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May 26, 2008

Virginia Amends Mortgage Lender & Broker Act

Category: State Home Financing Law Updates – admin – 6:57 pm

Virginia passed a bill amending several provisions of the Mortgage Lender and Broker Act (MLBA). Under the amended law, the term “owner-occupied” is deleted from the definition of “mortgage loan.” As such, mortgage loans subject to the purview of the MBLA are no longer limited to loans secured by owner-occupied properties. The amended law also requires mortgage lenders and brokers to consent to national and state criminal history records checks when applying for a license. A recent report indicated that mortgage loan applications have been declining in Virginia , Maryland and the greater D.C. area.

In addition Virginia mortgage lenders and brokers are now required to conduct background checks on all employees who may have access to personal identifying or financial information and must also ensure that employees are properly trained in applicable state and federal mortgage lending laws. The mortgage lending bill becomes effective July 1, 2008.

 

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Colorado Formalizes Education Requirements for Mortgage Brokers

Category: State Home Financing Law Updates – admin – 6:55 pm

Colorado adopted an emergency rule formalizing initial and continuing education requirements for mortgage brokers required to be licensed under the Mortgage Broker Licensing Act (MBLA). Under the rule, mortgage brokers must complete a 40-hour education course and pass an examination prior to initial licensure. Mortgage brokers currently licensed under the MBLA have until January 1, 2009 to complete the initial education course and examination. Mortgage brokers must also complete 9 credit hours of continuing education during each 3-year renewal cycle. The 9-hour continuing education requirement is not required until after the mortgage broker’s first 3-year renewal cycle.  Colorado mortgage lenders are not subject to the same laws and restrictions as mortgage brokers and this continues to fuel controversy.  Why should mortgage brokers be required to disclose “yield spread premium” if lenders in the same state do not.  Most mortgage professionals believe that yield spread premium also known as “rebate”, should not be a required in the disclosures like the “Good Faith Estimate.”

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Massachusetts Formalizes Education Requirements for Mortgage Loan Originators

Category: State Home Financing Law Updates – admin – 6:48 pm

Massachusetts issued a Regulatory Bulletin formalizing initial and continuing education requirements for loan originators subject to Massachusetts’ recently enacted mortgage loan originator law. Under the new law, mortgage loan originators must complete a 24-hour residential mortgage lending course prior to initial licensure. Individuals employed as mortgage loan originators prior to November 30, 2007 who submit an application for initial licensing by May 27, 2008 are not required to complete the course. In addition, mortgage loan originators are now required to complete at least 8 hours of continuing education courses on an annual basis.

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Ohio Issues Letters on Subprime Mortgage Lending

Category: State Home Financing Law Updates,Uncategorized – admin – 6:42 pm

The Ohio Division of Financial Institutions has issued two letters stating that mortgage brokers, loan officers, and mortgage lenders subject to the Mortgage Broker Act and the Ohio Mortgage Loan Act must give due consideration to the procedures set forth in the Statement on Subprime Mortgage Lending (Subprime Statement). The Subprime Loan Statement was developed by the Conference of State Banker Supervisors, the American Association of Residential Mortgage Regulators, and the National Association of Consumer Credit Administrators to address emerging risks associated with certain subprime mortgage products and lending practices. The Subprime Loan Statement is an attempt to assist state regulators in promoting consistent practices in the mortgage market, and to clarify how Ohio mortgage lenders and brokers can offer subprime mortgage loans in a fair and prudent manner that clearly discloses the risks that borrowers may assume.

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Maine Increases Homestead Exemption

Category: State Home Financing Law Updates – admin – 6:40 pm

Maine passed a bill increasing the homestead exemption to $47,500. The bill also increases the homestead exemption to $95,000 if the debtor is elderly or disabled, has minor dependents residing in the residence, or has dependents that are elderly or disabled residing in the residence. This mortgage bill becomes effective July 15, 2008.

