Americans Who Can’t Afford Their Homes Up 146 Percent

“In the wake of the financial crisis, so much capacity was taken offline,” Swonk told NBC News. “Much of the existing stock of housing is still underwater. Many of the entry level houses are in disrepair.”

Over 38 million American households can’t afford their housing, an increase of 146 percent in the past 16 years, according to a recent Harvard housing report.

Under federal guidelines, households that spend more than 30 percent of their income on housing costs are considered “cost burdened” and will have difficulty affording basic necessities like food, clothing, transportation and medical care.

But the number of Americans struggling with their housing costs has risen from almost 16 million in 2001 to 38 million in 2015, according to the Census data crunched in the report. That’s more than double.

And despite the overall economic recovery, it’s only a small improvement from 2014, going down by about 900,000 households.

When people can’t safely afford to pay their mortgages and rent, it isn’t just a problem for those with a lower income or people who bit off more house than they can chew.

Economic Trickledown

Housing unaffordability also drags down GDP, slowing down overall economic growth for everyone, said Dan McCue, senior research associate at the Joint Center for Housing Studies at Harvard University, which publishes the annual State of the Nation’s Housing report.

“It forces them to constrict spending on other items, which would reduce spending on other parts of the economy. They would buy less, save less, reduce savings,” said McCue.

“It may make it more difficult to venture out and start a new company — or, living month to month, they’re much less likely to go back to school and get additional training; and may not be in the job that makes them the most productive member of the labor market,” McCue told NBC News.

A big factor has been how wages haven’t kept pace with rising housing costs.

“For lower income groups, it’s even worse than stagnation. It’s not keeping up with inflation,” said McCue.

A Lack of Affordable Housing

Housing costs are being driven by a limited supply of move-in quality, entry-level housing, said Diane Swonk, CEO of DS Economics.

“In the wake of the financial crisis, so much capacity was taken offline,” Swonk told NBC News. “Much of the existing stock of housing is still underwater. Many of the entry level houses are in disrepair.”

And what building is happening is happening upmarket.

“Builders are less able to downscale and build smaller volumes of smaller homes,” said Swonk. “It’s restricting supply well below demand, so of course it shows up in price.”

Also factoring in is a net decline in migration from Mexico after 2009 that decreased the number of skilled construction workers, and an increase in material costs.

http://www.nbcnews.com/business/real-estate/americans-who-can-t-afford-their-homes-146-percent-n774106


Dodd-Frank: Trump says roll-back, consumers map fight back

Kevin McCoy and Roger Yu , USA TODAY Published 7:02 a.m. ET June 14, 2017 |

Newly announced Trump administration plans to weaken or eliminate many financial-industry regulations enacted after the 2008 financial crisis mark the opening shot in what consumer groups predict will be a long Washington siege.

On Tuesday, the day after the Department of the Treasury issued the most detailed blueprint yet of proposed changes to the Dodd-Frank Wall Street Reform and Consumer Protection Act, banking and other financial groups celebrated Trump’s backing of changes they’ve sought for years. The list ranged from restructuring and weakening the Consumer Financial Protection Bureau to reexamining Wall Street trading and mortgage rules.

“The Treasury Department’s report is an important first step in recognizing how a duplicative and onerous regulatory environment harms banks, the economy, and, more importantly, consumers,” said Richard Hunt, the CEO of the Consumer Bankers Association, a trade association for retail banks.

Consumer advocates argue that the proposals represent an unwarranted weakening of rules that reined in banks and Wall Street after their excesses contributed to the nation’s worst economic crisis in generations. But major changes won’t come soon, if at all, because eliminating federal laws or Washington agency rules can take years, the advocates say.

“The prospects for preventing the rollback of many of these rules are actually quite good in terms of delay, and probably not bad in terms of preventing,” said Dennis Kelleher, the president and CEO of Better Markets, a Washington, D.C.-based nonprofit group that promotes the U.S. public’s interests in financial markets. “Enacting the administration’s regulatory agenda can be as difficult as enacting its legislative agenda if there is effective opposition.”

File photo taken in 2015 shows Richard Cordray, director of the Consumer Financial Protection Bureau, at a hearing in Denver, Colorado.(Photo: Brennan Linsley, AP)

Lobbying will likely spread across multiple fronts. But perhaps nowhere are the disagreements hotter than over the Consumer Financial Protection Bureau. Echoing complaints from Congressional Republicans, the Treasury report said the CFPB’s leadership — a lone director only loosely accountable to the president and wielding authority to enforce 18 federal financial laws — has made the agency “unaccountable to the American people.”

In response, the Treasury report recommended:

Authorizing the president to remove the CFPB’s director at will, rather than only when he or she is found to have done something improper.

Considering an alternative leadership structure of an “independent, multi-member commission or board.”

Changing the agency’s funding procedure to require oversight by the U.S. Office of Management and Budget, as well as congressional review.

Switching enforcement actions to federal courts, rather than administrative proceedings handled internally at the agency.

Eliminating public access to underlying data in the agency’s consumer complaint database by restricting that material to federal and state agencies.

Stripping the agency’s supervisory authority over banking and other areas covered by other regulators.

Paul Merski, a Community Bankers of America vice president, applauded yet another proposal, one that would exempt banks with assets of $10 billion or less from complying with CFPB rules that remove some risk features from mortgage loans. That list includes an “interest-only” repayment period, balloon payments required at the end of some mortgages, loan terms longer than 30 years, and excessive upfront fees charged to consumers.

“The main reason for community bank relief is so that they can support growth and jobs,” Merski said.

The CFPB maintained an official silence on the Treasury proposals. Instead, the regulator announced that its director, Richard Cordray, would hold a Thursday public event in Raleigh, N.C. to discuss student loan servicing issues, an area of continuing concern for students who say some loan servicers have not helped the get into income-based repayment plans.

However, Alys Cohen, a staff attorney for the National Consumer Law Center, said the proposals would “kick the legs out from under the CFPB,” which reported it had provided nearly $12 billion in relief and assistance to more than 29 million consumers from its 2011 opening through the end of February 2017.

A random sampling of consumers referred by advocacy groups readily agreed.

In Minnesota, John Lukach said he filed a complaint with the CFPB after Navient, the servicer for his nearly $60,000 in private student loans, did not respond to his requests for more affordable repayment options that would cut his monthly bill. Within two days, a Navient representative contacted him to discuss available alternatives, “something that probably wouldn’t have happened” without the CFPB, Lukach said.

In Arkansas, Myra Brewer, 71, said a debt collector called her and tried to force her to repay a roughly $3,000 credit card debt the company said was owed by her late daughter. She refused, even as the company called multiple times a day for weeks, Brewer said. Ultimately, she obtained the name of the bank that had put the purported loan out for collection and then filed a complaint with the CFPB. “That got action,” she said.

In Florida, a mortgage loan originator Pamela Marron noticed that many former homeowners who’d been caught in a wave of financial crisis short sales — selling their houses for less than the mortgage total — had trouble reentering the housing market. The reason, she determined, was that the nation’s three major credit reporting agencies coded the short sales as foreclosures. That meant the consumers could not qualify for conventional, federal government-backed mortgages for seven years.

After Marron filed complaints with the CFPB, banks re-coded the consumers’ mortgage applications and started processing them. “The CFPB people were very helpful because they understood the data we were looking at,” she said.

Armed with similar consumer experiences, advocacy groups are already discussing efforts to block Washington’s efforts to weaken the CFPB.

Kelleher, the Better Markets CEO, likened the efforts to the recent consumer drive that stopped the administration from derailing an Obama-era rule that now requires financial advisers to put consumers’ interests above their own. The regulation went into partial effect last week, but enforcement isn’t set to start until January.

“Big parts of that coalition will also work against deregulation” elsewhere in the financial industry, Kelleher said.

Follow USA TODAY reporter Kevin McCoy on Twitter: @kmccoynyc

______________________________________________________________________________________________

In USA Today. Help that CFPB provided for short sale code problem noted. CFPB “Submit a Complaint” worked when other fixes did not. Directions: http://housingcrisisstories.com/submit-a-complaint-cfpb/

https://www.usatoday.com/story/money/2017/06/14/dodd-frank-trump-says-roll-back-consumers-map-fight-back/102814996/

© 2017 USA TODAY, a division of Gannett Satellite Information Network, LLC.

Dodd-Frank: Trump says roll-back, consumers map fight back

Call to weaken post-crisis financial safeguards could face long battle


Underwater homes on the decline nationwide – but that’s not the whole story

HomeNews

by Ryan Smith, 08 May 2017

There were nearly 5.5 million seriously underwater properties in the US during the first quarter, according to new data from ATTOM Data Solutions. That’s an increase from Q4 of 2016 but still down by more than 1.2 million from the first quarter of last year.

Seriously underwater properties – property where the loan amount was at least 25% higher than the estimated market value – accounted for 9.7% of all US properties with a mortgage in the first quarter, according to ATTOM.

But those numbers don’t tell the whole story, according to Darren Blomquist, senior vice president at ATTOM. While negative equity is on a mostly downward trend nationwide, there are still swathes of the country where underwater property is almost the norm.

