcing today the formation of a Small Business Review Panel as part of its initiative to integrate the mortgage disclosure forms that borrowers receive when applying for and closing on a loan. The review panel will solicit feedback from small businesses that make mortgage loans and conduct mortgage closings.

“This is another step in the CFPB’s wide-ranging efforts to gather the input of the people who will be affected by our rules. The CFPB is dedicated to issuing thoughtful, research-based rules that take into account not only the benefits to consumers but also how businesses of all sizes will be affected,” said CFPB Director Richard Cordray. “We take all feedback seriously.”

The CFPB began its Know Before You Owe initiative to combine mortgage loan disclosure forms in May 2011. The project integrates two federally required mortgage disclosures into a single, simpler form that makes the costs and risks of the loan clearer for borrowers. Combining and simplifying these forms will also reduce burdens on lenders.

For more than thirty-five years, two federal laws (the Truth in Lending Act or “TILA,” and the Real Estate Settlement Procedures Act or “RESPA”) have required lenders and settlement agents to give consumers who take out a mortgage loan different but overlapping disclosure forms regarding the loan’s terms and costs. This duplication has long been recognized as inefficient and confusing for consumers and industry. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB is responsible for solving this problem by combining the disclosures.

However, TILA and RESPA are separate laws with different and sometimes inconsistent requirements. The CFPB will propose rules that integrate the statutory requirements and resolve any inconsistencies. The CFPB’s thorough and innovative approach to the disclosure forms not only clearly conveys the information that the laws mandate but also highlights the information consumers really need to know.

The CFPB is convening the Small Business Review Panel to help with proposals the CFPB is considering. Examples of these include:

· Consumers need to know what information they can rely on. Three days after application, consumers will receive an integrated loan estimate that clearly discloses the terms and costs of the mortgage loan. However, many lenders and mortgage brokers provide consumers with preliminary estimates of loan terms and costs earlier in the process. These estimates are not required by TILA or RESPA. The CFPB is considering whether to require that these preliminary estimates carry a disclaimer informing the consumer that the preliminary estimate is not the Loan Estimate required by law. This is intended to help consumers avoid relying on estimates that may not be reliable.

· Consumers need to be able to rely on their loan estimate. Under current rules, when a lender provides the consumer with an estimate of the cost of its own services under RESPA, the actual cost cannot be higher than the estimate unless there is a valid change of circumstances. The CFPB is considering a proposal to apply the same limitation when the lender estimates the cost of services provided by its affiliates or by companies the lender requires the consumer to use. This is intended to make the Loan Estimate more reliable for consumers.

· Consumers need to know the final terms and costs before they sit down at the closing table. Under current rules, consumers typically receive a disclosure with some of their final loan terms and costs three business days before closing on the loan, but other costs are not finalized until the day of closing. As a result, consumers sometimes do not know how much they will owe until it is too late. The CFPB is considering a proposal that would generally require delivery of the integrated settlement disclosure stating the consumer’s final loan terms and costs at least three business days before closing to reduce the risk that consumers will face unexpectedly higher closing costs at the last minute.

In developing new forms, the CFPB has engaged and continues to engage extensively with consumers and industry – well before proposing its regulation. The CFPB has conducted one-on-one testing of the forms in 9 cities across the country. The CFPB has also posted the forms on its website and received more than 27,000 comments from the public, including industry. Engaging with consumers helps the CFPB understand what they need from the form. Engaging with industry helps the CFPB understand the benefits and costs from the businesses – large and small – that are likely to be directly affected by the new mortgage disclosure.

The CFPB will be sharing the following documents with the Small Business Review Panel:

An overview of the proposals under consideration: http://www.consumerfinance.gov/wp-content/uploads/2012/02/20120221_cfpb_tila-respa-integration-rulemaking-outline-of-proposals-and-alternatives.pdf

A fact sheet summarizing the Small Business Review Panel process:http://www.consumerfinance.gov/wp-content/uploads/2012/02/20120221_cfpb_factsheet-small-business-review-panel-process.pdf

A list of questions and issues on which the CFPB will seek input:http://www.consumerfinance.gov/wp-content/uploads/2012/02/20120221_cfpb_tila-respa-integration-rulemaking-discussion-issues-for-small-entity-representatives.pdf

In this process, the CFPB is following the requirements of the Small Business Regulatory Enforcement Fairness Act (SBREFA) of 1996. Generally, unless a proposed rule will not have a significant economic impact on a substantial number of small entities, the CFPB will seek input directly from small entities about potential costs of a proposed rule and potentially less-burdensome alternatives before issuing the proposal for public comment.

Under this law, representatives from the CFPB, the Chief Counsel for Advocacy of the Small Business Administration (SBA), and the Office of Management and Budget’s Office of Information and Regulatory Affairs will form a review panel. The panel meets with a group of representatives of small financial service providers selected by the CFPB, in consultation with the SBA. The representatives will provide the panel with feedback on the benefits and burdens of complying with the proposals the CFPB is considering. The representatives may also suggest alternatives that would minimize those burdens.

Within 60 days of convening, the review panel completes a report on the input received from small providers during the panel process. The report also contains the panel’s findings on the potential effects of the proposed regulation on small providers and any significant alternatives that accomplish the objectives of the proposed rule while minimizing such impacts. The CFPB then considers the panel’s report and the comments and advice provided by small providers as it prepares the proposed rule. The CFPB plans to formally release a proposed rule for comment in July.

###

The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit www.ConsumerFinance.gov.

Filed Under: Loan Information, Real Estate Professionals Tagged With: CFPB, consumer financial protection bureau, consumer loans, Consumers, foreclosure, housing applications, real estate loans, RESPA, SBREFA, single family owner occupied, Small Business ReviewPanel, TILA

Is Congress a little greedy?

February 16, 2012 By Jeff Heib

Here’s some food for thought. Read this &let me know what you think….. Thanks to Fred Kreger with CAMP for sharing this

Subject: G-fee Hike Not Part of Payroll Tax Package?

ByBrian Collins

FEB 16, 2012 1:14pm ET

A proposal to hike guarantee fees on Fannie Mae and Freddie Mac for the second time in two months was floated Wednesday night during negotiations over a $150 billion bill that would extend the payroll tax deduction and unemployment benefits.

However, a g-fee hike does not seem to be part of the package that congressional leaders are expected to unveil later today, according to industry sources tracking the issue.

In December, Congress passed a two-month extension bill, funded by a 10 basis point hike in Fannie/Freddie g-fees.

During Wednesday’s talks, it appears an additional g-fee hike was floated to help pay for the 10-month extension bill, which also ensures reimbursement rates for Medicare doctors.

It appears that Republicans were reluctant to accept another g-fee hike, because it would make the federal government even more dependent on the GSEs as a source of revenues. The 10bp g-fee hike that goes into effect in April is expected to raise $35 billion over 10 years to pay for the cost of the two-month extension.