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Mississippi Requires Mortgage Lenders, Brokers and Originators to Utilize Multistate Licensing System

Category: State Home Financing Law Updates – admin – 6:38 pm

Mississippi passed a bill requiring mortgage lenders, mortgage brokers and loan originators licensed or registered under the Mississippi Mortgage Consumer Protection Law to utilize the multistate licensing system for all license and registration applications and renewals. The lending bill went into effect on April 7, 2008

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North Carolina Amends Requirements for Mortgage Brokers & Lenders

Category: Mortgage News,State Home Financing Law Updates – admin – 6:37 pm

Last month, North Carolina adopted rules affecting surety bond requirements for mortgage bankers and brokers licensed under the Mortgage Lending Act. The new rules require mortgage lenders, bankers and mortgage brokers to report any claims made against a surety bond within 10 days and to reinstate the bond to the full amount within 30 days. The rules also amended recordkeeping and notification requirements under the Act. The lending rules went into effect on March 20, 2008.

Mortgage brokers and lenders have embraced the increased FHA mortgage loan limits for North Carolina, because so many more homeowners now qualify for government refinance and purchase loans.  In some cases these FHA mortgages actually help stop foreclosures.  Like most states, North Carolina has seen a significant surge in foreclosure activities and short sale transactions.

 

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Maryland Amends Foreclosure Law and Requires Identification of Mortgage Lenders and Originators on Security Instruments

Category: Mortgage News,State Home Financing Law Updates – admin – 6:34 pm

Maryland passed a bill amending the state’s foreclosure law. Under the new law, a written Notice of Intent to Foreclose must be provided to mortgagors or grantors prior to filing an action to foreclose on residential property. An action to foreclose may not be filed until 90 days after default or 45 days after the Notice of Intent to Foreclose is sent to the mortgagor or grantor, whichever is last to occur. A copy of the complaint to foreclose or order to docket must also be personally served to the mortgagor or grantor at least 45 days prior to the foreclosure sale. In addition, the name and license number of both the mortgage lender and the mortgage originator must now be included in all mortgages, deeds of trust, and other instruments securing mortgage loans on residential property.

If the Maryland mortgage lender or bank is exempt from licensing, the mortgage or deed of trust must contain an affidavit to that effect. The bill went into effect on April 3, 2008.  According to Jason Sklar an attorney who works with a Loan Modification Company in Owings Mills, the foreclosure issue is serious and needs to be addressed quickly so homeowners don’t lose their homes.

 

 

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Fannie Mae Single Family Clarifies Maximum Mortgage Financing in Declining Markets Policy

Category: Uncategorized – admin – 6:27 pm

Fannie Mae made recent changes while clarifying their Maximum Financing Policy:

  • Home equity combined loan-to-value (HCLTV) ratio is also subject to the Maximum Financing Policy.
  • How the Maximum Financing Policy applies to mortgage products with LTV, CLTV, or HCLTV limits of 95% or greater.
  • Outlining several exclusions from the Maximum Financing Policy
    • establishing a “floor”, below which the Maximum Financing Policy does not apply,
    • updating the policy to allow a maximum CLTV of 105% when the subordinate financing is in the form of a Community second mortgages

revising the existing exclusion from the Maximum Financing Policy for certain limited cash-out refinance transactions of Fannie Mae-owned or securitized first mortgages, and clarifying that home mortgages that are fully-insured or fully-guaranteed by a federal government agency are not subject to Fannie Mae’s Maximum Financing Policy.

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May 14, 2008

Mortgage Experts Believe Fed Will Start Hiking Rates Soon

Category: Uncategorized – admin – 10:15 am

There is a growing sense that the worst of the credit crunch may be behind us. And despite a tamer-than-expected reading for April, inflation is still very much a concern for many Americans.

So with that in mind, could the Federal Reserve be forced to raise interest rates before the end of the year….even in the midst of the presidential race?   The Fed has historically been reluctant to make significant policy moves in the months leading up to the election.  In fact, some Republicans still think that President George H.W. Bush would have won in 1992 if Alan Greenspan had lowered interest rates more aggressively.

