IS YOUR LENDER OR CREDIT CARD COMPANY KILLING YOUR CREDIT SCORE ? Financial Crisis-Part II-Credit Cards

This is an open letter to our current President, President-Elect, Congressmen and Senators.  It is also addressed to the Financial Services Committees of both Houses.

While I understand the importance of our election that just took place along with all of the other pressing financial issues taking place due to the financial crisis that we have been experiencing over the last few months, I feel pressed to address one key issue facing Americans today that you might not be totally aware of taking place now.

One of the side effects of our financial crisis has to do with credit cards, and specifically the issuers of those cards.  Many Americans are being severely effected by this crisis.  Two consequences taking place are the sudden elimination or lowering of credit limits and raising of annual percentage rates on our cards.  I can only speak for myself, but I have also read many accounts on the Internet and news publications regarding this specific issue.

I also speak to you as an individual who has been in the banking and now mortgage lending arena for almost 38 years………my point is that I come to you with experience.  

There has not been one article or Internet column on this subject has addressed how a consumer can challenge the affect this is having on our credit scores.  It is devastating, and is only getting worse.

Many in our nation are facing this same challenge.  I also have several real estate loan clients who have had their home equity lines of credit frozen or canceled…………many with zero balances.  One client has had their payment terms changed from what the original loan documents say when we initially closed their equity loan.

I understand the current crisis.  Yet for many who have had stellar credit before, this is drastically effecting their credit since all bureaus have similar scoring models that they use to determine a credit score.  I can only imagine the effect that these changes have had with people with lower scores or past credit issues.

Wake up Washington !!  Our crisis is and has gone past the sub-prime loan market to effect good past paying citizens.  In the meantime, the banks and card issuing companies…many banks or subsidiaries of them, are killing our credit out of fear.  They are also taking your bailout handout, and not lending but instead buying other companies or paying bonuses.

This is not getting America going again, but is rather creating an off-shoot of the crisis.  If you were not aware of this latest issue, you are now !

Do something about it!  You are our leaders that we elected.  Please take care of the normal average American for a change before you dole out your next or further bailout to the big-boys on Wall Street or banking communities.  Believe me, lenders are afraid to lend.  Consequently, small business men and women are facing challenges because of this latest issue.

My God speed you to quick action.

New Name Change

Since moving to San Diego last year from Orange County California where I had spent so many years, I have recently changed the name of our financial blog to SDMortgagefinder.

I will once again do my utmost to keep the public at large up to date on matters which are effecting the public relating to real estate and mortgage financing.

I welcome your comments or suggestions.

Responce to Federal Reserve Board of Governors Regarding Amendments to Regulation Z Disclosure , Comments Mandated to End April 8, 2008 for Docket # R-1305

Below is my responce today to the Federal Reserve Board of Governors request for Comments on Regulation Z Amendments, Docket # R-1305:

 

To:  The Board of Governors of the Federal Reserve

 

From: Wayne L. Brown, Broker

San Diego, California 92109

 

Subject:  Docket No. R 1305

 

Thank you for the opportunity to express my views regarding the upcoming review and amendments to Regulation Z.  While I concur that consumers should be protected under the law and regulations, I do have some concerns regarding the proposed changes.

 

I come to you with more than 38 years of experience.  Twelve years in commercial banking, twenty in mortgage banking, and now 6 years as a Mortgage Broker.  Previously, I had reached executive rank in both industries.  My point is that I come to you with vast years of personal experience within the industry.

 

It has taken me a long time to draft this response as I feel in many ways threatened by many of the upcoming changes.  Additionally, we Brokers seem to be taking the brunt of the punishment for problems in our industry when in fact we All must take some form of blame and responsibility.

 

I specifically am concerned regarding the proposal to restrict compensation for mortgage brokers.  I am also very disillusioned over the fact that for years our industry has had to disclose All forms of revenue; whereas, Bankers and Mortgage Bankers Do Not have to follow the same form of disclosure.  This in itself places us in a disadvantage and makes us appear to be non-competitive with our competitors who do not have to disclose any back end revenue.  As a former Banker, this makes No sense to me at all.

