October 29th, 2009
In October Mountain Crest Mortgage was honored to receive the 2009 Denver/Boulder BBB Torch Award for Market Place Trust Small Business Category.
In a statement made by the Denver/Boulder BBB to all nominees “thank you to these businesses who believe in the value of ethical business practices. Their efforts illuminate the importance of corporate conscience and responsibility in fulfilling our shared obligation to the marketplace.”
As in previous years, Mountain Crest Mortgage was the only mortgage company nominated as a finalist.
The recent acknowledgement from the Better Business Bureau is especially rewarding during a year when the media has focused on the unethical practices of the mortgage industry. We continue to be an industry leader in customer service and ethical operations.
I am available to answer question or review loan scenarios with you.
Please contact me if you are: buying a new home, your current mortgage rate is higher than 5.875%, if your ARM will adjust in the next 12 months or if you have an interest in investigating a 15 year mortgage.
Refinancing is still a wonderful option.
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February 21st, 2009
If you ever work with buyers with less than 20% down, this matters to you! Again, this change does not affect Mountain Crest Mortgage as we are a banker.
Another hurdle for mortgage brokers. . . In what could be another nail in the coffin of the loan brokerage industry, The PMI Group of San Francisco confirmed it will no longer insure any mortgages brought to them by third-party originators unless these firms have a warehouse line of credit. It’s believed that PMI is the first of the nation’s seven MI firms to totally exclude loan brokers from their coverage menus. In recent months other MIs - including Genworth and MGIC - have tightened guidelines on broker-sourced loans, particularly condominiums and high LTV notes.
A PMI spokesman confirmed the new policy change to National Mortgage News adding that, “This does not apply to correspondents.” He said PMI would honor any commitments on broker loans in its pipeline. Marc Savitt, president of the National Association of Mortgage Brokers, said he is seeking a meeting with White House officials to discuss issues affecting brokers (including the PMI matter) and believes the sector has been unfairly blamed for the nation’s mortgage crisis. “We don’t underwrite loans,” he said.
The NAMB chief believes the nation’s largest commercial banks are part of a “well orchestrated campaign” to put brokers out of business and gain market share. In a letter NAMB sent to the White House today he writes: “Make no mistake about it. This campaign to eliminate our profession has absolutely nothing to do with consumer protection. It’s about market share” (Nat’l Mtg News).
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February 21st, 2009
The $787 Billion Stimulus Plan made up of tax cuts and spending programs aims at reviving the US economy. Although the package was scaled down from nearly $1 Trillion, it still stands as the largest anti-recession effort since World War II. Home owners and potential homebuyers stand to gain from key provisions in this stimulus plan. Here is what we know as of today…
Tax Credit for Homebuyers
First-time homebuyers who purchase homes from the start of the year until the end of November 2009 may be eligible for the lower of an $8,000 or 10% of the value of the home tax credit. Remember a tax credit is very different than a tax deduction - a tax credit is equivalent to money in your hand, as opposed to a tax deduction which only reduces your taxable income.
The tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000. Buyers will have to repay the credit if they sell their homes within three years.
Tax Incentives to Spur Energy Savings and Green Jobs - This provision is designed to help promote energy-efficient investments in homes by extending and expanding tax credits through 2010 for purchases such as new furnaces, energy-efficient windows and doors, or insulation.
Landmark Energy Savings - This provision provides $5 Billion for energy efficient improvements for more than one million modest-income homes through weatherization. According to some estimates, this can help modest-income families save an average of $350 a year on heating and air conditioning bills.
Repairing Public Housing and Making Key Energy Efficiency Retrofits To HUD-Assisted Housing - This provision provides a total of $6.3 Billion for increasing energy efficiency in federally supported housing programs. Specifically, it establishes a new program to upgrade HUD-sponsored low-income housing (for elderly, disabled, and Section
to increase energy efficiency, including new insulation, windows, and frames.