“While negative equity continued to trend steadily downward in the first quarter, it remains stubbornly high in often-overlooked pockets of the housing market,” Blomquist said. “For example, we continue to see one in five properties seriously underwater in several Rust Belt cities, along with Las Vegas and central Florida. Additionally, close to one third of homes valued below $100,000 are still seriously underwater.”

And those underwater properties can pull down surrounding home values, Blomquist said.

“Several of the cities with the biggest quarterly increases in underwater properties saw a corresponding increase in share of distressed sales in the first quarter, creating a drag on overall home values…” Blomquist said.

Baltimore, Md. Saw the biggest quarterly increase in underwater homes, up 26,974. It was followed by Philadelphia (up 8,919), McAllen, Texas (up 7,746), Cleveland, Ohio (up 7,631), and St. Louis, Mo. (up 6,844). All of those markets still had fewer underwater properties in the first quarter than during the same period in 2016, ATTOM said.

reprinted from Mortgage Professional America: http://www.mpamag.com/news/underwater-homes-on-the-decline-nationwide–but-thats-not-the-whole-story-66996.aspx

 


Morning Briefing: HELOC owners face sharp payment increases in 2017

by Steve Randall

Challenging times are ahead for thousands of homeowners with HELOCs as their lines of credit reset with higher monthly payments while some may struggle to refinance.

Analysis by Black Knight Financial shows that 1.5 million HELOCs will see interest-only draw periods end this year with just under $100 billion in outstanding unpaid principal balances; an average of $62,500 per HELOC.

The data reveals that average borrowers whose lines of credit reset will face an additional cost of $250 per month, more than double the current average payment.

“In 2017, 19 percent of active HELOCs are facing reset,” said Ben Graboske, Black Knight Data & Analytics EVP. “This is the largest share of active HELOCs facing reset of any single year on record, although the approximate 1.5 million borrowers slated to see their HELOC payments increase this year is about 100,000 fewer borrowers than in 2016.”

Graboske explained that the lines resetting this year and early in 2018 are the last of the pre-crisis-era HELOCs that the industry has been focusing on since early 2014.

A third of those with HELOCs resetting this year will find refinancing challenging as they have less than 20 per cent equity in their homes. A fifth have less than 10 per cent and 1 in 10 are underwater.

While that is a concern, it reveals a large improvement from 2016 when 45 per cent of HELOC owners were below 20 per cent and a fifth were underwater.

For most borrowers though, recent conditions have enabled them to avoid the addition monthly cost of a reset.

“One thing that’s working in the 2007 vintage HELOCs’ favor has been the equity and interest rate environment of the last year. Rising home prices and low interest rates throughout 2016 have allowed borrowers to be much more proactive than in years past in terms of paying off or refinancing their lines to avoid increased monthly payments,” Graboske explained.

*originally published on Mortgage Professional America’s website.


Drill Down on Short Sale and Modification Credit

By Pam Marron | National Mortgage Professional Magazine | April 2017

Recently, a joint effort of the mortgage and the housing counseling industries to remedy continued credit problems of past short sellers who continue to receive a foreclosure credit code on their past short sale credit was investigated. While reviewing data, it was learned that this same credit code problem also affects consumers who have had a modification. The foreclosure code problem seems to be present when mortgage lates go past 120 days, a trait present in many short sales and modifications. But we were stunned when the foreclosure credit code also showed up on a consumer who had excessive mortgage lates… but no short sale, foreclosure or modification.

To prove the data found, nine cases including short sales, a modification, a Deed in Lieu and one where none of these existed were set up in the same format. A tri-merged credit report was pulled for each and a visual of the problem credit trade line was provided as well as a snapshot of the individual bureau repositories of Experian, TransUnion and Equifax.

Fannie Mae

All cases were run through the Fannie Mae Desktop Originator (DO) automated underwriting system (AUS) with the tri-merged credit report. A visual of the findings for an approval or declination and what the blended tri-merged credit in Fannie Mae looks like was provided.

The Fannie Mae workaround was used for loans that received a Desktop Originator Refer with Caution and it worked… even on the modification.

There is no workaround for Freddie Mac.

Freddie Mac

For Freddie Mac, cases were run through the Loan Prospector Advisor (LPA) first with the lender tri-merged credit report. Then, the case was run again using the credit in-file option allowed internally through Freddie Mac’s LPA. A snapshot of Freddie Mac’s tri-merged credit and the separate credit in-files was included.

Here is what was found in Freddie Mac:

  • There is no variation for foreclosure verbiage. Either “13. Recent foreclosure/signif derog appears on credit report” appears in findings, or it does not.

Other remarks are often included:

  • “64. Crdt rpt w/recent mtg delinq or review mtg credit history”
  • “YW. The Borrower has had a foreclosure within the last seven years. The mortgage file must also contain evidence of the completion of the foreclosure.”

Number of consumers at risk

Thanks to RealtyTrac (now ATTOM Data Solutions), it was learned that there were 1,978,754 short sales and deeds in lieu completed from 1/1/2010 through 12/31/2016.

The wait timeframe after a short sale or deed-in-lieu is 4 years, rather than the 7 year wait timeframe after a foreclosure.

Thus, as of Dec. 31, 2016, 1,032,211 of those with a past short sale or deed-in-lieu are past the 4 year wait timeframe and are now eligible to re-enter the housing market. Any of these clients and additionally those who had a modification or who had mortgage lates past 120 days will most likely encounter a new mortgage denial for a Fannie Mae or Freddie Mac conventional mortgage.

We haven’t even looked at the number of modifications affected yet.

How Problem Continues

A conventional mortgage denial occurs when the automated underwriting system reads credit code of a past short sale as a foreclosure. When the lender calls Freddie Mac or Fannie Mae, support tells the lender that the information is coming from one or more of the bureaus (TransUnion, Experian or Equifax). Ultimately, the consumer is told they must get the credit fixed with the bureau(s) where the foreclosure code is coming from, though Fannie Mae has a workaround for this problem.

The borrower tries to get this fixed by placing a “dispute” on the account. The “dispute” hides the actual credit from Fannie Mae and Freddie Mac automated systems and must be lifted from the credit when the consumer applies for a new mortgage. When the dispute is lifted, the problem credit comes back and most often credit scores plummet. This results in a higher rate for the consumer and the lender must pay for a Rapid Rescore, the quickest way for consumers to get a credit score change. This is a big problem when found during a contract with a deadline. Lenders that end up paying for the Rapid Rescore often do not want to assist consumers where this problem is anticipated due to the cost the lender must incur.

Another problem is the “Date Reported”, or a more recent change to an account than the initial occurrence date. The more recent date often exempts a past short seller from a new conventional mortgage when it falls within the minimum required wait timeframe. This date cannot be changed per credit reporting agencies.

Stay tuned.


Federal Housing Administration to reduce annual insurance premiums, saving homeowners avg $500 this year

FHA to lower annual insurance premiums

FHA to lower annual insurance premiums  

U.S. Housing and Urban Development Secretary Julián Castro said on Monday the Federal Housing Administration will reduce the annual premiums most borrowers will pay by a quarter of a percent.

The FHA is reducing its annual mortgage insurance premium by 25 basis points for most new mortgages with a closing or disbursement date on or after Jan. 27. The new rates are projected to save new FHA-insured homeowners an average of $500 this year, Castro said.

The secretary said consumers are facing higher credit costs as mortgage interest rates increase.

 “After four straight years of growth and with sufficient reserves on hand to meet future claims, it’s time for FHA to pass along some modest savings to working families,” said Castro.”This is a fiscally responsible measure to price our mortgage insurance in a way that protects our insurance fund while preserving the dream of homeownership for credit-qualified borrowers.”

The new rates come as the FHA enters a fourth straight year of improved economic health, the administration said. The FHA gained $44 billion in value since 2012.

“We’ve carefully weighed the risks associated with lower premiums with our historic mission to provide safe and sustainable mortgage financing to responsible homebuyers. Homeownership is the way most middle class Americans build wealth and achieve financial security for themselves and their families,” Ed Golding, principal deputy assistant secretary for HUD’s Office of Housing, said in the report.


Loan Originators: Be aware of “disputes” on credit reports and automated underwriting findings. Also on short sales, check “Date Reported”.

 Do it before a contract is signed.

By Pam Marron, Jan 9, 2017 for National Mortgage Professional Magazine

Frustrated consumers looking for solutions to correct erroneous information on their credit report often turn to credit repair companies or their mortgage lender for help. A dispute is the 1st method tried but this “fix” is temporary. A requirement to delete the dispute and rerun the automated submission is usually brought to the attention of loan originators who are unaware of the existence of the dispute or where to find it… often weeks before a closing date.

When an account is put into a dispute, that credit is temporarily hidden from Fannie Mae, Freddie Mac and USDA automated underwriting systems (AUS), allowing a false AUS approval. But direction from AUS findings or a mortgage underwriter alerts us that the dispute needs to be deleted from the credit report and that the AUS must be run again. If the credit in dispute is adverse credit, the credit score goes down when the dispute is lifted and an AUS approval commonly changes to a “Refer” or “Caution”, or a loan denial.

