Living In Tucson Blog

Wow, the weeks have blown by since my last post. Lots of things have been happening in our industry and for me personally.  My family and  I spent the first half of July in South America and had an amazing time. We were there on a personal trip to visit our son Adam who has been living in Uruguay since January. We spent time in Buenos Aires, Iguazu Falls (Click here to check out my youtube video!) and Montevideo. It was a great trip and we had the opportunity to meet several cousins from my father’s side of the family for the first time! My Great Uncle Isidor had immigrated to Argentina in the early part of the 20th century and we spent time with his daughter and grandchildren. (Uncle Isidor pased away in 1981.)

Back in Tucson, my mortgage license was approved. All originators (except for the originators in those big banks like Wells Fargo, Chase and Bank of America) needed to be fully licensed in Arizona on July 1st to continue taking loan applications. National licensing is also required for originators including a background check. Several thousand loan originators have left the business because of the licensing requirement and thousands have been forced to the sidelines while going through the licensing process.

FHA announced some good news and some bad news. The upfront mortgage insurance premium has been reduced from 2.25% to 1%! The bad news it the monthly premium has rise to .9% from .55% for most transactions. Please get off the fence if you are thinking about purchasing a home with a FHA loan! You will save about $40 per month for a $200,000 loan. The implementation date is scheduled to be September 7th, but I have heard that it may get postponed until October 4th.

In other mortgage news, interest rates have been continuing to drop to record low levels in Freddie Mac’s weekly surveys. Freddie Mac has been reporting the weekly average of mortgage rates for over forty years. The phones have been busy with refinance and purchase applications. Unfortunately, not every applicant will qualify these days. The most common reasons for denials include credit issues, lack of down payments or lack of  equity for refinances, inability to verify income or assets and insufficient work history. Don’t despair! We are getting our qualified borrowers approved! I welcome your inquires and referrals.

For further information, contact David Wolsky at david@davidwolsky.com or call 520-275-2536. I have over 16 years of experience!

Hi Friends,

I’ll be taking a break from mortgages and Tucson for a couple of weeks. My family and I are headed to Argentina and Uruguay for a couple of weeks while we are visiting our son and extended family in Buenos Aires. It seems hard for originators to go on vacation! We always have our borrowers relying on our expertise and guidance. I have a great team covering for me locally and in our loan processing center in Mt. Laurel, NJ.

Timing can be so very tricky. For example, as I write this blog, interest rates are at a fifty year low low according to the Freddie Mac weekly survey. The Wall Street Journal pointed out that demand has been relatively flat because  many homeowners were able to take advantage of low rates in 2009. Here in Tucson, a third of the houses are under water! Less than 40% of borrowers are able to qualify for a refinance and many don’t feel the closing costs are worth the potential savings. It’s not easy to get a mortgage these days and refinances can often become even more challenging.

It is also more challenging to become a mortgage originator. Did you know that over 30% of originators fail the exam for their licenses? I am proud to let you know that I passed all of my requirements with flying colors! The number of loan originators in Arizona has been drastically reduced. You can count on me to be there for your mortgage needs, now and down the road!

I’ll be back on July 13th! I can be reached at david@davidwolsky.com and 520-275-2536.

The Fed ended their program of buying MBS (Mortgage Backed Securities – Fannie Mae Bonds) and it is already affecting the market. We have already seen upward pressure on interest rates. Additionally, we are seeing an overall improvement in jobs and housing. The S & P/Case-Schiller Home Price Index has been rising for eight consecutive months and Pending Home Sales rose by 8.2%!

The $8000 tax credit for first time buyers has been a decent stimulus, but the $6500 credit for homeowners buying a new primary residence has fallen short of expectations.

Here are articles of interest regarding bonds and real estate:

Real Estate Outlook: Positive Track

Bonds in the “danger zone”

Contact me, David Wolsky,  if you have any mortgage related questions. I can be reached at 520-529-7515 or email david@davidwolsky.com. Your comments are welcome.

I took the opportunity to record this video blog outdoors this afternoon so please pardon the wind noise. It was another sunny day in Tucson! The message is “Time is running out!”. The home buying conditions are perfect and the affordability index is at levels not seen in decades. Remember:

1. Rates will not stay lower indefinetly

2. The homebuyer’s tax credits will run out in 5 weeks!

3. Home prices will go up eventually

Rates have  been staying low since spring of 2009 thanks primarily to the intervention by the Federal Reserve. Rate predictions are as simple as weather predictions in my home town, Chicago. It does seem reasonable to suggest that rates will go up when the Feds wrap up their program of purchasing MBS (Mortgage Backed Securities) on March 31st. If you would like a rate quote for your next mortgage, contact David Wolsky at 520-529-7515 or david@davidwolsky.com.

