I couldn’t help reading more about the issues that have been presented about how loan officers make their money, and how things are being disclosed. The challenge? These mortgage companies are going to have to let people go, and become a one man operation. While it isn’t conducive to anyone’s sanity during a busy time, it certainly spells trouble for everyone in terms of job loss and being able to run an office efficiently.
I know personally what that must feel like for loan officers across the board, but I work for myself and I know that when I get busy I wish I had more hands. I certainly hope that those who run a one man office are able to keep a processor because I know how hard that can be.
I guess my bigger issue is, I don’t have a problem paying anyone for a service that they provide, and even though some were unethical in their business practice that doesn’t mean that I was, and I have to make a living. I work hard, and while I do believe I work harder than most I just don’t see how cutting back on compensation helps anyone. The regulators are much better off by ensuring that buyers and homeowners get educated before borrowing money, and that they get what they need when they take out a mortgage loan.
Whether a current homeowner wishes to refinance, or someone else is looking to buy, the real problem was making sure that borrowers were actually getting loans that they needed and that were of benefit to them. That was the real issue, and before the regulators spend too much time on the wrong things, they need to get really involved in how these modifications are going and how they are being handled, along with the foreclosures.
-Mayer Dallal
Wednesday, March 30, 2011
Are Securities Really Secure ?
Moving forward banks will be forced to take some of the risks that are associated with these securities. In the past they weren’t hold the risk, but now it is essential in order for our economy to move forward; at least that is what everyone is saying now. Banks will also be enabled to determine for themselves what risk they wish to take on and what they plan to get dish out to someone else.
Major banks asked that the government call all their loans qualified residential loans, but will that really happen? Bank regulators certainly wanted to jump in and say that they only wanted to take responsibility for the most conservative mortgages. Shouldn’t the banks take responsibility for everything they do?
The Dodd-Frank Act was final with only requiring them to hold onto 5% of the risk for only qualified residential mortgages. Bankers know that when business isn’t properly defined, that many borrowers wouldn’t qualify to get loans, which will do anything but stimulate the economy. Banks did get regulators to agree to limiting the risk they would have to take.
Mortgages were being sold in order to act as collateral for existing debts, which caused the banks to go down faster. At the time, everyone thought this was a great idea, because these mortgages were deemed as the least likely to default. I am not sure how that was possible, but I think we know better now. I would say that not only should these mortgages be monitored more closely, but I would also agree that yes, banks should take more responsibility as well.
-Mayer Dallal
Major banks asked that the government call all their loans qualified residential loans, but will that really happen? Bank regulators certainly wanted to jump in and say that they only wanted to take responsibility for the most conservative mortgages. Shouldn’t the banks take responsibility for everything they do?
The Dodd-Frank Act was final with only requiring them to hold onto 5% of the risk for only qualified residential mortgages. Bankers know that when business isn’t properly defined, that many borrowers wouldn’t qualify to get loans, which will do anything but stimulate the economy. Banks did get regulators to agree to limiting the risk they would have to take.
Mortgages were being sold in order to act as collateral for existing debts, which caused the banks to go down faster. At the time, everyone thought this was a great idea, because these mortgages were deemed as the least likely to default. I am not sure how that was possible, but I think we know better now. I would say that not only should these mortgages be monitored more closely, but I would also agree that yes, banks should take more responsibility as well.
-Mayer Dallal
Monday, March 28, 2011
Principal Reduction in Mortgages
Foreclosures are being filed left and right and are killing the country. The “robo-signing” issue is still being discussed and no one can seem to find a good way of making sense of it all and settling things down. Everyone has thoughts on how to help correct it, but no one has come up with a good answer yet. While we all keep thinking, it seems that we can’t think fast enough.
A group of attorneys decided to confide in one of their friends from Iowa, Attorney General Tom Miller. What these state attorneys asked for was nothing more than to review in fairness what could be done to tone down the foreclosure issues by reducing the principal on these loans. Could principal be reduced enough so that families won’t lose their homes?
The focus initially isn’t on the process itself, but on principal reduction. If the principal reduction actually makes a difference than they should do it, but if we are only getting the principal reduced and still foreclosing on these families what is the real benefit? The primary argument is that if the modifications aren’t done, then we will continue to see the prices of homes go down and have too many homes with negative equity in them. The other dilemma is that you have a group of people that believe that by doing this, that those who haven’t paid are getting rewarded.
I don’t know I would call it a reward, but there plenty of reasons why modifications are good. I would say that the good outweighs the bad, and we just have to look at the situation for what it is. Everyone was greedy; brokers, lenders, banks and borrowers. However, what we need to do now is admit what we did to screw it all up and move on. Let’s fix what we can, and accept what we cannot change.