Deleting a dispute is not a one step solution. The borrower can do the “fix” if they have 45 to 60 days to do so. But often, due to impending contract deadlines, the only option is a Rapid Rescore which can delete the dispute within 2 to 5 days. However, this is a costly remedy. Further, under FCRA guidelines, the borrower cannot pay for this Rapid Rescore cost and the loan originator or lender must pay.

There are four things a loan originator can do upfront.

  1. Disputes: check the entire credit report whether a mortgage, credit card or loan, for any dispute verbiage. Common dispute statements:
    1. DISPUTE RESOLVED – CONSUMER DISAGREES (disputes the dispute!)
    2. CONSUMER DISPUTES THIS ACCOUNT INFORMATION
    3. ACCOUNT INFORMATION DISPUTED BY CONSUMER

Go into each of the three repositories (Experian, Equifax, Trans Union) on the borrower’s credit and check which ones have dispute verbiage. These are the disputes that must be deleted. Zero balance accounts normally do not apply, but check with your lender.

If you have at least 45 days, retrieve the generic dispute form from your credit reporting agency and have your borrower follow explicit direction from your credit reporting agency on how the dispute can be deleted.

If you don’t have this time, retrieve the Rapid Rescore form from your lender and find out what is needed to delete the dispute.

  1. Run automated Fannie Mae Desktop Originator(DO)/Underwriter(DU) or Freddie Mac Loan Prospector Advisor(LPA) and USDA Government Underwriting System (GUS) upfront. Usually dispute messages are within the findings stating “there appears to be a dispute on the credit report” and direction appears for what needs to be done.
  1. Submit a Complaint to the CFPB for Short Sale Credit Code Correction

What has worked is to “Submit a Complaint” for a mortgage at the Consumer Financial Protection Bureau (CFPB) website: http://www.consumerfinance.gov/complaint/. (Visual instruction and what to attach is located at  http://housingcrisisstories.com/submit-a-complaint-cfpb/.) This is not a dispute but a request for correction to the credit.

Why this is different:

Short sale credit is often coded as a foreclosure when the late payments (still) required to get a short sale approved exceeds 120 days. Often, past short sellers have already had an experience where it was learned that their short sale was coded as a foreclosure. Many have gone to a credit repair company or have attempted a correction themselves to get the erroneous credit code changed. A placed dispute temporarily hides the credit but does not correct the code.

  1. Check “Date Reported” on credit report. Make sure the date is the same as the short sale closing date on the HUD-1 closing statement. If the borrower has previously contacted the short sale lender upon learning that their short sale was coded as a foreclosure, that new date which may also include a dispute of the account becomes the “Date Reported”, or a more recent date then the short sale closing date. If the new “Date Reported” is within four years, the wait timeframe required for a new conventional Fannie Mae or Freddie Mac mortgage, this will result in a loan denial in both Fannie Mae and Freddie Mac AUS’s. If this occurs, you will need to find a conventional lender that will do a manual underwrite.

Hunting for solutions on this now. “The valuable role that housing counselors can play in helping consumers with credit” coming soon. Stay tuned.


Mortgage and Real Estate industries blamed each other for the crisis.

Plea for Smart Analysis of What Works and What Doesn’t from the Mortgage and Real Estate Industries

by Pamela Marron

8 years ago, our current administration inherited a financial crisis that this country has not experienced anything close to since the Great Depression. When it occurred, it was visibly seen in the collapse of the housing market. Initially, problems were blamed on an unscrupulous mortgage broker industry until it was learned that the banking industry had an equal amount of blame.

Almost every loan originator I know was negatively impacted by the housing crisis. They were either losing their homes or their income and in many cases, both. All of us saw this coming but complacency set in after years, not months, of the housing market going up. Conversation slowly dissipated as the housing market heated up and more jumped in. But, when the crash happened, it was fast and mammoth.

Many of us are taking notice of similar signs again as we see housing values increase quicker than normal market appreciation. Flippers have become the norm and are challenged when appraised values don’t meet increased asking prices of homes. This time it can’t be blamed on the lending company. Even though the process can be frustrating, appraisals are now done by third-party appraisal management companies (AMC) who lenders and realtors have no communication with until after the appraisal is completed. Ultimately, this policy seems to have tempered an explosion of skyrocketing home values, requiring consistent data to go to an arms-length third party arbitrator who can change value when warranted.

Additionally, due to the qualified mortgage (QM) requirements put in place by the Consumer Financial Protection Bureau (CFPB), almost all sellable mortgage products no longer have prepayment penalties, negative amortization, balloons and interest only options. Prior to the housing crash, these negative options were mostly explained to consumers as “rare to happen” but ultimately became a main problem for so many homeowners who were negatively affected.

There’s still great anger at the current administration for policies put in place meant to protect the consumers and the housing market. Many say those measures went too far and stalled the progress of the housing market and ultimately added more cost to the entire mortgage process. Others say it could have been much worse if these safeguards were not put in place, and that the inconveniences placed upon our industry needs to be adapted to. Yes, policies can be streamlined. Yes, we have had to deal with unintended consequences not realized often until policy is in place. But the depth of problems that the housing industry faced during the last eight years was unprecedented. Drastic measures were necessary immediately to stop the bleeding.

I know that many in both mortgage and real estate industries have opposite views of the above. What is real is that over the last eight years, more people than ever realized had hardships never-before experienced that resulted in a downward spiral in their lives, and for their children, extended family and ultimately entire communities. To add to frustration, dealing with housing issues seemed to come to a standstill months before general elections, a topic that no political candidate wanted to touch.

Please don’t tell me this won’t happen again with this new administration. Instead, those of us in the mortgage and real estate industries need to make the time to speak to each other’s industries about what worked and what didn’t and to connect with agencies that can help when needed. Good practices need to be expanded on and policy that provides equal benefit to the mortgage industry and consumers must prevail. WE need to be the first stewards of our industries, and without prodding.

Pamela M. Marron, Florida Licensed Mortgage Broker NMLS#246438


Feds Plan to Sue Moody’s Over Pre-2008 Securities Ratings

, as published on National Mortgage Professional.com

Friday, October 21, 2016 – 15:07

Moody’s Corp. has announced that the U.S. Department of Justice (DOJ) is planning to bring a civil complaint that charges the company with violating the Financial Institutions Reform, Recovery and Enforcement Act for its rating of residential mortgage-backed securities and collateralized debt obligations in the period before the 2008 financial crash.

According to a Bloomberg report, Moody’s revealed that it was informed of the DOJ’s plans in a September 29 letter from the department. Moody’s added that an unspecified number of state attorneys general may pursue similar claims, adding that the governmental probes into the case “remains ongoing and may expand to include additional theories.”
The DOJ offered no public comment on the report. Last year, another credit ratings agency, S&P, paid $1.5 billion to settle federal charges accusing it of improper ratings prior to the 2008 crash. S&P added that it accepted the settlement rather than deal with the “delay, uncertainty, inconvenience, and expense” of litigation.

Yellen Raises the Possibility of a “High-Pressure” Economy

from National Mortgage Professional Magazine, Friday, October 14, 2016

Federal Reserve Chairwoman Janet Yellen took a dramatic departure from her usual talking points to wonder aloud if a “high-pressure” economy would be able to erase the lingering economic wreckage created by the 2008 crash.

According to a Reuters report, Yellen used a speech today before an economics conference to outline potential solutions to the continued problems that have prevented a complete recovery from the last recession. Yellen stated whether a fix could be achieved “by temporarily running a ‘high-pressure economy,’ with robust aggregate demand and a tight labor market. One can certainly identify plausible ways in which this might occur. Increased business sales would almost certainly raise the productive capacity of the economy by encouraging additional capital spending, especially if accompanied by reduced uncertainty about future prospects. In addition, a tight labor market might draw in potential workers who would otherwise sit on the sidelines and encourage job-to-job transitions that could also lead to more efficient—and, hence, more productive—job matches. Finally, albeit more speculatively, strong demand could potentially yield significant productivity.”

Yellen did not speculate on what this scenario would mean for the housing market, which has seen home prices rising far ahead of wages. Nor did she address what has become the new guessing game in economic political circles: when will the Fed start to raise interest rates with greater regularity? Instead, her comments pointed to a new toolbox that central bankers would be able to use in the event that the 2008 situation were to happen again.

“If strong economic conditions can partially reverse supply-side damage after it has occurred, then policymakers may want to aim at being more accommodative during recoveries than would be called for under the traditional view that supply is largely independent of demand,” Yellen said, adding that it would “make it even more important for policymakers to act quickly and aggressively in response to a recession, because doing so would help to reduce the depth and persistence of the downturn.”


Even if Refinancing Looks Like a No-Brainer…

from MortgageNewsDaily.com, Sep 28 2016, 12:27PM

Why are so many people holding on to mortgages with high interest rates?  Sentiment? Inertia?

Apparently not.  In the current issue of CoreLogic’s MarketPulse, Principal Economist Molly Boesel drills down into the universe of borrowers who are standing fast with their old loans, even though it looks on paper like a refinance would be a smart move.  She finds that many of these borrowers haven’t refinanced either because they can’t or it really isn’t worth it.