 

I chose to become a Broker after years in the Banking and Mortgage Banking arena.  Believe me, I saw enough to make the decision to get out since I would not put up with what goes on behind management’s closed doors.  We Ethical Brokers strive to ensure that our customers are getting the best terms available.  The proposed changes will only further the cause of Reducing competition.

 

I feel that due to the mess that we are in, we Brokers are being made as the “ Sacrificial Lamb” so to speak.  While I agree that there have been bad characters in our business….our industry segment surely is Not alone in this arena.

 

Years ago, HUD, with the blessing of Congress and the Senate helped to pass changes to RESPA that forever changed the way we do business.  Specifically, Affiliated Business Arrangements (Originally called Controlled Business Arrangements) were created to basically legalize “ Kickbacks”.  What was intended as a bundling of services to reduce costs to consumers turned into “ Cash Cows” for all Builders, Large Real Estate Brokerages, Title and Escrow companies?  The Bankers and Mortgage Bankers rushed into this as well forming allegiance with various builders and Realtor shops to Control the flow of business.

 

I know this to be true since the mortgage banker that I worked for assigned me to one of these arrangements with the builder.  I left in less than a year after seeing first hand the “ Fleecing” of Americans so to speak.

 

A review and possible change is in order; however, Why disclosures are Not uniform for all is beyond my comprehension.  We must disclose YSP; whereas, Banks and Mortgage Bankers do not have to disclose any back end revenue.

 

There are times where this option allows the customer to choose whether to pay costs, or apply all or most of this to cover loan costs.  It is also almost impossible with rates being so volatile to guarantee exactly what we disclose up front.  Some borrowers elect to float, rather than lock, making this option almost impossible to guarantee.  Yes we should disclose, but we must be given the flexibility to change with the market.  The final result should also not be a surprise to the customer………but close or even less than originally disclosed.

 

I could go on for hours explaining the “Horrors “ I have seen over the years in ALL segments of the industry.

 

Let’s make sure that our consumer is protected, but in doing so, do not ruin a segment of the industry where most are ethical and honest.  If we are to disclose, it should be uniform for All.

 

Thank you for considering my comments. 

 

Wayne L. Brown

Mortgage Broker

 

Coming Soon ! Everything Your Politicians-Senators And Congressmen, HUD, Federal Reserve and Banking Regulators, NAHB, NAR, Bankers, MortgageBankers, Builders, and Realtors NEVER Want You to Know

Well, it’s been awhile.   As of Today, I only have Four more days to Respond to Proposals by Politicians who Think that they have the Solutions to the Current Mortgage Crisis.  While I applaud the Effort by those in Political positions……………Most including Representative Barney Brank and Senator Christopher Dodd have NO CLUE what the Talking Heads are feeding them relative to critical information regarding the Current Mortgage Crisis.

Within the next few days, I will detail an Account of what has transpired Over the Last Decade or so……..Beginning with Changes to RESPA by HUD with Congresstional and Senate Approval WHICH IN FACT is a MAJOR FACTOR THAT CREATED THE MESS THAT WE ARE CURRENTLY EXPERIENCING WITH THE FINANCIAL AND HOME BUILDING INDUSTRY, as well as, the FORECLOSER EXPLOSION WE ARE CURRENTLY EXPERIENCING.

First, let me tell you that I come to you with More than 30 years of Banking, Mortgage Banking, and now more than 8 years of Mortgage Brokerage Experience.  The Bottum Line is that I have Sufficient Experience to at least Write with Some Credibility within that Regard.  Also Note that while I admit that I am of the Conservative Side of the Poilital Fence, BOTH Parties Share Responsibility in the Debacle that We Now Face.  Lastly, while I have Extensive Background in this Field, I do Not Pretend to have All the Answers or Solutions to these Problems ……..Although I will Give You My TWO Cents Worth if You care to Read All that I have to Say.

Make sure to come back over the next few days to get a Major load of Facts that will help Identify the Real Purportrators of THIS MESS !