Many Republican lawmakers want to wind down Fannie and Freddie and privatize them. Nevertheless, the g-fee option remains enticing for some in Congress as it gets harder to find sources of revenue to pay for government programs.

Housing and other industry groups have made clear to Congress that they oppose the use of g-fees as a source to fund other government programs.

“We are united in opposition to increasing g-fees and FHA premiums for reasons other than minimizing the GSEs’ or FHA’s risk exposure, shoring up capital reserves and ensuring the liquidity of the secondary mortgage market,” according to a joint letter signed by 19 trade groups.

As part of the two-month extension, Congress also increased the annual premiums on Federal Housing Administration loans by 10 bps. But the premium revenues will remain with FHA to shore up its reserves.

Fred Kreger, CMC

President Elect & Vice President, Government Affairs

California Association of Mortgage Professionals (CAMP)

“Excellence and Integrity in Lending”

Certified Mortgage Consultant

American Family Funding,

A Division of American Pacific Mortgage – A Direct Lender

24961 The Old Road Ste 101

Stevenson Ranch, CA 91381

Phone: (661) 505-4311

Cell: (661) 400-8905

Fax: (661) 705-8339

DRE License # 01371184 / 01215943

NLMS License# 214640 / 1850

Check out our GA blog site: www.campga.org

Filed Under: Real Estate Professionals Tagged With: CAMP, congress, consumer loans, doctors, fannie mae, freddie mac, medicare, real estate loans

News flash about servicing abuses

February 9, 2012 By Jeff Heib

The big guns get slapped pretty hard!

FOR IMMEDIATE RELEASE

THURSDAY, FEBRUARY 9, 2012 (202)514-2008

WWW.JUSTICE.GOV TTY (866) 544-5309

FEDERAL GOVERNMENT AND STATE ATTORNEYS GENERAL REACH

$25 BILLION AGREEMENT WITH FIVE LARGEST MORTGAGE SERVICERS TO ADDRESS MORTGAGE LOAN SERVICING AND FORECLOSURE ABUSES

$25 billion agreement provides homeowner relief & new protections, stops abuses

WASHINGTON – U.S. Attorney General Eric Holder, Department of Housing and Urban Development (HUD) Secretary Shaun Donovan, Iowa Attorney General Tom Miller and Colorado Attorney General John W. Suthers announced today that the federal government and 49state attorneys general have reached a landmark $25 billion agreement with the nation’s five largest mortgage servicers to address mortgage loan servicing and foreclosure abuses. The agreement provides substantial financial relief to homeowners and establishes significant new homeowner protections for the future.

The unprecedented joint agreement is the largest federal-state civil settlement ever obtained and is the result of extensive investigations by federal agencies, including the Department of Justice, HUD and the HUD Office of the Inspector General (HUD-OIG), and state attorneys general and state banking regulators across the country. The joint federal-state group entered into the agreement with the nation’s five largest mortgage servicers: Bank of America Corporation, JPMorgan Chase & Co., Wells Fargo & Company, Citigroup Inc., and Ally Financial Inc. (formerly GMAC).

“This agreement – the largest joint federal-state settlement ever obtained – is the result of unprecedented coordination among enforcement agencies throughout the government,” said Attorney General Holder. “It holds mortgage servicers accountable for abusive practices and requires them to commit more than $20 billion towards financial relief for consumers. As a result, struggling homeowners throughout the country will benefit from reduced principals and refinancing of their loans. The agreement also requires substantial changes in how servicers do business, which will ensure the abuses of the past are not repeated.”

“This historic settlement will provide immediate relief to homeowners – forcing banks to reduce the principal balance on many loans, refinance loans for underwater borrowers, and pay billions of dollars to states and consumers,” said HUD Secretary Donovan. “Banks must follow the laws. Any bank that hasn’t done so should be held accountable and should take prompt action to correct its mistakes. And it will not end with this settlement. One of the most important ways this settlement helps homeowners is that it forces the banks to clean up their acts and fix the problems uncovered during our investigations. And it does that by committing them to major reforms in how they service mortgage loans. These new customer service standards are in keeping with the Homeowners Bill of Rights recently announced by President Obama – a single, straightforward set of commonsense rules that families can count on.”

“This monitored agreement holds the banks accountable, it provides badly needed relief to homeowners, and it transforms the mortgage servicing industry so now homeowners will be protected and treated fairly,” said Iowa Attorney General Miller.

“This settlement has broad bipartisan support from the states because the attorneys general realize that the partnership with the federal agencies made it possible to achieve favorable terms and conditions that would have been difficult for the states or the federal government to achieve on their own,” said Colorado Attorney General Suthers.

The joint federal-state agreement requires servicers to implement comprehensive new mortgage loan servicing standards and to commit $25 billion to resolve violations of state and federal law. These violations include servicers’ use of “robo-signed” affidavits in foreclosure proceedings; deceptive practices in the offering of loan modifications; failures to offer non-foreclosure alternatives before foreclosing on borrowers with federally insured mortgages; and filing improper documentation in federal bankruptcy court.

Under the terms of the agreement, the servicers are required to collectively dedicate $20 billion toward various forms of financial relief to borrowers. At least $10 billion will go toward reducing the principal on loans for borrowers who, as of the date of the settlement, are either delinquent or at imminent risk of default and owe more on their mortgages than their homes are worth. At least $3 billion will go toward refinancing loans for borrowers who are current on their mortgages but who owe more on their mortgage than their homes are worth. Borrowers who meet basic criteria will be eligible for the refinancing, which will reduce interest rates for borrowers who are currently paying much higher rates or whose adjustable rate mortgages are due to soon rise to much higher rates. Up to $7 billion will go towards other forms of relief, including forbearance of principal for unemployed borrowers, anti-blight programs, short sales and transitional assistance, benefits for service members who are forced to sell their home at a loss as a result of a Permanent Change in Station order, and other programs. Because servicers will receive only partial credit for every dollar spent on some of the required activities, the settlement will provide direct benefits to borrowers in excess of $20 billion.

Mortgage servicers are required to fulfill these obligations within three years. To encourage servicers to provide relief quickly, there are incentives for relief provided within the first 12 months. Servicers must reach 75 percent of their targets within the first two years. Servicers that miss settlement targets and deadlines will be required to pay substantial additional cash amounts.

In addition to the $20 billion in financial relief for borrowers, the agreement requires the servicers to pay $5 billion in cash to the federal and state governments. $1.5 billion of this payment will be used to establish a Borrower Payment Fund to provide cash payments to borrowers whose homes were sold or taken in foreclosure between Jan. 1, 2008 and Dec. 31, 2011, and who meet other criteria. This program is separate from the restitution program currently being administered by federal banking regulators to compensate those who suffered direct financial harm as a result of wrongful servicer conduct. Borrowers will not release any claims in exchange for a payment. The remaining $3.5 billion of the $5 billion payment will go to state and federal governments to be used to repay public funds lost as a result of servicer misconduct and to fund housing counselors, legal aid and other similar public programs determined by the state attorneys general.