Looking at the mortgages that were outstanding at the end of May, Boesel found that 41 percent of them representing 31 percent of unpaid principal balance (UPB) had mortgage rates greater than 4.38 percent, roughly 100 basis points higher than the current rates at that juncture and a point at which refinancing makes financial sense.  Eighteen percent of all mortgages (representing 17 percent of UPB) have rates between 4.38 and 5.0 percent, and 23 percent have rates over 5 percent.  Why wouldn’t these borrowers refinance?

First she found that a lot of them are currently seriously delinquent on their existing loans. While only about 2 percent of low interest rate mortgages (under 5 percent) are seriously delinquent, 12 percent of those with rates above 7 percent are 90 or more days past due and would be unlikely to qualify for a new mortgage.

 

Even current mortgages with high rates present a difficult credit profile.  Between 30 and 50 percent of loans with rates over 5 percent have at some point had a 30-day delinquency.  The incidence rises with the rate.  Only about 11 percent of those with rates below 5 percent have at some point been 30 days overdue.  Those “ever late” borrowers may not be able to qualify for a low enough rate to make refinancing attractive.

 

 

Boesel also removed mortgages in private-label securities from the list of refinancable borrowers because they would not be eligible for HARP loans that are reserved for refinancing Fannie Mae and Freddie Mac loans.

After taking the currently delinquent, ever delinquent, and private label loans out of the mix she found that the share of loans with interest rates greater than 5 percent had fallen to 13 percent of those outstanding and to 7 percent of UPB.  And that latter number is the final piece of the puzzle.

 

 

Small outstanding balances may not be worth refinancing as the resulting savings would be low. The figure above shows the average UPB of outstanding mortgages that have never been delinquent and are not in private pools by their interest rate.  Those borrowers with rates above 5% have very low UPB; those above 7 percent have average balances of $53,000.

While mortgages rates are near historic loans, Boesel concludes, there may not be many borrowers left who have the incentive or are eligible to refinance.



Wages Lag Home Prices; Affordability Suffers

from Mortgage News Daily, Sep 29 2016, 12:57PM

The lack of housing affordability is rising among the 414 U.S. counties tracked by ATTOM Data Solutions.  ATTOM, the new parent company of RealtyTrac, said on Thursday that 24 percent of those counties were less affordable than their historic averages in the third quarter of 2016, up from 22 percent in the second quarter and 19 percent a year earlier.  It was the highest share for this metric since the third quarter of 2009 when 47 percent of markets had fallen below their historic affordability averages.

ATTOM reports that 101 of the 414 counties had an affordability index below 100 in the third quarter of 2016, meaning that buying a median-priced home in that county was less affordable than the historic average for that county going back to the first quarter of 2005.

ATTOM’s affordability index is based on the percentage of average wages (taken from the U.S. Bureau of Labor Statistics) that is needed to make monthly house payments on a median priced home (as determined from publicly recorded sales deeds.) That payment is composed of principle, interest on a 30-year fixed rate mortgage with a 3 percent downpayment and including property taxes, and insurance.

“The improving affordability trend we noted in our second quarter report reversed course in the third quarter as home price appreciation accelerated in the majority of markets and wage growth slowed in the majority of local markets as well as nationwide, where average weekly wages declined in the first quarter of this year following 13 consecutive quarters with year-over-year increases,” said Daren Blomquist, senior vice president at ATTOM Data Solutions. “This unhealthy combination resulted in worsening affordability in 63 percent of markets despite mortgage rates that are down 45 basis points from a year ago.

 

 

Counties that were less affordable than their historic averages in Q3 included Harris County (Houston), Kings County (Brooklyn); Dallas County; Bexar County (San Antonio); and Alameda County in the San Francisco metro area.

Counties still affordable by historic standards included Los Angeles County, Cook County (Chicago); Maricopa County (Phoenix); Miami-Dade County; and Queens County, New York.

continue reading


The Problem with Credit Report Disputes

By Pam Marron

Written for National Mortgage Professional Magazine, September 26, 2016

Many past short-sellers attempting to purchase a home are told that their short sale credit shows up as a foreclosure in the Fannie Mae and Freddie Mac automated underwriting systems. Many of these affected consumers then dispute this credit or employ a credit repair company to do so. Thus, it is not uncommon to see a credit dispute on past short sale credit.

The problem with credit disputes is that they are often a temporary fix. When a credit account is disputed, the creditor is given a 30-day timeframe to respond to the dispute. If the creditor does not respond, the disputed information is taken off the credit. However, the comment “account in dispute” appears on that credit line. Dispute comments make the affected account invisible to both Fannie Mae and Freddie Mac automated underwriting systems (AUS) causing the findings to be inaccurate. This is why underwriters require that dispute comments must be deleted from the credit report before an accurate response can be provided through the Fannie Mae or Freddie Mac automated underwriting systems.

When the dispute is lifted, the past negative credit appears again.

Your borrower can request that the dispute is deleted from their account themselves but the timeframe to get this done start to finish can take up to 50 days. Often, there is a signed purchase contract that is time sensitive. Instead of having the luxury of time, a costly Rapid Rescore must be done to get the dispute comments deleted quickly. And loan originators, YOU must pay for this Rapid Rescore.

It gets worse. On a Rapid Rescore, deleting dispute comments from a negative credit account usually results in a lower credit score.

If There is Time for Borrower to Handle Deleting Dispute Comments Directly with Creditor and Credit Bureaus

  1. Loan Originators: Check every credit report for dispute comments prior to application. If dispute comments exist, start working to delete these remarks immediately and allow for a closing date that gives enough time.
  2. Make sure your borrower has the name and account number of the disputed account creditor. Have the borrower contact the creditor directly to request deletion of dispute remarks. Depending on the dispute comments, deletion can take 24 hours to 30 days.
  3. Make sure that your borrower states and puts in writing if necessary that no other parties can provide a new dispute notice.
  4. Have your borrower contact the creditor 5 days later to insure the dispute has been taken off and have them retrieve a letter with contact information for verification purposes.
    • This letter can be used to send to the credit bureau to order a *Rapid Rescore, where corrected information is merged into a new credit report at a cost and produced within 2-5 days. The timeframe of getting this correction on a new credit report without using Rapid Rescore is 30-45 days after the creditor initiates the deletion.
  5. Once the creditor has confirmed that the dispute comments have been removed, have your borrower contact the live agent at the Dispute Department for each of the 3 credit bureaus and ask them to remove the dispute comments. Ask each credit bureau if a request to delete a dispute must be requested in writing or if this can be done over the phone. (This can vary depending on the status of the dispute.) If a letter is needed, the borrower will have retrieved this from the creditor.
    • TransUnion: 800-916-8800
    • Experian: 800-493-1058
    • Equifax: 877-322-8228
  6. Pull a new credit report 35 days after the borrower has requested that the dispute comments be deleted by the creditor. If dispute comments still show up, wait another 10 days and repull credit.
  7. When the new credit report with deleted dispute comment comes in, check the credit score, make sure the loan still fits within program guidelines and run through Fannie Mae or Freddie Mac automated underwriting system.

Retrieving the Credit Report with a 2-5 Day *Rapid Rescore Through a Credit Reporting Agency

A new credit report can commonly be updated in 2-5 business days using *Rapid Rescore. You, the loan originator will have to pay for this.

  1. Each credit reporting agency (CRA) has a link to 1) TransUnion, 2) Equifax and 3) Experian for each account on the credit report that allows you to see “which bureau” specifically has the dispute comment noted.
  2. Complete the generic form for your CRA to order the deletion of dispute remarks for only those bureaus that show the dispute through a *Rapid Rescore for each borrower connected to the dispute account and who is on the new mortgage.
  3. When the new credit report is done, follow step 7 above.

FHFA Announces New Streamlined Refinance Offering for High LTV Borrowers: HARP Extended through September 2017

8/25/2016

Washington, D.C. – The Federal Housing Finance Agency (FHFA) today announced that Fannie Mae and Freddie Mac (the Enterprises), at FHFA’s direction, will implement a new refinance offering aimed at borrowers with high loan-to-value (LTV) ratios.  The new refinance offering will provide much-needed liquidity for borrowers who are current on their mortgage but are unable to refinance through traditional programs because their LTV ratio exceeds the Enterprises’ maximum limits.

“Providing a sustainable refinance opportunity for high LTV borrowers who have demonstrated responsibility by remaining current on their mortgage makes financial sense both for borrowers and for the Enterprises,” said FHFA Director Melvin L. Watt.  “This new offering will give borrowers the opportunity to refinance when rates are low, making their mortgages more affordable and thus reducing credit risk exposure for Fannie Mae and Freddie Mac.”

Eligibility

In order to qualify for the new offering, borrowers: (1) must not have missed any mortgage payments in the previous six months; (2) must not have missed more than one payment in the previous 12 months; (3) must have a source of income; and (4) must receive a benefit from the refinance such as a reduction in their monthly mortgage payment.  Full details will be available in the coming months through the Enterprises, but the offering will make use of the lessons learned from the Home Affordable Refinance Program (HARP) and its streamlined approach to refinancing.

Read more


mortgage crisis

What Could Drive Another Mortgage Crisis?

