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Archive → June, 2010

FHA Loans May Become More Costly

It is time for a call to action as FHA loans are in danger of becoming more costly thereby pushing persepctive home buyers out of the market.  To view a video and get more details on this issue - CLICK HERE! 

Please take the time, watch the video and let your representative know how you feel!!

Worried About That Dreaded Knock on the Door?

The news or buzz on the street is that the next round of crack downs and arrests for mortgage fraud are coming – THIS WEEK!  The details so far are:

By Michael Braga

Published: Saturday, June 12, 2010 at 1:00 a.m.
Last Modified: Saturday, June 12, 2010 at 12:10 a.m.

“The FBI is expected to ramp up its clampdown on mortgage fraud and arrest hundreds across the United States as early as next week, according to a Friday story published by the Financial Times.

 

The British business newspaper said that its information was based on conversations with two people familiar with the FBI operation and that the agency is “targeting offenders who have persuaded borrowers to submit false data about their income on mortgage applications, have given homeowners misleading information about foreclosure rescue programs and have inflated home appraisals.”

The FBI has set up 23 local mortgage fraud task forces around the U.S. since October 2008 with the mandate to limit the illegal misstatement, misrepresentation or omission of material facts on mortgage applications.

Because Southwest Florida was the site of so much potential mortgage fraud during the real estate boom and its aftermath, there is a strong possibility that local residents could be rounded up in the crackdown.

After a year-long investigation and the review of nearly 19 million real estate transactions, the Herald-Tribune reported last summer that Florida was the site of more than $10 billion in suspicious property flips.

The newspaper has since reported that several large-scale criminal investigations are underway, but it was unclear on Friday whether any of those cases are part of the FBI’s imminent efforts.

David Couvertier, the FBI’s Tampa spokesman, did not respond to calls or e-mails from the Herald-Tribune seeking comment. Steve Cole, a spokesman for the U.S. Attorney’s office in Tampa, said Friday that he could not comment.

The most prominent investigation uncovered by the Herald-Tribune involves Sarasota real estate agent Craig Adams.

Adams, who organized scores of transactions in which houses were sold to associates at inflated prices so that they could obtain hundreds of millions of dollars in loans, turned himself into the FBI in 2008 and has been providing information that has implicated at least 30 of his colleagues.

The information has already led to the April 2009 arrest of Lisa Rototo, a Sarasota title agent who closed dozens of deals for Adams and his associates.

Rotolo has been cooperating with the FBI ever since.

An FBI affidavit in Rotolo’s criminal case, which was filed in U.S. District Court in Tampa, contains a list of 37 transactions in which Adams and his associates allegedly obtained mortgages through fraudulent means.

All told, the players involved in flipping and mortgage fraud defaulted on nearly $500 million in loans in Southwest Florida, the Herald-Tribune investigation found.”

If you are in the mortgage business do you fell safe or are you a little nervous!

Fridat was FDIC pays a visit day and overall it was pretty quiet! Washington First International Bank of Seattle Washington bit the dust and all deposits were assumed by East West Bank of Pasadena.

The market is atrting the week on the negative side with upward pressure on mortgage rates. The economic calendar for the week consists of:

Date ET Release For Actual Briefing.com Consensus Prior Revised From
Jun 15 08:30 Export Prices ex-ag. May   NA NA 1.4%  
Jun 15 08:30 Import Prices ex-oil May   NA NA 0.5%  
Jun 15 08:30 Empire Manufacturing Survey Jun   20.0 20.0 19.11  
Jun 15 09:00 Net Long-Term TIC Flows April   NA NA $140.5B  
Jun 16 08:30 Housing Starts May   680K 655K 672K  
Jun 16 08:30 Building Permits May   650K 631K 610K  
Jun 16 08:30 PPI May   -0.2% -0.5% -0.1%  
Jun 16 08:30 Core PPI May   0.0% 0.1% 0.2%  
Jun 16 09:15 Capacity Utilization May   74.5% 74.4% 73.7%  
Jun 16 09:15 Industrial Production May   0.9% 0.8% 0.8%  
Jun 16 10:30 Crude Inventories 06/12   NA NA -1.83M  
Jun 17 08:30 Initial Claims 06/12   450K 450K 452K  
Jun 17 08:30 Continuing Claims 06/5   4500K 4475K 4462K  
Jun 17 08:30 CPI May   -0.1% -0.1% -0.1%  
Jun 17 08:30 Core CPI May   0.0% 0.1% 0.0%  
Jun 17 08:30 Current Account Balance Q1   -$125.0B -$124.0B -$115.6B  
Jun 17 10:00 Leading Indicators May   0.4% 0.5% -0.1%  
Jun 17 10:00 Philadelphia Fed Jun   20.0 20.0 21.4