The $5 billion includes a $1 billion resolution of a separate investigation into fraudulent and wrongful conduct by Bank of America and various Countrywide entities related to the origination and underwriting of Federal Housing Administration (FHA)-insured mortgage loans, and systematic inflation of appraisal values concerning these loans, from Jan. 1, 2003 through April 30, 2009. Payment of $500 million of this $1 billion will be deferred to partially fund a loan modification program for Countrywide borrowers throughout the nation who are underwater on their mortgages. This investigation was conducted by the U.S. Attorney’s Office for the Eastern District of New York, with the Civil Division’s Commercial Litigation Branch of the Department of Justice, HUD and HUD-OIG. The settlement also resolves an investigation by the Eastern District of New York, the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) and the Federal Housing Finance Agency-Office of the Inspector General (FHFA-OIG) into allegations that Bank of America defrauded the Home Affordable Modification Program.

The joint federal-state agreement requires the mortgage servicers to implement unprecedented changes in how they service mortgage loans, handle foreclosures, and ensure the accuracy of information provided in federal bankruptcy court. The agreement requires new servicing standards which will prevent foreclosure abuses of the past, such as robo-signing, improper documentation and lost paperwork, and create dozens of new consumer protections. The new standards provide for strict oversight of foreclosure processing, including third-party vendors, and new requirements to undertake pre-filing reviews of certain documents filed in bankruptcy court.

The new servicing standards make foreclosure a last resort by requiring servicers to evaluate homeowners for other loss mitigation options first. In addition, banks will be restricted from foreclosing while the homeowner is being considered for a loan modification. The new standards also include procedures and timelines for reviewing loan modification applications and give homeowners the right to appeal denials. Servicers will also be required to create a single point of contact for borrowers seeking information about their loans and maintain adequate staff to handle calls.

The agreement will also provide enhanced protections for service members that go beyond those required by the Servicemembers Civil Relief Act (SCRA). In addition, the four servicers that had not previously resolved certain portions of potential SCRA liability have agreed to conduct a full review, overseen by the Justice Department’s Civil Rights Division, to determine whether any servicemembers were foreclosed on in violation of SCRA since Jan. 1, 2006. The servicers have also agreed to conduct a thorough review, overseen by the Civil Rights Division, to determine whether any servicemember, from Jan. 1, 2008, to the present, was charged interest in excess of 6% on their mortgage, after a valid request to lower the interest rate, in violation of the SCRA. Servicers will be required to make payments to any servicemember who was a victim of a wrongful foreclosure or who was wrongfully charged a higher interest rate. This compensation for servicemembers is in addition to the $25 billion settlement amount.

The agreement will be filed as a consent judgment in the U.S. District Court for the District of Columbia. Compliance with the agreement will be overseen by an independent monitor, Joseph A. Smith Jr. Smith has served as the North Carolina Commissioner of Banks since 2002. Smith is also the former Chairman of the Conference of State Banks Supervisors (CSBS). The monitor will oversee implementation of the servicing standards required by the agreement; impose penalties of up to $1 million per violation (or up to $5 million for certain repeat violations); and publish regular public reports that identify any quarter in which a servicer fell short of the standards imposed in the settlement.

The agreement resolves certain violations of civil law based on mortgage loan servicing activities. The agreement does not prevent state and federal authorities from pursuing criminal enforcement actions related to this or other conduct by the servicers. The agreement does not prevent the government from punishing wrongful securitization conduct that will be the focus of the new Residential Mortgage-Backed Securities Working Group. The United States also retains its full authority to recover losses and penalties caused to the federal government when a bank failed to satisfy underwriting standards on a government-insured or government-guaranteed loan. The agreement does not prevent any action by individual borrowers who wish to bring their own lawsuits. State attorneys general also preserved, among other things, all claims against the Mortgage Electronic Registration Systems (MERS), and all claims brought by borrowers.

Investigations were conducted by the U.S. Trustee Program of the Department of Justice, HUD-OIG, HUD’s FHA, state attorneys general offices and state banking regulators from throughout the country, the U.S. Attorney’s Office for the Eastern District of New York, the U.S. Attorney’s Office for the District of Colorado, the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Western District of North Carolina, the U.S. Attorney’s Office for the District of South Carolina, the U.S. Attorney’s Office for the Southern District of New York, SIGTARP and FHFA-OIG. The Department of Treasury, the Federal Trade Commission, the Consumer Financial Protection Bureau, the Justice Department’s Civil Rights Division, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Department of Veterans Affairs and the U.S. Department of Agriculture made critical contributions.

For more information about the mortgage servicing settlement, go towww.NationalMortgageSettlement.com. To find your state attorney general’s website, go to www.NAAG.org and click on “The Attorneys General.”

The joint federal-state agreement is part of enforcement efforts by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information about the task force visit:www.stopfraud.gov.

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Filed Under: Real Estate Professionals Tagged With: consumer financial protection bureau, consumer loans, federal reserve system, fha loans, foreclosure, loan collections, monthly loan payments, real estate loans, single family owner occupied

First Tuesday newsletter

February 9, 2012 By Jeff Heib

This may be of interest. Ther’s a couple interesting points to consider here. You can reach them at their contact info below.

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THE FIRST TUESDAY JOURNAL WEEKLY HEADLINES
WEEK OF FEBRUARY 6, 2012

Hello Jeffrey,

As a current first tuesday student, you have access to our Membership Benefits. One of them is the first tuesday Newsletter, an email feed from our online magazine with the latest news in California’s real estate market.

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Frannie forbears, unemployed homeowners deferExtend and pretend is alive and well: unemployed homeowners with mortgages owned by Frannie now have…Vote
What is the best foreclosure relief option for unemployed and underwater homeowners?
Down payment insurance: a nice idea in WonderlandPeople will begin buying homes again if…
Down payment gifts prevent skin in the gameComing by a down payment acceptable to today’s mortgage lenders is…
The Votes Are In: It’s time lenders allow investors to leaseback to shortsale sellers73% of first tuesday voters believe the time has come for the return of…
February Focus: Newly-licensed sales agent and broker population
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Filed Under: Loan Information, Real Estate Professionals Tagged With: affordable housing, consumer loans, department of real estate, foreclosure, real estate loans, single family owner occupied

A warning wakeup call

January 31, 2012 By Jeff Heib

The due-on time bomb

By Jeffery Marino • Jan 6th, 2012 • Category: Feature Articles, January 2012 Journal, Journal Articles

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This was an article out of First Tuesday you need to read & think about. It’ll be coming down the road quicker than you think.

please wait…

Rating: 2.7/5 (6 votes cast)

This article warns of the impending era of due-on-sale enforcement that will befall the real estate market in the approaching age of rising interest rates.

