Simpler mortgage rules on the horizon?

Consumer Financial Protection Bureau considers rules to simplify mortgage points and fees
By Ashley Gordon

Rules would bring greater transparency to the mortgage market

WASHINGTON, D.C. — Today the Consumer Financial Protection Bureau (CFPB) outlined rules it is considering that would simplify mortgage points and fees and bring greater transparency to the mortgage loan origination market. These rules, which the CFPB expects to propose this summer and finalize by January 2013, would make it easier for consumers to understand mortgage costs and compare loans so they can choose the best deal.

“Mortgages today often come with so many different types of fees and points that it can be hard to compare offers,” said CFPB Director Richard Cordray. “We want to bring greater transparency to the market so consumers can clearly see their options and choose the loan that is right for them.”

The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) places certain restrictions on the points and fees offered with most mortgages. The CFPB is considering proposals that would:

  • Require an Interest-Rate Reduction When Consumers Elect to Pay Discount Points: Discount points are a fee, expressed as a percentage of the loan amount, to be paid by the consumer to the creditor at the time of loan origination in return for a lower interest rate. Discount points can benefit consumers by allowing them to reduce their monthly loan payments. The CFPB is considering proposals to require that any discount point must be “bona fide,” which means that consumers must receive at least a certain minimum reduction of the interest rate in return for paying the point.
  • Require Lenders to Offer Consumers a No-Discount-Point Loan Option: It is often difficult for consumers to compare loan offers that have different combinations of points, fees, and interest rates. Under the proposal under consideration, consumers must also be offered a no-discount-point loan. This would enable the homebuyer to better compare competing offers from different lenders.
  • Ban Origination Charges that Vary with the Size of the Loan: Brokerage firms and creditors would no longer be allowed to charge origination fees that vary with the size of the loan. These “origination points” are easily confused with discount points. Instead, under the rules the CFPB is considering, brokerage firms and creditors would be allowed to charge only flat origination fees.

In addition to regulating origination points and fees, the proposals the CFPB is considering would also address mortgage loan originators’ qualifications and compensation. Mortgage loan originators, who take mortgage loan applications from consumers seeking to buy a home or refinance a mortgage, include mortgage brokers and loan officers. The rules the CFPB is considering would:

  • Set Qualification and Screening Standards: Under state law and the federal Secure and Fair Enforcement Act, loan originators currently have to meet different sets of standards, depending on whether they work for a bank, thrift, mortgage brokerage, or nonprofit organization. The CFPB is considering rules to implement Dodd-Frank requirements that all loan originators be qualified. The proposal would help level the playing field for different types of loan originators so consumers could be confident that originators are ethical and knowledgeable:

-Character and Fitness Requirements: All loan originators would be subject to the same standards for character, fitness,
and financial responsibility;
-Criminal Background Checks: Loan originationators would be screened for felony convictions; and
-Training Requirements: Loan originators would be required to undertake training to ensure they have the knowledge
necessary for the types of loans they originate.

  • Prohibit Paying Steering Incentives to Mortgage Loan Originators: In 2010, the Federal Reserve Board issued a rule that prohibits loan originators from directing consumers into higher priced loans because they could earn more money. The Dodd-Frank Act requires the CFPB to issue rules as well. The proposals the CFPB is considering would reaffirm the Board’s rule, which bans the practice of varying loan originator compensation based on interest rates or certain other loan terms. The CFPB’s proposal would also clarify certain issues in the existing rule that have created industry confusion.

The proposals that the CFPB is considering are designed to preserve consumers’ choices while increasing transparency. In developing a formal proposal, the CFPB plans to engage with consumers and industry, including a Small Business Review Panel that will meet with a group of representatives of the small financial services providers that would be directly affected by the proposals under consideration. The documents that the CFPB will be sharing with these small providers include an overview of the proposals under consideration and a list of questions for input. The small provider representatives will provide feedback to the panel on the proposals the CFPB is considering and suggest alternatives. The Panel will issue a report summarizing this feedback, which the CFPB will consider when formulating the proposed rules.