Inflation data can always be a market mover so pay close attention to the PPI and CPI figures this week.  Thanks for stopping by and happy Monday to all!

A Word About Condominiums

The economic downturn has created havoc throughout the US economy and changed our credit parkets dramatically.  With Fannie and HUD essentially removing themselves from the condo approval business and placing the burden of project warranties on the funding lenders, it is only natural that condominium purchases are becoming more difficult.  The reasons are that many lenders do not have the expertise or the stomach to warranty a project and risking a loan re-purchase and the economic crisis has rendered many projects un-approvable.

For a lender to warrant a project, they must have the expertise avaialable to review the project documents such as the CC & R’s, Articles, By Laws, Budget, Articles of Incorporation, and Master Insurance Policy to insure that the project does indeed meet Fannie Mae or HUD standards.  If the expertise is not in-house then this process may be outsourced to a thrid party provider but the burden of that warranty will still be on the funding lender.  If a loan goes bad and it is determined that the project should not have been approved, the investor is going to expect the loan to be re-purchased by the funding lender.  The funding lender can then go back and request the third party provider cover any losses (good luck with that!).

The other challenge is that the guidelines for a project to be approved have also tightened up.  The main issue that renders many projects unwarrantable in the current market is the issue of delinquent HOA dues.  If 15% or more of the current property owners are 30 days or more delinquent with their HOA dues, then the project is a no go!  Given the level of foreclosures, short sales, and cash strapped owners, we have been seeing as delinquency rates in projects as high as 25% to 30% of the unit owners! 

When considering a condo purchase or if you are thinking of listing your unit for sale, perform some homework in advance to see where your project stacks up with current lending standards.

More on LQI and What Banks are No More!

Here are links to 2 helpful documents that give some clarification to Fannie Mae’s Loan Quality Initiative (LQI). 

The first is a summary of the initiative: CLICK HERE

The second is a FAQ document that further clarifies the program: CLICK HERE

Last Friday’s bank closures were as follows:

  1. First National Bank (MS)
  2. The Jefferson Bank (MS)
  3. Arcola Homestead Savings Bank (IL)
  4. TierOne Bank (NE)

82 closed banks YTD and counting!!

Friday Fish Wrap

So the jobs report came out and the news was very good – or was it??  The economy added 431,000 jobs – that is the good side.  The bad side is that the break down on the number is that 390,000 of these jobs were temporary government census workers and only 41,000 jobs were added to the private sector!  Unemployment went from 9.9% to 9.7% but the news on the private sector was very disappointing and has caused stocks to drop and bonds to rally.  Of course we all now know that a rally in the bond market can and usually does lead to lower interest rates.

You can also bet on the fact that these numbers are skewed.  Here is a for instance.  If a census worker is hired, shows up and works one hour and walks off the job, then another worker is hired in his or her place, this is counted as 2 new jobs being created for the month! It really makes you wonder who makes up the rules and what the real truth is behind the numbers.  I guess the truth in regards to our recovery is what you feel in your own pocket and how well each individual is fairing.  There is still a lot of struggling people out there and it still “feels” like we have a hill to climb as far as our economy is concerned.