 In the meantime, besides working, I will be Formally Responding to the Fed and Banking Regulators who are running a Dog and Pony Show in DC, and in the process Proposing Regulations to Help the Banking System Fall of the Cliff.

Best Regards

 

 

Mtg. Crisis / Meltdown, Recession, Stimulas Package, Political Posturing

For those of you who have followed me over the late months of 2007, I think you’d agree that I was a Straight Shooter and on the Mark the majority of the time.  I’ve been gone a while due to my relocation to San Diego to join my son who I raised in business ventures here.

I’ve watched the news as I relocated and set up business here in San Diego.  Everyday, some tidbit of news send the markets Reeling in one direction or another depending on the perspective of the Traders on Wall Street.

Politicians Posture touting their ” Economic Stimulus Package” which in Reality is NOTHING more than Thin Air with NO teeth when it come to Resolutions.  The Mortgage Stimulus does Nothing but for a Mere FEW who fit the Parameters of said package………………………I’ve Seen the Directives and it does Squat for the majority of homeowners that I can think of with loans Maturing or Adjusting past, present, or future.

So I am BACK !!!  I can’t sit back Any  Longer while the Meltdown before me unravels with Politicians Mouthing off just how Wonderful they are to Create this Wonderful Stimulus Package, and Savior to Mortgage Crisis and Meltdown.

Stay Tuned……………………………………………

Housing and Mortgage Crisis- How’s This Going to Affect You in the New Year?

This is usually the time of year when those of us in the industry are winding down for the year, and are contemplating our marketing plans and strategies for the New Year.  It’s also a time for many of us to close out what we need to get done, hopefully before the Holidays, and kick back and enjoy the remainder of the year.  In years past, I have often looked back happily on what has transpired during the year with anticipation for what I would do the following year. 

This year has been, to say the least, an exception to the rule.  It’s also been one of the most eventful and painful years that I have experienced in my 37 years in the business.  Personally, I can’t complain too much for myself, but the year has brought a lot of changes to our industry……….most of them pretty painful and drastic.  I have also lost many friends in the Real Estate and Lending industry, and other Affiliated Sectors, either to company closures or just plain throwing in the towel due to lack of business. 

In an earlier post, I bought you information about what Senator Dodd has recently proposed in regards to Predatory Lending.   I spent quite amount of time in November covering Congressman Barney Frank’s bill HR 3915 ( See November Archives ), which is the counter part to Senator Dodd’s new bill S-2495.

 I could probably go on here for pages outlining what I think caused many of the problems or issues, as well as, who was to blame.  Believe me, a lot of people out there are throwing stones at almost anyone in the business in some way, shape or form.  Personally, I believe there is plenty of blame to go around in many of the industry sectors, as well as, the government.  In fact, it’s my belief that it actually starts at the government level, but that is a book in itself. 

On the other side, I have seen and spoken to people who were placed in homes and loans that were way over their heads or means to afford.  In a declining market, it is really painful for me to have to look someone in the eye or tell someone over the phone that I can’t help in any way.  I’ve always had a can do attitude with a goal to help other people, especially those in need.  

 Quite honestly, for me the biggest problem that I have experienced this year started in August when the “ fallout “ really started it’s downward spiral.  It’s been continuing ever since, and has made it difficult for me to handle my Realtor and clients’ requests in what I consider to be a professional manner.  With all the fallout, many of us in the lending arena have experienced drastic changes to underwriting and credit standards.  It’s is now not uncommon to get several notices daily from lenders on different changes to their guidelines or sometimes complete elimination of programs.  Frankly, this makes my job and that of my Realtors so much more difficult.  The difficulty comes when we are all trying to ensure that our clients are getting the best service and terms available. 

Personally, I think that much of this is the result of the media hype And government posturing and changes to regulations.  Ever since Congressman Frank’s bill, HR 3915 passed the House, the Lenders have been going insane with changes to their programs or guidelines as mentioned above.  It’s like the Pendulum going from one extreme to the exact opposite.  Unfortunately, we had severe casualties when things got too loose.  Now, we are causing more casualties……this time taking lender standards to levels and constraints almost unseen.  Many people with impeccable credit and income are even having difficulty finding financing today due to all these changes. 

