About Everett's Downtown By The Waterfront

Thank you for being accessible and your service. I hope you take my comments in the spirit they are intended. First off I sincerely believe there is a huge disconnect. HUD is running around making changes that do not impact the consumer positively and in fact doing harm.

The revised Good Faith Estimate is the first item. Explain to me what the problem was with the previous format. To me the purpose of this "improved" document is to regulate how much a mortgage professional can make (nothing to do with consumerism) even though every other profession in the world including the medical community do not have to show how much they make on each transaction. No other industry is required to itemize with precision or within tolerances the exact costs etc. The consumer should take some responsibility to shop as they do with everything else that is consumed and HUD it seems is trying to 'protect' the consumer in a manner that is not possible, ackward but also ineffective and for sure confusing to everyone including HUD itself.

The notion that a document as it is designed will safeguard the consumer from bad behavior or their own stupidity is baffling to me. This document should be scrapped and I sincerely believe you instinctively know this. Humility is not a bad thing in fact it is a sign of character and integrity. I ask HUD to exercise it.

Oversight has been the problem and continues to be the problem and unfortunately all the agencies have dropped the ball including congress (obviously). HUD should be focused on policy to bring the real estate market back to include programs that really do assist the struggling home buyer not these ineffectual non-solution solution programs that continue to be pitched across America only to fall on their face as evidenced by the increasing foreclosure rate.

"Reduce allowable seller concessions from 6% to 3%....o The current level exposes the FHA to excess risk by creating incentives to inflate appraised value. This change will bring FHA into conformity with industry standards on seller concessions."

The above change at least is consistent with the other changes in that it is meaningless and in fact it harms or is yet another nail in the coffin of what is a very dead and more bad news to come real estate market. Where is the magic with the number of 3% vs. 6%? No magic.

This policy is based on a false premise that was first offered up by New York Attorney General Cuomo and that is the appraiser is the problem here and the result of such bizarre analysis is the gutting of an entire sector - banks and "AMC's" coming in gutting the modest fee the appraiser receives in the name of making sure the report has integrity and accuracy. The AMC's are vultures in an economy that is in peril. Since HUD likes disclosures so much you could add a form for the borrower, appraiser, realtor and lender to sign that simply says he was not influenced by anyone. There...we all are covered ...kind of like the lead paint notice if you will.

My point to the appraisal issue is in today's market as it had been up until the year 2000 (before the repeal of the Glass Steagall act of 1933)appraisals were and are underwritten by underwriters so any report that has irregularities can be picked up by an underwriter...that is their job. 2nd, all the major lenders have an automated system they run the appraisal through with the sole purpose to dumb down a reports value even though the data they glean from electronic sources may be flawed which is why we have an appraiser in the field in the first place. This secondary check is a direct result of the nonsense created by Cuomo and friends as a defensive move for cover in case Barney Frank & friends decide to offer up punitive ridiculous regulation or penalties.

How can you inflate an appraisal in a declining market anyway? I suppose the next thing you will do is decide to increase the down payment. From the beginning of time the folks with the gold wanted to lend only to those that could pay back the loan. For the folks that put 30% down three years ago and since lost their jobs sure wish they had the cash in the bank now wouldn't you agree? So down payment is not the issue here which is why HUD should BRING BACK THE DOWN PAYMENT ASSISTANCE PROGRAM!!! For heaven sakes... a cost neutral incentive and yes the appraiser will have to do their job ... they can do it...!!!

I am not a fan of HUD right now and the less tinkering the better. Please re-consider the approach. Take a step back and bring in some mortgage professionals. We can help and we are not the enemy even though we are made out to be.

I have been doing this for 25 years and I have been successful because my clients have been treated fairly and that is why they continue to come back. The mortgage professional has developed systems and education for the consumer over the past 25 years that the banks never considered offering or delivering yet the regulation favors the banks. And Mortgage Brokers are being wiped out and the Mortgage Banker is next because there is no way to make a living the way things are going so what's left are the banks just like it was 30 years ago. Higher costs (terrific profits - undisclosed of course) and it will take months to close. I REMEMBER, I WAS THERE, I WORKED FOR A BANK.

You buy a loaf of bread at a store that has to tell you how much they make on the bread yet the other store sells the same bread at the same price and doesn't have to disclose what they make and on top of it points to the other store to note how much they are making .... the result is the consumer is then wondering if they are taken advantage of because the profit is disclosed? Why do the banks get a pass on this?

Increasing the upfront MIP back to 2.25% is the smart thing to do and should have been done years ago so not all is bad or wrong and I do believe we both want the same thing however HUD must revisit the approach....we the people beg you to do so!

That's all I have for now. Thanks for listening. I wish us all well.

Yes HUD (and our government) is at it again and yes the mystery continues as to why they do what they do. Great thinking on the yield spread premiums, the revised good faith estimate, HVCC appraisal mess, the elimination of a cost neutral down payment assistance program....do I need to go on?

HUD has decided that the seller can no longer contribute 6% toward closing costs and or prepaid expenses. Instead they say the magic ....the place where the healing begins....is 3%. YES, 3% is the magical number and will solve unemployment, the real estate collapse, too big to fail and that nagging itch....fine whatever.