Interest rates — WWII to Reagan and back

At the dawn of America’s postwar economy, interest rates were at historic lows. In 1951, the 30-year fixed rate mortgage (FRM) hovered around 4%, as it did for most of that decade. The personal savings rate was also historically low.

Despite the fact that personal wealth was still recovering from the body blow of the Great Depression, jobs were in great abundance. The advent of the military-industrial complex Eisenhower so distrusted (WWII to Vietnam), coupled with the need to restore America’s crumbling infrastructure led to surging employment, booming gross domestic product (GDP) and a seemingly unquenchable demand for houses, goods and services.

By 1965, the constricted money supply set interest rates on a long upward trajectory, and inflation started to soar under the wartime economy. Almost a quarter of all the savings and loan associations (S&Ls) in California were in serious financial turmoil. The S&Ls had lent on anything to everyone during the booming early ‘60s, and had done so at rates that did not adequately cover the risk of future inflation, eventually causing their total demise by the early ‘90s.

The result was not unlike what we saw in 1991 and 2008. Foreclosures spread like wildfire, and rather than receiving a bailout, a large number of California-based S&Ls were allowed to collapse. Lenders were forced to acquire property by foreclosure, and lender insolvency ran rampant. Thus, merger upon merger occurred. Most often, mergers were induced by governmental pressure (and money) to keep weak lenders from going under or being taken over at greater expense to the government (sound familiar?).

Inflation, Boomers and interest rate uprisings

By the early 1970s the Baby Boomers had arrived and were setting the economy on fire. The Federal Reserve (the Fed) in those days was not as alert and proactive as our current Fed, allowing inflation to hit double digits, turning homeownership into a hedge against inflation-investments. In 1979, the new Fed Chairman promptly shut down the over-exuberant economy by raising short-term rates to 18% plus, on and off for two years before the Fed single handedly brought inflation under control.

Once this occurred, mortgage rates began a long and steady 30-year decline, until they reached the point of absolute zero that we see today. Today, we are right where we were at the end of WWII in terms of low interest rates and inflation, but not in terms of having come out of the recession as occurred by the end of that economic period. [For a comprehensive financial history of the U.S. real estate market spanning WWII to the present, see the first tuesday publication Real Estate Finance, Fifth edition, Chapters 1 and 2.]

Interest rates at the real bottom

Based on the current historically low 30-year FRM interest rate, many industry pundits have speculated about the future fluctuations of the interest rate and its effect on prices. The prevailing question in the press has been oversimplified and uninformed: will the interest rate go any lower? This query is typically accompanied by the seemingly eternal and intrinsically related refrain, when will prices increase? [For current real estate-related interest rate data, see the December 2011 first tuesday article, Current market rates.]

The simple answer to the first question is: no, rates cannot go any lower. This, of course, answers the second question in the negative, since prices will only increase if mortgage ratesdrop, (or production of goods and services increases beyond the rate of inflation).

Will the interest rate go any lower? The simple answer is no.

Allow us, dear reader, to explain.

Although the current 30-year FRM interest rate hovers around 4%, the real interest rate is effectively zero. Thus it is impossible for the rate to go any lower, lest lenders start paying borrowers to accept their loan funds — a fantasy that is possible but highly improbable (called going negative by bankers).

In order to understand the reason why mortgage rates are now essentially zero, one must first grasp the concept of real vs. nominal interest rates — a fairly straightforward concept. Essentially, the nominal interest rate is the mortgage rate advertised by lenders, stated in the note and reported by the media. In theory, the nominal rate includes a premium rate sufficient to account for expected future consumer inflation.

In turn, the real rate of interest is the nominal interest rate minus the current rate of inflation. Since the core rate of inflation is currently 2%, the real interest rate of today’s 30-year FRM is 2%.

Editor’s note — The rate of inflation used for this analysis reflects the core rate of inflation, an adjusted index excluding food and energy prices, which are volatile and properly adjusted out of inflation calculations. The reason: commodities return to their mean-price level leaving little long-term effect on the core rate of consumer inflation. Evidence: Gasoline and copper prices are all over the place every few years, but your mechanic has been charging you $100 n hour since the ‘80s.

Additionally, the core rate of inflation is reported monthly and has fluctuated marginally above and below 2% for the past two decades. Thus, we use the 2% figure here for the sake of clarity and simplicity, acknowledging that it is the targeted level of inflation set by the Fed for their long-standing monetary policy. The same is true for the mortgage rate discussed in this article, which has marginally fallen below and risen above 4% for the past year or so and will most likely do so well through 2013.

The zero lower bound and the liquidity trap

But 2% is not zero, as we have claimed the effective rate on the 30-year FRM to be. This vestigial 2% is eaten up by two inexorable factors: the discount rate and the risk premium rate (to cover defaults) added to mortgages, a margin to assure profitability. The discount rate (the rate paid by lenders to borrow funds directly from the Fed) is currently at .75%, which puts the effective rate of return on a 30-year FRM at 1.25%. This just happens to be the approximate risk premium added to 30-year mortgages, as they are typically pegged at 1.4% or so higher than the 10-year Treasury note (T-note) in order to effectively capture investor dollars for mortgages that might otherwise be invested in “risk-free” government bonds.

The current real rate of return for the 10-year T-note runs just a few tenths of a percentage point above the core rate of inflation. This is due mainly to excessive world-wide currency risks which have driven the yield on the T-note down, the U.S. dollar being the safe haven delivering the real estate industry this benefit.

Thus, the real interest rate on the 30-year FRM is currently zero, offering only a high enough nominal yield for lenders and their investors to keep pace with inflation and retain their money’s purchasing power until they find themselves clear of this rippling global downturn.

It is axiomatic, dear reader. Just like bonds, mortgage rates operate in inverse proportion to prices. As rates go down, prices go up, and vice versa.

Just like bonds, mortgage rates operate in inverse proportion to prices. As rates go down, prices go up, and vice versa.

Since rates literally cannot go down, prices will not go up until the money supply is unleashed and consumers begin to spend. Although money in the form of loan funds is basically free, no one, especially lenders, is spending it — a phenomenon known as the liquidity trap.

In order for prices to rise any further, we must first pass through a full cycle of rising-then-falling interest rates. As inflation picks up, mainly due to the trillions of dollars of cash the Fed has injected into the private banking system since 2007, and as we gain more jobs into 2014-15, interest rates will be driven up by the Fed to withdraw excess liquidity (money) pumped-in to keep the economy from tanking.

The question is not if, but when — and by how much will interest rates rise to keep the economy from recovering at breakaway speed.

The due-on time bomb: be aware and ready

Now here is the rub. The fact that interest rates have bottomed-out and will begin increasing over the next several years is a paradigmatic game-changer for the real estate market. That includes you, our readers.

Since the interest rate spike of the 1980s, when rates peaked at 18%, interest rates have been on a steady decline, and have come to rest at a point beyond which they cannot go. An entire generation of homebuyers has become accustomed to not only low interest rates, but interest rates that have continuously gotten lower.

