Neither do the investors.
Neither does the government.
A couple of weeks ago I was on a conference call for wholesale lenders and mortgage brokers with HUD Deputy Secretary Jim Beavers who is in charge of FHA's Single Family Housing Products. Jim "fussed" at the wholesale lenders for writing their own rules above and beyond what FHA's guidelines allow for. He gave them/us an earful about how FHA Secure has been treated by the lenders.
I agreed with him. Lenders have treated FHA Secure like the piece of garbage it is. Designed to help homeowners (originally) who were behind in their mortgage but no other bills and only since their rate started adjusting FHA Secure was/is pretty much a joke. Why didn't the lenders get behind it?
THE NO-POOP FACTOR
Let's see, the borrower is not making their mortgage payment now but you want us to refinance their loan and then magically they WILL start making their payment and on time? As Ricky Ricardo (Dezi Arnez) would have said, "Eye doan teenk so!" And think about this: if you are a good parent and you have a ton of bills and all of a sudden you cannot affford to pay all of them are you going to let your Exxon credit card payment slide or let your house payment slide? No poop! Me too. I am going to have a roof over the heads of my children and food in their tummy in that order. Come get the car, turn off the cable - we will have a home and food.
HERE'S THE REAL DOPE
Now the problem is that many lenders (most lenders) do not lend to Fannie or Freddie guidelines. One who would, Homecomings, is now in the trash with the others. So you can cite Fannie/Freddie all day but the few lenders still in business who do any volume don't adhere to those guidelines.
Oddly enough 12 months ago they went OVER the guidelines. Now they stop short - no happy medium.
BUT WHY DADDY, WHY?
Because Fannie Mae doesn't run the mortgage industry. Neither does Freddie Mac. Neither do the lenders or banks. Neither does Chris "Hang 'em All" Dodd. Definitely not Barnie "Queen of Hate" Frank. Although they still blame all of this on mortgage brokers - which would be similar to blaming a hurriccan on oh, say, the butterflies. (If you believe them you also probably believe that story about a butterfly flapping its wings in Botswana causes a breeze to blow on Madonna's cheeks in Hollyweird. The author evidently forgot to study 5th grade physics - resistance and dissapation anyone?) But as per usual, I digress.
COME ON KEN, WHO RUNS THE MORTGAGE INDUSTRY?
United Guaranty www.ugcorp.com
GE www.gemortgageinsurance.com
MGIC www.mgic.com
PMI www.pmigroup.com
RMIC www.rmic.com
Radian www.radian.biz
There are the links - have at them. You really want to know "who caused this mess" look at who's controlling what loans are offered today. The powerful mortgage insurance companies. In case you don't recognize the word "insurance" let me take you back to real America where small business owners pay "insurance" to organized crime "families" and now rogue gangs of thugs to "insure" their store won't be robbed or their thumbs accidentally caught in the cash register ... a few dozen times.
Insurance controls much of your life. Government makes changes that affect what insurance does - your life gets harder. Lawyers sue people, insurance companies make changes, everyone's life gets tougher.
You and your clients cannot get a loan that Fannie Mae or Freddie Mac will buy because the above listed "families" oh, sorry, companies, will not insure that the lender's thumbs aren't harmed. They are the companies who call the shots - not the lenders. Even the mighty and powerful Bank of America must listen to the Big Bosses at the above named companies. So when you submit your application for a loan to a FNMA/FHLMC lender or broker and they don't see any reason why you don't qualify ask them if they checked with the Enforcers first.
SO NOW WHAT?
Vote Republican. Don't let the fact that you are a Bush hater make you stupid. No matter who is elected George Bush is gone. Remember - the Republicans aren't really all the fired up about John McCain because he is regarded as "too liberal". Higher taxes won't fix this problem. More regulation will NOT fix this problem. What will fix this problem is a social groundswell of a demand for common sense underwriting from lenders, and more importantly the mortgage insurers.
See you at the polls in November. I dare you to vote for inexperience in a time like this. Both leaders on the Republican ticket have a proven track record of attacking spending even in their own party. Neither of the Democrats can claim this.
THE OPINIONS IN THIS COMMENTARY ARE STRICTLY KEN COOK's PERSONAL OPINION AND NOT REFLECTIVE ON ACTIVE RAIN, NOVATION MORTGAGE, or ANY SPONSOR OF THIS WEBSITE.
EDUCATION BEATS LEGISLATION EVERY TIME. Get your clients, friends and family members to a LENDER RUN home mortgage seminar as soon as possible.
Copyright©2008 Ken Cook. Georgia and Florida real estate investment loans, FHASecure and FHA Home Loans, nationwide commercial hard money and small business loans, non-recourse loans for real estate investors
Novation Mortgage, 2501 E Piedmont Road, Suite 201, Marietta, GA 30062 Georgia Residential Mortgage Licensee 20014. Florida Mortgage Broker Business MBB 0703760 FHA Lender - Equal Housing Lender
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