Still, the market now seems to think that Fed chair Ben Bernanke may take action just a few days before Election Day on Nov. 4.  According to futures listed on the Chicago Board of Trade, investors are currently pricing in a 56% chance that the Fed will raise its benchmark federal funds rate by a quarter of a point, to 2.25%, at the conclusion of a two-day meeting on Oct. 29. Traders widely expect the Fed to keep rates at 2% at meetings in June, August and September.  There have been calls for the Fed to, at the very least, leave rates alone for the foreseeable future. Critics of the Fed have maintained that a relatively low federal funds rate, an overnight bank lending rate that affects how much interest many consumers and businesses pay on loans, has weakened the dollar and helped fuel the boom in commodity prices.

The economy, as it was in 1992, is likely to be the primary focus for this election. There is a reason why we at CNN and CNNMoney.com have dubbed this ‘Issue #1′ after all.  Even those who don’t think the Fed would mess with an election think rates are heading higher by year’s end.  “I really doubt the Fed would go and raise rates right before the election, especially one that’s hotly contested. But I think they could definitely raise rates in December,” said John Derrick, director of research with U.S. Global Investors Inc., an institutional investment firm based in San Antonio.  Still, if the Fed were to make a move just before the election, would that be the right decision? I’d argue yes. The Fed has to do its best to steer clear of politics. And even though raising (or lowering) interest rates in the days before Americans hit the polls might have an impact on the race, the Fed has to do what it is best for the economy.

If food and gas prices continue to rise and the dollar remains weak, the central bank may have no choice but to start raising rates.  At this point, it’s unclear which candidate a rate hike would benefit (or hurt).  If it boosts the dollar and lowers oil and gas prices, a rate hike could actually make Americans feel better about the current economy. What’s more, many voters, particularly older ones, would welcome rate increases since that would lead to higher rates on savings accounts. The Fed’s series of rate cuts since last September has caused rates on CDs, money market accounts and other savings instruments to fall below the inflation rate, a blow to many retirees.

So if (and these are admittedly big ifs) the housing market starts to show signs of stabilization later this year and the economy bounces back a bit as consumers spend their tax rebate checks, then inflation, not a recession, is likely to be the top concern for voters and the Fed this fall.  “There is no reason to think the Fed will do anything but sit tight for awhile,” said Jim Glassman, senior economist with JPMorgan Chase. “But over the summer months, my guess is Wall Street will realize maybe that economic stimulus is working and those who thought the economy was falling apart may start pricing in more of a chance of tightening later this year.”  And that means that the candidate that makes the best pitch for a stronger dollar and shows the best inflation fighting credentials could wind up winning the White House.  So instead of blaming Ben Bernanke for costing them the election, John McCain, Barack Obama or Hillary Clinton may actually need to thank him if the Fed raises rates in October.  Article written by Paul R. La Monica - See more articles at http://money.cnn.com

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May 12, 2008

Democrats Challenge Republicans on Mortgage Recovery Bill

Category: Uncategorized – admin – 10:58 am

The spiraling wave of foreclosures has become an election year issue. Along with the ending the war in Iraq, fixing the health care crisis, and addressing the rising cost of gas and food, voters want candidates for President and Congress to stem the accelerating loss of their homes and its disastrous impact on the economy and surrounding communities. The issue is front-page news. In recent primary contests, Senators Hillary Clinton and Barack Obama have made constant reference to the growing problem of foreclosures. In the battle for control of Congress, the housing and credit crisis is likely to become a hot issue, especially in many key swing districts and states.

In 2007, 405,000 households lost their homes, an increase of 51% over the more than 268,000 that were repossessed in 2006. The Center for Responsible Lending projects that 2 million families are likely to lose their homes in the next few years due to the current subprime lending crisis. More than 80 sub-prime mortgage lenders went bankrupt by the end of last year. 