Here’s an excerpt of an article on March 11th from BankRate.com. Keep in mind that rate surveys are reflecting the rates of the previous week and there are ebbs and flows to the market causing rate fluctuations.

Rates Fall to Lowest Point of this Young Year

The Fed is in the final three weeks of a mortgage-buying initiative that began more than a year ago. In all, the Fed plans to buy $1.25 trillion in mortgage-backed securities. The central bank is down to the last $30 billion or so of these purchases. Afterward, it will be up to investors to buy mortgages and keep home loans available. 

For a while, the consensus among bankers and economists was this: Mortgage rates would rise roughly half a percentage point after the Fed’s withdrawal. That consensus of an expectation of higher rates has transformed into uncertainty.

“Are we going to see a half-point blip? I don’t know. Maybe. Possibly. Probably. I don’t know,” says Dick Lepre, senior loan consultant for Residential Pacific Mortgage. If the Fed’s withdrawal means that rates are going to rise, why haven’t rates gone up already?

Even members of the Fed are asking that question, which implies that they are uncertain about the direction of mortgage rates, too. Brian Sack, executive vice president of the New York Fed, said in a speech Monday that the central bank has been tapering its purchases of mortgage-backed securities. “However, even as the pace of our purchases has slowed, longer-term interest rates have remained low,” Sack said, and the gap between mortgage rates and Treasury yields has remained narrow.

Click here to read the full article: http://www.bankrate.com/finance/mortgages/rates-fall-again-to-new-low.aspx

New Underwriting Guidelines effective 3/01/2010

* All Borrowers’ Birth Certificate will be required with Pictures taken in the hospital with medical staff. Birth certificate with a live home delivery will not be eligible for first time home buyers.

* Marriage certificate with bridal dress will be required if both husband and wife are required to qualify for the loan

* GFE will not require signature but will require blood sampling from a recognized institution within three days of application

* DNA test will be performed at closing to avoid any ARM length transaction. Loan funding will be contingent upon satisfactory receipt of DNA results.

* Verification of deposit will be acceptable only if Bank representative is present at the closing.

* Copy of Pay stubs and W2 will only be acceptable through IRS only with a wax sealed envelope mailed directly to the lender.

* 7 Witnesses from neighborhood will be required as proof of primary residence in case Borrower owns more than 1 property.

* All appraisers will be required to use Mask and ear plugs at the time of inspection to avoid any personal influence by the Borrower for the appraised value.

* In order to correctly calculate DTI and true house running ratio a list of Grocery items, monthly usage and brand names will be required with receipts and projected 12 months consumption chart.

* Closing will not occur without loan officer presence at settlement and Loan officer picture will be taken at the closing in a Mug shot format with loan number. Picture should meet standard guideline of 2 X 2 inch in color format with one facing and one side view.

* Loan officer picture will be attached to the Deed and note and will be made available for general public and security agencies in case Borrower defaults on the loan.

Thanks to one of my colleagues for sending the funny email to a Realtor in my office. She has more empathy for loan officers after reading this. If you want to have some fun with the mortgage process, give me a call. I’m David Wolsky from Coldwell Banker Home Loans in Tucson, Arizona. You can reach me at (520) 529-7515 or david@davidwolsky.com. I have over 15 years of experience and we offer great rates and terms for conventional, FHA and VA loans including USDA and HomePath Financing.

Homebuyer’s tax credit update

There was some encouraging news on the extension of the $8000 tax credit for first time buyers. The Senate reached an agreement to extend the tax credit and added a $6500 tax credit for other primary home buyers. They also raised the qualifying income limits, in a meaningful way, increasing single taxpayer’s  income from $75,000 to $125,000 and joint taxpayer’s income from $150,000 to $250,000. Buyers must have an executed purchase agreement by April 30, 2010 and will have to close by June 30, 2010. More details are likely to come. Changes may occur in the reconciliation of the bill with the House and when voting takes place. The White House is strongly in favor of an extension of the tax credit especially for first time buyers.