A “fact sheet” summarizing the Panel process can be found here: http://files.consumerfinance.gov/f/201205_CFPB_public_factsheet-small-business-review-panel-process.pdf

An overview of the rules under consideration can be found here: http://files.consumerfinance.gov/f/201205_cfpb_MLO_SBREFA_Outline_of_Proposals.pdf

A list of questions for the Panel’s input can be found here: http://files.consumerfinance.gov/f/201205_cfpb_MLO_SERs_Questions.pdf

The public can email the CFPB their comments and feedback atMortgageLoanOrigination@cfpb.gov.

The CFPB plans to publish a Notice of Proposed Rulemaking this summer, which will be followed by a formal public comment period. The rules will be finalized by January 21, 2013.


SRCAR Endorses Kevin Jeffries for Supervisor Seat.

Two Influential Realtor Associations Endorse Jeffries
First and Only Candidate Ever Endorsed by Both Local Associations


(Riverside, CA) – Kevin Jeffries announced today that his campaign for Riverside County Supervisor (1st District) has received a pair of important endorsements from both the Southwest Riverside County Association of REALTORS and the Inland Valleys Association of REALTORS.

Both Associations advance the American dream of home ownership for families while promoting and maintaining high standards of conduct for local real estate professionals.

“Kevin Jeffries has been an unwavering advocate of home ownership for Riverside County families. Kevin has worked at both the state and local level to help keep fees and taxes low for homeowners” said Joe McGowan, Chairman of the Southwest Riverside County Association of Realtors.

“Kevin has not only worked to help jump-start our distressed housing market by proposing tax breaks for first time homebuyers, he has also been an unwavering advocate for private property rights” said Steve Manos, President of the Inland Valleys Association of REALTORS located in Riverside.

“Like thousands of Riverside County families, Riverside County Realtors have been living with the meltdown of our economy and the housing market. They know I’m going to be fighting to turn our local economy around and that affordable housing is a key part of our future recovery,” said Jeffries.

As an advocate on behalf of Riverside County homeowners and families since his 1990 election to a local water district, Jeffries was often a leading voice to oppose water and sewer rate increases, as well as the placement of unfair water “standby” taxes on homeowner property tax bills. Jeffries also led efforts at the State Capitol to provide first time homebuyers with tax breaks. Today Jeffries is currently leading an effort to repeal a soon to be implemented $150 special state fire prevention tax on nearly 800,000 homeowners across the state and portions of Riverside County.

This announcement comes just weeks after the Riverside County Farm Bureau announced their endorsement of Jeffries for Supervisor, according to Stacy Nicola with the Jeffries campaign.

 

# # #


CAR Opposes SB 1220 Transfer Tax

C.A.R. Opposes Transfer Tax Legislation
C.A.R. is opposing SB 1220 (DeSaulnier), which imposes a transfer tax to generate funds for affordable housing. C.A.R. is opposing SB 1220 because it will add to the cost of buying a home at a time when the housing market is struggling to recover. C.A.R. is an aggressive advocate for affordable housing, but believes it is bad policy to fund affordable housing by making housing less affordable and to fund affordable housing at the expense of homebuyers.
Sen. DeSaulnier has introduced SB 1220 to permanently fund an affordable housing trust fund. Unfortunately, SB 1220 creates a real estate transfer tax of $75 per document to fund this program. In virtually all transactions, a minimum of three documents are recorded – the grant deed, the release and reconveyance, and a trust deed. SB 1220 will create a minimum $225 transfer tax, and the amount could be even higher, depending on the total number of documents recorded.
C.A.R. believes it is unfair and unwise to target one group (homebuyers) to pay for affordable housing, which is an issue of broad social concern. C.A.R. is also troubled that SB 1220 increases the already-substantial cost of buying a home.
While C.A.R. adamantly supports the creation of homeownership opportunities, SB 1220 is clearly not the way to achieve this goal.