Thus, the notion of a double-digit interest rate on a 30-year FRM is unthinkable to most potential homebuyers. Aside from the negative implications that zero-bound rates carry for a recovering economy that depends on consumer confidence, a surge in the heretofore receding interest rate tide heralds the resurrection of a most insidious barrier to real estate transactions: enforcement of the due-on-sale clause. [For a comprehensive overview of the due-on-sale clause inherent in all trust deeds, see the March 2011 first tuesday article, The due-on-sale clause: barricading homeowners since ’82.]

Events to occupy a broker’s mind

Thus, while the housing market lingers in the purgatory of low interest rates and low prices, waiting for interest rates to begin their inevitable rise, there exists a due-on time bomb ticking silently just below the surface of real estate sales volume numbers. The bomb will not explode all at once but in slow motion, as rates will rise gradually with creeping inflation and as the employment rate picks up.

This calculus is well-known to brokers who arranged sales during the high interest rate period of 1977 to 1982, a period during which the due-on clause was held at bay by the courts and the strong-arm sheriff – until deregulation let the bears of Wall Street roam at will and build strength, gorging themselves on profits for the last 30 years.

However, once those who have been lucky enough to secure a mortgage at today’s low rates are ready to sell and interest rates have begun to rise (likely during a 2016-forward real estate boomlet), prospective buyers everywhere will be asking the same question that most did in the late ‘70s and early ‘80s: how can I assume the seller’s low-rate loan? At that moment, real estate brokers and agents will have to take the opportunity to educate their client buyers and sellers about the due-on-sale clause included in every trust deed.

Since most buyers in the near future have been raised on falling interest rates, they have had no occasion to learn the term due-on. Brokers have forgotten; agents have not been trained.

Dangerous assumptions

Buyers in the real estate market of the last 30 years would not be interested in assuming the seller’s loan, as they were almost always more likely to get a lower rate on a freshly originated loan.

The advent of Fair Isaac Corporation (FICO) scoring and the fears it engendered added to the lender’s dream of constantly rolling over mortgages to get origination fees (and prepayment penalties). In the off chance a real estate transaction took place which could trigger due-on enforcement, a lender would never exercise their right to call the loan; that would be insisting on making a new loan at a lower rate than the existing loan’s rate — something that will never happen as lenders have one goal only: profit. [For an analysis of the fallacy of FICO scoring, see the December 2011 first tuesday article, The FICO farce.]

As mortgage rates go up, as we have shown they will, lenders will not only pose a barrier to new deals, but they will also begin to call loans en masse on all “subject to” sales transactions, conduct creating high potential for another lender-instituted housing bust of a completely avoidable variety.

They will even sue brokers and agents in retaliation for assisting buyers and sellers in Wellenkamp-style loan assumptions, demanding payment of retroactive interest differential (RID) at the increased market rate over the note rate from the date of closing, a sum they cannot collect when they call the loan on discovery of the sale. [Wellenkamp v. BofA (1892) 12 C2d 212 (Disclosure: the legal editor of this publication was the attorney of record for the plaintiff in this case.)]

Who’s manning the ship?

What can be done to protect the housing market from the unbridled lender dominance instituted by the Garn-St. Germain Federal Depository Institutions Act of 1982 (Garn) and essentially ignored by lenders, brokers and principals ever since?

First, awareness of the deleterious effects of due-on enforcement (especially to a recovering economy and Multiple Listing Service (MLS) housing sales volume) must be developed amongst the professional gatekeepers of the real estate industry who have more at stake than padding their bottom line (read: brokers and agents who deal in real estate as their vocation).

This awareness must then coalesce into political action agitating for the repeal of Garn St. Germain due-on enforcement — for without repeal nothing can change. The momentum for such an action is already building with focus on mortgage lenders by elements of the Occupy Wall Street (OWS) movement. Do not ignore the increasing national consciousness that the successes of the 1% are now systemically integrated into the guts of our political system. [For more information real estate professional involvement in the OWS movement, see the October 2011 first tuesday article, Unions occupy Wall Street — where are the Realtors?]

Enforcement of the due-on sale clause is a prime example of such institutionalized avarice. It benefits no one but lenders to the detriment of society at large, no longer justified as serving any social good as it was portrayed before Congress 30 years ago.

Begin agitating for change now, before rates start rising — once the great boulder begins rolling again, you and your sales volume will get crushed.

Readers are encouraged to reproduce and/or distribute this article.

Copyright © 2011 by first tuesday Realty Publications, Inc. Readers are encouraged to reprint or distribute this information with credit given to the first tuesday Journal Online — P.O. Box 20069, Riverside, CA 92516.

Filed Under: Real Estate Professionals Tagged With: affordable housing, consumer loans, due on sale clause, foreclosure, Garn St Germain, home sales, installments, nominal inflation, Occupy Wall Street, OWS, property values, real estate loans, real inflation, single family owner occupied, subject to sales transactions, Wellencampv BofA

Duane’s Musings

January 30, 2012 By Jeff Heib

Duane Gomer’s claim to fame is real estate education. If you need to renew your license, you’ll wanna talk with him. Read these snippets. I’m sure youu’ll find a gem hidden there. I did

About a month ago I sent you my recent Facebook postings. The response was so great I am doing it again. Enjoy.

If you would like to read them daily, go to www.DuaneGomer.com/DuaneGomerSeminars and press the like button. You will have to be registered with Facebook which will take you just a few minutes.

By the way, if you want to renew a Real Estate License or a Notary Commission or get a Sales or Broker License or MLO Courses, call 800-439-4909 or go to www.DuaneGomer.com. We are ready to help. That is our business.

BUSINESS GIFTS
One gift that has been well received by our clients is a year’s subscription to Sunset Magazine. 12 issues with your name on every issue. We have been receiving copies for years from Terry Yapp, Mission Viejo Realtor, and D.J. and I appreciate them greatly. One strong selling point. The cost is only about $16.00 per year. Well worth it. Other gifts we have used successfully are movie tickets, Danish Kringles, Gas Cards and James Salt Water Taffy.

CONGRATULATIONS LINDSEY
This month Lindsey Virginia Gomer gets her degree from CSUN with a Real Estate Major. She passed her DRE Sales test in June, 2010 and now has all her broker courses done. Since she has a four-year degree she needs no experience and will take her Brokers Test soon. Hopefully, she will follow in the footsteps of her father, David Gomer, also a CSUN Real Estate Major and now a Reverse Mortgage Specialist, and Grandpa Duane, a Real Estate Speaker. Look out world here comes Lindsey.

GREAT JOBS
A student said recently, “I would love your job, you just talk all day.” I’ve had some great jobs. One in Germany years ago was Athletic Director for USAF Germany, running Sports Events all over Europe. At Indiana University, I worked nights in the Girl’s Dorms making sandwiches, milk shakes, etc. Had a seminar student the other day who had been one of my customers. BTW, doing seminars is not as easy as it looks. Most of the work is before you start talking. Still, it is the greatest of all possible jobs.