 Appraisal Reforms My Be Terminated

According to Ken Harney of  The Washington Post in his recent column, the Home Valuation Code of Conduct (HVCC) could be on its way out. A bi-partisan amendment was approved October 22 by the House Financial Services Committee. The “Home Valuation Code of Conduct” would be terminated early in the existence of a proposed new Consumer Financial Protection Agency. The agency’s director would replace the code with a new procedure. The code was implemented last May as a firewall between lenders and appraisers to remove any collusion and inflated value. HVCC has created appraisal management companies which in some cases, collects fees from borrowers, pays appraisers reduced fees for their appraisals and pockets the difference. This practice has resulted in inferior quality appraisals. Some management companies hire inexperienced personal willing to work for lower fees and appraisers unfamiliar with the areas they are assigned to appraise. There have been many complaints since HVCC’s inception. In Michigan, The National Association of Home Builders contends the code is impeding new construction as well. More than half of the 500 builders who responded to a recent survey said at least one of their new homes was appraised at less than the cost of construction.  On the other hand, Freddie Mac stated on October 20^th the quality of appraisals has improved.

Personally, I think the system could use some tweaking. I have recently received low value appraisals. It has been a difficult and arduous process to get the appraisers to reconsider the values. You would think a buyer and seller agreeing to a sales price would also influence home values! I am certain we can come up with a better system that will allow independence between appraisers, Realtors, borrowers and lenders.

PHH Corporation names Jerome Selitto CEO 

An issue close me, David Wolsky. My company, PHH Mortgage hires a new CEO. Veteran Industry Leader Brings to PHH Successful Track Record of Innovation, Transformation and Value Creation in Mortgage Business

 MT. LAUREL, N.J. – October 26, 2009 – The Board of Directors of PHH Corporation (NYSE: PHH) today announced that Jerome J. Selitto has been named President and Chief Executive Officer and appointed to the Board of Directors, effective immediately.  George Kilroy, who in June had stepped in on an interim basis as Acting President and CEO of PHH, will continue to lead the company’s fleet management business and serve as a member of the company’s Board of Directors.

 Mr. Selitto brings to PHH nearly forty years of experience in the mortgage industry and in capital markets, as well as a long and successful track record of building companies that have created value by transforming key sectors of the home lending market.  Mr. Selitto served most recently as a senior consultant and then member of the senior management team of mortgage industry software provider Ellie Mae and, before that, as Chief Executive Officer of DeepGreen Financial, the groundbreaking online home equity lender that he helped found.  Earlier, he launched and helped lead mortgage insurance company Amerin Guaranty Corporation (now Radian Guaranty) and held senior leadership positions at First Chicago Corporation, PaineWebber and Kidder, Peabody & Co.

 Jim Egan, Chairman of the PHH Corporation Board of Directors said, “Jerry Selitto is an innovative leader with a proven ability to drive change in an organization and execute transformational strategies that create value for its stakeholders.  Jerry was the architect of two companies in the mortgage industry that created distinctive competitive advantages, found innovative and cost-efficient ways to serve their customers and created new opportunities to generate revenue.  We are confident that his strategic vision, leadership ability and experience re-designing corporate processes will drive increased value across our mortgage and fleet management businesses and help take PHH to a new level of success.”

 Mr. Selitto said, “I am thrilled to have the opportunity to join PHH.  This is a great company with valuable assets, talented employees, world-class clients, and significant opportunities for growth.  PHH’s mortgage and fleet management businesses are well-positioned in the marketplace, and I look forward to working closely with my colleagues across the company to create new opportunities and significant value for our shareholders, customers and employees.”

Economic Update For The Week of November 2nd 

This is a big week for economic information. The Federal Reserve Open Market Committee meets on Tuesday and their monetary policy statement is released on Wednesday. On Friday, we have the jobs report which is an important report especially with unemployment hovering around 10%. Some good news in our industry, the house and senate voted on Friday for a one year extension of higher loan limits for FHA, Fannie Mae and Freddie Mac. The limit in Pima County is $316,250 for FHA and $417,00 for Fannie and Freddie.  Expect a vote this week for an extension of the $8000 tax credit which should stimulate housing for the first quarter of 2010. Pending home sales were up 6.1% in October. It’s the eight straight month with an increase thanks in large part to the $8000 tax credit. It is a great time to be a home buyer!