My point to all of this is not actually to sit here and make excuses, but rather to educate those of you who are interested in what exactly is happening.  Let’s face it, as a Realtor you depend on us to take the ball so to speak and carry it across the goal line so that your client completes their touchdown to homeownership.  Maybe if you are a listing agent, you are relying on us to ensure your seller closes the transaction that you helped negotiate with a new incoming buyer or buyer’s agent. 

I believe it is critical for all of us who plan on remaining in the industry to get off our behinds so to speak.  Specifically, be proactive in your industry, and ensure that you are aware of what is happening within the government that could affect the industry. 

I am not saying that I have all the answers to the problems that we face today…..although I am of the belief that I’ve got a pretty good insight as to what’s happening and why it happened.  In the coming days and weeks, I plan on following Senator Dodd’s new bill just as I did with Congressman Franks bill, HR 3915.  If I know one thing, I know with all their good intentions, that most of the time these Legislators normally make things worse.  Often times, they are merely posturing politically or pandering to some major interest group. 

Regardless of whether you agree with me or not, just make sure that you stay fully involved in what’s happening in your sector.  Moreover, you may need to check out what is happening in related sectors for what may eventually affect you and yours.  Finally, and again regardless of the side of fence that you are on, voice your opinions to you industry leaders, and state / federal legislators.  Let’s keep their feet to the fire to ensure that whatever they do, they know just how we feel and what side of the fence we are on for matters they are addressing. 

The survival of our industry as we know it, depends on this participation by you and your colleagues. 

 

Looking for an Ethical and Knowledgeable Lender, See My Link below:

 

http://ocmortgagefinder.com/index.htm

 

 

Only 6 Days Until Christmas !!! 

Best Wishes and…………….. Merry Christmas Everyone  

Senator Dodd Proposes New Bill S-2452

On December 12th, Senator Dodd put forth a new bill, Senate Bill S-2452.  This is a counterpart to the Bill passed by Congressman Barney Frank , HR- 3915, in November that overhauls the Lending Industry.  Both bills are designed to prevent and foster measures to circumvent Predatory Lending.

While the Legislator’s intentions are admirable, the consequences of their Bills are going to be far reaching to say the least.  I am not going to sit and write here that there have not been abuses in the system or industry.  In my opinion, the blame can go to many, and is not just with one sector of our industry.  I could almost write a book on the past exploits that I’ve seen take place over my many years in the industry.

My point in addressing this blog to you is to first ensure that you are informed of what is taking place back in Washington.  Truthfully, I myself, have not had the opportunity to fully read and analyze the Senator’s bill as I did with Congressman Frank’s HR 3915.  Regardless of what side of the fence that you are on regarding this issue, the fact remains that the decisions being made in Washington today will have some widespread affect on the real estate, lending, builders, and other related sectors of our business.  Again, while the intentions may be good, too often the results are politically motivated and laced with wording and changes that sometimes only help certain interest groups.

I urge you to educate yourself on this and other pieces of legislation that affect our industry as a whole.  Then decide.  For your review, although it is long and dry, is a copy of the proposed legislation by Dodd.  The link to it is listed below for your convenience.  Over the next few days and weeks, I am certain that I will provide you with more information and clarification on this bill.  In the meantime, read it since it affects you and your clients, and let your respective Senators know your point of view.

Link to Dodd’s Bill S- 2452:

http://www.namb.org/images/namb/GovernmentAffairs/Dodd%20Bill.pdf

If you are in California and need Ethical and Knowledgeable mortgage assistance, please refer to my link also listed below:

http://www.ocmortgagefinder.com/

 Only 7 Days Until Christmas

Peace and Merry Christmas

Jumbo Mortgages / There May Be a Saving Grace

The last three to four months have really played havoc on the real estate and mortgage industry along with the various servicing companies that depend on these sectors for a living.  August was the month when the bottom really fell out of the mortgage industry, and it’s been a roller coaster ever since.  Most of the problems really heated up when the subprime debacle, and the consequences, unleashed it’s wrath causing company after company to either close it’s doors or announce huge losses stemming from this sector of the business.

