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Rules, Rules, Rules - Mortgage by Randy Newsletter - Dec 2012

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Services for Real Estate Pros with Marketing Advisor & Squeeze Mortgage NMLS# 377413

 

Mortgage by Randy

monthly update to our clients, colleagues, family & friends

By: Randy Mitchelson, December 2012

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In Issue 57 We Touch On:

 

Rules, Rules, Rules
FHA Tightens Noose

Reverse Mortgage Scam?

 

 

Looking back at 2012, the biggest thing that stands out as far as the mortgage market is concerned is that the new Consumer Financial Protection Bureau (CFPB) got its legs and started making an impact on several fronts. The entire mortage industry has been thoroughly shaken to its foundation and the rebuilding process is beginning. Everything is new - new ways of doing things - new laws - new jargon. Most mortgage professionals will tell you that they feel like they've had to learn how to do mortages all over again! If it's that confusing for seasoned veterans of the industry, one can only imagine how confusing it is now for consumers.

More than ever, consumers must rely upon trusted advisors when making decisions about the largest financial decision they may ever make - buying a home. 

 

The current newsletter and all prior newsletters are archived at the Mortgage by Randy blog. Bookmark it and share with your friends and family.  You can make your own comments and feedback as well.  Time for the news…

 

 


 

Mortgage Market: Rules, Rules, Rules
By January 21, 2013, the CFPB is required by law to finalize a bunch of new mortgage rules. Among the topics that will be decisioned are: qualified mortgages, originator compensation (i.e., how I get paid), high-risk appraisals, high-cost mortgages, escrow requirements and forced-placed insurance.

Lenders are kind of handcuffed until these new rules are communicated. Many of these things can't be implemented overnight. It takes time to train thousands of workers across the banking industry. Who does this affect the most? You - the consumer. The final mortgage rules "will dramatically change the way mortgages are written as well as access to credit," said Leonard Chanin, a partner at Morrison & Foerster who recently served as the assistant director of the CFPB's regulations division.

I will do my best to keep you informed as the industry continues to be turned upside down by the regulators who seem to have endless appetite to change, tweak and adjust as we enter the 6th year since the mortgage crisis began. Stability will be welcome and maybe by the end of 2013 we will achieve that.

 

Personal Credit: FHA Implementing Tighter Debt To Income Ratio On Low Credit Score Applicants

FHA is taking a beating on Capitol Hill right now. They are losing money rapidly kind of like the Post Office. The FHA faces a projected $16.3 billion shortfall due to massive defaults on loans made during the height of the financial crisis.

Last month I wrote about major increases in fees on FHA loans to help rebuild their coffers. Another change that FHA is finalizing is a formal policy that will require borrowers with a credit score below 620 to have a maximum total debt-to-income ratio no greater than 43%. This only affects 3% of FHA-insured loans so it's by no means a solution to the overall problem.

Nevertheless, this is a smart decision, If a borrower's credit score is below 620, it means they have had major payment issues within the past few years. About 70% of the FHA's insured loans have been issued to borrowers with credit scores between 620 and 660 and those folks only had to put a 3.5% downpayment! Putting a tighter limit on how much debt they are allowed to manage just makes sense.

 

Ask Me Your Credit Score Questions

Have you been given credit score advice that you are not sure about or read an article that has conflicting credit score information from what you believe to be true?  I am here to help.  Submit your question and I will be happy to respond. For more free and easy to read credit score tips visit the DailyDollar and click on the Credit Score and Credit Monitoring sections.

 
 

Economy & Financial Insights: No Pain, No Gain Should Tell Story Of 2013
Home inventory continues to dwindle.This means two things. One, prices are escalating. Two, builders are digging again. This is positive. However, the turmoil in the mortgage industry is still ongoing and it will still be difficult for consumers to get mortgages, but not impossible. It will just require a lot of fortitude, patience and perseverence.

As of this writing, no solution has been reached to the Fiscal Cliff drama, so many businesses continue to operate in limbo awaiting what the tax picture will look like. This is affecting hiring decisions and has dampened holiday spirits among consumers (as was evident in the poor shopping figures). Whatever compromise is reached by our elected officials, it will result in less government spending and higher taxes. That will guarantee us an ongoing slow economy for the near future.