SB 1220 is expected to have a hearing in the Senate in April.
For more information, see C.A.R.’s web site: http://www.car.org/governmentaffairs/getinvolved/sb1220opposetransfertax/


LAPD Warning Against Hiring Unmanned Aircraft Operators for Aerial Photos

Los Angeles authorities have asked C.A.R. to communicate this warning to REALTORS® who hire unmanned aircraft operators to take aerial photographs for marketing high-end properties. Using these devices (also known as drones) for flight in the air with no onboard pilot may violate, among other things, the Federal Aviation Administration’s (FAA) policy on unmanned aircrafts, and Los Angeles’s local ordinance requiring permits for filming commercial motion pictures and still photographs.
The Los Angeles Police Department’s (LAPD) investigation has apparently revealed that aerial photos where unmanned aircraft were observed have appeared on certain real estate sales websites. According to FilmL.A., the LAPD Air Division has issued this warning as it intends to prosecute violators in the near future. FilmL.A. is a public benefit company created by the City and County of Los Angeles to manage film permit activity and related issues.
Under the Federal Aviation Administration (FAA)’s current policy, no one can operate an unmanned aircraft in the National Airspace System without specific authority. Operators who wish to fly an unmanned aircraft for civil use must obtain an FAA experimental airworthiness certificate, which will not be issued to an unmanned aircraft used for compensation or hire. Although the FAA allows hobbyists to fly model airplanes for recreational purposes under specific guidelines, that authority does not extend to operators flying unmanned aircraft for business purposes. More information is available from the U.S. Department of Transportation’s Notice on Unmanned Aircraft Operations and the FAA’s policy.


NAR Survey – What are we wiling to give up?

Don’t know if you all got this yesterday from NAR 2012 President Moe Veissi. NAR is doing a survey and would like your opinion regarding our federal policy agenda for the 2012. The survey touches on numerous policy areas from housing to healthcare, GSE’s to foreclosures. If you haven’t received it yet, take a minute to follow this link and give your opinion. It takes less than 5 minutes and you will be some of the few (probably) who bother to respond and make your voice heard.

http://www.zoomerang.com/Survey/WEB22E47V5J5E6″

Here’s the final question. I’d be interested to hear what you all think about this. It goes back to the root issue we all face that is the stumbling block for many of our legislators – how do you feel about putting your own issues on the table? We’re quick to encourage cuts to other areas of ‘obvious waste’ – but what about those issues that are near and dear to us?

Which of these statements most closely reflects your opinion on NAR response?

* When it comes to changes in tax deductions, real estate tax preferences and federal spending, we must all share in the sacrifice to reduce our national debt (including reducing or eliminating some real estate related deductions) to assure the future health of our nation.

OR…

* Existing real estate related federal tax deductions and preferences, including mortgage interest deduction and the $250,000/$500,000 capital gains exclusion, should be preserved in their current form despite concerns about federal deficits and national debt.

We’re having some fun now, eh?


SCAM – Has your Direct Deposit been Disabled?

I’ve been ignoring this SPAM message for the past couple weeks again since it first made the rounds this spring.

Until now.

The past couple days I’ve had calls from several friends asking if this is a scam – and friends, I hate to say it but IT IS!

If you get something in your email that looks like this…

nacha

or this…

ach

Don’t click on anything but your delete button – otherwise you could end up with some seriously nasty times for you and your computer. Don’t take my word for it – you can check the NACHA website yourself – their front page carries a caution about the fraudulent emails along with a website to send a copy if you got one. That’s abuse@nacha.org. Or you can check Snopes for more info at: http://www.snopes.com/fraud/phishing/nacha.asp. NACHA, the electronic Payments Association, does not process nor communicate directly with persons or organizations about individual ACH transactions.


Temecula, Murrieta among nations safest cities again.

Finally there’s a national statistic that shows parts of California in a positive light – and two of my cities are at the top of the heap. Business Insider.com recently released their analysis of FBI statistics for 2010 showing the 13 safest cities in America along with the 25 most dangerous. California scored 6 out of the 13 safest and just 3 of the 25 most dangerous.

