From the Arizona Republic 01/30/11
Catherine Reagor
In a historic wave of foreclosures, countless thousands of Americans have given up their homes, unable - or unwilling - to pay the mortgage. Plunging values left their homes worth far less than the amount of their loans.
Many borrowers let banks take the houses back, believing the lenders would simply resell them at a loss. Some borrowers even did so out of spite, angry that lenders wouldn't help them refinance or adjust their payments.
But in many cases, banks lost little or nothing on those foreclosures.
Instead, the biggest losers have been market investors and the American taxpayers.
Most foreclosures now are on loans that were issued by banks but backed by government-owned Fannie Mae and Freddie Mac. Created to boost U.S. homeownership, the Federal National Mortgage Association and the Federal Home Mortgage Corp. buy mortgages from banks and now own half of all mortgages.
It's a system that was built to encourage banks to make mortgages and keep being able to make more. But the system also means that when homeowners stop making mortgage payments, the lenders who issued the mortgages don't take the biggest loss.
"Fannie and Freddie losses are passed onto taxpayers," said Anthony Sanders, a former professor of real estate and finance at Arizona State University, now with Virginia's George Mason University.
Those federal entities' losses are expected to near $400 billion before the foreclosure crisis ends.
Many other mortgages that have failed were even riskier than the ones bought by Fannie Mae and Freddie Mac. Those were packaged by the financial industry and also resold to investors. When those loans fail, investors lose.
And many of those losses could end up hitting taxpayers, too. Big investors included government pension funds and other public agencies."If the federal government begins bailing out pension funds," Sanders said, "then the taxpayer pays for that, too."
A report from a federal inquiry into the financial meltdown, issued last week, concluded that those investments were bundled and sold even as housing prices declined - and that investors were let down at many steps along the way.
Regulators who could have seen the failures didn't understand the system, the report found. And a top investment-rating agency labeled the packaged mortgages with the top, AAA-grade, rating without reviewing the quality of the mortgages themselves.
"It has become musical chairs for mortgages and foreclosures," said Jay Butler, director of realty studies at ASU. "Whoever ends up holding the mortgage at the end holds the bag for the loss. Unfortunately, taxpayers will end up with the biggest tab."
Since 2008, nearly 150,000 homes have been foreclosed on in metro Phoenix. Housing analysts are concerned that the housing market is only halfway through the foreclosure mess.
While foreclosures continue, banks have drawn public ire, being quick to accept federal bailouts but slow to respond to federal plans meant to help struggling homeowners.
"I understand why some people want to walk away, but we should all understand who ultimately pays the bill for foreclosures," said Amy Swaney, former president of the Arizona Mortgage Lenders Association and Arizona manager of Citywide Home Loans. "Most foreclosures end up costing us all."
Monday, January 31, 2011
Saturday, January 8, 2011
New Year, New Clients and New Loan Officers?
I LOVE the start of a new year. There is something so cleansing and fresh about the beginning of January that I will start considering that it is its own "season." You know in Arizona you have several important seasons..."In Season", where hotel prices and traffic jams remind us daily that we live in a resort community. "Boot-Wearing Season", where I finally get to give my high-heeled pumps, sandals and mules a few days off during the week and bring out my high-heeled boots, you know, to protect my calves from the near freezing 60 degree weather. An now we have, "The Season of Our New Year", where desires and goals are re-born like babies with unlimited opportunities and potential.
I love everything about "The Season of Our New Year." I love that we spend time reviewing the previous year, ranking those things that have impacted, inspired or identified with us the most. But more importantly, I love that we take the time to envision what our lives will be in the future; who we want surrounding us, what we want to accomplish and who do we want to be. We may have hit speed bumps last year, we may feel as if we have had failures in the past or maybe we just started to hit our stride, but in the Season of Our New Year, it is a blank canvass, a tabula rasa for us each to decide what is to come. What an opportunity. I plan on huge successes in 2011 and for me that means that those I surround myself with will be reaching huge successes as well. I just love how that works!
Here is to an amazing 2011 and to the start of the Season of Our New Year.
Bankruptcy Filings in AZ Rise 24%
What Obstacles Will Your Clients Face in 2011?
The Wall Street Journal wrote this week that the number of Americans filing for personal bankruptcy topped 1.5 million in 2010 which is up 9% from 2009 nationwide. This is the highest level since 2005 when a revamp of the Bankruptcy Code took place. The Journal also reported that most of the uptick was accounted for in the Pacific Southwest with California increasing 25% and Arizona up 24% from 2009.
That fact begs the question that I get asked almost daily, "so how long until I can qualify to buy a new house?" My answer, almost unwaveringly begins with, "Well, what kind of loan or house are you looking to get?"
The rules regarding bankruptcies are divided into different categories of FHA, VA, FNMA/FHMLC and Portfolio Lenders. Then they are subdivided in groups of what type of bankruptcy was filed. In all cases, we must determine the cause and significance of the derogatory information, verify that sufficient time has elapsed since the date of the bankruptcy and confirm that the borrower has re-established an acceptable credit history.
In discussing bankruptcies we almost always discuss the term extenuating circumstances. FNMA/FHLMC define the term as are nonrecurring events that are beyond the borrower's control that result in a sudden, significant, and prolonged reduction in income or a catastrophic increase in financial obligations.
If a borrower claims that a bankruptcy was the result of extenuating circumstances, the borrower must provide documentation that can be used to support and confirm the event (such as a copy of a divorce decree, medical reports or bills, notice of job layoff, job severance papers, etc.) and documents that confirm the inability to resolve the problems that resulted from the event (such as a copy of insurance papers or claim settlements, property listing agreements, lease agreements, tax returns (covering the periods prior to, during, and after a loss of employment), etc.).