-Mayer Dallal
A group of attorneys decided to confide in one of their friends from Iowa, Attorney General Tom Miller. What these state attorneys asked for was nothing more than to review in fairness what could be done to tone down the foreclosure issues by reducing the principal on these loans. Could principal be reduced enough so that families won’t lose their homes?
The focus initially isn’t on the process itself, but on principal reduction. If the principal reduction actually makes a difference than they should do it, but if we are only getting the principal reduced and still foreclosing on these families what is the real benefit? The primary argument is that if the modifications aren’t done, then we will continue to see the prices of homes go down and have too many homes with negative equity in them. The other dilemma is that you have a group of people that believe that by doing this, that those who haven’t paid are getting rewarded.
I don’t know I would call it a reward, but there plenty of reasons why modifications are good. I would say that the good outweighs the bad, and we just have to look at the situation for what it is. Everyone was greedy; brokers, lenders, banks and borrowers. However, what we need to do now is admit what we did to screw it all up and move on. Let’s fix what we can, and accept what we cannot change.
-Mayer Dallal
Rates Are Going Up
It is no secret that interest rates are going up, and they are going up steadily. Freddie Mac does a periodic survey in which it was proven that the interest rates were in fact going up and getting closer to the 5% mark. Naturally, the fluctuation in interest rates is affected by what is happening around the world, and political concerns are never really all that far from home.
To give you an idea of how the rates on the 30 year fixed mortgage have been fairing, let’s take a look at the most recent changes. The week prior to the tsunami, rates were hovering at around 4.76% on the 30 year fixed, and now they are hovering at 4.81%. It doesn’t sound like a lot, but this time last year they were at 4.99%, and the market has been nothing but a yo-yo ever since.
Mortgage rates are still somewhat low, but over time that is going to change. I know I keep saying that, but ultimately it’s the truth. There is no way that the market can stay where it is with everything that is going on in the world. Everything that is happening in Japan and Libya ultimately affects our country, but so few realize this.
The housing market did experience a setback, but we can continue to look forward to new and better things as we move forward.
-Mayer Dallal
To give you an idea of how the rates on the 30 year fixed mortgage have been fairing, let’s take a look at the most recent changes. The week prior to the tsunami, rates were hovering at around 4.76% on the 30 year fixed, and now they are hovering at 4.81%. It doesn’t sound like a lot, but this time last year they were at 4.99%, and the market has been nothing but a yo-yo ever since.
Mortgage rates are still somewhat low, but over time that is going to change. I know I keep saying that, but ultimately it’s the truth. There is no way that the market can stay where it is with everything that is going on in the world. Everything that is happening in Japan and Libya ultimately affects our country, but so few realize this.
The housing market did experience a setback, but we can continue to look forward to new and better things as we move forward.
-Mayer Dallal
Friday, March 25, 2011
New LO Compensation
In case you haven’t heard, LO compensation is being tracked a little differently. I am sure you do know by now, because everybody has been talking about it since it first came up. CompEditor is the new tool that was chosen in order to help lenders maintain LO compensation. Regulation Z has had its day, and now compensation has taken its lick.
Compensation no doubt has been a topic of discussion and a sore one at that, but steps have been taken to make sure that every detail of the transaction has been recorded. The compensation on the records must be the same as it was when the interest rate was agreed upon for the loan transaction. The records must be retained for two years once the mortgage has closed.
While I do know that many borrowers were being charged too much, they were also receiving the wrong loan which is the real issue at hand. Not only that, but you had many who were getting into the business as loan officers just to see if they could make a quick buck. You had those who really knew the business and cared about the borrowers working hard and making money because they knew the programs and they knew the laws.
While compensation should be controlled, it doesn’t really resolve any issues other than careful paperwork. There isn’t anything wrong with someone being paid for a service that they provide, but again the truth is if the goal is to resolve the lending issues we have been dealing with then we still have much more to do than worry about what loan officers are being paid.
-Mayer Dallal
Compensation no doubt has been a topic of discussion and a sore one at that, but steps have been taken to make sure that every detail of the transaction has been recorded. The compensation on the records must be the same as it was when the interest rate was agreed upon for the loan transaction. The records must be retained for two years once the mortgage has closed.
While I do know that many borrowers were being charged too much, they were also receiving the wrong loan which is the real issue at hand. Not only that, but you had many who were getting into the business as loan officers just to see if they could make a quick buck. You had those who really knew the business and cared about the borrowers working hard and making money because they knew the programs and they knew the laws.
