Uncategorized – Page 3 – Trevor Curran

Uncle Sam Cleans Up the Mortgage Business

HUD announced yesterday the indictments of more than 400 people in mortgage-related fraud schemes. Operation “Malicious Mortgage”

HUD announced yesterday the indictments of more than 400 people in mortgage-related fraud schemes. Operation “Malicious Mortgage” set out to combat the threat mortgage fraud poses to US and global markets.

HOORAY!!!!

I am thrilled to see Uncle Sam jumping in feet first and cleaning up the slime still hanging around our industry. I’ve written about this often here at tcurranmortgage.com of the low-quality slimebags polluting the mortgage industry and preying on innocent consumers. With all that happened in the Boom-Bust-Meltdown years, there needs to be more “Mr. Clean” action in the mortgage industry. Here then, is the announcement by HUD of a substantial cleanup of our business.

Here in New York, the United States Attorney for New York and the FBI were busy alongside HUD throughout the New York Metro region doing their part in the huge cleanup. As part of Operation “Stolen Dreams” 55 defendants were charged in the Southern District of New York, involving over $45 million in fraudulent loans. Phony mortgage modification scams were uncovered, too, as part of the sweeping undercover investigations.

YAY! Uncle Sam! Good news for consumers; good news for ethical mortgage professionals!

Delinquent FHA Mortgages: DOWN!

The Federal Housing Administration reports that delinquencies on FHA Insured mortgage loans are down.

The Federal Housing Administration reports that delinquencies on FHA Insured mortgage loans are down.

Many in Congress are worried that the Federal Housing Administration will fail in its attempt to save, bolster and support the crashing housing market. Too many pessimists—and those without a thorough understanding of the longevity of the FHA and it’s ability to weather previous storms—see a future taxpayer bailout of the vaunted agency.

At the end of 2009 and into 2010, HUD (which oversees FHA) took some serious steps towards reigning in potentially damaging loans and Lenders. FHA closed the door on many Lenders who abused the FHA system and subsequently had high default rates. FHA proposed important changes to manage risk on its package of insured loans, including the appointment of a Risk Manager, the increase of the Upfront Mortgage Insurance Premium (which goes into effect April 5th, 2010), and other important changes to the program to protect the viability of FHA to continue to insure mortgage loans for Americans.

It’s not often you see immediate effects from policy changes in an organization as large as HUD, but there it is: FHA statistics report a reduction in delinquencies of FHA Insured mortgage loans. This change is not very large by the standards of current originations, but it’s certainly a good start.

I’ve been originating FHA Insured mortgages since the day I started in the mortgage business in 1989. I have always believed the FHA truly fulfilled its original Congressional mandate from 1934 to make it easier for Americans to become homeowners. I have helped so many families over the years with FHA Insured loans. I’m thrilled to hear this very positive news in a time when good news about anything housing or mortgage related is a rare thing indeed.

I’m still originating today mostly FHA loans as it seems to be the only way most families in the New York Metro region can manage to qualify to buy a home. I have full faith and confidence in the ability of HUD to maintain its potential to insure mortgage loans.

Protect Yourself from Identity Theft: FREE

Why pay the Credit Agencies for Identity Theft Protection? You can do it yourself for FREE thanks to free information from Uncle Sam.

Those television commercials will scare you into paying for some kind of ID Theft protection from one (or all, depending on your level of paranoia) of the three major credit reporting bureaus (Experian, Trans-Union, Equifax). Since Congress unfettered these agencies from the constraints of selling credit products to the consuming-public, ID Theft protection and credit score watch (allegedly to make your credit history better) are the hot products that consumers fork over cash money for each month in the form of “ID Theft” prevention monitoring and whatnot. Usually the fees are in the range of $10-15 a month, but they can be higher, $25-40 depending on the level of monitoring the consumer desires.

The problem I have with all these services is that the savvy consumer, by spending just a little time each year (and almost NO money) can pretty much get the same level of protection without subscribing to anything nor sending money to the credit bureaus.

Here’s a link to the Federal Trade Commission website that has a wonderful pdf brochure on all you need to know about Identity Theft and how to protect yourself against ID Theft. It’s FREE and it’s here: FTC: Fighting Back Against Identity Theft

Take some time to read the information, then set yourself on the path to protecting your Identity FREE of CHARGE.