Continued Policy That Damages Credit of Responsible Homeowners and the Apathetic Reason Nothing is Done

By Pam Marron, for National Mortgage Professional Magazine | Sept. 2016 Issue

There is no refinance available for as many as 6.4 million negative equity homeowners who have a conventional first mortgage not backed by government sponsored enterprises (GSE) Fannie Mae or Freddie Mac, or a second mortgage or home equity line of credit (HELOC) that is “underwater”, where more is owed on the mortgage than the home is worth. Many of these mortgages are interest only loans that are now resetting to fully amortized payments with increases seen as high as 400%+. Simply, because these loans have negative equity, there is no refinance available to reduce initial higher interest rates from years ago. The only option for affected homeowners is a modification or a short sale and both require the homeowner to be delinquent on their mortgage first.

These homeowners struggle to “stay put” in negative equity homes awaiting home values to return. If this problem is not taken seriously, the result will be a new wave of short sales that will have a negative impact on the housing industry. It is already happening.

And this time it is affecting the elderly.

Caps placed on the maximum loan-to-value of non-GSE 1st mortgages and the combined loan to value when 2nd mortgages and HELOCs exist are what holds back a refinance for these specific negative equity loans. Compound this with the interest only reset of many of these loans, and the problem is disastrous.

For too long, there has been a lack of attention to a refinance where none exists for negative equity homeowners. Many believe these homeowners “did it to themselves” and massive press about short sellers labeling them as “strategic defaulters” (or those able to make payments but refuse to) was overshadowed by the fact that negative equity homeowners who worked with banks to short sell homes were told by their own lenders that they could not get approved for the short sale until they were delinquent on their mortgage first. This policy continues to this day for most lenders.

But since 2013, reports have proven that [1]”ruthless” or “strategic” default during the 2007-09 recession were relatively rare. In a [2]2015 follow up of this study, job loss and adverse financial shocks in addition to divorce, large medical expenses and other severe income loss attributed greatly to mortgage default. Most importantly in this report… While household-level employment and financial shocks are important drivers of mortgage default, analysis shows that financially distressed households do not default. More than 80% of unemployed households with less than 1 month of mortgage payments in savings are current on their mortgage payments.

Disdain of reasons for why negative equity occurred is often the primary focus of apathetic attention to a refinance solution. Instead, focus should be on a sustainable refinance for those on time with their mortgage payment to assist them to “stay put” longer.

There is no argument of “moral hazard” or “strategic default” for a refinance option that allows responsible homeowners breathing room to stay put. When homeowners are not struggling to make their payments, they keep up homes which increases the value of our communities.

We can continue to think that the negative equity problem has gone away in the United States but it has not.  More calls are coming in from elderly with no chance of increase in their income. Many of them did a refinance or a second mortgage to help other family members but are now stuck themselves. The reason for a refinance should not matter. And we shouldn’t require affected homeowners to be delinquent on their mortgage first causing a destruction of good credit that results in negative unintended consequences for future credit.

Instead, we should be questioning how we can stabilize areas where negative equity still exists.

There are solutions available with existing mortgage programs now. A white paper entitled “Urgent Attention Needed: Two Problems and Solutions That Exist for Responsible Homeowners Who Have Negative Equity in Their Homes” that provides U.S. and Florida data showing how many negative equity homeowners can be helped is at http://housingcrisisstories.com/wp-content/uploads/2016/07/Urgent.pdf.

 

[1] Unemployment, Negative Equity, and Strategic Default | August 2013 |Federal Reserve Bank of Atlanta | http://www.urban.org/sites/default/files/gerardi-kerkenhoff-ohanian-willen-strategic-default.pdf

[2]  Can’t Pay or Won’t Pay? Unemployment, Negative Equity, and Strategic Default | Sept. 21, 2015 | https://www.bostonfed.org/publications/research-department-working-paper/2015/cant-pay-or-wont-pay-unemployment-negative-equity-and-strategic-default.aspx


Democrat vs republican

Clinton vs. Trump: Different visions for housing finance

By Victor Whitman, Reprinted from the Scotsman Guide

Republicans and Democrats have approved party platforms with fundamentally different views on the role of government in housing and housing finance. As the presidential election shifts into high gear, we’ve looked at what both parties and the presidential candidates have to say about the future role of government in housing finance.

Republicans

The Republican platform makes the case for cutting regulations and the government’s role in housing. The document sharply criticizes the sweeping financial reforms under Dodd-Frank, calling the 2010 law the Democrats “legislative Godzilla” that is “crushing small and community banks and other lenders.” It also singles out the consumer watchdog agency created by Dodd-Frank, the Consumer Financial Protection Bureau (CFPB). According to the Republican platform, the CFPB is “a rogue agency” that if “not abolished, it should be subjected to congressional appropriation.”

Republicans also directly blame the government-sponsored enterprises Fannie Mae and Freddie Mac for sparking the 2008 housing crisis.

continue reading here


Urgent Attention Needed. Two Problems and Solutions That Exist for Negative Equity Homeowners

Let’s Work Together to Fix the Problems Now

Restructured and Refinanced: There is a way to use government entity funds as a new 2nd mortgage and combine these funds with six existing refinance programs to provide a refinance where none exists for millions of responsible, currently paying homeowners who have negative equity mortgages. The benefit? Credit stays intact, homeowners “stay put” in homes while equity escalates and communities recover.

There are over four million homeowners across the U.S. who are still trapped in their current location because they have no refinance option for a first mortgage, a second mortgage, or a Home Equity Line of Credit (HELOC). Over 454,000 of them live in Florida alone!

These are often people who are hanging on by a thread, but through no fault of their own, have no option for a refinance. Currently the only option available requires mortgage delinquency and proof of hardship to achieve a loan modification. We must provide solutions that do not destroy the credit of those with negative equity.

Unless we provide a solution, there will be another wave of defaulted mortgages. These are not people looking for a handout. They desperately want to keep their credit intact, but no option currently exists to let them do so. The solutions presented in this report simply restructure current debt with available programs to allow the homeowners to stay in their home while staying current on their mortgage.

Solutions to lift these homeowners out of negative equity are already available. We need to get our legislators and leaders on-board now because three of the options will expire in December, 2016.

Read the entire report! Click the button below to download it and start reading now. Comments are welcome.


Candidates Need to Focus on Housing Affordability: Survey

By

Nearly two-thirds of Americans think that something can be done to address problems related to housing affordability — and they want the presidential candidates to talk about it.

Sixty-three percent of adults believe that candidates for president have not spent enough time discussing housing affordability, according to the fourth annual How Housing Matters survey released Thursday from the John D. and Catherine T. MacArthur Foundation. The survey also found that 81% of adults believe that housing affordability is a problem in America today.

And results from the survey suggest that Americans’ optimism toward the economy’s recovery from the financial crisis is waning. This year, 29% of adults said that they felt “the housing crisis is pretty much over,” down six percentage points from a year ago. In contrast, 44% believe the country is still in the midst of the housing crisis, and 19% said the worst is yet to come.

Meanwhile, having stable, affordable housing tied for second with saving for retirement as being very important for maintaining “a secure, middle-class lifestyle,” with 85% of respondents. Having a good job came in first with 90% of survey takers.

Unsurprisingly then, most respondents think more can be done politically, with 76% saying it is either very or fairly important for leaders in Washington to address the issue of housing affordability.

Democrats and independents were more likely than Republicans to say that the 2016 presidential candidates have not focused enough attention on the subject, with 75% of Democrats and 66% of independents saying this versus just 49% of Republicans, according the MacArthur Foundation’s report.


Over 20% Say Housing Will Affect Their Choice for President

by Jacob Passer, National Mortgage News – June 22, 2016

More than one in five Americans say the presidential candidates’ policies on housing and finance will shape their vote in November, according to the results of a survey conducted for loanDepot.

Altogether, 21% of survey respondents said that these policies will influence their choice of candidate, loanDepot reported Wednesday. But 36% of survey-takers said that the presidential candidates are not articulating their policies in these areas well.

Nevertheless, folks across the country are hungry for more: 35% of respondents said they want to hear more from the candidates on housing and finance, and that figure rose to 56% for Democrats and 39% for Republicans.

“People across the nation told us they want to hear more from the presidential candidates about their housing and financial policies on issues like income, access to credit, interest rates and affordable housing,” loanDepot Chairman and Chief Executive Anthony Hsieh said in the release.

“The candidate who does a good job in communicating their policies moving forward has an opportunity to influence millions of potential voters.”

Regarding the next president’s first 100 days in office, 37% of respondents said increasing the affordability of homeownership for lower- and middle-income families ranked as the top economic or housing priority to be addressed. Next was keeping interest rates low, 34%, and increasing the availability of credit to small businesses, 11%.

Nearly half of both Democrats and Republicans also responded that they wanted interest rates to remain low during the first 100 days of the next president’s term.

As for voters’ expectations of how the next president would affect their financial situation, 66% said they expected their situation to remain the same while 24% believe they will be worse off. Just 6% of voters expect the next president to improve their financial situation.

But loanDepot noted in the survey that voters’ perceptions don’t always align with reality. Case in point: 38% of respondents said they think it is harder to get a home loan today than it was immediately after the financial crisis. But as loanDepot notes, citing data from the Federal Reserve, denial rates for purchase loan applications reached 18% in 2008 versus 13% in 2014, the most recent year for which data is available.