Well today is Friday and that means it is bank closure day.  If you are a banker, your biggest fear is the appearance of a bunch of individuals at closing time all wearing shirts or jackets with the Federal Reserve emblem on their apparel.  Since May 14th, the following banks have said goodbye:

  1. Sun West Bank in Las Vegas
  2. Granite Community Bank NA, Granite Bay, CA
  3. Bank of Florida – Tampa
  4. Bank of Florida – Southwest
  5. Bank of Florida – Southeast
  6. Pinehurst Bank, Minnesota
  7. Midwest Bank and Trust Company, Illinois
  8. Southwest Community Bank, Missouri
  9. New Liberty Bank, Michigan
  10. Satilla Community Bank, Georgia

To date the count is at 78 total closures on the bank side. Credit Unions have fared better with only 8 failed credit unions YTD.

So on the heels of all of this good cheer is a rallying bond market and lower rates as we head into the traditional home buying season.  Inventory still remains a challenge but the home prices are attractive and so are the rates.  If you are still sitting on the fence waiting for the perfect time to buy it is probably time to jump down off the fence and start pounding the pavement in search of your dream home!  Good luck and happy hunting!

A Switch From The Norm With An Improtant Message

I do not get political on this blog but felt this was a very appropriate message:

“I’m 63 and I’m Tired”
by Robert A. Hall

I’m 63. Except for one semester in college when jobs were scarce and a
six-month period when I was between jobs, but job-hunting every day, I’ve
worked, hard, since I was 18. Despite some health challenges, I still put in
50-hour weeks, and haven’t called in sick in seven or eight years. I make a
good salary, but I didn’t inherit my job or my income, and I worked to get
where I am. Given the economy, there’s no retirement in sight, and I’m
tired. Very tired.

I’m tired of being told that I have to “spread the wealth” to people who
don’t have my work ethic. I’m tired of being told the government will take
the money I earned, by force if necessary, and give it to people too lazy to
earn it.

I’m tired of being told that I have to pay more taxes to “keep people in
their homes.” Sure, if they lost their jobs or got sick, I’m willing to
help. But if they bought McMansions at three times the price of our
paid-off, $250,000 condo, on one-third of my salary, then let the left-wing
Congress-critters who passed Fannie and Freddie and the Community
Reinvestment Act that created the bubble help them with their own money.

I’m tired of being told how bad America is by left-wing millionaires like
Michael Moore, George Soros and Hollywood Entertainers who live in luxury
because of the opportunities America offers. In thirty years, if they get
their way, the United States will have the economy of Zimbabwe , the
freedom of the press of China , the crime and violence of Mexico , the
tolerance for Christian people of Iran , and the freedom of speech of
Venezuela .

I’m tired of being told that Islam is a “Religion of Peace,” when every day
I can read dozens of stories of Muslim men killing their sisters, wives and
daughters for their family “honor”; of Muslims rioting over some slight
offense; of Muslims murdering Christian and Jews because they aren’t
“believers”; of Muslims burning schools for girls; of Muslims stoning
teenage rape victims to death for “adultery”; of Muslims mutilating the
genitals of little girls; all in the name of Allah, because the Qur’an and
Shari’a law tells them to.

I’m tired of being told that “race doesn’t matter” in the post-racial world
of Obama, when it’s all that matters in affirmative action jobs, lower
college admission and graduation standards for minorities (harming them the
most), government contract set-asides, tolerance for the ghetto culture of
violence and fatherless children that hurts minorities more than anyone, and
in the appointment of U.S. Senators from Illinois.

I think it’s very cool that we have a black president and that a black child
is doing her homework at the desk where Lincoln wrote the Emancipation
Proclamation. I just wish the black president was Condi Rice, or someone who
believes more in freedom and the individual and less arrogantly of an
all-knowing government.

I’m tired of a news media that thinks Bush’s fundraising and inaugural
expenses were obscene, but that think Obama’s, at triple the cost, were
wonderful; that thinks Bush exercising daily was a waste of presidential
time, but Obama exercising is a great example for the public to control
weight and stress; that picked over every line of Bush’s military records,
but never demanded that Kerry release his; that slammed Palin, with two
years as governor, for being too inexperienced for VP, but touted Obama with
three years as senator as potentially the best president ever. Wonder why
people are dropping their subscriptions or switching to Fox News? Get a
clue. I didn’t vote for Bush in 2000, but the media and Kerry drove me to
his camp in 2004.

