The following is an article published in todays edition of Mortgage News Daily:

The continued availability of government guaranteed mortgages for rural homebuyers was virtually assured yesterday when the House Financial Services Committee voted to approve H.R. 5017. The unanimous vote will send the Rural Housing Preservation and Stabilization Act of 2010 to the full House of Representatives where sources said it was fast tracked for a vote as early as next week.

If passed, the bill will correct the Section 502 Single Family Housing Guaranteed Loan Program to make it self-funding. Section 502 assists homebuyers living in rural areas to obtain affordable mortgages guaranteed by the Department of Agriculture (USDA). These loan guarantees have become enormously popular during the financial crisis and consumer demand has tripled the annual number of loans that are typically issued each year. The program is set to exhaust its available funds within days. Under the new legislation, lenders will pay up to a 4 percent premium for the guarantee at the time the loan is initiated which will enable the financing of the program to move from a combination of government funding and industry fees to a self-sustaining initiative. The bill authorizes the department to guarantee up to $30 billion in loans in FY 2010.

In order to qualify for the program an applicant must have good credit and reliable and adequate income sufficient to sustain mortgage payments. The average guarantee in 2009 was for a $112,000 mortgage. In an announcement of the bill's passage the Committee said that the program provides a vital source of mortgage credit for people living in rural communities where low and moderate-income residents often have fewer credit options than households in urban areas. The USDA program aims to fill that void and lower the costs of homeownership by giving rural areas access to a home loan guarantee program.  The bill was sponsored by Congressman Paul E. Kanjorski (D-PA), Chairman of the House Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises. He said of the bill, "Since its creation in 1987, USDA's affordable rural home loan guarantee program has helped hundreds of thousands of families to realize the American dream of homeownership, including many in Northeastern Pennsylvania. As a result of the unprecedented demand, theprogram is now unfortunately running out of money. At no cost to taxpayers, my bill will preserve the access of millions of families living in America's heartland to needed USDA loan guarantees, so that they can continue to buy homes with affordable mortgages. Without action, too many families in rural America will have no options for getting home loans. We cannot allow that to happen."

In case you didn't know, we have been hanging in limbo on properties that require flood insurance for several weeks now.  The old FEMA flood insurance appropriation had expired and congress had not re-authorized until now.  Congress approved the Continuing Extension ACT of 2010 (H.R. 4851), which includes a temporary extension of the Federal Emergency Management Agency's (FEMA) statutory authority to issue flood insurance policies under the National Flood Insurance Program (NFIP). The temporary amendment will expire on May 31, 2010. Many investors, such as Union Bank, Provident, and others, sent out announcements re-installing their previous flood insurance policies.

We are once again in the business of lending on properties that require federal flood insurance! 

Art Marine

art.marine@academymortgage.com

Branch Manager/Loan Originator | Academy Mortgage Corporation

10220 SW Greenburg Road, Suite 250, Portland, OR 97223

o. 503-764-4005 | f. 1-866-510-4716

Lenders accross the land are taking different twists on the FHA flipping rule waiver.  Just to demonstrate how major lenders are treating this tender topic, I will list some examples from the largest national leaders.

Some things are simple, others not. On January 15, 2010, HUD issued a Waiver of Requirements of 24 CFR 203.37a(b)(2) revising exceptions to the FHA Flipping Rule policies. (Notice that HUD did not actually issue a Mortgagee Letter.) The FHA Flipping Rule prohibits FHA financing if the contract of sale for the purchase of the subject property is executed within 90 days of the prior acquisition by the seller, and the waiver temporarily puts this aside. Where do the various mortgage investors stand on following or not following the waiver?

Wells Fargo has taken the approach of being silent on the issue - and if WF is silent on an issue, the default policy is to follow the agencies with their policies. Therefore these loans are a "go".

Neither Bank of America, SunTrust, nor GMAC have adopted the FHA issued directive on the waiver of the 90-day FHA Flip Rule, however.

With other investors, the issue is not black and white. Chase will buy FHA loans with a sales contract executed in less than 90 days with overlays. If the property seller is a government entity or a Chase REO, and the sales price is less than 20% higher than the purchase price, it is ok. If the gain to the "flipper" is greater than 20%, the loan is unacceptable under the waiver. If the seller is a non-Chase bank, or even Chase, and the gain is greater than 20%, it is not eligible. The same 20% line applies to inheritances; private sales are not eligible.

