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First-Time Buyer Tax Credit Isn’t a Done Deal!

Friday, June 18th, 2010

For those of us with first time buyers closing on or before June 30, 2010, tension is mounting as to whether or not 1) the deal will close on time or 2) the closing deadline will be extended to September 30, 2010.  An initial proposal did pass the Senate on Wednesday.  This is part of many tax policy extensions and federal program renewals under consideration in the Senate.  The measure would also have to pass in the House. 

 Under the proposed measure, buyers would have until Sept. 30 to close on sales that went under contract by April 30. The current closing deadline is June 30.

I’ve already seen some of my favorite bloggers writing about the extension, implying that its a “done deal” to their prospects and clients.  Hopefully that will be the result, but let’s be sure we have the cart before we start shopping for a horse.

Posted in Uncategorized | 2 Comments »

Mary On Your Brand Radio

Tuesday, March 30th, 2010
Thanks to Mark Crowley and David Sandusky for allowing me to be part of the Your Brand Radio program.  Awesome opportunity to be part of an exciting local radio show.
http://www.yourbrandplan.com/forum/your-brand-radio/30380-creative-connections-business-owners-your-brand-radio.html#post87738

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Posted in Uncategorized, education, mortgage | 2 Comments »

Today is a new day!

Saturday, March 27th, 2010

I’m turning over a new leaf and a new commitment to blogging regularly.  I’m happy to again report that I passed the new licensing text, the national S.A.F.E. exam.  All that remains is the credit check.  Once that becomes available, I’ll get in and get that done too.  I’m ready to have all of this completed and be able to focus on the business of residential lending.

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Award for Mountain Crest Mortgage

Thursday, 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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PMI Anyone?

Saturday, 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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Stimulus for Housing?

Saturday, 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 8) 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.

Posted in Uncategorized | 3 Comments »

Stimulus Anyone?

Saturday, 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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Texas Ratio Anyone?

Tuesday, 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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DPA Programs Ending

Tuesday, 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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Option ARM Woes. . .

Tuesday, 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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