RECOMMENDATIONS
Thank you all who have written recommendations for my Facebook page Duane Gomer Seminars. It is sincerely appreciated. You are the best. BTW, is it against Facebook Policies to have a drawing for all my recommenders at the end of the year and give prizes? I am not an expert about all the Facebook Policies, and I sure don’t want to be eliminated from the program.

MOVIE AWARDS
Screen Actors Guild and Golden Globe nominations were released this week. It is clearly evident that five movies will be around at Oscar time. They are Help (civil rights in the South), Descendants (George Clooney), Midnight in Paris (Woody Allen), Bridesmaids (raunchy female comedy) and the Artist (an ode to silent movies). Fortunately Help and Bridesmaids are available on DVD and Midnight in Paris will be available next week. Other touted movies include Moneyball, Hugo, War Horse, My Week With Marilyn, Ides of March, 50-50. So many to see so little time.

R.E. AGENTS
I have an idea for you. Homeowners just paid their taxes December 12^th. They have heard all the gossip about distressed property sales with low prices and their assessed value is higher. Send your clients, friends, relatives, prospects, etc. information about your County Assessor’s website and URL where they can request a lowered assessment. Tell them that you can help them with comps. Some might appreciate the reminder and remember you when someone has a real estate problem.

NOTARY FACTS
1 – To become a Notary you have to pass a 30 question multiple choice exam with a grade of 70% plus do a 6 hour course. 2 – The maximum fee for each signature is $10.00. 3 – A real estate agent can notarize documents for a deal in which they are receiving a commission. 4 – People can look at your Journal by giving you a written request and paying $.30 per item. 5 – A person does not have to sign a trust deed in front of the Notary. Want to be a Notary? Call me – (800) 439-4909.

END OF THE YEAR
Time to estimate how much you’ll make in 2012. You need to know so you can determine whether you should pay more expenses this year or not and if possible whether you should take income this year or not. Also, make more charity donations in 2011 or wait till 2012. I am positive your religious donation recipients wouldn’t mind a little prepayment. You can pay your April Tax Installment, etc. No handy money. If you use a credit card in December, you can deduct the expense. Talk to your CPA before doing anything. I bet they might have time to talk right around this time of year.

TRAVELING
Years ago we could not get a room at our go-to hotel in Berkeley (The Durant) so they told us about a small hotel nearby. It was 9:00 pm-ish so we grabbed our 4 bags and walked into the small lobby. We didn’t see a reception desk. A couple came out from a side room; when we asked them where the desk was they said, “The hotel is next door this is our home.” As we retreated, I overheard one say, “We have to be sure to lock the door in the future.”

CREDIT CHECK
Go to http://annualcreditreport.com and get your free credit report. While there, get a credit report for your minor children. They have a Social Security Number and agencies are finding identity theft on children. If you want to buy a credit score, go to Trans Union or Equifax. Costs about $15.00 and would be informative. Stay away from freecreditreport.com. They are the largest seller of personal information of any URL in the US of A.

UNEMPLOYED
Saw a great Wall Street Journal article the other day about recommendations for the unemployed. A couple I liked: Volunteer at some charity, etc. to be active. I would add, find charities that have networking possibilities. Stay fit: Exercise more now that your have time. Can it help? Can’t hurt. Consider going 1099. Find something entrepreneurial that costs nothing to try, for example H&R Block. I have been 1099 for almost 50 years. Also, take a trip to North Dakota – great employment possibilities.

SHOPPING TRENDS
Retail sales are up. That is good news. Corporations have more cash on hand than anytime in history. That is good news. Duane Gomer Seminars is still in business and planning 2012. That is extremely good news. Surveys are showing that more people are buying presents for themselves this year then in recent years past. We deserve it. Another good thing about buying for yourself, the sizes, color, style, etc. should be correct.

SEASONS GREETINGS
First, Seasons Greetings to everyone and Happy Hanukah, Merry Christmas, Happy Kwanzaa, etc. For some foreign language speakers I say “Nollaig Shona Dhuit”; “Kala Christouyenna”; “Cestitamo Bozic”; “Mo’adim Lesimkha. Chena tova”;”Feliz Navidad”; “Vrolijk kerstfeest en een gelukkig nieuw jaar” ; “Merry Keshmish”; Mele Kalikimaka Ame Hauoli Makahiki Hou!”; Nadolig Llawen”; “Joyeux Noel”; “Buone Feste Natalizie” ; “Froehliche Weihnachten”;”Boas Festas”; God Jul”;”Gun Tso Sun Tan Gung Haw Sun”; “Merii Kurisumasu”; “Sung Tan Chuk Ha”; “Sawadee Pee Mai”; “Maligayang Pasko”. Sorry for any language we left out we will get them later. But best wishes to all. Duane and DJ Gomer.

NOISE
Relief is coming. Effective December 13, 2012 the Federal CALM Act goes into effect. What does this acronym mean? Commercial Advertising Loudness Mitigation. Finally, regulations that will penalize TV advertisers who crank up the sound on their commercials. If you have ever watched TV you know this. Commercial sound levels will have to be in a proper relationship to the sound levels of the shows they will be on. About time.

VETERANS
A Career Builder’s Survey illustrated that many companies are looking to hire military veterans. Why? 66% of the companies state that they are more disciplined; 65% understand teamwork; 58% are respectful, 56% leaders; 54% better problem solvers. I agree and another interesting stat – of all the different loan problems including Conventional, FHA, Fannie/Freddie, HOEPA etc., VA loans have the best payment records in every year that I have studied. Signed, Duane Gomer LTJG US Navy.

LOOKING FOR YOUR FIRST HOUSE
Rule #1 – There is no perfect house for you anywhere. Rule #2 – If you don’t find a perfect home with every item you want, remember Rule #1. My wife and I really looked for a long time in our last two purchases. We’ve been in our current house 14 years and growing and in our prior house 13 years. Was either home perfect and had every item from our “check list”? No, but they obviously had many attributes that we loved. So, you won’t find “perfect” but you will find “perfect” for you at this time.

ANNA POST
She is the great-great-grand daughter of Emily and the guru of etiquette. For Christmas thank you’s, she says even if you thank grandparents etc. in person send them a hand-written note. They will appreciate it. When is an email thank-you okay? Anna says, “When you are dealing with someone who does everything online.” A good theory I follow in business. If someone mails, I mail. If someone emails, I email. If someone phones, I phone. If someone faxes, I fax, etc. Seems to work for me. I hope.

REAL ESTATE NUMBERS
In the heyday there were 548,000+ licensees in California. Today there are under 440,000 and dropping about 36,000 a year. Divide 36 into 440 and you get in 12 years there will be no agents left. The number of DRE Loan Originators has dropped about 60%. What do you think this has done to an Education Company’s income? BTW, other companies have not faired well. For example, Kodak in 1988 had 145,000 employees; 2011 – 18,800 employees. Guess people aren’t buying film.