I welcome Comments for all my blog entries. I will be happy to review and approve all legitimate comments provided by readers of tcurranmortgage.com. I do not permit unfettered access to comments for obvious reasons: mortgage spammers and their ilk. If you wish to Comment on any entry, please do so and I will quickly review and approve. Thanks for reading tcurranmortgage.com. Hope that helps!

Blah, blah, blah…!

I thought all the internet babble provided by pseudo-experts about the mortgage business had basically disappeared. I was wrong.

I thought all the internet babble provided by pseudo-experts about the mortgage business had basically disappeared. You know back in the day, back in the “BUBBLE” day, when the entire planet seemed to provide yet another internet expert on mortgage financing? I figured that these people all went the way of the Dodo bird, that is, i.e., became EXTINCT when the meltdown brought the entire planet back to reality.

I was wrong.

Hey, what do I know? I’ve been busy these past few years helping people sort through the mess and get mortgage loans to achieve their goals of homeownership. It’s been danged hard work and I have NOT been on the ‘net the way I used to be, back in the DAY. Back in the “BUBBLE” day.

So I see this link from my pal Gary to some website where an interview is under way with some latest and greatest internet expert named “Interfluidity.” Fifteen minutes, pal, that’s all yer gonna get. Because you don’t know what you’re talking about. My comment for the site, quoted below, is currently in moderation and we’ll see if it actually gets published. Point is, what the heck is this guy tawwking about? This “leverage” thing and all this high-falutin’ talk of economic theories and statistics and analyses.

OUT OF TOUCH with the real world where I live and work. Out of touch with the true economic analysis that I have personally witnessed for the past 20 years: can I afford the mortgage payment? DUH! That’s the extent of the “analysis” I have heard from my first time buyer clients since 1989. It’s a tradition that continues to this day. “Trevor, what’s my payment going to be?” That’s what folks want to know. What do they care about the government allegedly over-subsidizing the mortgage industry?

Here’re my comments for that site; lessee if they publish them. Hmm…

“First, what the heck makes this character ANY kind of expert on mortgages, housing and PLAIN vanilla (not “vanilla”) mortgage loans (NOT “contracts!”)???

Second, has this person ever, actually, maybe, possibly, coulda-sorta SPOKEN to a real live homebuyer/homeowner? Because, if he had, he’d realize the true dynamic of the homeownership experience has nothing to do with the economic drivel he espouses. People have families and they just want to own something that is their own “piece of the rock.” I know because I’ve been speaking to these folks in plain English (and Spanish) for the past twenty years helping them achieve that goal.

Third, since you weren’t actually THERE, let me help you to understand Bubble Era Mentality: EVERYONE WAS CRAZY. I sat with homebuyers trying to tell them their $40,000 per year salaries could not support a $975,000 house. I listened to Sub-Prime account executives telling me on the phone to commit fraud to get my clients to qualify (I don’t do Fraud and I don’t make up fancy job titles with exotic income to qualify people for mortgage loans. Never have. Never will.) I was flamed constantly on the internet for hewing to a strict 30year Fixed Rate, buy-what-you-can-afford line. I watched as the media and internet bozos like Mr. Interfluidity told everyone to BUY NOW, BUY More, Be Happy. I was there, and your analysis doesn’t even come close to catching one whit of the trend of those “bubble days.”

Guys, do us professionals who are still standing and who didn’t create this mess a favor: stop talking such nonsense. There’s folks out there who just want to own their own home. It’s not complicated, it’s really very simple.

“Leverage?” I’ve been sitting with first time buyers for 20 years. Not ONE person has EVER used the word “leverage” in a sentence with me. Cut it out.
”

P.S.: PHIL, you wanted me to get back to blogging, right?!?

Hope that helps!

Comments are wide-open. Fire away. I’m moderating them, of course, to prevent Ye Olde Spamology, but those legitimate comments will be published. Unless you make fun of my old hometown, Woodside.

Inspired by Phil Faranda

As I gobbled some crazy good pizza Phil lectured me that I need to be blogging again.

I had lunch with my good pal and Realtor Extraordinaire Phil Faranda the other day. As I gobbled some crazy good pizza Phil lectured me (kindly, as it were) that I need to be blogging again.

In between chomps on the pizza I responded.

GULP. “Been there done that Phil. I used to blog on tcurranmortgage a LOT.” BITE. CHOMP. GULP. YUM.

“Do it again,” says the JPhilip man.

So he got me to thinking. Not just about Pizza, but about blogging again. Then he drew me in ever so craftily when I responded in a rather lengthy way to his posting on his Facebook blog. You can read for yourself how my pizza-enabling-pal became my new blogging-enabling-friend. And I quote: “Trevor, you just wrote a blog post! See how easy?”