Expanding Housing Assistance - This provision increases support for several critical housing programs. It includes $2 Billion for the Neighborhood Stabilization Program to help communities purchase and rehabilitate foreclosed, vacant properties.
More Help for Homeowners in the Future
Another thing to keep an eye on in the coming weeks is President Obama’s plan to help struggling borrowers before they are faced with a default on their mortgage.
According to reports, the Obama administration is discussing plans to help borrowers who are struggling to stay afloat, but who have not yet fallen behind on their payments. At this point, details are scarce; however, reports indicate that President Obama is looking to spend approximately $50 Billion to directly help homeowners before they face foreclosure and financial disaster.
While this is good news for individual homeowners, it will likely be good for the housing industry as a whole. That’s because, assisting struggling borrowers before they default should help stop the wave of foreclosures, which are estimated to top two million this year. That, in turn, will help stabilize home prices.
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February 21st, 2009
People often ask me what I think of the stimulus package and honestly I’m less than enthusiastic.
Treasuries dropped yesterday as the Fed signaled it’s not going to purchase U.S. securities to lower consumer borrowing costs any time soon.
There are actually two huge plans – the $787B economic stimulus package and yesterday’s details on a plan to help millions of mortgagors re-finance their homes and avoid foreclosure (called “workouts”). Given the reactions from investors neither plan is being met with much outward enthusiasm. Interest rates are unchanged from last week, the stock market is teetering close to its November lows, markets do not believe the plans will make significant impacts to turn the ailing economy anytime soon.
On the mortgage rescue plan, James Lockhart, head of the Federal Finance Agency that is responsible for Fannie and Freddie is saying today that he believes 40% of the workouts will within six months end up back in delinquency. Sheila Blair at the FDIC thinks 55% of the workouts will eventually fail. Not very good odds when taxpayers have to pay for it, and the reason the plan is being met with tepid enthusiasm. Even the government doesn’t give it high marks for success. Nevertheless, at the same time the two regulators are firmly behind the plan. It is now almost two years and $2.5T, the credit markets are still not functioning, foreclosures are still increasing, home prices are still falling, and there is still no value being placed on the trillions of dollars of bad assets sitting on banks’ books. Until markets know how deep the losses are at banks there is no shining light out there signaling any end in sight.
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August 19th, 2008
SAN FRANCISCO (MarketWatch) — Banks remain under pressure after bad loans increased during the second quarter, according to one measure of financial strength in the industry. Downey Financial may be among the lenders that are suffering most, while National City and UCB Holdings are in better positions, judging by a measure of these companies known as the Texas Ratio.
The number basically measures credit problems as a percentage of the capital a lender has available to deal with them. It’s calculated by dividing a bank’s non-performing loans, including those 90 days delinquent, by the company’s tangible equity capital plus money set aside for future loan losses.
The ratio was developed by RBC Capital analyst Gerard Cassidy and colleagues as an early-warning system for spotting future trouble at banks. During the Texas banking crisis in the late 1980s, Cassidy noticed that when problem assets grew to more than 100% of capital, most of the banks in that precarious position ended up failing. A similar pattern occurred in the New England banking sector during the recession of the early 1990s. Since the mortgage-fueled credit crunch erupted last year, Cassidy and his colleagues have applied the ratio to commercial banks and other lenders.
At the end of the first quarter, IndyMac had a Texas Ratio of 140%. In July, federal regulators shut down the thrift in one of the largest bank failures in U.S. history. Cassidy recently updated Texas Ratios for the 50 largest commercial banks in the U.S., incorporating results from the second quarter. None of these banks are in anywhere near as much trouble as IndyMac. However, increases in bad loans continued at a worrying pace, the analyst reports.