While compensation should be controlled, it doesn’t really resolve any issues other than careful paperwork. There isn’t anything wrong with someone being paid for a service that they provide, but again the truth is if the goal is to resolve the lending issues we have been dealing with then we still have much more to do than worry about what loan officers are being paid.
-Mayer Dallal
Tuesday, March 22, 2011
Are Second Mortgages Important?
Sound like a crazy question? Well, inquiring minds want to know, because there has been some contention over what happens in a foreclosure, or even in the case of a home mortgage modification. It is better not to have a second mortgage if you can avoid it, and cash is king, but let’s face it so many people have them; it used to be the thing to do. So, with that being said here is why I am even mentioning it.
The ruling as of now is that the first lien holder takes priority, which is why they are in first place. The second lien holder not so much; they get whatever is left. This is why so many companies have gone sour on the second mortgage programs, requiring hefty credit scores and reserves in order to grant them. I can’t say I blame them; you can only lose so many times before the game changes and you have to be strategic.
However, there are some that want a second mortgage to be wiped out completely before a modification is ever done. Is this right or wrong? The challenge is the settlement form, and being 100% truthful when we fill it out. Should the second lien holder be listed or not? This is something that many people differ on, but if there is a second lien on the home why wouldn’t it be listed? Banks are getting enough gifting of people’s money that it’s time for it to end.
The new settlements will ensure that mortgage servicers are being held to a higher standard, but it’s still unclear as to how this will all go down. A lot of it is really confusing, and once it is done we still may not understand it. The idea is to create guidelines for banks, not to give them special permissions.
Either the second will be completely wiped out so that a modification can be done on the first, or whether or not a second should be listed on a foreclosure. The facts are that the largest banks hold more than half of those second liens out there. What does that tell you?
-Mayer Dallal
The ruling as of now is that the first lien holder takes priority, which is why they are in first place. The second lien holder not so much; they get whatever is left. This is why so many companies have gone sour on the second mortgage programs, requiring hefty credit scores and reserves in order to grant them. I can’t say I blame them; you can only lose so many times before the game changes and you have to be strategic.
However, there are some that want a second mortgage to be wiped out completely before a modification is ever done. Is this right or wrong? The challenge is the settlement form, and being 100% truthful when we fill it out. Should the second lien holder be listed or not? This is something that many people differ on, but if there is a second lien on the home why wouldn’t it be listed? Banks are getting enough gifting of people’s money that it’s time for it to end.
The new settlements will ensure that mortgage servicers are being held to a higher standard, but it’s still unclear as to how this will all go down. A lot of it is really confusing, and once it is done we still may not understand it. The idea is to create guidelines for banks, not to give them special permissions.
Either the second will be completely wiped out so that a modification can be done on the first, or whether or not a second should be listed on a foreclosure. The facts are that the largest banks hold more than half of those second liens out there. What does that tell you?
-Mayer Dallal
Tuesday, March 15, 2011
The Rules on Getting Mortgage Debt Forgiven
There are so many homeowners that faced hard decisions this year regarding getting a load modification on their home, to allow the home to be foreclosed upon, or to try and negotiate a short sale. When in doubt, be sure to check with the IRS regarding what the rules really are regarding your taxes. There isn’t a lot of negotiating you can do with them, but there are some things you need to know regarding what happens when your mortgage debt is considered “forgiven”.
The word was in the beginning that homeowners were able to get special tax treatment because they were doing a short sale, but there is a fine line there. Initially the only way for someone to be able to get a short sale negotiated on the home was if they had been in the home for more than a year. Those who had just recently purchased a home were not good candidates because they wouldn’t have been in a program that put them underwater like those who had purchased within the past five years.
The idea that bankers had in their head is that those who had purchased within the past several years were slaves to the subprime market, and were more than likely in loans that weren’t really a benefit to the borrower, nor were they loans that were affordable. The challenge is that many borrowers were defaulting on loans no matter what loan they were in. The other catch? The money that was forgiven must have been included in the effort to improve the home. How often did this happen?
Nine times out of ten, borrowers were looking to pay off other debt when they refinanced; not looking to do an addition to the home. So, this means that the population by which these standards are met is so limited.
-Mayer Dallal
The word was in the beginning that homeowners were able to get special tax treatment because they were doing a short sale, but there is a fine line there. Initially the only way for someone to be able to get a short sale negotiated on the home was if they had been in the home for more than a year. Those who had just recently purchased a home were not good candidates because they wouldn’t have been in a program that put them underwater like those who had purchased within the past five years.