Since I am in Orange County California, I can tell you first hand that our industry has been hit hard, and one area in particular is the non-conforming or sometimes referred to jumbo market.  Typically Fannie Mae ( FNMA ) and Freddie Mac ( FHLMC ) take up the slack for those loans under the current limit of $ 417.000.  The market above that limit, the jumbo market, is for the most part dependant on investors on Wall Street who buy and sell these loans. 

The debacle with subprime loans has left many of these investors reeling from losses, and possibly more losses to come.  The result has been described by some like a train hitting a wall or car going 90 mph with the brakes being applied almost full force.  The outcome has been almost a complete erosion in the secondary markets for lenders to sell their jumbo loans when they don’t fall within FNMA or FLLMC linits or  guidelines.

Consequently, many of us here in Orange County and in areas of the country where home prices do not normally fall within the limits of FNMA or FHLMC, are without many sources of funds to make these loan.  Yes, they are still available, but the availability and certainty of funds has raised interest rates in this sector way beyond normal expectations.  Additionally, lenders are changing underwriting guidelines so drastically that only those in the very top categories of income and assets can qualify for these loans.

The word has been spreading for weeks as to the urgency of this issue.  The subprime debacle which helped to create foreclosure levels almost unseen is bad enough on it’s own merit.  Yet, many outside those issues and wanting to refinance or purchase have almost been cut off at the knees for lack of funds, unreasonably high rates, just because they are above those limits set by FNMA andFHLMC.

So today, we got what may be some potential welcome relief on the jumbo market front after Treasury Secretary, Henry Paulson, was interviewed during his speaking engagements throughout the country.  Secretary Pauson made comments today in an interview that just may give both the housing and mortgage industry the shot in the arm that is needed with respect to jumbo loans.

To see a commentary of his interview, please refer to the link below to Bloomberg:

http://www.bloomberg.com/apps/news?pid=20601087&sid=aax4zzPqV9dk&refer=worldwide

In California and seeking expert advice and choices on mortgage lending, see my link below:

http://ocmortgagefinder.com/index.htm

 

Only 8 Days Left Till Chrismas

 

 Peace and Merry Christmas

Senate Approves Bill to Raise FHA Limits

The Senate passed a Bill today, Bill number S.2338 which would help FHA and raisethe limits in areas throughout the country fairly substantially.  The Bill is designed to assist those suffering from the Subprime debacle, but also adds features like the limit increase which will help more buyers to FHA.

The limits in Less expensive housing markets would be raised from $ 200,160 to $ 271,050.  In the Higher cost areas such as California, the limits would be raised from it’s current limit of $ 362,790 to $ 417,000.  The increase would keep FHA in-line with Fannie Mae and Freddie Mac limits currently in place.

FHA over the years has seen it’s importance and relativity greatly reduced by loan limits that have not kept up with the real estate markets.  The move is designed to foster more interest in these types of loans vs. conventional financing.

If you would like more detailed information, I have included a link to Aol where the article was spotted.  It gives a much more detailed account of the whole reasoning on this matter, as well as, links to the House and Senate if you wish to view the Bills direct.  Please see the link below:

http://news.aol.com/story/_a/senate-votes-to-help-strapped-homeowners/n20071214172009990009 

Need Mortgage Advice, Refinancing, or New Purchase Loan……..Looking for a Ethical, Knowledgeable, and Results Oriented Lender…..then check out my Link below:

http://ocmortgagefinder.com/

Peace and Merry Christmas

Only 9 More Days Till Christmas…..LMAO…I haven’t even Started Yet !

Fed Rate Cut, Mortgage Rates Go Up, What’s Going On In the Market?

It’s been two days since the Fed Rate Cut, and many of us in the Lending business are sitting here Wondering just what is going on.  A lot of people always assume that when the Fed raises or lowers interest rates that Mortgages automatically follow suit in the Same direction. 