As of the end of the second quarter, First Horizon National of Memphis, Tenn., had a Texas Ratio of 33%, the highest of the 50 largest U.S. commercial banks, according to RBC Capital. That was up from 30.6% at the end of the first quarter and 10.6% on June 30, 2007. First Horizon raised $690 million selling new shares in the second quarter. The company also agreed to sell its mortgage business outside Tennessee. These steps helped strengthen its capital ratios. However, the bank also said second-quarter net charge-offs increased to $127.7 million from $99.1 million in the previous quarter. Non-performing asset were 3.88% of total loans, up from 2.78% in the first quarter.
Fifth Third makes it into the Top 10, with a Texas Ratio of 27.9% at the end of June. That’s up from 23.4% on March 31 and 8.5% a year ago, according to RBC. The North Carolina company lost almost $9 billion in the second quarter after huge write-downs and charges. It cut its dividend for a second time, saving $700 million of capital per quarter and is planning other steps to conserve capital including shrinking its balance sheet, cutting costs and selling units that aren’t central to its business.
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August 19th, 2008
Effective with all FHA loans underwritten on or after October 1, 2008, Seller-Funded DPAs are prohibited.
In order to be excluded from this prohibition the final approval and sign off of the MCAW MUST precede October 1, 2008. All loans containing a Seller-Funded DPA must close by October 31, 2008.
If you have a buyer needing down payment assistance through one of the DPA programs and have any questions, please don’t hesitate to give me a call.
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August 19th, 2008
In case you haven’t heard: option ARMs are a problem, and Countrywide holds ‘em in spades. The Calabasas, Calif.-based lender’s latest 10-Q filing with the Securities and Exchange Commission underscores the pain that’s now flowing through the veins of Bank of America (BAC: 30.70 +1.72%) (Countrywide filed a Q2 report because its acquisition wasn’t complete until July 1, for those curious to know).
Countrywide held $25.4 billion in pay option mortgages at the end of June; a full 12.4 percent of those loans were 90 or more days delinquent. Want to know more? Get ready to cringe: 83 percent of the portfolio was underwritten via low-doc or no-doc programs, and 72 percent of those borrowers still paying on the loans elected to make less than a full interest payment in June.
Average original LTV of 76 percent had increased to refreshed LTV of 95 percent - that’s the average for the entire portfolio, folks - by the end of April. What to know still more? Despite a severe delinquency rate well into double-digits, Countrywide’s own recast projections suggest that the worst of the portfolio’s recasts won’t hit until sometime in 2011 ($6.96 billion in projected recast volume, net of repayments).
All of which means that 90+ day delinquency figure really only has one direction to go from here. And Countrywide knows it, too; the company, like other lenders with significant option ARM exposure, has been aggressively looking to restructure loans for borrowers stuck in pay-option mortgages, to the tune of $1.2 billion in troubled debt restructuring this year alone.
Countrywide, by the way, also holds $32.3 billion in home equity loans in portfolio; the performance there isn’t likely to be much better than what’s being seen in option ARMs, although the company didn’t break out credit performance for the area in its filing.
While Countrywide’s option ARM holdings are large, the company doesn’t hold the largest such portfolio of loans. That distinction would go to Wachovia Corp. (WB: 15.57 -1.52%), which holds $122 billion in option ARMs, a substantial part of the bank’s $488.2 billion in total loans; no other U.S. bank has as much exposure to option ARMs in real-dollar terms. The North Carolina-based bank yanked its option ARM lending program earlier in the year, as mounting losses and continuing home price declines made the product unprofitable.
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July 30th, 2008
Recently, I had a client pose a few questions relative to the mortgage process. They are questions probably many people have, so I thought they were worth repeating.
Where does the money for the loan come from?
The money comes directly from us as we are a mortgage banker (the funds do not come from Fannie or Freddie). At present, Fannie Mae has announced they will not be using the credit line offered by the Fed (they made a few billions dollars in the 1st quarter of this year). The Fed more or less offered the “bail out” to calm the financial markets.
What are the benefits/risks of working with a broker like Mountain Crest Mortgage?