I did it again this morning. Got on my soapbox and came real close to ranting and raving in reply to one of Phil’s eloquent and passionate blogs about our interesting business we all work in.

Am I back to blogging BIG-TIME? Since I’m crazy busy in my new role as Director of Business Development for a busy mortgage company, I truly don’t believe I have the time, but I’ll try to come back here to tcurranmortgage.com more often and enlighten y’all with my thoughts and information on mortgages, real estate and the homebuying experience.

Speaking of blogs, do check out Phil’s and also my good friend Gary’s (also known as Dedicated WebMaster of this here tcurranmortgage blog) blog about his search for a home in Babylon.

Hey Phil, here’s a re-cap of a bunch of articles I done blogged “back in the day” about the negotiating process. These are the lessons I’ve learned over my 20 year career as a mortgage professional and the distillation of the advice I have given (and continue to give) my HomeBuyer clients:

How To Make An Offer: Redux 2009

Asking Price Doesn’t Matter To Realistic Buyers

When Is The Best Time Of Year To Buy A Home?

FSBO’s: For Sale By Owner

And, in a more-detailed response to Phil’s FaceBook posting this morning about the Seller who didn’t counter-offer, an excerpt from a rather old blog entry here on tcurranmortgage.com, Negotiating An Offer In A Changing Market. The excerpt from that article is posted here to further illuminate Phil’s point that a Seller should ALWAYS counter-offer a Buyer’s offer no matter how low it is. Phil says that Buyers are so hard to come by that, when you have one in front of you, you (The Seller) must react with more than a “NO” to a lowball offer.

My personal spin on that is the Seller isn’t really serious about selling the house. See more below.

Serious Sellers. Oh boy there are a lot of houses on the market. Don’t let that fool you into thinking they are all ready for the taking by smart Buyers like you.

Assume there is a percentage of Sellers out there who are not serious about selling their homes. They still think it’s last year and the prices are still mega-millions. Note to Sellers: the market has changed!

You want to discern who is serious about Selling and who is standing there thinking their homes are cash cows waiting to be milked by an unsuspecting Buyer. Note to Buyer: that’s not YOU!

Some folks don’t need to move. The job is not relocating to Arizona; it’s not time to retire; they don’t need to buy a bigger house to accommodate the elderly Mom who is moving in with them. Some folks just have this idea they can sell their home and make tons of money. That’s not “serious about selling” in my book.

You can ask a lot of questions to get at the “truth” behind a Seller’s motivations to sell. You may not get answers to your questions, or the answers may reveal nothing of the Seller’s intentions, or, worse, you may be lied to.

In my long experience I have found the best way to get at the secret of whether or not a Seller really wants to/needs to sell a home is to make an offer.

The person who doesn’t respond to an offer probably thinks he’ll just sit tight to get his price. That’s fine, but if the house isn’t worth that price anymore, then you, educated Buyer, will be moving on to greener pastures.

If your original offer is seriously low, and there is no response, try raising it. If still there is no reaction—a counter offer from the Seller is what I consider a reaction—then this Seller probably isn’t serious.

Time for you to move on. There are plenty of houses out there. Keep going until you find a Seller who really is serious about selling their home.

These are just basic suggestions to help you chart the mysterious waters of a cooling market.

You really must be out there looking, looking, and looking some more, making offers, and making more offers in order to develop a good sense of where the market is going and how you can achieve your goal of homeownership.

Thanks Phil for dragging me back here! Let’s see where it goes from here…
TC

Wake up call. “Vulture” Hedge Funds soon to Destroy The FHA.

Washington was asleep at the switch the first time ’round, now the train of economic recovery is about to go off the rails again unless someone WAKES UP!!!

Hedge funds—known on the street as “vulture” funds—buying distressed mortgage loans from banks at discount prices then refinancing these mortgages into U.S. Government Insured FHA mortgage loans. These funds are probably run by the very same people who created this whole danged mess to start with. Now they’re going to ruin the FHA—an important instrument in the recovery of the housing market and the economy—the way they ruined your pension, 401k, credit, career and you-name-it what else.

Wake up call. Please someone in Washington has to get smarter about developments like these and step in before it’s too late. Washington was asleep at the switch the first time ’round, now the train of economic recovery is about to go off the rails again unless someone WAKES UP!!!