The survey was conducted by Omniweb and included 1,000 adults, split evenly between men and women.


Good Credit Doesn’t Help Those with Negative Equity

Policy still exists today that requires mortgage delinquency first before any help on lower payments for underwater homeowners is considered. There are still 6.7 million underwater homeowners “staying put” awaiting equity to return and who are paying their mortgage on time. A great majority of them have no refinance option except a modification…. which requires mortgage delinquency and a hardship first.

Homeowners who have negative equity, who are staying put, and who are current on their mortgage… need to be given a refinance option just like those with equity available to them… a refinance that does not require mortgage delinquency first and allows continued, on time mortgage payments.

Many have asked why I am obsessed with keeping problems that surround underwater homeowners at the forefront. It is because of continued policy applied to those who have negative equity that requires mortgage delinquency first just to be considered for a better finance option when no refinance is available, or when an underwater homeowner must short sale their home.

For those with a non-Fannie Mae, non-Freddie Mac conventional first mortgage, a second mortgage or a home equity line of credit that has negative equity, mortgage delinquency is still required first just to be considered for a modification, their only option.

This delinquent mortgage requirement results in a denial of a new secondary market mortgage and a prolonged period of time to get a new mortgage. This directly affects mortgage and real estate industries and the U.S. economy.

Resetting [1]Interest Only First Mortgages, Second Mortgages and Home Equity Line of Credit (HELOC)

A large number of loans originated as interest only first, second mortgages and HELOCs are now resetting to fully amortized payments. Interest only loans have a set period of time when interest is paid only. It is common to see a three, five, seven or ten year reset time frame where full principal and interest payments on the outstanding balance including principal that is unpaid start to be paid back. In areas across the nation where home values have not come back yet, homeowners are stuck with initial higher interest rates simply because they have negative equity. Fully amortized payment increases have been seen as high as 400%. The only option available for negative equity non-Fannie Mae, non-Freddie Mac conventional first mortgages, second mortgage or home equity line of credit (HELOC) is a modification that.… you guessed it… requires mortgage delinquency and a hardship first in order to get help.

An alarming number of elderly homeowners who have refused to go delinquent on their mortgage but have negative equity interest only loans are now coming forward. It is especially heartbreaking to see homeowners in their 70s and 80s demoralized by the fact that they have to destroy their credit just to be qualified for a lower interest rate.

And, if these underwater homeowners ultimately short sale, the negative credit from the required mortgage delinquency results in a higher rent payment.

A great deal of early press educated our nation about “strategic defaulters”, claiming that many who walked away voluntarily were able to make payments but chose not to. However, a 2015 study entitled [2]“Can’t Pay or Won’t Pay? Unemployment, Negative Equity, and Strategic Default” cites that though unemployment was the single biggest financial shock, most financially distressed households didn’t default and underwater homeowners tapped into retirement resources and friends or relatives to stay afloat. Even among unemployed households lacking enough savings to make even one monthly mortgage payment, more than 80% stayed current.

Another issue centered around families who could afford to keep paying their mortgage but chose not to do so. Despite media attention to strategic defaulters, the study shows that these were rare. Fewer than 1% of households with the financial means to pay instead chose to walk away.

The study largely confirmed that personal economic events led to mortgage defaults without citing negative housing equity as the overriding factor. It also showed that many underwater homeowners struggle to hang on to their homes perhaps longer than they should, wiping out retirement assets awaiting positive equity to return.

Many who are in the mortgage business in areas still affected by negative equity are acutely aware of how the required mortgage delinquency results in a downward spiral of credit that prompts other negative consequences for underwater home owners just trying to stay put.

This country can’t afford to turn a blind eye to what we all saw coming in 2007-08. Good credit is still the benchmark of the mortgage and real estate industries and the driver of a good economy. Solutions are available right now.

[1] The I-O payment period is typically between 3 and 10 years. https://www.fdic.gov/consumers/consumer/interest-only/

[2] Can’t Pay or Won’t Pay? Unemployment, Negative Equity, and Strategic Default


Negative Equity Falls Nationally, Finds Foothold in Midwest

(by Jacob Passy – National Mortgage News)

While negative equity rates continue to drop nationally from their 2012 peak, the share of homeowners underwater in the Rust Belt remains elevated, according to data from Zillow.

The negative equity rate, which measures the share of all homeowners with a mortgage who owe more than their home is worth, was 12.7% during the first quarter, down from 13.1% in the fourth quarter and 15.4% in the first quarter of 2015. The negative equity rate hit its peak in the first quarter of 2012 at 31.4% and has either fallen or held steady every quarter since then, Zillow said Wednesday.

read more…


Pam Marron, Mortgage Professional

HUD Names New Federal Housing Advisory Committee

Written by Brian Sullivan, (202) 708-0685

WASHINGTON – The U.S. Department of Housing and Urban Development (HUD) today named 12 persons who will constitute the first-ever Housing Counseling Federal Advisory Committee (HCFAC). Established under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, this advisory panel will help HUD’s Office of Housing Counseling improve upon all the efforts to provide consumers with the knowledge they need to make informed and lasting housing decisions.

Last April, HUD solicited nominations to serve on the first-ever federal advisory committee. Those selected hail from among mortgage, real estate, consumer and housing counseling sectors. They include:

Mortgage Sector
1.    Pamela Marron New Port Richey, Florida
2.    Linda Ayres Las Vegas, Nevada
3.    José Larry Garcia El Paso, Texas
Real Estate Sector
4.    E.J. Thomas New Albany, Ohio
5.    Cassie Hicks Hattiesburg, Mississippi
6.    Alejandro Becerra Silver Springs, Maryland
Consumer Sector
7.    Afreen Alam Long Island, New York
8.    Meg Burns Arlington, Virginia
9.    Ellie Pepper New York State, Schenectady, New York
Housing Counseling Sector
10.  Judy Hunter Sacramento, California
11.  Arthur Zeman Saint Louis, Missouri
12.  Terri Redmond Hummelstown, Pennsylvania

Read brief bios of the HCFAC members.

The Housing Counseling Federal Advisory Committee will explore new opportunities to expand access to HUD housing counseling programs, develop new innovative strategies to support community-based counseling agencies, and identify methods to leverage our resources to amplify the impact of federally funded housing counseling. This panel will also develop new metrics to evaluate the health and capacity of the housing counseling industry, specifically in the context of disaster recovery and identify ways to improve the use of technology in housing counseling.

By teaching consumers basic principles of housing and money management, HUD’s network of approximately 2,000 HUD-approved housing counseling agencies help families to improve their financial situation, address their current housing needs, and pursue their housing and financial goals over time. Housing counselors increase awareness of both rights and responsibilities of homeownership and rental tenancy, addressing fundamental concepts such as anti-discrimination laws, the types of ownership and tenancy, budgeting, affordability calculations, maintenance and upkeep responsibilities, eviction and homelessness prevention, and where to get help when future housing challenges arise. Housing counselors provide support to households facing unemployment, finding and maintaining housing after returning from military deployment, or moving their families because their current housing situation is unsustainable.

There are many ways to find a HUD-approved housing counseling agency. Visit HUD’s website or call 1-800-569-4287 for our interactive telephone directory. Get the free housing counseling i-phone app from the app store (not yet available for android). Watch HUD’s video on how housing counseling can help families find (and keep) housing.


Fannie Readies Launch of ‘Trended Data’ Initiative

by Brian Collins, National Mortgage News

WASHINGTON — Lenders and credit bureaus are gearing up for Fannie Mae’s June 25 launch of its “trended data” initiative, which provides a new data element to its automated underwriting process.

The program provides a snapshot of an applicant’s revolving credit payments in an attempt to better divine a borrower’s creditworthiness. The launch marks a significant change for the mortgage industry.

Read More: http://www.nationalmortgagenews.com/news/secondary/fannie-readies-launch-of-trended-data-initiative-1078111-1.html?zkPrintable=true


Foreclosure rate is likely two years away from a return to true normal, CoreLogic economist says

The U.S. foreclosure rate and mortgage delinquencies have fallen to levels not seen since before the housing crash eight years ago, but that doesn’t necessarily mean that the housing market has return to normal. CoreLogic’s Chief Economist Frank Nothaft spoke with Scotsman Guide News about the improved housing market and why the foreclosure rate could take another two years to return to its traditional norm.

Completed foreclosures ticked up for the month in March, but overall the trend has been down, right?  

When you look on a year-over-year basis, and we compare our latest data from March 2015 to March 2016, the news is very good, and it has been very good for  a number of years. The total amount of foreclosure inventory — that is the percentage of mortgaged property that is some stage of  the foreclosure process — that’s dropped 23 percent from a year ago. We are now at the lowest inventory level, the lowest foreclosure rate, since November 2007 prior to the onset of the Great Recession. It is still elevated if we compare it to what the foreclosure rate was 15, 20 years ago, so we are not back to a normal foreclosure rate yet, but we have made substantial progress in the U.S.

Do you believe we’ll get back to a foreclosure rate that would be considered normal and, if so, when?