There are two main benefits of going with a banker like us vs. directly to a bank. 1) If the bank closes, borrowers with pending closings are out of luck. For example, borrowers who were scheduled to close with IndyMac now have to re-apply someplace else and reschedule their loans. If this is a purchase transaction, the impact can be disastrous. As a banker we just take you to a different bank if one of them closes; 2) We work on the wholesale side and have the ability to “shop” your loan to multiple investors to find the best overall loan package for you and your clients.
What’s impacting interest rates so much?
Regarding the rates, what is driving them up (or down) is news of inflation. We’re in a volatile market. I’m advising all of my clients to lock early to avoid major swings in interest rates. We have some investors who allow a “float down” so if rates dramatically improve after locking, we can still take advantage of the pricing improvement for our clients. Rates for the past 7 months have been bouncing up and down between 6% and 6.5% with 0 & 0 points - I expect this to continue over the next few months.
Have other questions?
Let me know. I’d be happy to answer them here or privately.
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July 30th, 2008
I am pleased to report that I sat for and passed the state mortgage broker licensing exam yesterday, July 24, 2008. I now hold both the mortgage broker license as well as my Certified Mortgage Lender designation.
Let’s be candid for a minute. With record foreclosures, unscrupulous mortgage companies were part of the problem.
To help combat mortgage fraud, predatory lending, and bait and switch tactics, the Colorado Legislature now requires persons who take mortgage applications to be licensed, carry an individual state bond, individual errors and omissions insurance, 40 hours of industry education by the end of the year, continuing education, and passage of mandatory state exams. I have completed all of these requirements.
But the Colorado Legislature has no legal authority over national banks or state credit unions which are regulated at the federal level. As a result, these lending institutions’ loan officers are exempt from the strict requirements placed on mortgage brokers and bankers (like Mountain Crest). Their loan officers are exempt from the all of the above requirements.
Especially during these turbulent times, be sure to work with a Colorado-licensed Mortgage Broker.
Mary Steinmeyer
MB License #10017382
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July 30th, 2008
This bears repeating as it goes into effect next week. I’m still hearing many lenders quote FHA as the mortgage option with no penality for FICO score. This is no longer correct.
Effective with new FHA case number assignments on or after July 14, 2008, FHA will implement risk-based premiums on one- to four-unit single family mortgages. Highlights of change include:
- Upfront MI will range from 1.25 percent of the loan amount for lower-risk borrowers to 2.25 percent for riskier borrowers.
- No borrower who qualifies for a FHA-insured mortgage will pay more than 2.25 percent on the upfront mortgage insurance premium and 55 basis points for the annual premium.
- Borrowers with credit bureau scores must be risk-classified by FHA’s TOTAL Mortgage Scorecard.
- Those in risk categories without a premium shown are not eligible for FHA-insured mortgage financing.
- Borrowers without credit bureau scores will need to be manually underwritten and deemed as eligible based on criteria described in Mortgagee Letter 2008-11; the mortgage insurance premium will be determined by the loan-to-value ratio for the non-traditional column in the premium schedule.
First-time homebuyers who will be obtaining a mortgage with an LTV greater than 95 percent and whose decision credit score is in the 559-500 range are entitled to a reduction of their upfront mortgage insurance premium from 2.25 percent to 2.00 percent provided the homebuyer completes HUD-approved pre-purchase counseling.
Pre-purchase counseling must be obtained from a HUD-approved housing counseling agency, a participating agency of a HUD-approved housing counseling intermediary or a state Housing Finance Agency receiving HUD housing counseling grant funds, and the counseling must occur prior to execution of the sales agreement. With this requirement, it is FHA’s intent to encourage borrowers to participate in meaningful counseling prior to the decision to purchase a home, not to create an incentive or burden for lenders to have borrowers re-execute the sales contract in order to receive a reduced premium. Borrowers can take the course within one year of purchase.
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