CitiMortgage also has policy overlays. Any increase of sales price over seller acquisition costs should be documented if the increase is 10% or more, instead of the 20% allowed by Citi's original announcement. The increase in sales price over the seller acquisition cost may not exceed 20%, even if documented per the announcement. If the sales price is greater than $500,000, the increase in sales price over the seller acquisition cost may not exceed $100,000. For Citi, and other investors, all other requirements per the HUD Announcement must be followed.

For Flagstar, the purchase transaction must be arms-length with no identity of interest between borrower and seller or any other parties participating in the transaction, FHA's guidelines, and there is no history of flipping for the subject property. If the sales price is 20% or more higher than the seller's acquisition cost, the property flipping waiver applies only if the lender obtains certain documentation (such as complete documentation for renovations and repairs, a very solid property inspection, etc.). "While FHA's temporary property flipping exemption applies to all purchase transactions that meet these criteria, Flagstar will continue to prohibit FHA and VA financing for properties owned less than 90 days unless the seller meets one of the following Flagstar seller exemptions: seller is a relocation company or employer who acquired the subject property as the result of an employee transfer, seller is any one of the following: HUD, VA, GNMA, FNMA, FHLMC, seller is a non-profit approved to purchase and sell HUD-owned properties with re-sale restrictions, etc. (Check with Flagstar for the complete list.) And Flagstar Bank requires a second appraisal from an FHA-approved and Flagstar-eligible appraiser or a Flagstar-approved appraisal management company for all transactions having a new purchase price that is 20% or more higher than the seller's acquisition cost.

Good Luck!

Art Marine

Branch Manager

Academy Mortgage

503-764-4005

Borrowers need to be aware that many mortgage brokers are choosing to raise fees to maintain their income on each loan transaction.  Following is advice from one major wholesaler to their broker customers:

THE NEW GFE

 See the original GFE given to the Customer - Line 1. Contains the following:

Origination fee + Processing Fee + Lenders Admin. Fee + YSP

(plus any other compensation / fee that the broker charges). Once you give the GFE to the Customer your line 1 will not change higher (except if the loan amount changes your origination will be adjusted up or down if a percentage was used).

 Line 2 shows the credit that the Customerwill receive (YSP).

 So Line A is going to be what is earned on this loan (Original GFE).

Many brokers still think that by increasing the YSP they earn more income on a loan.

Is this TRUE?   Answer is NO

If you add in the YSP in Line 1, then subtract it in Line 2 (the credit that goes to the customer). What are you making from YSP?

 $2,085- $2,085= $ 0

 Now see the New HUD at Closing

 Line 801 is from the Original GFE - Line 802 the YSP = Line 803 Total Broker Compensation

Suggestion on How Brokers can make money in this new environment.

Since higher YSP do not increase your earning, it only increases the Credit to the Customer to reduce their costs, you may want to look at charging more Origination Fee (On Conventional & FHA loans, VA limit is still 1%) and as little as possible YSP.

 Line 1 - Origination 2% + Processing $450 + Lender Admin $775 + No YSP = $8425

Line 2 -  Zero YSP

Line A (income to broker) $8,425

This will made a big difference in the Broker compensation. Plus the Customer benefits by receiving a lower interest rate.

Conclusion- in this new environment the only time to charge a YSP is to lower the closing costs for the Customer (as in a  low or no cost refinance).

My Conclusion is that Mortgage Brokers are and will continue to raise fees to cover their operating expenses and profits.  Banks and Mortgage Banks continue to have the flexibility to price their profit into rate.  Is this fair?  Probably not to mortgage brokers...but it does save the consumer from the game playing that many abusive brokers used to play with fees.  The question we really need to ask; Did abusive brokers kill the golden goose?