Below are the current required waiting periods for each category of loans:
FNMA/FHLMC: Chapter 7 or 11
4 year waiting period from the discharge or dismissal date
2 Years from discharge date - Extenuating Circumstances
FNMA/FHLMC: Chapter 13
2 years from the discharge date
4 years from the dismissal date
FHA: Chapter 7 or 11
2 years from the discharge date
1 year from the discharge date - Extenuating Circumstances
FHA: Chapter 13
12 months into the payout period with all payments on time AND written approval from the court. MUST be manually underwritten
VA: Chapter 7 or 11
2 years from the discharge date
1 year from the discharge date - Extenuating Circumstances
VA: Chapter 13
12 months into the payout period with all payments on time AND written approval from the court.
Portfolio Lender: All BK Types
Lender Specific
In all circumstances, if a housing related incident, such as a short sale, foreclosure or deed in lieu occurs in conjunction or within of the bankruptcy, you must reference that housing related event individually to determine the time frame for purchase.
Who Will Surround You This Year?
Possibly Fewer Loan Officers than Last Year!
As 2011 begins, there are noticeably fewer participants in our industry. The regulatory and legislative changes in our industry have been cumbersome and made for a tedious process for many. December 31st also closed out the renewal process for licensees and thus we have seen more and more individuals dropping out of the business altogether. The Nationwide Mortgage Licensing System (NMLS) reports that of over 230,000 national tests administered there is still close to a 20% failure rate.
If you are interested in who you and your clients are working with you can view license information online at http://www.nmlsconsumeraccess.org/
Ha Ha
Did you hear about the guy who sent ten puns to friends, in the hope that at least one of the puns would make them laugh.
Unfortunately, no pun in ten did.
I love everything about "The Season of Our New Year." I love that we spend time reviewing the previous year, ranking those things that have impacted, inspired or identified with us the most. But more importantly, I love that we take the time to envision what our lives will be in the future; who we want surrounding us, what we want to accomplish and who do we want to be. We may have hit speed bumps last year, we may feel as if we have had failures in the past or maybe we just started to hit our stride, but in the Season of Our New Year, it is a blank canvass, a tabula rasa for us each to decide what is to come. What an opportunity. I plan on huge successes in 2011 and for me that means that those I surround myself with will be reaching huge successes as well. I just love how that works!
Here is to an amazing 2011 and to the start of the Season of Our New Year.
Bankruptcy Filings in AZ Rise 24%
What Obstacles Will Your Clients Face in 2011?
The Wall Street Journal wrote this week that the number of Americans filing for personal bankruptcy topped 1.5 million in 2010 which is up 9% from 2009 nationwide. This is the highest level since 2005 when a revamp of the Bankruptcy Code took place. The Journal also reported that most of the uptick was accounted for in the Pacific Southwest with California increasing 25% and Arizona up 24% from 2009.
That fact begs the question that I get asked almost daily, "so how long until I can qualify to buy a new house?" My answer, almost unwaveringly begins with, "Well, what kind of loan or house are you looking to get?"
The rules regarding bankruptcies are divided into different categories of FHA, VA, FNMA/FHMLC and Portfolio Lenders. Then they are subdivided in groups of what type of bankruptcy was filed. In all cases, we must determine the cause and significance of the derogatory information, verify that sufficient time has elapsed since the date of the bankruptcy and confirm that the borrower has re-established an acceptable credit history.
In discussing bankruptcies we almost always discuss the term extenuating circumstances. FNMA/FHLMC define the term as are nonrecurring events that are beyond the borrower's control that result in a sudden, significant, and prolonged reduction in income or a catastrophic increase in financial obligations.
If a borrower claims that a bankruptcy was the result of extenuating circumstances, the borrower must provide documentation that can be used to support and confirm the event (such as a copy of a divorce decree, medical reports or bills, notice of job layoff, job severance papers, etc.) and documents that confirm the inability to resolve the problems that resulted from the event (such as a copy of insurance papers or claim settlements, property listing agreements, lease agreements, tax returns (covering the periods prior to, during, and after a loss of employment), etc.).
Below are the current required waiting periods for each category of loans:
FNMA/FHLMC: Chapter 7 or 11
4 year waiting period from the discharge or dismissal date
2 Years from discharge date - Extenuating Circumstances
FNMA/FHLMC: Chapter 13
2 years from the discharge date
4 years from the dismissal date
FHA: Chapter 7 or 11
2 years from the discharge date
1 year from the discharge date - Extenuating Circumstances
FHA: Chapter 13
12 months into the payout period with all payments on time AND written approval from the court. MUST be manually underwritten
VA: Chapter 7 or 11
2 years from the discharge date
1 year from the discharge date - Extenuating Circumstances
VA: Chapter 13
12 months into the payout period with all payments on time AND written approval from the court.
Portfolio Lender: All BK Types
Lender Specific
In all circumstances, if a housing related incident, such as a short sale, foreclosure or deed in lieu occurs in conjunction or within of the bankruptcy, you must reference that housing related event individually to determine the time frame for purchase.
Who Will Surround You This Year?
Possibly Fewer Loan Officers than Last Year!
As 2011 begins, there are noticeably fewer participants in our industry. The regulatory and legislative changes in our industry have been cumbersome and made for a tedious process for many. December 31st also closed out the renewal process for licensees and thus we have seen more and more individuals dropping out of the business altogether. The Nationwide Mortgage Licensing System (NMLS) reports that of over 230,000 national tests administered there is still close to a 20% failure rate.
If you are interested in who you and your clients are working with you can view license information online at http://www.nmlsconsumeraccess.org/
Ha Ha
Did you hear about the guy who sent ten puns to friends, in the hope that at least one of the puns would make them laugh.
Unfortunately, no pun in ten did.
Subscribe to:
Posts (Atom)
Posts