For example if you buy a home for $200,000 the seller can contribute $6000. This means the borrower will pay some cash out of pocket in addition to their 3.5% down for their property tax, insurance and interim interest impounds. No it is not the end of the world my point is to ask the question why? Why now?

Yes, your government hires a man that draws pictures....an architect. This is the guy that will manage us out of a housing crisis at one of the most important domestic departments (HUD) in government?

HUD's Shaun Donovan an innovator? I say Fire Donovan NOW!

On another note HUD is increasing the Up front insurance premium from 1.75% back to 2.25% (the good ol' days) which isn't a bad thing in fact they should have done that a long time ago.

Remarkably, the idiots at HUD did not increase the down payment to 5%. What happen there? I call it a miracle but the day is not over.

I hope the real estate and lending community along with the public at large contact their representatives and give them an ear full. I have and I will continue to do so.

Sorry about the rant.

I wish us all well.

Over the past two years we have had hearing after hearing with all the usual suspects that I have named as public enemies to the consumer and our industry. Wall Street certainly set the table for this calamity but they couldn't have done it without the help of repealing an act called GLASS STEAGULL (Originally passed in 1933). The repeal happened in the dark of night a late December eve in 1999. Thank you Phil Gramm.

Without going into much detail you can read the awful details and yes you will find the usual enemies of the consumer and our industry currently costing the consumer millions with their antics of "reform" - familiar names.

You will find a huge list on both sides of the political spectrum which demonstrates and supports my previous blogs noting that we are not represented by anyone and for those that are ideologues and carry the water for their political party should be ashamed. Everyone is to blame period. Three plus bank lobbyist to every representative and senator so you wonder how this happened....really?

http://www.counterpunch.org/kaufman09192008.html

My point is the FDIC chair Shela Bair (a Bush appointee) was a lone voice over a year ago and stated the painfully obvious however was pushed off by the 'big shots' Mr. Summers (the architect that cost Harvard 1.8 billion in investments) and Mr. Geithner (a former NY FED guy advising the Bush team on the now infamous bail out).

During the hearings while JP Morgan Chase, Citi, Wells Fargo, Countrywide, Bank of America, Washington Mutual and others testified they were making great progress in giving the consumer options for relief in these troubled times the foreclosure rate quadrupled. Ms. Bair called them out but seemingly was quieted and became silent until now.

Obama is applying pressure forcing banks to do short sales instead of foreclosures...a "Short Sale Directive"...hmmm. Took two years and by the way congress is still asleep on this issue but slowly waking up realizing if the foreclosure rate were to slow or short-sales were quickened maybe the bleeding has a chance to subside and a floor in real estate can be established.

READ MORE:

http://www.boston.com/realestate/news/blogs/renow/2009/12/forcing_bankers.html

Thank you Sheila Bair for hanging in there. Between you and the brilliant Elizabeth Warren we have a chance of getting through this mess.

WATCH VID:

http://www.youtube.com/watch?v=QzD1w4Y9IpQ&feature=related

I wish us all well.

Not surprising to me HUD is going to put a 120 day 'enforcement' delay for the new Good Faith Estimate and HUD-1 roll out scheduled for Jan. 01, 2010. What a mess. What a disaster. This photo depicts perfectly how our government (the big guy - Oliver Hardy) and HUD (the skinny -Stan Laurel) are managing this little thing we call a financial calamity. Recovery my (Fill in blank).

HUD always has a scandal each administration costing millions or billions (depending upon how many years you include). Inexplicably they eliminated the down payment assistance program thinking a down payment would solve this economic calamity. BIG thinking.

So here the nation of lenders wait to see what's next. How are the investors going to react. Some lenders may require us to use the new form. Others may not. How will the consumer navigate through this?

ME of course and my fellow mortgage professionals. As usual although always made out to be the villain it is up to us to interpret as best we can the mess handed down to us by the idiots, the knuckleheads, the "intellectuals" - congress & HUD.

We are the ones picking up the pieces to try and make sense of the non-sense. We are the receivers of funny looks from the consumer asking us - WHY DO WE HAVE TO DO THIS OR THAT - glaring at us like WE are the crazy ones!

AMERICA -WE did not make this up....this is Barney Frank, Chris Dodd - both sides of the political spectrum- brilliance is coming out from all corners.

The consumer is getting nothing. The consumer cost is increasing - will increase and continues to get more expensive. After getting reamed at the financing table because of the 'new' regulation the consumer will have to pay more taxes to cover the bureaucratic tape that goes with it.

I'm in a bad mood.

I wish us all well.

Yes. Instead of doing the heavy lifting and figuring out how to work out loans for the folks still employed Fannie has decided to become a landlord. Instead of foreclosing they will lease to folks for one year then month to month there after.

How they set the rent or how things get fixed in a timely manner or even how they evict people are details nobody knows. It is safe to say knowing our government Fannie Mae does not know but sounds good doesn't it? Just like the other failed programs.

Unfortunately if you live in an area where home sales are brisk there will be less inventory because Fannie isn't foreclosing on homes that perhaps should be foreclosed on. (I don't believe that will be a problem in most areas unfortunately)

The real tragedy from where I sit is the government cannot come up with a loan work out plan and force anybody to play along (it seems) so this is the solution. I wonder if lobbyists have anything to do with this....hmmm.

So here we go again and what a mess.

I wish us all well.