WE in the industry know - HUD,  along with the so called "leadership" in the House & Senate and all the members of both bodies miserably failed on many levels to assist toward an end to this economic calamity specifically the housing market. Values continue to drop and sweet heart deals continue on Wall Street.

The other group (the investors) including Fannie Mae and Freddie Mac continue to tighten their guidelines. Below is a little tongue and cheek but it really is not so funny. Credit score lending should be eliminated and we should go back to normal risk analysis like 'the good ol' days' but instead we have something like this:

YOU WANT A LOAN?

Please scroll down for important underwriting changes. 

       New Underwriting Guidelines out today 3/8/2010:

 All borrowers' birth certificates will be required with pictures taken in the hospital with medical staff.

Birth certificate with a live home delivery will not be eligible for first time home buyers.

Marriage certificate with bridal dress will be required if both husband and wife are required to qualify for the loan.

GFE will not require signature, but will require blood sampling from a recognized institution within three days of application.

DNA test will be performed at closing to avoid any non-arms length transactions. Loan funding will be contingent upon satisfactory receipt of DNA results.

Verification of deposit will be acceptable only if Bank representative is present at the closing.

Copy of Pay stubs and W2 will only be acceptable through IRS and only with a wax-sealed envelope mailed directly to the lender.

Seven witnesses from the neighborhood will be required as proof of primary residence in case borrower owns more than 1 property.

All appraisers will be required to use masks and ear plugs at the time of inspection to avoid any personal influence by the borrower or broker for the appraised value.

In order to correctly calculate DTI and true housing ratio a list of grocery items, monthly usage and brand names will be required with receipts and projected 12 month consumption chart.

Closing will not occur without loan officer presence at settlement and loan officer picture will be taken at the closing in a mug shot format with loan number. Picture should meet standard guideline of 2 X 2 inch in color format with one facing and one side view.

Loan officer picture will be attached to the Deed and note and will be made available for general public and security agencies in case borrower defaults on the loan.

We all can chuckle about this because what else is there to do. With all the BS going on at Wall Street and in Washington DC the best they (Politicians) can do is make up stuff that has nothing to do with quality lending or consumerism as evidenced by the bizarre HVCC (appraisal) regulation.  As usual the middle class and the economy pays the price and to me folks that is NOT funny.

Write your representive even though the response will be a templated non-response response. Then pick up the phone and call your representatives local office even though you get a recording. Doing nothing is not an option.

HUD, Barney Frank, Chris "I'm a little bit Countrywide" Dodd, Nancy Pelosi and Harry "can I have another" Reid have done nothing for the average American and certainly NOTHING for our economy despite what you hear reported to you by the media.

Thank you for your indulgence. I wish us all well.

HVCC is not just an industry issue it is a consumer issue. In previous blogs over the past year I have been critical of the Attorney General of New York - Cuomo and I speculated early on he was laying out resume material for the furtherance of his political career...I was right. No individual or state for that matter should be able to have such an incomprehensable impact on small business's(the appraisal industry) taking money -literal theft out of the appraiser and dictating to them how they do their business. Remarkable.

I hope the National Association of Realtors (membership) and the consumer start googling to find out who represents them and drop a note as to why this should be stopped. Share your story....

The link below is a parity however it is factually correct.

I wish us all well.

 http://www.youtube.com/watch?v=lDUpXwoj5Ck

Thank you for being accessible and your service. I hope you take my comments in the spirit they are intended. First off I sincerely believe there is a huge disconnect. HUD is running around making changes that do not impact the consumer positively and in fact doing harm.

The revised Good Faith Estimate is the first item. Explain to me what the problem was with the previous format. To me the purpose of this "improved" document is to regulate how much a mortgage professional can make (nothing to do with consumerism) even though every other profession in the world including the medical community do not have to show how much they make on each transaction. No other industry is required to itemize with precision or within tolerances the exact costs etc. The consumer should take some responsibility to shop as they do with everything else that is consumed and HUD it seems is trying to 'protect' the consumer in a manner that is not possible, ackward but also ineffective and for sure confusing to everyone including HUD itself.

The notion that a document as it is designed will safeguard the consumer from bad behavior or their own stupidity is baffling to me. This document should be scrapped and I sincerely believe you instinctively know this. Humility is not a bad thing in fact it is a sign of character and integrity. I ask HUD to exercise it.

Oversight has been the problem and continues to be the problem and unfortunately all the agencies have dropped the ball including congress (obviously). HUD should be focused on policy to bring the real estate market back to include programs that really do assist the struggling home buyer not these ineffectual non-solution solution programs that continue to be pitched across America only to fall on their face as evidenced by the increasing foreclosure rate.

"Reduce allowable seller concessions from 6% to 3%....o   The current level exposes the FHA to excess risk by creating incentives to inflate appraised value.  This change will bring FHA into conformity with industry standards on seller concessions."

