Mortgage Industry Updates

I was on California Association of Mortgage Brokers State Board of Directors conference call last week and here are some things that you need to know:

STIMULUS PACKAGE

There is a provision in the House version of the proposed stimulus package to bring the loan limits back up to the temporary limits of $729,750 ($697500 in San Diego) and this provision would make higher loan limits permanent. As part of a compromise with the Senate expect the loan limits to be made permanent at $625,500.

IMPLEMENTATION of HIGH BALANCE CONFORMING LOANS (over 417K)

Most lenders have significant rate or fee increases for loans over $417K up to the current loan limits, $546,250. One of the reasons for this is that lenders are limited to have only 10% of the loans that they fund that could be over $417K. This limitation is put on the GSE’s by the bond traders. Also, the Fed has been buying less 4.00% notes than 5-5.50 notes which are keeping overall rates higher.

CAMB will be going to Washington in February to drive home that better implementation of high loan limits is a must along with ways to lower loan costs which would benefit our customers. Dealing with how bonds and securities are sold and the rules that the traders set is a big issue that many seem to be overlooking and we will attack that issue.

REAL ESTATE LICENSEES BE PREPARED TO SHOW FINANCIAL RESPONSIBILITY, if you plan on doing loans:

As part of HR 3221 that passed in July there is a clause in that bill that every loan agent must show financial responsibility and mandates that credit reports are run for all licensees. There have been reports that in some states current licensees have not been able to renew their licenses because they have had a foreclosure or bankruptcy in the past 2 years. A couple of states have declined to renew their licenses.

If you plan on staying in any part of the business try whatever you can do to stay out of foreclosure and/or bankruptcy. If you are behind on bills, try to settle the accounts. Do a short sale instead of foreclosure but speak to a RE attorney before doing anything.

In California CAMB is working on guidelines with Jeff Davi the DRE Commissioner who will have the ultimate call as to whether or not somebody gets a license. I will let you know how that goes.


LOAN MODIFICATION UPDATE

Currently, there is a task force made of HUD, DOC, DRE and other departments reviewing loan modification practices. There are currently over 1500 cases by the Bar Association aggressively pursuing attorney’s that are doing loan modifications.

SD 94 is a bill in the State Legislature that deals with loan modifications. It will outlaw Advance Fees for ALL loan modifications and require the person that does a loan modification to have a DRE License. DOC brokers will not be able to do Modifications. At this stage of the bill even attorneys that do modifications may be required to have a DRE Brokers license with certain exclusions.

CAMB NAME CHANGE POSSIBLE

The California Association of Mortgage Brokers Board of Directors, as part of the industry consolidation, may vote to change our name and include other areas of the industry. If you are an appraiser, escrow, title, credit company, or any other part of the industry be looking for more information as to how you can help with the consolidation. We all have to band together.

STATE OF THE MORTGAGE INDUSTRY IN 2009

Within the next 4-6 months you will be looking at a major shift as to how loans will be disbursed. Per our conversation today, many of the mortgage bankers that are still around have not been selling directly to FNMA because it is too expensive. FNMA prices in the service release premiums which makes it more expensive to sell to them. Mortgage bankers have been able to get better pricing from the larger banks who don’t price in the SRP. As larger banks fail, these mortgage bankers have less places to sell their loans. FNMA is one of their last options.

In another e-mail I will breakdown for you what we expect to happen, but the realization is that the small mortgage broker will have to be working under, be a net branch of, or have at least have a relationship with a correspondent lender.

Again, under a different e-mail I will show you how I think things are going to play out….from FNMA and Freddie Macs revised structures (which aren’t revised yet), to who is going to being providing warehouse lines to who is going to be the main origination channels. We should know more within a couple of weeks after the dust settles from next weeks Treasury Department announcements.