Here’s my posted comment to the NYTimes.com article:

“I’m giving money away,” said Mr. Florez, who is a 35-year-old Las Vegas native. “It’s really a feel-good business.”

This sounds suspiciously similar to the language used during the Sub-Prime boom. Are they kidding? These are many of the same people who created this mess in the first place. Now they’re going to trash the FHA the way they trashed everything else. I’m sorry, you can’t tell me that these people have anything even remotely resembling an “altruistic” motive when their profits are directly tied to the origination and closing of the new FHA mortgage.

How is it that FHA is monitoring the situation? This is exactly the characteristic of previous massive frauds perpetrated on FHA in the past (think 203k Investor loans in Florida, 1993-1994): when the “originator’s” profit motive is as strong as it is here, that’s the perfect invitation to commit mortgage fraud. The FHA cannot afford a wait and see attitude in this case; too much of the nation’s economic recovery depends on the FHA’s ability to continue to insure mortgage loans. If the FHA is damaged in any big way, kiss any hope of recovery goodbye.

First-Time Buyer Tax Credit Fraud: Get $8,000, GO TO JAIL

The Internal Revenue Service today announced its first successful prosecution related to fraud involving the first-time homebuyer credit and warned taxpayers to beware of this type of scheme

The IRS is closely watching the First-Time Buyer Tax Credit program for fraud. I’m glad they are. I have personally heard of two situations where people have collected $8,000 under the program and they have not yet purchased homes. In one of those instances, I was told that 3 people in one family received the credits—totalling $24,000—and they had not yet purchased a home, were planning to, and were told by their tax person that, “If you don’t buy the house by the deadline you just have to repay it.”

I can’t imagine why anyone would think a stimulus program allows receipt of the stimulus money without actually undertaking the stimulus activity: BUYING THE HOUSE!

Here’s an excerpt from the IRS press release and a link to the IRS site for more information:

“The Internal Revenue Service today announced its first successful prosecution related to fraud involving the first-time homebuyer credit and warned taxpayers to beware of this type of scheme.

On Thursday July 23, 2009, a Jacksonville, Fla.-tax preparer, James Otto Price III, pled guilty to falsely claiming the first-time homebuyer credit on a client’s federal tax return. Price faces the possibility of up to three years in jail, a fine of as much as $250,000, or both.

To date, the IRS has executed seven search warrants and currently has 24 open criminal investigations in pursuit of potential instances of fraud involving the credit. The agency has a number of sophisticated computer screening tools to quickly identify returns that may contain fraudulent claims for the first-time homebuyer credit.

‘We will vigorously pursue anyone who falsely tries to claim this or any other tax credit or deduction,’ said Eileen Mayer, Chief, IRS Criminal Investigation. ‘The penalties for tax fraud are steep. Taxpayers should be wary of anyone who promises to get them a big refund.'”

IRS Warns Taxpayers To Beware Of First-Time Buyer Credit Fraud

FHA in the New York Times

The New York Times presented a brief piece about FHA insured loans.

I attended the grand opening of the Hamilton Lofts development in Harlem last week. The developer and sponsor of this brand new condominium project, Romy Goldman, has done an exceptional job: the finishes, the thoughtfulness and attention to every detail are very impressive. More impressive still is Romy’s understanding of the nuances of financing for her potential buyers, especially with regards to FHA Insured Financing. She had the condominium approved by HUD to allow her potential Buyers to purchase using the FHA program. On the entire island of Manhattan there were only 7 other approved condominiums for FHA financing. Romy was definitely ahead of the curve: her project is the eighth approved condo in Manhattan.

The New York Times presented a brief piece about FHA this past Sunday; they interviewed Romy Goldman and included her thoughts on FHA in the article.

My favorite quote from the article, “According to Meg Burns, the F.H.A.’s director of single-family program development, these loans actually perform very well. “That’s kind of a shock to most people because we serve borrowers with riskier profiles,” she said. “But we have pretty stringent underwriting standards. You have to have sufficient verifiable income and employment to make your mortgage payments.” YAY FHA!!!

Here’s the article: FHA Loans Help Sales

FHA Insurance is NOT PMI!!!

Realtors and clients will call FHA loans, or the attendant insurance premiums, “PMI.” “Trevor, what is the monthly PMI on that FHA loan?” The two programs are different.

A brief primer on the difference between FHA Mortgage Insurance and its pale imitator: PMI or Private Mortgage Insurance.