But it is not just borrowers and lenders who are losing. Standard and Poor’s reported that home prices dropped by more than 12 percent over a one-year period beginning in February 2007. As a result, property values and property tax revenues have declined. The U.S. Joint Economic Committee has projected a loss of $71 billion in housing wealth as a result of the mortgage meltdown. The U.S. Conference of Mayors projected that 10 states alone would lose $6.6 billion in local tax revenue.

Most Republicans in Congress, including Senator John McCain, balk at using tax dollars to rescue homeowners and gasp at the idea of holding businesses accountable to be socially and economically responsible. They prefer to blame the victim the borrowers who got snookered by predatory lenders and mortgage brokers, but feel no hesitation at bailing out Wall Street banks like Bear Stearns.

The mortgage bill allows homeowners to shift from sub-prime mortgages they can no longer afford to federally backed mortgages. It would provide $300 billion in federal loan guarantees to lenders who agree to reduce the outstanding principal on loans. In exchange for a new mortgage, backed by the FHA, homeowners must share profits on a subsequent sale of their home with the government.

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May 8, 2008

Mortgage Foreclosure Bill in Trouble

Category: Mortgage News – admin – 10:32 am

A surge of partisanship has placed in jeopardy a bill aimed at helping homeowners who are at risk of foreclosure. But the political resonance of the issue could prompt the measure’s Republican critics and Democratic backers to find middle ground.

The bill would try to lower risks for both the lender and the homeowner, by offering government-backed insurance to lenders willing to reduce the principal for mortgage loans made to some people who owe more on the property than the home is now worth. It passed through the House Financial Services Committee with 10 Republicans joining Chairman Barney Frank and the panel’s other Democrats. But after President Bush yesterday came out and threatened to veto the bill, Republicans put up legislative road blocks  to keep the measure from the House floor, as the New York Times reports. Mr. Bush says the bill would “reward speculators and mortgage lenders” without making a big dent in the country’s mortgage and housing-market crisis. Moreover, Republicans argue, it means taxpayers could be stuck with bad credit mortgage loans newly insured by the Federal Housing Administration. But the issue is more complicated than that.

Wall Street Journal columnist David Wessel boils down the debate to a question of whether Washington should push the lenders to help Americans whose home values sank below the size of their mortgages “even if it may cost taxpayers some money,” with the White House saying “No!” and Mr. Frank, quietly backed by Federal Reserve Chairman Ben Bernanke, saying “Yes!” Citing research from Economy.com, Mr. Wessel puts the number of families with such “underwater” mortgages at about four million, and notes that number is predicted to reach around 12 million by early next year. While many of those families will keep paying their mortgages, “many won’t, and are at risk of losing their homes,” he says. Since “no one in Washington wants to help the ’speculators’” who bought homes as investments, and most there agree people who bought houses they can’t afford are probably beyond aid, “the debate revolves around the ‘preventable foreclosures,’” he adds.

According to California mortgage banker Bryan Dornan, “America looses when the government starts subsidizing foreclosures.”:  Dornan continued, “letting the market correct itself will make housing more affordable while getting our economy back on track quicker.”  And no one, from the homeowners to the lenders to the politicians and economists like Mr. Bernanke, wants to let preventable foreclosures go unprevented. The bill, while crafted to exclude people who don’t need the help or wouldn’t benefit, “could allow some homeowners to get a deal they don’t deserve; that’s the unfortunate byproduct of any rescue,” Mr. Wessel notes. But the Treasury and Fed, he argues, “surrendered the let-the-market-work-it-out high ground when they agreed to risk nearly $30 billion of taxpayer money to shield Bear Stearns, its creditors and counterparties from losses.” Democratic legislators yesterday were mentioning the Bear Stearns bailout again and again.

The housing downturn is an economic problem with as much political resonance as gas prices, and if no relief is provided, it could be a poignant issue ahead of November’s elections. Even as Mr. Bush was threatening a veto yesterday, Keith Hennessey, director of the White House National Economic Council, was saying the differences between congressional Democrats and the administration aren’t impossible to overcome the Journal reports, adding that this leaves the door open for an eventual deal. 

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