Yes, I do think we will, but I think it is probably still a couple of years away. There are still a lot of what we refer to in the industry as “the legacy books,” that is, the book of loans that originated in ’05, ‘06 and ’07, which continue to have poor performance — in other words, high default rates. The loans that have been originated since 2009 have performed… read more here


Pam Marron, Mortgage Professional

Pam Marron Selected for Housing Counseling Federal Advisory Committee

Yesterday I received a letter from HUD Secretary Julian Castro that I have been selected to serve on the U.S. Department of Housing and Urban Development’s Housing Counseling Federal Advisory Committee.

Millions of homeowners across the U.S. have been devastated with lives changed forever due to the housing recession. I want you to know that it is your stories of challenges… how you plodded through even though you lost a great deal and did everything possible to stay afloat… before you finally had to ask for help… that changed my perspective on how I will do business in the mortgage industry forever.


Help set the agenda for the Florida Senate debate between Alan Grayson and David Jolly!

Hi there!

I just participated in a first-of-its-kind Open Debate for U.S. Senate candidates in Florida where all questions will be chosen from among the Top 30 voted on by the public online.

Could you vote on this question so David Jolly and Alan Grayson can answer it live at the debate?

https://floridaopendebate.com/questions/17097/vote/

There are tons of other great questions to vote on at FloridaOpenDebate.com. You can search by topic area or keyword, or you can even submit your own question. Voting closes just before the debate begins at 7:00 pm EDT on Monday, April 25. Tune in to FloridaOpenDebate.com to watch this event, co-hosted by the Open Debate Coalition and the Progressive Change Institute.

Thanks for helping us create a debate for U.S. Senate that reflects the real concerns of Americans!


Negative Equity still Plagues Lowest Tier Homes

While the percentage of properties with negative equity decreased during 2015, the lowest-priced homes continued to struggle to regain value, according to Black Knight Financial Services.

The number of underwater borrowers dropped by 31%, or 1.5 million homeowners, but there are still a total of 3.2 million borrowers in negative equity positions, representing $126 billion in underwater first- and second-lien housing debt, Black Knight said in its year-to-year Mortgage Monitor Report for February. read more…


6.2 million Underwater Homeowners in Crisis

The housing crash might seem like old news, but for families left behind by the recovery it remains a defining economic reality, with negative equity preventing moves and limiting choices in life.

 Seven years after the Great Recession, some Chicago suburbs may never recover

Chicago Tribune   By Kim Janssen    March 26, 2016

Highlights below:

Cook County’s top 10 towns for foreclosures are all in the south suburbs, according to data compiled by the Institute for Housing Studies at DePaul University. Residents on a typical block in middle-class towns like Matteson, Country Club Hills and Richton Park can expect one of their neighbors to be in foreclosure, because about one in 30 homes was in foreclosure as recently as 2014.

In a handful of the poorest towns — Harvey, Ford Heights, Phoenix, Riverdale, Robbins and Sauk Village — more homeowners are foreclosed upon than obtain new mortgages, a surefire recipe for vacant homes, declining tax bases and blight.

“Everybody seems to think we’ve recovered from the housing crisis, but for many communities of color that’s not the case,” Petruszak said.

The number of lender-mediated sales in the Chicago area — short sales and foreclosures — accounted for 26 percent of existing home sales in February, compared with more than 50 percent just two years ago, according to Midwest Real Estate Data, the local multiple listing provider. But the long-term snowball effect of so many vacant, foreclosed properties in mainly black neighborhoods was exacerbated because banks took less care of the properties they owned there than they did in largely white communities, said Petruszak, who has helped bring national discrimination cases against six lenders.

The couple have friends who walked away from mortgages that no longer made sense, but Mitchell Versher said that wasn’t his style, and that if his wife hadn’t suffered a couple of layoffs, or if they were able to renegotiate their debt again, he’d have liked to stay put.

“I come from the old school,” he said. “My grandchildren visited me in this house. It was supposed to be our home for the rest of our lives.”

Still, he and his wife expect ultimately to be forced from their home. And any hope Mitchell Versher had of retiring is gone.

“I’m gonna have to work till I die,” he said. “Don’t get me wrong, Vietnam taught me that I’m blessed for every moment that I have. But the majority of us who are living paycheck to paycheck are being held hostage by an indifferent political class.”

He’s looking online, for a rental, he said.

kjanssen@tribpub.com

Twitter @kimjnews

Copyright © 2016, Chicago Tribune

 It is time to get changes made for underwater homeowners; Still 6.4 million underwater nationally, and most are desperately trying to stay put!


Better Details Needed for FHA Back to Work & Conventional Loan Extenuating Circumstances

By Pam Marron

For past short sellers who have gone through the loss of a home and are eligible to return, criteria needed for a new mortgage is vague. The result is a partial story.

Proving “extenuating circumstances” and confining the timeline for an economic event is a struggle for loan originators and underwriters trying to comply with vague  criteria. Because of so many variables, lenders deny new loans for borrowers with a short sale or foreclosure in their past even when they may be eligible to repurchase again.

We HAVE to get this right. Detailing WHY the loss of a home is the hardest thing for affected consumers to provide… not because they can’t remember, but because they relive it.

In attempting to originate the FHA “Back to Work” loans, it would seem the process is simple. The criteria for “Back to Work” is to show a 20% reduction in income sustained for 6 months minimum that resulted from a loss of employment or reduction in income, which is considered the “economic event”.

Here’s the bigger problem. Most who had an “economic event” tried to hang on, wiping out assets along the way. But, while trying to hang on, homeowners accumulated more debt to stay solvent and in most cases, to stay current on their mortgage.  Then, another “economic event” hit, assets were gone and debt is so excessive that there is no choice but to short sell.

As a mortgage broker in Florida where it is common to see Boomerang Buyers (those eligible to re-enter the housing market after a short sale or foreclosure), I often hear the full story for those who have lost a home and want to re-try home ownership again. An economic event followed by a prolonged period of trying  to stay put, finally ended with another event where funds were no  longer available and the only choice was to short sale, occurred in a great deal of these cases.

Proof also exists to show a good number of these folks  had excessive debt that pushed up debt to income ratios incredibly high prior to the sale of their underwater home.

But, it gets confusing for a new mortgage. For the FHA “Back to Work” program, HUD approved counselors are able to determine hardship and can provide those who attempt a re-purchase one year after a short sale, foreclosure or bankruptcy with a housing counseling certificate.

However, that doesn’t mean the mortgage company will approve the mortgage. Because the economic event may have occurred years ago and short sale processes took months or years, documentation such as tax returns and bank statements needed to show a lack of assets may stretch over the previous five to seven years rather than the most recent two years that lenders are accustomed to evaluating.

Mortgage companies who offer  FHA “Back to Work” are reluctant to promote this almost two year old program due to few of these loans getting approved. Part of this is because loan originators don’t provide enough documentation, and the other problem is that there seems to be wide discrepancy between underwriting opinion on these files.

Varying opinion also exists for “extenuating circumstances” noted in Fannie Mae and Freddie Mac guidelines for eligibility of a new mortgage under four  years. Underwriting interpretation of these guidelines vary greatly from lender to lender for the few mortgage companies who offer these loans.

For loans submitted with what seems to be an iron clad “extenuating circumstance” or proof of the 20% reduction in income for 6 months minimum for FHA’s “Back to Work” program, underwriter opinion seems to vary widely. Some underwriters think the decision to short sale was too soon, while others wonder why homeowners waited. It seems they are trying to justify the sale was “not strategic”.

The income, current credit and assets of borrowers who have gone through a short sale and are trying to re-enter the housing market is more than acceptable per current guidelines. They have to be next to perfect, and they know it. Other than knowledge of the past short sale, these are loans that any lender would want to have on their books.

Those who make policy need to talk directly with affected past short sellers. They need to come to where underwater home problems still exist and see for themselves what is really happening. This can truly help the housing industry recover.

 

 


HELOC Shock Heat Map

April 8, 2015 | Daren Blomquist, RealtyTrac

A RealtyTrac analysis of open Home Equity Lines of Credit originated during the housing bubble years of 2005 to 2008 shows that there are nearly 3.3 million HELOCs scheduled to reset at fully amortizing monthly mortgage payments between 2015 and 2018 after a 10-year period with interest-only payments. The average increase in monthly payments when these HELOCs reset will range from $138 for those resetting in 2016 to $161 for those resetting in 2018.

More than 1.8 million of the resetting HELOCs (56 percent) are on homes that are seriously underwater, with a combined loan to value ratio of 125 percent or more, and the percentage of underwater homes with resetting HELOCs is much higher in some markets such as Las Vegas (89 percent), Inland California (80 percent or more in many markets), Orlando (79 percent), Reno, Nevada (78 percent), and Phoenix (76 percent).

The heat map below shows markets with the most resetting HELOC shock over the next few years, both by sheer number of HELOCs scheduled to reset (size of the bubble) and by the percentage of resetting HELOCs that are on homes seriously underwater (color of bubble). This heat map displays metropolitan statistical areas with a population of 200,000 or more.

 


How to Make a Niche Market out of 7.3 Million Boomerang Buyers

NMP Instant Webinar

NMP logo

Click here to view the webinar NOW.