FHA Logo

Special thanks to Inman News and Matt Carter for the following information:

Beginning in January, The Federal Housing Administration will tighten the credit guidelines and make rule changes the appraisal process to minimize defaults.. FHA’s insurance fund is sufficient to cover future losses, Federal Housing Commissioner David H. Stevens said, but the tighter policies will ensure that the loan guarantees remain self-sustaining and continue to be funded by premiums paid by borrowers, not taxpayers. The rule changes for appraisals will be similar to the changes implemented by Fannie Mae and Freddie Mac this past May, known as the Home Valuation Code of Conduct (HVCC). There has been some push back to HVCC by industry groups, but I suspect that it is here to stay.

Other FHA changes include new requirements for streamlined refinancing such as income verification and demonstrating a tangible benefit  to the borrowers.

There will bill tighter restrictions for FHA approved lenders that will require us to submit audited annual financial statements. Another rule change transfers the risk of loans originated by mortgage brokers to lenders who fund the loans. This practice is already in place for Fannie and Freddie. Brokers won’t have to be individually approved to originate FHA loans which will potentially increase the number of lenders eligible to provide FHA loans resulting in more effective oversight per The U.S. Department of Housing and Urban Development (HUD).

HUD also proposes to increase the net-worth requirement for approved mortgagees from $250,000 to $1 million — a move that could exclude many smaller companies from FHA lending. The requirement has not been increased since 1993 and is currently below industry standards, HUD said. The Mortgage Bankers Association (MBA) issued a statement saying it has long advocated a higher net-worth requirement for FHA lenders, but noted that it “is just as important that any new requirements be reasonable and not unduly hamper competition.” MBA has proposed a $500,000 net-worth requirements.

I have 15 years of FHA lending experience. My company, PHH Mortgage is the fourth largest lender in the country and we specialize in government loans. Call David Wolsky at 520-275-2536. We are licensed in all 50 states. Email me at david@davidwolsky.com for all your mortgage needs.

 I like to share my thoughts on the mortgage industry as an insider on the from lines. It’s been a month since my last blog entry and that is too long!!

 As you may already know, the $8000 tax credit for first time home buyers (defined as an individual who has not owned a home for the past three years), expires on November 30th. Will it be extended? Let’s hope so! The tax credit has really helped sell some homes! There is speculation of expanding the program to include buyers who are not first time homeowners. Of course, Congress has a lot on their plate with health insurance reform as well as climate change legislation. In my view, extending the credit is crucial to our economy, especially in Arizona, Florida, California, Nevada and Michigan. The National Association of Realtors and the National Association of Home Builders are doing some intensive lobbying of Congress. Hopefully, they can get a few words in edgewise between all of the health care and energy lobbyists.

I have also heard first hand that banks are making a concerted effort to renegotiate mortgages and facilitate short sales. You know why? It’s because the government is putting a lot of pressure on the banks. They have received billions of dollars and have helped only a small percentage of homeowners so far. Even if you were already turned down, you may hear from your lender again. In some cases, homeowners were experiencing hardships like reduced hours of work when they attempted to redo their mortgages and were still declined. Many of these at risk borrowers have lost their jobs, but are still trying to hang on to their houses! If you or anyone you know fits into this situation, don’t despair and good luck!

There have been a few regulations implemented in the past month. The biggest change involves the Truth-In-Lending (TIL) disclosure. Mortgage originators have always had to deliver a TIL within three days of application (Sundays and bank holidays are not included). The new changes include an additional seven day period to coordinate the loan disclosures. Another change is if the final rate for the loan is one eighth (.125%) higher than the original TIL, a new TIL needs to be sent over to the borrower within three days before the closing. The minimum time to close a mortgage is ten days or thirteen days if the final rate is higher than the original disclosures. In case you are wondering why a rate might be higher for the final mortgage than the initial rate, there are a few scenarios which can affect interest rates. For example, if a borrower “floats” the interest rate and the market worsens, the final “locked” rate would be higher. Also, a rate could change if the credit score changes or the loan-to-value ratio changes.

Another change is FNMA (Fannie Mae) underwriting is the verification of a self employed borrower. Thirty days prior to the dates on the loan closing documents, third party employment verification must be done. Approved verifications include a CPA letter, a Yellow Pages ad or a website.

As always, if you need any direct advice for mortgages, please contact me, David Wolsky at Mortgage Services by calling 520-529-7515. The email address is david@davidwolsky.com.