The idea that bankers had in their head is that those who had purchased within the past several years were slaves to the subprime market, and were more than likely in loans that weren’t really a benefit to the borrower, nor were they loans that were affordable. The challenge is that many borrowers were defaulting on loans no matter what loan they were in. The other catch? The money that was forgiven must have been included in the effort to improve the home. How often did this happen?
Nine times out of ten, borrowers were looking to pay off other debt when they refinanced; not looking to do an addition to the home. So, this means that the population by which these standards are met is so limited.
-Mayer Dallal
Monday, March 14, 2011
AARP Sues HUD
Foreclosing on those who are widows or widowers sounds pretty cruel, but it happened when HUD foreclosed on surviving spouses. The case was made due to the fact that there were rules that were established long ago regarding foreclosing on those who had lost their spouses. Isn’t the idea to keep them in their home and not kicking them out of it?
The choice of defense is AARP’s department of litigation, and in this case the HUD secretary is the defendant. The central issue of the case is in fact that there are long standing rules that state that it is illegal to foreclose on surviving spouses. The deeper issue is that those who would typically have an interest in the property can’t even make a dent in buying the home because the values are so skewed.
With homes losing value, and sales slowing down, it doesn’t leave anyone in a good position. This situation is really hard to overcome, but not all foreclosure cases are created equal. There are still many cases in which no one wants to take on the property regardless simply because it is more of a chore than a benefit.
Hopefully, these individuals will be able to stay in their homes as a result of the final ruling, but there is no way to know for sure. With so many homes underwater, it could justify these individuals keeping their homes simply because reverse mortgages were designed specifically for those age 62 and over, and this situation doesn’t add up to what the program really is all about. No wonder so many are confused about what is happening.
-Mayer Dallal
The choice of defense is AARP’s department of litigation, and in this case the HUD secretary is the defendant. The central issue of the case is in fact that there are long standing rules that state that it is illegal to foreclose on surviving spouses. The deeper issue is that those who would typically have an interest in the property can’t even make a dent in buying the home because the values are so skewed.
With homes losing value, and sales slowing down, it doesn’t leave anyone in a good position. This situation is really hard to overcome, but not all foreclosure cases are created equal. There are still many cases in which no one wants to take on the property regardless simply because it is more of a chore than a benefit.
Hopefully, these individuals will be able to stay in their homes as a result of the final ruling, but there is no way to know for sure. With so many homes underwater, it could justify these individuals keeping their homes simply because reverse mortgages were designed specifically for those age 62 and over, and this situation doesn’t add up to what the program really is all about. No wonder so many are confused about what is happening.
-Mayer Dallal
Saturday, March 12, 2011
The Word From Jay Gould
Jay Gould may not be a familiar term to you, but he was a former SEC attorney. The SEC stands for the Security Exchange Commission, and this organization dealt with securities exchanges and investment advisors. Gould recently made a statement that resonated with many of us who are bankers.
What Gould had to say was tough to hear, but he was telling his truth against the untruths of many others. His statement was simply this; ‘you can’t throw people in jail for being brokers or bankers because they did these loans according to the guidelines.’ (my paraphrase).
The reason I paraphrased that is because I can’t remember the exact statement, but that was the sentiment behind it. It isn’t tricky, and it isn’t hard to believe either. It is simply that I understand what he is saying, and although I realize that there were many bankers out there telling people to sign for loans they couldn’t afford, there were still so many that didn’t operate in that manner.
I have built my business on the belief that I can truly help people; help families and I love it. I never set out to write a mortgage loan with the intent for a family to end up in bankruptcy. When I worked with families it was all about helping them understand the process, and educating the borrower.
I don’t have any regrets for any financing that I ever offered, however I do regret that we are in this position as a country, and that there are so many who were targeted because the broker felt that they weren’t savvy enough to figure it out.
-Mayer Dallal
What Gould had to say was tough to hear, but he was telling his truth against the untruths of many others. His statement was simply this; ‘you can’t throw people in jail for being brokers or bankers because they did these loans according to the guidelines.’ (my paraphrase).
The reason I paraphrased that is because I can’t remember the exact statement, but that was the sentiment behind it. It isn’t tricky, and it isn’t hard to believe either. It is simply that I understand what he is saying, and although I realize that there were many bankers out there telling people to sign for loans they couldn’t afford, there were still so many that didn’t operate in that manner.
I have built my business on the belief that I can truly help people; help families and I love it. I never set out to write a mortgage loan with the intent for a family to end up in bankruptcy. When I worked with families it was all about helping them understand the process, and educating the borrower.
I don’t have any regrets for any financing that I ever offered, however I do regret that we are in this position as a country, and that there are so many who were targeted because the broker felt that they weren’t savvy enough to figure it out.
-Mayer Dallal
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