 

No pain, no gain. It's belt tightening times and the result must be a more fiscally responsible country.
 

Question of the Month: Are Reverse Mortgages Predatory On Seniors?

As the U.S. population ages and the baby boomers seek cash flow solutions, reverse mortgages are becoming very prominent in television and Internet advertising. Silver haired or no-haired celebrities like Henry Winkler, Robert Wagner and former Senator Fred Thompson are on our television pitching free information kits about reverse mortgages.

The children of the baby boomers often become integral in the analysis and decision making process with their aging parents. It is just as important for that younger generation to understand the reverse mortgage product and its purpose. It does serve a purpose. It is not a scam. But there are shady people out there that could do you wrong. Like most things in life, there are pros and cons to it. If you ever have a question that you can't get answered about a reverse mortgage, please do not hesitate to ask.

 

Giving Back: What Did Blake Shelton Have To Say To Us The Other Day?
If you aren't using michellesangels.com to post requests for prayers and well wishes for people in your life that are sick, what are you waiting for? Just the other day, Michelle's Angels was able to procure a video message from 2012 CMA Male Vocalist of the Year Blake Shelton from his set on The Voice for one of our prayer list members who is a huge fan of Blake but is forever trapped in a hospital bed and unlikely to survive much longer. Inspirational deeds like this are what Michelle's Angels is all about - providing love, hope and compassion for those who quietly suffer. Follow Michelle's Angels on Facebook right now!

 

Need volunteers? Do you have a fundraising event upcoming?   Do you have a personal web site where you are raising donations for your cause?  Submit the information to randy@mortgagebyrandy.com by the 5th day of each month and we will do our best to include your information in the next issue.
 

Best wishes for a healthy, happy and prosperous 2013!.
 

Randy
 

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Mortgage by Randy newsletter, Copyright 2008-2012 Randy Mitchelson.  All Rights Reserved.

Randy Mitchelson is a licensed mortgage professional. All material presented herein is believed to be reliable but we cannot attest to its accuracy. All material represents the opinions of Randy Mitchelson.  Recommendations may change and readers are urged to check with their financial advisors before making any decisions. Opinions expressed in these reports may change without prior notice. Mitchelson can be reached at 239-851-6738.

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You have permission to publish this article electronically or in print as long as the following is included:

 

Randy Mitchelson is an entrepreneur, author and community activist with almost 20 years experience in financial services.  Mitchelson has served in leadership roles for Fortune 500 firms Bank of America, KeyBank and CIBC.

 

As a licensed mortgage professional and member of National Association of Mortgage Brokers, Mitchelson educates both individuals and groups about credit scoring by conducting personalized credit report reviews, action plans and one on one consultations. He is author of the free monthly newsletter, Mortgage by Randy.

 

He founded of Estero, Florida based National Web Leads, LLC, (NWL) in 2005, an internet marketing and lead generation services company. NWL merged with Reach Media Group in 2012 where Mitchelson is co-owner and CMO. Reach drives new customer acquisition through email, web display, social media, keyword search strategies, mobile devices and more.

 

Reach distributes customers' marketing campaigns via it's network of publishing partners. Clients include payday lenders, auto loan lenders, educational institutions, legal services, health and beauty product distributors and more. Lead generation companies utilize end-to-end lead generation software solutions provided by Reach's technology affiliate company Applied Cognetics.

 

Mitchelson also writes the DailyDollar™ personal finance newsletter. U.S. News and World Report named DailyDollar to its list of 8 Savvy Personal Financial Podcasts.

 

Mitchelson earned his BS and MBA at Rensselaer Polytechnic Institute in Troy, NY.  He is a founding member of the Southwest Florida Regional Technology Partnership Inc. and Vice President for the Michelle’s Angels Foundation Inc.  He is married to Susan, a Pharmacy Supervisor in the Lee Memorial Health System in Fort Myers, Florida.

 

 

 
 
 
 
 
 
 
 
 
 
 
 
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Comments (1)

Barbara-Jo Roberts Berberi, MA, PSA, TRC - Greater Clearwater Florida Residential Real Estate Professional
Charles Rutenberg Realty - Clearwater, FL
Palm Harbor, Dunedin, Clearwater, Safety Harbor

Hope you are enjoying this awesome weather we are having here this month!

Jan 12, 2013 01:43 AM