The above change at least is consistent with the other changes in that it is meaningless and in fact it harms or is yet another nail in the coffin of what is a very dead and more bad news to come real estate market. Where is the magic with the number of 3% vs. 6%? No magic.

This policy is based on a false premise that was first offered up by New York Attorney General Cuomo and that is the appraiser is the problem here and the result of such bizarre analysis is the gutting of an entire sector - banks and "AMC's" coming in gutting the modest fee the appraiser receives in the name of making sure the report has integrity and accuracy. The AMC's are vultures in an economy that is in peril. Since HUD likes disclosures so much you could add a form for the borrower, appraiser, realtor and lender to sign that simply says he was not influenced by anyone. There...we all are covered ...kind of like the lead paint notice if you will.

My point to the appraisal issue is in today's market as it had been up until the year 2000 (before the repeal of the Glass Steagall act of 1933)appraisals were and are underwritten by underwriters so any report that has irregularities can be picked up by an underwriter...that is their job. 2nd, all the major lenders have an automated system they run the appraisal through with the sole purpose to dumb down a reports value even though the data they glean from electronic sources may be flawed which is why we have an appraiser in the field in the first place. This secondary check is a direct result of the nonsense created by Cuomo and friends as a defensive move for cover in case Barney Frank & friends decide to offer up punitive ridiculous regulation or penalties.

 How can you inflate an appraisal in a declining market anyway? I suppose the next thing you will do is decide to increase the down payment. From the beginning of time the folks with the gold wanted to lend only to those that could pay back the loan. For the folks that put 30% down three years ago and since lost their jobs sure wish they had the cash in the bank now wouldn't you agree? So down payment is not the issue here which is why HUD should BRING BACK THE DOWN PAYMENT ASSISTANCE PROGRAM!!! For heaven sakes... a cost neutral incentive and yes the appraiser will have to do their job ... they can do it...!!!

I am not a fan of HUD right now and the less tinkering the better. Please re-consider the approach. Take a step back and bring in some mortgage professionals. We can help and we are not the enemy even though we are made out to be.

I have been doing this for 25 years and I have been successful because my clients have been treated fairly and that is why they continue to come back. The mortgage professional has developed systems and education for the consumer over the past 25 years that the banks never considered offering or delivering yet the regulation favors the banks. And Mortgage Brokers are being wiped out and the Mortgage Banker is next because there is no way to make a living the way things are going so what's left are the banks just like it was 30 years ago. Higher costs (terrific profits - undisclosed of course) and it will take months to close. I REMEMBER, I WAS THERE, I WORKED FOR A BANK.

You buy a loaf of bread at a store that has to tell you how much they make on the bread yet the other store sells the same bread at the same price and doesn't have to disclose what they make and on top of it points to the other store to note how much they are making .... the result is the consumer is then wondering if they are taken advantage of because the profit is disclosed? Why do the banks get a pass on this?

Increasing the upfront MIP back to 2.25% is the smart thing to do and should have been done years ago so not all is bad or wrong and I do believe we both want the same thing however HUD must revisit the approach....we the people beg you to do so!

That's all I have for now. Thanks for listening. I wish us all well.

Via David H Stevens (United States Dept. of HUD):

Yes HUD (and our government) is at it again and yes the mystery continues as to why they do what they do. Great thinking on the yield spread premiums, the revised good faith estimate, HVCC appraisal mess, the elimination of a cost neutral down payment assistance program....do I need to go on?

HUD has decided that the seller can no longer contribute 6% toward closing costs and or prepaid expenses. Instead they say the magic ....the place where the healing begins....is 3%. YES, 3% is the magical number and will solve unemployment, the real estate collapse, too big to fail and that nagging itch....fine whatever.

For example if you buy a home for $200,000 the seller can contribute $6000. This means the borrower will pay some cash out of pocket in addition to their 3.5% down for their property tax, insurance and interim interest impounds. No it is not the end of the world my point is to ask the question why? Why now?

Yes, your government hires a man that draws pictures....an architect. This is the guy that will manage us out of a housing crisis at one of the most important domestic departments (HUD) in government?

HUD's Shaun Donovan an innovator? I say Fire Donovan NOW!

On another note HUD is increasing the Up front insurance premium from 1.75% back to 2.25% (the good ol' days) which isn't a bad thing in fact they should have done that a long time ago.

Remarkably, the idiots at HUD did not increase the down payment to 5%. What happen there? I call it a miracle but the day is not over.

I hope the real estate and lending community along with the public at large contact their representatives and give them an ear full. I have and I will continue to do so.

Sorry about the rant.

I wish us all well.

We know what the credit card issuers have been doing but according the FED they have cleaned up and pushed out the final REG Z wording that will be implemented February 22, 2010.