One misconception that needs to be clarified is the issue regarding mortgage rates verses the tie in to Fed Rate Changes   More than a few years ago, mortgage rates typically followed Longer Term Bonds such as the 30 Year Treasuries.  Just a few years ago, the government in their infinite wisdom, decided to stop issuing and selling these long term Treasuries.  Ironically, they are now issuing these on a limited basis.  Go Figure.  The point is here that too many people assume that any Reduction or Increase in the  Fed Funds Rates should immediately affect mortgage rates.  The Answer is NO, or more correctly, not necessarily.

The reason being is that the Fed Funds Rates is Tied to Short Term Borrowing.  This is why many of you see the Prime Rate Drop or Rise almost immediately when they change this rate.  Mortgages, typically as I said, are Tied to Longer Term Rates such as Treasuries.  But wait!  Let’s make this a little more confusing, eventually these Longer Term Rates will in Most cases follow the Shorter Term Rates as well.

After the government temporarily stopped the issuance of 30 Year Treasuries, the Market forces as they be, started to follow the 10 Year Treasuries when setting mortgage rates.  One reason given was that most households don’t hold on to their mortgages for more than 10 years. Today, therefore, most of us Lenders in the Know try to follow the movement on the 10 Year to determine the direction that they are headed.

So, Where does that bring us now? On Tuesday after the Fed reduction, based on typically what would have happened after personally following Years of  Detailed History, Mortgage rates should have taken a Temporary Blip up.  This blip up or down normally happens, depending on the direction of change of the Fed Funds rate.

As we all know, ever since the escalation and Meltdown of the SubPrime Debacle that Nosedived in August, the Market has Not quite reacted to changes in the market as they would normally have done based upon case history.  Rates should have gone up Slightly on Tuesday, but instead, the Bond market Rallied sending Treasury Yields and Mortgage Rates Tumbling.

Then yesterday,  the day after the Federal Open Market Committee Meeting where rates were Lowered,  the Fed announced that in concert with three other central banks and the European Central Bank they were going to Infuse about $ 24 Billion dollars to the ECB and the Swiss National Bank to Increase the supply of dollars in Europe.  The reason for all this was due to the fact that the world’s major central banks have been struggling to restore Liquidity since the market for assets backed by U.S. Subprime mortgages collapsed.  THIS sent the Treasury Markets here Reeling and Erasing All Gains from Tuesday’s announcement.

Today, in-conjunction with More Loan losses announced by B of A, Wachovia, and PNC Bank, the government announced that Retail Sales and the Consumer Price Index for November Rose More than Anticipated.  Good News for the Economy as far as Retail Sales, but Horrible News for Bonds.  Consequently, Treasuries Again Fell through the Floor Raising Yields and sending Mortgage Rates back up again in addition to Wednesday’s increase.  This is Why mortgage rates have for at least the time being have shot back up.

SIDE-NOTE for those Old Geezers like me, but Rates are Still LOW.  In 1981 when I was a VP at Union Bank, I was lending to couples mortgages that were in the 16% to 17% range.  It wasn’t until 1986 that rates came back down to under 10%, and we haven’t even been close to getting back that high in quite a long time.  I am simply amazed when people tell me that rates are just Too High. 

Simply put, those actions and announcements listed above are the reasons why rates have Escalated.

To see more, refer to the links below to Bloomberg for the last two days for Exact Details. Treasuries Fall

http://www.bloomberg.com/apps/news?pid=20601087&sid=awN333fyQw6s&refer=worldwide

Fed, EUB to Ease Crunch

http://www.bloomberg.com/apps/news?pid=20601087&sid=a8Oed.hCgAvo&refer=worldwide

Retail Sales/ Consumer Price Index

http://www.bloomberg.com/apps/news?pid=20601087&sid=aimb0vpmKjI0&refer=worldwide

 Seeking Ethical, Knowledgeable, and Results oriented Mortgage Assistance.  Visit my link below:

http://ocmortgagefinder.com/index.htm