According to FBI stats, violent crime, including murder, forcible rape, robbery and aggravated assault, is down across the country by 5.5%. That’s pretty good considering the economic situation. You might imagine just the opposite would be happening but so far so good.

For at least the 2nd year in a row Irvine California ranks #1 in safety with almost 10 times less than the national average crime rate – just 55 crimes per 100,000 people with Zero murders and 30 robberies. Contrast this with the most dangerous city in the country, Flint MI, with 2,208 violent crimes per 100,000 including 49 murders and 84 forcible rapes.

Southwest County again scored well. For the past couple years Murrieta has ranked #2 behind Irvine, with Temecula coming in at 4 or 5. This year Temecula leapfrogged to #2 and Murrieta came in 4th. Temecula had just 72 violent crimes per 100,000 with 3 rapes while Murrieta had 95 violent crimes and 1 murder. Considering that each city has just over 100,000 population, that means there really were only 72 violent crimes in Temecula last year. Applying the same count for #2 Detroit with 1,887 violent crimes per 100,000 and a population of 800,000 gives you a crime spree of nearly 19,000 violent crimes and 340 murders last year. Yowza!

The 13 safest:
Irvine CA
Temecula CA
Cary NC
Murrieta CA
Gilbert AZ
Red Rock TX
Frisco TX
Simi Valley CA
Bellevue WA
Orange CA
Amherst Town NY
Thousand Oaks CA
Surprise AZ

The 25 most dangerous:

Flint MI
Detroit MI
St. Louis MO
New Haven CT
Memphis TN
Oakland CA
Little Rock AK
Baltimore MD
Rockfort IL
Stockton CA
Buffalo NY
Springfield MA
Cleveland OH
Hartford CN
Washington DC
Springfield IL
Philadelphia PA
Lowell MA
Richmond CA
Saint Petersburg FL
Nashville TN
Kansas City MO
Miami FL
Lansing MI
Elizabeth NJ


I Survived Real Estate 2011

For the past four years Bruce Norris, founder of The Norris Group has presented a forum entitled ‘I Survived Real Estate (2011)’ at the Richard Nixon Library. The event, attracting more than 400 real estate and investment leaders from California and beyond, is both an informational evening with panels discussing real estate trends, as well as a fund raiser for The Susan G. Komen Foundation. As a fundraiser the event has been singularly successful, raising over $250,000 for breast cancer research during the past four years. This year’s event was especially poignant as Bruce lost his own wife to the disease earlier this year after a courageous seven year battle.

Norris has over 30 years of real estate experience and more than 2,000 real estate transactions as a buyer, seller, builder and capitol partner. He is an award winning author, hosts a weekly radio program, is a frequent speaker throughout the state and is the founder of The Norris Group, one of the premier real estate investment resources in California. The ‘I Survived Real Estate’ event brings together a number of industry leaders to discuss their often disparate views of the housing industry and answer questions posed by Norris.

This year’s panel included Fannie Mae Chief Economist Doug Duncan, Foreclosure Radar President Sean O’Toole, National Association of Realtors First Vice President Gary Thomas, Chair-elect of the Mortgage Bankers Association Debra Still, President-elect of the Appraisal Institute Sara Stephens and iTulip Founder Eric Janszen.

Duncan, recently named one of the nation’s top four most accurate economists by the Wall Street Journal, discussed the future of his organization in light of President Obama’s call to eliminate Fannie Mae and Freddie Mac within the decade. Duncan believes this will be a positive step forward as a way to minimize the government’s role in the housing industry and promote private industry’s participation in the market.

This has been a very controversial position as Fannie, Freddie and the FHA, currently underwrite more than 90% of mortgage loans on the market today. Many would argue that there would not be a mortgage market without them. Duncan acknowledged the validity of this claim but offered that the gradual phase-out as called for by the administration will allow alternative financing methods to be developed and that negative impact to the market would be minimal.