In January 2015, RealtyTrac reported that there are approximately 7.3 million Boomerang Buyers that will have the ability to re-enter the housing market over the next 8 years. Boomerang Buyers are those who had a short sale or foreclosure in the past and are eligible to obtain a new mortgage again. A new website, HousingCrisisStories.com, was created to assist Boomerang Buyers back into the housing market, with direction for loan originators that can provide them with a new mortgage. The site also provides assistance for more than 7 million distressed homeowners who are still in underwater (negative equity) homes.

In this instant webinar:

▪ RealtyTrac Vice President Daren Blomquist will explain where the Boomerang Buyers are located, and how they can be found.

▪ Terry Clemans, Executive Director of the National Consumer Reporting Association, will tell you about the QMCR (Qualified Mortgage Credit Report), a novel credit idea that can help with persistent credit errors that hamper these folks and many others from getting a new mortgage.

▪ There’s even a HELP Network, where lenders, loan originators, credit reporting agencies, HUD approved counselors, PMI companies and government agencies that can assist Boomerang Buyers and Distressed Homeowners will be promoted for free.

▪ Jim McMahan NMLS#218164, a loan originator from Georgia, will explain the benefits of assisting these borrowers.

▪ Pam Marron NMLS#246438, a loan originator from Florida, will explain how the website helps these borrowers and loan originators, and invites those who want to assist these clients to be part of a national HELP Network.

Click here to view this FREE Webinar!

 


Past Short Sales Are Like a Bad Divorce

Helping Borrowers with Extenuating Circumstances Through the Mortgage Process

By Pam Marron April 1, 2015

Explaining a past short sale is a harder task than most think, and it re-opens a period of time that many who have had the experience don’t want to go through again. Loan originators should not be surprised when past short sellers show anger, reluctance and may even opt out of re-purchasing a home upon learning what they must do.

Part of the problem is that guidelines, especially those surrounding explanation of extenuating circumstance, are vague. And detail needed is not always easily accessible. Quietly, more than one lender has told me that documentation received is not enough to prove extenuating circumstances, which results in a new mortgage denial for those who may be eligible to re-enter the housing market. Though lenders offer the FHA “Back to Work” program, a low percentage of these loans have been approved.

Extracting and clearly defining the detail of extenuating circumstances to show how past sellers ended up with a short sale or foreclosure falls upon loan originators. So, what is the extra work and detail needed for these loans?

At HousingCrisisStories.com,  there are 3 worksheets for the borrower and loan originator to prepare a case for an underwriter.

  1. Borrower Makes Case:  extensive list of questions for the borrower to detail. Items needed are included on this list.
  2. LO: Economic Event Worksheet:  loan originator uses “Borrower Makes Case” and provided documentation to complete.
  3. LO: Reduced Income and Increased Debt Table: made to show percentage of reduced income for FHA Back to Work and increased expenses needed for Fannie Mae, Freddie Mac and USDA(medical). Also, lower table shows how “Un-anticipated Additional Debt” can be substantial, showing the REAL hardship.

Loan Originators

  1. Be attentive to your borrowers’ entire story. Question needed details.
  2. Be prepared to document income 1 year prior to the event and over multiple years. Many affected saw trouble coming and tried to prepare. However, the process of going through a short sale or foreclosure with a lender is often drawn out and some take years. During this time, assets are depleted, income fluctuates and credit becomes worse.
  3. Do not be surprised when the borrower is reluctant to detail this timeframe. Many try to forget, and having to dig up paperwork or discuss the event again can be highly emotional.
  4. Loan originators must go the extra mile to prove all remedies tried. WHY? Even when jobs were lost or incomes reduced, when rental income did not cover the mortgage payment on an underwater property, when divorce or a death occurred, a great majority of these homeowners whittled away at savings and retirement funds trying to stay afloat. For many, there is often a final problem  after the economic event where there was no choice left but to sell the home.
  5. It is very common to see an alarmingly high BACK debt to income (DTI) ratio (Reduced Income and Increased Debt Table) even when the mortgage payment is made. This worksheet is intended to show that reduction in income is not always the primary reason to sell.
  6. On short sales, retrieve the HUD-1, the final lender short sale approval letter on 1st and 2nd mortgages and proof of the wire sent from the closing of the property. Why? It is common for the date of payoff on a credit report to be a different date than the actual closing date.
  7. Borrowers that had a deficiency payment may have a “Satisfaction of Mortgage” that shows a release of lien/mortgage but “does not constitute a satisfaction of debt”, so check documents received.  Retrieve the letter to the borrower stating when the deficiency is satisfied the 1099 that often states “forgiveness of debt”. (Documents noted above can be retrieved from the title company noted on the HUD-1 or listing agent.)
  8. Preferably, run file through Fannie Mae’s automated system upfront, which specifies which account and what date causes a Refer. If the short sale shows up as a foreclosure or findings note an incorrect  disbursement, contact your [1]credit reporting agency to correct the date and repository comment.
  9. For an FHA mortgage, make sure the homeowner goes to a HUD Approved counselor at least 30 days before a contract is written or an application taken.

Bonus: the gratitude of these clients will remind you of why you are in the mortgage business.

Pam Marron (NMLS#246438) is senior loan originator with Innovative Mortgage Services Inc. (NMLS#250769) in Tampa Bay, Florida. She may be reached by phone at (727) 375-8986 or e-mail  pmarron@tampabay.rr.com. Websites: HousingCrisisStories.com, CloseWithPam.com, 8Problems.com.

[1] National Consumer Reporting Association (NCRAinc.org) is aware of the erroneous foreclosure code on short sale credit and error in dates. Go to http://www.ncrainc.org/mortgage-credit-reporting-referral-network-by-state.html to find credit reporting agencies in your state.

 


New Buyers Hurt by Servicing Transfer Policy for Short Sales and Foreclosure Properties in Loss Mitigation

By Pam Marron

Sept. 19, 2014

The practice of transferring servicing from one servicer to the next is often a surprise to unsuspecting homebuyers. The transfer can start the short sale process all over again with no regard for buyers already in the purchase process who are trying to close on a newly purchased property. Some are losing appraisal  fees, home inspection costs, and repair estimate fees when servicers opt for foreclosure rather than to extend the contract.

The practice of servicing loss mitigation properties is taking a toll on new buyers who have signed contracts to purchase these homes. Servicing contracts for loss mitigation properties appear to span four to five months. Buyers of these serviced properties are unaware of the contract timeframes and may sign a purchase contract within this term. When servicing is at the end of a cycle, buyers are given little notice of the servicing deadline. Buyers have often paid for appraisals, home inspections, and estimates for needed repairs to make the applied for mortgage approvable on “As Is” contracts.

Servicer transfer dates are not told to the buyers until shortly prior to the date, and in most cases, new buyers and their lenders are unprepared to close before that date. Then, buyers are further delayed as they wait for the new servicer to order a brand new BPO and go through the loss mitigation cycle again. Often, new BPO’s are ordered for a property that has a valid appraisal already done and paid for by the purchaser. And, if the servicer opts to foreclose, the purchaser of the home is out all of the funds they spent upfront, even if they are not notified of the deadline date until after the mortgage process has started.

Title companies, frustrated with contracts where this is happening on a regular basis, tell of this common problem. Realtors aware of this practice are reluctant to show short sales, where this happens the most, fearful they will never get the new buyer to the closing table. And unsuspecting buyers are left stranded, stunned that there is no protection for them through the daunting mortgage process.

Homeowners going through a short sale or foreclosure are notified that servicing is changing and who the new servicer is. However, homebuyers trying to purchase these homes are not given the same information nor the ability to access loss mitigation negotiators for an extension of a contract already in process.

The [1]”Protecting Tenants at Foreclosure Act of 2009″ was legislation that allowed renters who suddenly lost their lease due to a foreclosure to stay until the end of the lease or be entitled to a 90 day notice before having to move. The same protection for new homebuyers who are investing upfront in a property that can improve a community when closed, needs to be applied.

Why should this policy be changed?

Buyers who purchase these often distressed properties are clearing out problematic mortgages for servicers and are almost always paying for repairs needed on these homes. Coming up with a sound policy to insure protection for the process to finish for these buyers can only improve values – and encourages realtors to sell these properties. A better policy that encourages and better accommodates a short sale will provide a higher net than a foreclosure will to servicers and investors.

[1]

Protecting Tenants at Foreclosure Act of 2009  http://www.occ.gov/publications/publications-by-type/comptrollers-handbook/ptfa.pdf

 


Lenders Requiring Delinquency/Non-Delinquency For Short Sale Update

LENDERS REQUIRING DELINQUENCY/NON-DELINQUENCY FOR SHORT SALE UPDATE:

U.S. Bank: as of 5.2.2014, will allow an FHA mortgage holder to proceed with short sale with less than 90 days delinquency, which was required 30 days ago.

Wells Fargo: As of 4/17/2014, will allow homeowner to apply for short sale without delinquency but with hardship. Homeowner in process for 5th time.

Fannie Mae (Federal National Mortgage Association (FNMA) ): will approve homeowner with hardship for short sale without delinquency. Homeowner closed 6/2014.