Art Marine

Branch Manager

Academy Mortgage

10220 SW Greenburg Road, Suite 250

Portland, OR 97223

503-764-4005 direct

503-799-7085 cell

1-866-510-4716 fax

www.academy.cc/artmarine

art.marine@academymortgage.com

A few months ago I wrote a blog titled "The Death of an Industry".  To say the least it met with a lot of resistance from the Mortgage Broker community.  The Mortgage Brokers of active rain showered me with reasons why I was wrong.  They contended that mortgage brokers could shop for the best deal for their customers, but of course the HVCC rules that require the lender to order the appraisal cut the shopping off at the knees. Brokers claimed they could deliver loans at a lower price to the consumer.  The new RESPA rules are quickly proving a challenge to that claim!  When junk fees become part of the origination cost, it takes much of the advantage from the broker.  I have a number of broker friends that are really crying about the new GFE.  While many of us welcome the change to hold our competitors accountable, the broker community is crying foul. 

Currently mortgage broker market share stands at about 12% vs. a peak of around 69% 4 years ago.  Maybe not the death of the industry but it certainly is on life support.  In spite of these dismal statistics for the broker industry, there is a ray of hope.  The extreme contraction in the industry has weeded out the vast majority of the weak and unprofessional broker shops.  Those that remain are the cream of the crop.  They are the organizations that approach the mortgage business with professionalism and high integrity.  Most of these companies will thrive in some form regardless of their business structure.  I think there will be further contraction of the wholesale business model but many of the remaining companies will convert to mortgage banking or the net branch model.

The real threat to the mortgage broker industry is the elimination of the wholsale chanel from the remaining lenders.  There has been a virtual abandoment of wholesale for many large lenders and that trend will most likely continue.  Combine that with major movement (both from citizen watchdog groups and legislators) against the number two wholesale lender (Provident Funding Associates) and it spells trouble for wholsale supply.

I now believe that a small shell of the broker community will survive but in a sense you could say the days of the old fashioned mortgage broker are already dead!

Do you ever want to get away for the weekend but don't have an extra 4 or 5 hundred bucks laying around for a resort hotel?  Have you ever considered going camping?  Yes in February.

My family and I will often pack up and head out to one of the many Oregon State Parks that offer Yurt camping.  The cost is reasonable and the accommodations are quite comfortable!

You see yurts, although they look like a glorified tent are actually quite comfortable...even in winter.  They are always dry, they have electricity, and yes they are heated.  We even bring our laptop or portable dvd player so we can watch a movie if it gets too wet to go outside.  The Oregon coast or Cascade mountains are fabulous recreation opportunities right at our doorstep and a great way to enjoy them is in a Yurt.

So, the next time you are looking for a get-a-way on a budget.  Reserve a Yurt!

http://www.oregon.gov/OPRD/PARKS/rustic.shtml

Art Marine

Branch Manager

10220 SW Greenburg Road, Suite 250

Portland, OR 97223

503-764-4005 direct

503-799-7085 cell

1-866-510-4716 fax

www.academy.cc/artmarine

art.marine@academymortgage.com

Click Here for Online Free Credit Approval

The market share for refinances must be considerably lower here in Oregon.  Borrowers are really in a bind with shrinking equity and tougher loan underwriting.

Art Marine

Branch Manager

10220 SW Greenburg Road, Suite 250

Portland, OR 97223

503-764-4005 direct

503-799-7085 cell

1-866-510-4716 fax

www.academy.cc/artmarine

art.marine@academymortgage.com

The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending January 22, 2010.  The Market Composite Index, a measure of mortgage loan application volume, decreased 10.9 percent on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index decreased 10.1 percent compared with the previous week and decreased 19.8 percent compared with the same week one year earlier.

"Refinance activity fell substantially last week," said Michael Fratantoni, MBA's Vice President of Research and Economics.  "Although rates remain low, there appears to be a smaller pool of borrowers who are willing and able to refinance at today's rates."

The Refinance Index decreased 15.1 percent from the previous week and the seasonally adjusted Purchase Index decreased 3.3 percent from one week earlier.  The unadjusted Purchase Index increased 2.8 percent compared with the previous week and was 4.5 percent lower than the same week one year ago.
 
The four week moving average for the seasonally adjusted Market Index is up 2.6 percent.  The four week moving average is up 1.3 percent for the seasonally adjusted Purchase Index, while this average is up 2.8 percent for the Refinance Index.

The refinance share of mortgage activity decreased to 67.6 percent of total applications from 71.7 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 4.7 percent from 4.1 percent of total applications from the previous week.

The average contract interest rate for 30-year fixed-rate mortgages increased to 5.02 percent from 5.00 percent, with points decreasing to 1 from 1.05 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.