The FHA mortgage insurance program has been around since 1934. This program was created under President Franklin Roosevelt’s New Deal to help turn a nation of renters into a nation of homeowners. Back then, the rental rate was 70%, and FHA was instrumental in turning that around.

What the FHA or Federal Housing Administration does is it provides insurance for Lenders against foreclosure. When an FHA loan goes bad, the FHA steps in, reimburses the Lender and takes the house in foreclosure. Anytime you see “HUD Homes For Sale” those are FHA loans that went bad.

FHA has been absent for most of the “boom” years due to the limitations on loan amounts for any given geographic area. These loan limitations are set through an act of Congress and are—by law—a percentage of the median price and the FNMA limit in a given area. FHA was absent for most of the past ten years due to the low limit on lending. For example, in the NY Metro region, the limit for a single family home was $362,000 (approx.). The fact is, during those crazy times, you couldn’t find a single family home priced in the New York market unless you went very far afield, indeed, usually to a distant suburb.

As part of the 2008 stimulus package, Congress increased the permanent FHA limit to $625,000 (approx) for a single family home. As part of President Obama’s 2009 stimulus package, that limit has been further increased to $729,250 through December 31st, 2009. These numbers are not only more reasonable for our market place, but open up the FHA mortgage opportunity to so many more homebuyers.

FHA is, in my opinion, the “miracle loan.” The Underwriting criteria, as set forth by FHA, is much more flexible than Conventional or Fannie Mae guidelines. FHA requires a purchaser or homeowner (in a refinance) to pay mortgage insurance regardless of the size of the downpayment. In my humble opinion, this is a small price to pay for the excellent flexibility afforded by FHA guidelines, and the opportunity for homeownership opened up to so many more families.

PMI, or Private Mortgage Insurance, is the corporate, non-public version of mortgage insurance. PMI companies came into existence to fill the gap left by the FHA loan limits. For Conventional, or Fannie Mae/Freddie Mac loans, when a purchaser makes a downpayment of less than 20%, the Lender requires the purchaser to buy Private Mortgage Insurance to protect the Lender’s (riskier) investment.

Often, Realtors and clients will call FHA loans, or the attendant insurance premiums, “PMI.” “Trevor, what is the monthly PMI on that FHA loan?” The two programs are different. The FHA insurance is actually called, “MIP” for Mortgage Insurance Premium. There are two MIP’s when obtaining and FHA Insured mortgage loan.

The first is the Upfront Mortgage Insurance Premium, or UFMIP. This is typically 1.75% of the loan amount and is most often financed on top of the mortgage loan you need to purchase or refinance your home.

The second premium is the Monthly Mortgage Insurance Premium or MMIP. This premium is included with your monthly mortgage payment to your Lender. The premium is calculated based on a percentage value of the loan amount determined by the amount of your downpayment (and in recent history, your credit score, although that requirement has been cancelled). You will pay this monthly premium until your equity position in the home reaches 78% of the value at time of closing. It may be possible to eliminate FHA MMIP after 5 years of good payment history.

The UFMIP is included in your principal and interest payment for the life of the loan. If you sell the home or refinance into a non-FHA mortgage, you may be entitled to a refund of a portion of the UFMIP.

More information about FHA loans can be found at the FHA website.

Hope that helps!

I’m Going To Be Sick

The New York Times reports today on targeted racial discrimination by Wells Fargo.

The truth comes out, and I am so disgusted by it that I literally want to vomit. I knew there were shenanigans going on back in the day—I watched my clients evaporate before my eyes when I told them they could get a 30yr Fixed Rate loan if they only purchased a cheaper home. Those clients went elsewhere for their mortgage financing, preferring to “drink the koolaid” with mortgage “professionals” peddling loans that were affordable for about the first fifteen minutes after closing.

As much as the “boom” was great for lots of people in the mortgage business, I watched my originations decrease. I made less money. I started writing tcurranmortgage.com as a way to maybe, possibly, sorta-kinda, hold on to clients by demonstrating more about who I was as an originator and how I really had their best interests in mind. I guess I had some vague hope that the clients would read my blog, come to realize they were being bamboozled by the “other mortgage person” and stick with me. They didn’t. (It’s okay, I sleep very well at night)

Little did I realize then—I guess I am that naive—the kinds of officially sanctioned shenanigans going on at companies like Wells Fargo Home Mortgage. Read more about it in today’s NYTimes.com article linked HERE.

You might want to be sick while you read.

Excuse me…I think I’m going to be ill…