I’m tired of being told that out of “tolerance for other cultures” we must
let Saudi Arabia use our oil money to fund mosques and madrassa Islamic
schools to preach hate in America , while no American group is allowed to
fund a church, synagogue or religious school in Saudi Arabia to teach love
and tolerance.

I’m tired of being told I must lower my living standard to fight global
warming, which no one is allowed to debate. My wife and I live in a
two-bedroom apartment and carpool together five miles to our jobs. We also
own a three-bedroom condo where our daughter and granddaughter live. Our
carbon footprint is about 5% of Al Gore’s, and if you’re greener than Gore,
you’re green enough.

I’m tired of being told that drug addicts have a disease, and I must help
support and treat them, and pay for the damage they do. Did a giant germ
rush out of a dark alley, grab them, and stuff white powder up their noses
while they tried to fight it off? I don’t think Gay people choose to be Gay,
but I damn sure think druggies chose to take drugs. And I’m tired of
harassment from cool people treating me like a freak when I tell them I
never tried marijuana.

I’m tired of illegal aliens being called “undocumented workers,” especially
the ones who aren’t working, but are living on welfare or crime. What’s
next? Calling drug dealers, “Undocumented Pharmacists”? And, no, I’m not
against Hispanics. Most of them are Catholic, and it’s been a few hundred
years since Catholics wanted to kill me for my religion. I’m willing to
fast track for citizenship any Hispanic person, who can speak English,
doesn’t have a criminal record and who is self-supporting without family on
welfare, or who serves honorably for three years in our military…. Those
are the citizens we need.

I’m tired of latte liberals and journalists, who would never wear the
uniform of the Republic themselves, or let their entitlement-handicapped
kids near a recruiting station, trashing our military. They and their kids
can sit at home, never having to make split-second decisions under life and
death circumstances, and bad mouth better people than themselves. Do bad
things happen in war? You bet. Do our troops sometimes misbehave? Sure.
Does this compare with the atrocities that were the policy of our enemies
for the last fifty years and still are? Not even close. So here’s the
deal. I’ll let myself be subjected to all the humiliation and abuse that was
heaped on terrorists at Abu Ghraib or Gitmo, and the critics can let
themselves be subject to captivity by the Muslims, who tortured and beheaded
Daniel Pearl in Pakistan, or the Muslims who tortured and murdered Marine
Lt. Col. William Higgins in Lebanon, or the Muslims who ran the
blood-spattered Al Qaeda torture rooms our troops found in Iraq, or the
Muslims who cut off the heads of schoolgirls in Indonesia, because the girls
were Christian. Then we’ll compare notes. British and American soldiers are
the only troops in history that civilians came to for help and handouts,
instead of hiding from in fear.

I’m tired of people telling me that their party has a corner on virtue and
the other party has a corner on corruption. Read the papers; bums are
bipartisan. And I’m tired of people telling me we need bipartisanship. I
live in Illinois , where the “Illinois Combine” of Democrats has worked to
loot the public for years. Not to mention the tax cheats in Obama’s cabinet.

I’m tired of hearing wealthy athletes, entertainers and politicians of both
parties talking about innocent mistakes, stupid mistakes or youthful
mistakes, when we all know they think their only mistake was getting caught.
I’m tired of people with a sense of entitlement, rich or poor.

Speaking of poor, I’m tired of hearing people with air-conditioned homes,
color TVs and two cars called poor. The majority of Americans didn’t have
that in 1970, but we didn’t know we were “poor.” The poverty pimps have to
keep changing the definition of poor to keep the dollars flowing.

I’m real tired of people who don’t take responsibility for their lives and
actions. I’m tired of hearing them blame the government, or discrimination
or big-whatever for their problems.

Yes, I’m damn tired. But I’m also glad to be 63. Because, mostly, I’m not
going to have to see the world these people are making. I’m just sorry for
my granddaughter.

Robert A. Hall is a Marine Vietnam veteran who served five terms in the
Massachusetts State Senate.