"The rule bans several harmful practices and requires greater transparency in the disclosure of the terms and conditions of credit card accounts."

Among other things, the rule will:

• Protect consumers from unexpected increases in credit card interest rates by generally prohibiting increases in a rate during the first year after an account is opened and increases in a rate that applies to an existing credit card balance.
• Prohibit creditors from issuing a credit card to a consumer who is younger than the age of 21 unless the consumer has the ability to make the required payments or obtains the signature of a parent or other cosigner with the ability to do so.
• Require creditors to obtain a consumer's consent before charging fees for transactions that exceed the credit limit.
• Limit the high fees associated with subprime credit cards.
• Ban creditors from using the "two-cycle" billing method to impose interest charges.
• Prohibit creditors from allocating payments in ways that maximize interest charges.

Click: "What You Need to Know: New Credit Card Rules."

I wish us all well. 

What the NSF fee is to a bank (big buck revenue) regulation is to our government. Regulations are designed to generate revenue in case you have not noticed. For example even though I am licensed with my state and working for a licensed company I have to FOR A FEE take a national test to see if after 25 years I know what I am doing. That's government regulation.

FEMA is the most recent to assault our industry (behind Summers, Timmy G, our friend the AG of NY Cuomo, Shaun Donovan (HUD), Barney Frank and the soon departing Chris Dodd) and decided to update their flood maps. So what does this mean for you? Your property may be in a flood plain and you will be compelled to purchase flood insurance!

You can apply for flood insurance through your insurance agent however you are really purchasing it from your very own government. So if you live in an area that has flooding nearby you may have been put in the flood plain and a policy will have to be purchased by you from the government. Your lender may contact you and request flood insurance be added to your existing policy.

Here is the link to check to see if your property is now in a flood plain:

http://msc.fema.gov/webapp/wcs/stores/servlet/FemaWelcomeView?storeId=10001&catalogId=10001&langId=-1&userType=G

If you are in a flood plain then it is a good idea to purchase flood insurance but if you believe the map is incorrect (and many maps are for a variety of reasons) you can at your expense have your property surveyed to determine the topography or layout of the land in context to your home and flooding. It is not cheap but in the long run if you don't flood it will save you a pile of money.

I wish us all well.

I have forwarded this poem by an unknown author however it is circulating around the industry. It is an eloquent statement of fact surrounding the mess HUD and our government continues to make of our industry.

PLEASE SEND THIS TO YOUR REPRESENTATIVE!

T'was the week before New Years
When all through the lands,
LO's and Closers were wringing their hands.
RESPA Changes are coming,
They all started to worry,
We'd better get trained, and trained in a hurry!

We all kept on hoping
There would be a delay.
But HUD said, "No Way," it's all here to stay.
"We love our new HUD
And our new GFE,
Don't fret, don't worry, it's as simple as can be."

We all shook our heads,
Threw our hands to the sky.
What were you smoking? You must have been high!
You took a one page doc
And changed it to three.
Easier? More simple? How can that be?

The Regs don't match up,
So now what do we do?
HUD says, "No comment, It's all up to you."
No info on TILA,
HMDA, REG B.
We are totally screwed, why can't they see??

In a time when some borrowers
Think lenders are scary,
You've given 3 pages to make them more wary.
This doesn't make sense,
No, not one little bit.

We are all trying hard to not throw a big fit.
So we all do our best
To put borrowers at ease.
But make more reform, please, please, please!

Please bring someone in
Who knows what to do.
What is best for both borrowers AND lenders too.

We are all still waiting,
Though not holding our breath
And hoping the government doesn't "Reg" us to death.

So on this week before New Years,
I'd like to wish you
Good luck with RESPA, I need it too!

It won't be long before you hear about the endless tax payer gift given to Fannie Mae and Freddie Mac and that is a blank check to absorb more losses. The scary part about this is how the foreign and domestic private investors of our debt are going to respond to this most recent move by the Fed.

I don't think it will be kindly and in fact there are rumblings already of investors moving away. The move from where I sit simply means the government is now in charge of the housing market. YIKES.

As more information comes about I will forward on to you but for now anticipate interest rates going up and you can expect a very volatile week as we begin the new adventure of 2010 and don't be surprised if we have a second recessionary dip in 2010.

Housing prices could continue to dip some but if interest rates go up (and I believe they will) the savings you would get purchasing at the lower price will be wiped out because your interest rate will be higher. Don't shop yourself out of the market .....GET BUSY AND BUY NOW.

I wish us all well.

The clouds are coming and the warning signs are in place. Interest Rates will be moving up soon. The strategy of waiting for lower home prices could back fire because of higher interest rates.

If you feel comfortable about your employment situation (particularly if you work for the public) I would consider shopping now. Rates will be moving up. Perhaps a full percentage point by this time next year.

Happy New Year Everyone and I wish us well.