HAPPY NEW YEAR
Duane Gomer Seminars would like to wish you a Happy, Joyous, Profitable and Fulfilling New Year. As we did on December 25^thwe want to express it in several other idioms. It is beyond my comprehension how many languages are spoken in our world. Shnorhavor nor Tari, Urte, Berri On, Xin Nian Kuai Le / Xin Nian Hao, Godt Nytar, Gelukkig Nieuwjaar, Bonne Annee, Prost Neujahr, Kali Chronia, Hauoli Makahiki Hou, Shana Tova, Buon Anno, Akemashite Omedeto, She Heh Bok Mani Bat Uh Seyo, Gody Nytarr, Sale No Mobarak, Szczesliwego Nowego Roku, Feliz Ana Novo, La Multi Ani, S Novim Godom, Feliz ano Nuevo, Gott Nytt Ar, Manigong Bagong Taon.

NEW JOBS
Everyone today was saying “Happy New Year” and in my mind I kept paraphrasing Tennessee Ernie Ford’s song, “16 Tons.” “You do 200 seminars and what do you get, another year older, and deeper in debt, Saint Peter please can’t I be free, I owe my soul to DRE.” Side note: In my long ago Certified Property Manager days, I once managed a building for Mr. Ford. Not one of my favorite memories. Some favorites: Ann Margaret and her husband Roger; Richard Carson, Johnnie’s brother; etc. Feliz año nuevo.

BIRTHDAYS
I am a Capricorn so my birthday is around now. As you know, identity security experts recommend that publishing your birthday and even more so your birthdate is not good, so I’m not. Some other ideas I learned again at an ID session. When away from home, stop newspapers and mail; no announcements of your absence; put some inside lights on timers in different rooms; don’t neglect front lawns; have friendly neighbors to check periodically, put locks on breaker cabinets and gates.

RESOLUTIONS FOR YOU IN 2012
Get a real estate license, you never know when you might need one; if you have a real estate license – study and get your Broker license; already have a Broker license – become a Notary; already a Notary and Broker – become a CRS (outstanding NAR designation), already a Broker, Notary and CRS, call me for more tips. Where should you do all this? Duane Gomer Seminars, your friendly education and information source; check www.DuaneGomer.com .

ROSE BOWL
When I lived in Wisconsin we would watch the Rose Bowl on black and white TV from our snowbound home and marvel at the weather and the beauty of the Rose Bowl. This year was another great tableau of the San Gabriel Mountains and now it is in living 3D color. Temperatures on the 1st dropped to -9 degrees in North Dakota and -53 degrees in Alaska. Do you think anyone out in the cold made plans to leave for California this week? Let’s hope they bring jobs with them.

I’M LUCKY
I am so fortunate that I’ve never been in a hospital for treatment, never had to wear a cast, etc. However, many friends and family are gone, and now I would love to ask them some questions – my Grandparents; “What do you remember about coming from Germany?” my Parents; “How did you two meet?”; my Uncle; “What was it like fighting in WWII, etc., etc., etc. My point, all you elderly (over 62) start recording and make your memories available to family and friends.

CLOONEY
I’m writing this note from memory so I may be off but: In the movie, “Descendants”, George Clooney is extremely wealthy. He said, “It is good to give your offspring enough so they can do something but not enough so they can do nothing.” Buffet and Gates seem to agree with that as they are donating so much to charity. I want to run out of breath and money at the same time working on my own short sales.

EPILOGUE

This newsletter is sent to my past students and other real estate professionals. If you are not interested in receiving them, please opt-out at the bottom of this email and please accept my apology for any inconvenience. I would like to mention that we receive many outstanding comments about our information. Try us, you might like us.

Duane
Real Estate, Notary Public & MLO Education
DRE Sponsor #0054 & NMLS Provider #1400388
Duane@DuaneGomer.com
23312 Madero St. #J, Mission Viejo, 92691
WEB: www.DuaneGomer.com
BLOG: www.DuaneGomer.info
FACEBOOK: Duane Gomer Seminars
(800) 439-4909 or (949) 457-8930
Office Hours: 9 a.m. to 3 p.m.

DRE LICENSE CONTINUING EDUCATION REVIEW SEMINARS

Cerritos – Wed., Feb. 22 – 9 a.m. Call 562-860-5656 to register by 2/20

Corona – Mon., Feb. 6^th – 9 a.m. Call 951-735-5121 to register by 2/3

Chula Vista – Mon., Jan. 23^rd – 9 a.m. Call 619-421-7811 to register by 1/20

Downey – Thurs., Feb. 9^th – 9 a.m. Call 562-861-0915 to register by 2/7

Laguna Hills – Thurs., Jan. 26^th – 1 p.m. Call 949-457-8930 to register by 1/24

Long Beach – Tues., Jan. 24^th – 9 a.m. Call 800-439-4909 to register by 1/19

Mission Viejo – Mon., Jan. 30^th – 9 a.m. Call 949-457-8930 to register by 1/27

Newport Beach – Wed., Feb. 15^th – 9 a.m. Call 949-722-2300 to register by 2/13

Oxnard – Fri., Feb. 10^th – 9 a.m. Call 805-981-2100 to register by 2/8

Filed Under: Real Estate Professionals Tagged With: business promotion, department of real estate, movie awards, notary public employment, real estate licenses, shopping trends, veterans

Possibly a webinar you need?

January 5, 2012 By Jeff Heib

I received this today & thought it interesting enough to pass along. Don’t know the guys, nor the caliber of their product, but wanted to let you know about it.

Jeff

Mortgage Regulatory Strategies for 2012

An Inside Mortgage Finance Webinar
January 25, 2012, from 2:00-3:30 pm ET

Register Now for the Early Bird Discount

The regulatory outlook for the mortgage industry has perhaps never looked more challenging. The mortgage market meltdown has resulted in an onslaught of new rules from both federal and state regulators. The new environment of much tougher mortgage regulation is quickly unfolding in 2012.

Find out about the latest developments in the mortgage regulatory landscape and what they will mean for various mortgage market players at a special Inside Mortgage Finance webinar kicking off the new year. What changes are right around the corner and how will they alter the mortgage lending and servicing business equation? Hear from some of the top law and regulation mortgage experts in the country at this must-attend event on Wednesday, January 25, at 2 pm ET.

The passage of Dodd-Frank legislation has empowered regulators to manage almost every aspect of the mortgage lending, servicing and securitization business. Many seasoned players are wondering if there will be any room for innovation and profitability in the new mortgage regulatory environment. The Consumer Financial Protection Bureau has emerged as the most important mortgage industry regulator, yet its slow and somewhat confusing implementation of new powers has made it difficult to figure out exactly what the mortgage regulation landscape of the future will look like.