The average contract interest rate for 15-year fixed-rate mortgages increased to 4.34 percent from 4.33 percent, with points decreasing to 1.14 from 1.19 (including the origination fee) for 80 percent LTV loans.

The average contract interest rate for one-year ARMs increased to 6.84 percent from 6.72 percent, with points increasing to 0.33 from 0.31 (including the origination fee) for 80 percent LTV loans.

**SPECIAL NOTES**

The index values are no longer included in MBA's Weekly Applications Survey press release, only the percentage changes.  If you would like to subscribe to MBA's Weekly Applications Survey, please contact MBA Research at (202) 557-2830 or mbaresearch@mortgagebankers.org or click here.

Media inquiries should be directed to Carolyn Kemp at (202) 557-2727 or ckemp@mortgagebankers.org.

The survey covers over 50 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990.  Respondents include mortgage bankers, commercial banks and thrifts.  Base period and value for all indexes is March 16, 1990=100.

###

The Mortgage Bankers Association (MBA) is the national association representing the real estate finance industry, an industry that employs more than 280,000 people in virtually every community in the country. Headquartered in Washington, D.C., the association works to ensure the continued strength of the nation's residential and commercial real estate markets; to expand homeownership and extend access to affordable housing to all Americans. MBA promotes fair and ethical lending practices and fosters professional excellence among real estate finance employees through a wide range of educational programs and a variety of publications. Its membership of over 2,400 companies includes all elements of real estate finance: mortgage companies, mortgage brokers, commercial banks, thrifts, Wall Street conduits, life insurance companies and others in the mortgage lending field. For additional information, visit MBA's Web site:  www.mortgagebankers.org.

I think we are poised for an early Spring buying season for real estate in 2010.  Several factors come together to make this possible. 

1. Real Estate prices have dropped like a rock.  Some areas have dropped 40 to 50% or more.  The clearance sale is on!
2. The federal homebuyer tax credit will expire on transactions that do not have an accepted contract by April 30, 2010.
3. Interest Rates remain very low...30 year fixed rates in the 4's.
4. Changes in regulations could create fear of change for those looking to buy homes in the next year.  There is even talk of elimination of FNMA and FHLMC.
5. There has got to be significant pent up demand.  We have had very sluggish home sales for the last two years.  People need a home to live in and they won't remain renters forever.

All of this adds up to robust real estate sales for February, March, and April.  The clearance sale is on...don't let it pass you by.

Art Marine

Branch Manager

10220 SW Greenburg Road, Suite 250

Portland, OR 97223

503-764-4005 direct

503-799-7085 cell

1-866-510-4716 fax

www.academy.cc/artmarine

art.marine@academymortgage.com

Click Here for Online Free Credit Approval

The following from a CNBC story:

CNBC Reports... Fannie, Freddie Cannot Exist in Current Form: Frank Rep. Barney Frank (D-Ma.), chairman of the House Financial Services Committee, said Friday that Fannie Mae and Freddie Mac should be eliminated as they stand now. "This committee will be recommending abolishing Fannie Mae and Freddie Mac in their current form and coming up with a whole new system of housing finance, that's the approach rather than the piecemeal one," Frank said. Frank made his comments during the committee's hearings on executive compensation.

I, for one, agree with congressman Frank on this issue.  It is simply wrong for the federal government to provide all the funding, either directly or through the Federal Reserve, when things are going poorly but to allow these entities to siphon off big profits for investors when things are going well.  We need to stop kidding ourselves that privatization of every business is in the best interest of the public or the institution for that matter.  I know all you Libertarians are starting to fume but our national security revolves around a healthy housing industry.  It is not prudent, constructive, or fair to let our housing industry hinge on the decisions of a private industry that cannot look beyond next quarters profits. 

We need a strong and viable secondary market for mortgage loans.  If the GSE's fail in that function, we will end up with the exact thing we have in the jumbo loan market now...a market near death and desperately needing life support.  Let's reorganize the bohemith's of the secondary market and do it without the goal of privatization.  Hell the taxpayers already own them!

I would suggest the Clackamas County Fair and Events center.  This is an incredible facility with enough space for very large events and small settings inside for smaller more intimate events.

The management at this facility is exceptional and the prices are reasonable.  I highly recommend them!

http://www.clackamascountyeventcenter.com/default.html