Federal regulators must agree on “Qualified Residential Mortgage” criteria following a flood of opposition to a proposed rule. Meanwhile, the CFPB must finalize a separate regulation on a “Qualified Mortgage” standard that is part of a new requirement that lenders assess a borrower’s ability to repay a mortgage. The Federal Trade Commission and Justice Department are looking to crack down on mortgage advertising and fair lending, respectively.

Learn about the risks and liabilities found with many of the new regulatory initiatives at this webinar where experts will explain everything you need to know about regulatory challenges that lie ahead.

Among the topics to be discussed:

The timetable for finalizing a QRM regulation and what changes may be made;
The difference between QRM and QM standards and their application to lending practices;
What risk-retention requirements may mean for different mortgage business models;
How to handle activist legislators and regulators that are looking to levy penalties, sanctions, etc.;
Truth in Lending Act liability and safe harbor standards;
What to expect from the new CFPB examinations;
How a lender can price a non-qualified mortgage to account for increased risk, and what the consequences are;
How the RESPA-TILA reform process will change how we do business and interact with the public;
The regulatory future of the non-agency or non-conforming mortgage market;
The increased regulatory demands facing mortgage servicers – how to manage foreclosures and represent the interests of investors at the same time.

These industry experts will share their insights and answer questions:

Rod Alba, VP/Senior Regulatory Counsel, American Bankers Association
Donald C. Lampe, Leader, Financial Services and Regulatory Compliance team, Dykema
Laurence E. Platt, Practice Area Leader, K&L Gates LLP
Guy Cecala, Publisher, Inside Mortgage Finance (moderator)

Your Webinar registration includes these added benefits:

Webinar attendance for you and your entire team;
A webinar manual with a program outline, speaker bios and presentations, and pertinent articles on the subject from Inside Mortgage Finance and our other newsletters;
A full transcript, emailed to you when you take our post-conference survey; and
The opportunity to connect with any or all of the speakers during the audience Q&A session—a favorite part of these events.

Cancel before 5:00 pm ET 1/23/12 for full refund less $25 fee.
You will receive an email confirmation shortly after completing your registration. You may also contact us at (301) 951-1240.

Two Ways to Register:

1. REGISTER ONLINE

2. REGISTER BY PHONE: Call Erika at 800-570-5744 or 301-951-1240. Our Customer Service representatives can answer any questions and register you in minutes.

For one low rate you and your entire staff (in one location) can participate in this exclusive Inside Mortgage Finance webinar without ever having to leave your office. You’ll come away with firsthand, actionable information. NOTE: Call for discounted rates for multiple sites.

What Is a Webinar?
It is a live event in which you listen to presenters either through your phone or through your computer while viewing their presentations online.

Register Now for the Early Bird Discount

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If you do not wish to continue receiving information of practical value from Inside Mortgage Finance Publications, Inc., often with money saving offers, please click here to unsubscribe. By opting out of this program, you will no longer benefit from getting market news and data on the latest audio conferences, newsletters, and special reports.

Filed Under: Loan Information, Real Estate Professionals Tagged With: consumer financial protection bureau, consumer loans, Dodd Frank, fair lending, mortgage advertizing, qualified residential mortrgage, real estate loans, single family owner occupied

A commission or not?

December 30, 2011 By Jeff Heib

Quite often we are asked if a licesee can participate in a loan commission.

The answer is absolutely!, maybe.

With a valid R.E. Broker’slicense, & the property is not a 1-4 residential, the answer is how much do you want & can I keep at least a meager amount to buy fuel for the yacht?

With a Salesperson’s license, as long as the check is written to your broker of record, the only difference is how much more I keep for gas for the company plane.

A single family (1-4) is a whole different kettle of fish. RESPA (Real Estate Settlement Procedures Act) mandates that in order to participate in the commission earned, you must perform some or all of 14 services normally performed in the origination of a loan. In the interest of brevity, call & I’ll be happy to send you the whole enchilada.

Additionally, on the 1-4s there’s a very good chance you may need an additional license from the federal government which entails an unbelievable amount of education, reporting, & quite probably more hassle than it’s worth unless you are deeply involved in the conventional lending market.

There is a possible out of this quagmire which has to do with the purpose of the loan. If it is not for consumer purposes, you may be home free.

So there ya go. My best suggestion is to call prior to creating a pickle for yourself.

Filed Under: Investors, Loan Information, Real Estate Professionals Tagged With: broker license, commission, consumer loans, department of real estate, dre regs, private lending, private real estate loans, real estate loans, Real Estate Settlement Procedures Act, RESPA, salesperson license, single family owner occupied

A love note from the City of Los Angeles

December 30, 2011 By Jeff Heib

This isn’t particularly new, but they rubbed my nose in it, so I wanted to be sure you are aware & register with them. (Doesn’t that word just send a warm glow directly to your heart)

You need to register properties that have been issued a notice of default every calendar year. If you registered it in 2011, it needs to be reregistered in 2012 or pay $250 PER DAY AS A FINE.

If you had a NOD filed last year, the property reverted to you (& was sold or not) or reinstated you have until January 31, 2012 to upload supporting documentation so the staff can confirm/deny the status change through a verification process. (I promise I am not making this up!)

The info is available at http//clkrep.lacity.org/onlinedocs/2009/0365_ord_18115.pdf

Filed Under: Investors, Real Estate Professionals Tagged With: city of los angeles, consumer loans, foreclosure, loan collections, monthly loan payments, nod, Notice of Default, ordinance 18115, private lending, private real estate loans, real estate loans

late charges; a potential problem to be aware of

December 27, 2011 By Jeff Heib

There may be an issue with your late charge collection.Before you book the reservations to Patagonia, you might wanna read this.

California Civil Code 2954.4 regulates the assessing of late charges on OWNER OCCUPIED single family dwellings (1 to 4 residential units)

A payment receivedwithin the 10 day grace period (realisticly 11 days, the due date +10 days after) must be credited as a current payment per the late charge assessment. For example, the borrower misses the January 1st payment, he makes a payment on February 29th, March 25th & April 9th. Per the law, any payment received within 10 days, either forward or backward is to be considered a payment on time. The interest would be paid to March 1st & you would be entitled to a late charge for only the January payment. “Rolling 30s” do not exist as to the late charges.

Keep in mind, this festriction is only on owner occcupied homes. Any other property does not receive the same protection.

Another reason to carefully consider the loan to value on any consumer loans you are thinking about. The bottom line is the government is protecting Joe Lunchbucket to the point his loan is not nearly as attractive as a loan not saddled with the same economic & legislative stumbling blocks.

Another sidebar issue, the late charge provision in the civil code is 6% of the payment. However, if the loan is arranged by a real estate broker, the 10% limitation applies.

Filed Under: Investors, Real Estate Professionals

CFPB & your regulators makng life easier?

Is Congress a little greedy?

News flash about servicing abuses

First Tuesday newsletter

THE FIRST TUESDAY JOURNAL WEEKLY HEADLINES
WEEK OF FEBRUARY 6, 2012