Thomas, in line to be the President of the National Association of Realtors in 2013 indicated the industry is very concerned with the plan, or lack there-of. “Without Fannie & Freddie in place there would not have been a mortgage written since 2007,” according to Thomas. “Private lenders are risk averse right now as a result of getting burned by their own exotic inventions during the early part of the decade and stepped away from the market at a time we needed them most. NAR will work very aggressively to make sure whatever programs remain in place are in the best interest of the American consumer.”

The panel also addressed concerns over the massive bail-outs orchestrated by the federal government and their impact on the economy. Janszen, a long-time financial and economic market analyst, added ‘there is really no consensus on the efficacy of the programs’, noting that many believed the programs were little more than ‘print and pray’ exercises with our money. Duncan and Still took some exception to that characterization pointing out that at the very least the programs helped stabilize a rapidly declining market and that much of what was loaned to banks as ‘bail-out’ has been repaid with interest.

Legislation and the global economy figured prominently in the evening’s discussion with Duncan concluding that ‘the likelihood of Greece defaulting on its obligations today is 100%.’ “It’s not a matter of ‘if’ they will default, it’s simply a matter of ‘when’. The only questions is will it be done in an orderly manner which will allow the European economy to hit the bump and continue on, or if it’s done chaotically which will likely result in another worldwide recession.”

O’Toole, whose Foreclosure Radar website is considered to be the pinnacle of information on future trends in the distressed property market, drew some of the evening’s loudest applause when he called on banks to step up their efforts to take back properties and clear out the backlog. “Is it fair for you and I to keep making payments on our home, whether underwater or not, when the family next door can live there without making a payment for a year or two or three? And, face it, many of them just made bad decisions and should not have been in those homes to begin with. They knew it, their lenders knew it and now we all know it but the problem keeps dragging on. Until that backlog of non-performing loans is cleared off the books, banks can’t move forward. And until we get all these homes back into the hands of real home-owners or investors and renters, the market cannot stabilize.”

For more information on The Norris Group and to hear the more than 7 hours of interviews and commentary by this year’s panel, please visit http://www.thenorrisgroup.com/.


It's not job loss – it's simply a little leakage.

If you’ve read much of my stuff before, you know the high esteem in which I hold most legislators, with an extra dollop of esteem for our California Nimrods. Yeah, these are the same addlepates that year after year saddle us with budgets they know won’t work, with 20+ billion dollar deficits every year, who recently mandated we instruct grammar school students on their gay heritage, who just passed the Dream Act, providing billions in financial aid to residents who are here illegally when our own resident students cannot get into classes or receive financial aid if they do. Yeah – we’ve got the best and the brightest working for us in Sacramento.

And one of the problems, as you’ll recall, is that some 90% of our Democratic legislators (who comprise the majority in both houses) have NEVER held an honest job. In one fashion or another they have been on the public dole their entire career, public office holder, commissioner, union organizer – some facet of public employment which has never forced them to meet a payroll, be responsive to the desires of customers, never required that they produce a product or a profit. Honest!

So it was no wonder during a recent discussion of the far-reaching costs of our landmark AB32 Greenhouse Emissions bill, that Democratic legislators referred to one of the by-products of the bill as ‘leakage’. Know what leakage was a euphemism for? JOBS! Yeah. Our state, with consistent unemployment of 12+% and these a-holes are referring to further job loss as ‘leakage’.

They were voting on some final rules to this horrendous piece-of-crap bill that will drive more businesses out of state and put even more people out of work but to them it’s simply leakage. Implementing this bill has already cost long-haul truckers and construction crews their jobs and resulted in increased costs for consumer goods from food to gas in the state. The last phase, slated for implementation in 2013 and 2014 sets in place the cap-and-trade emissions system whereby companies will either cut their emissions levels back to what they were in 1990, OR pay for emission credits from companies that emit below their cap OR pay substantial fines.

So the exodus of jobs from California will not only continue but probably expand. We already have more than 5 times as many companies leaving the state, reducing their footprint in the state or just going out of business as we did just 2 years ago. Aww, it’s just leakage says the California Air Resources Board. Oh, and the manufacturing and other jobs that are being over-regulated and over-taxed out of state – they’re going to Mexico or China or other states that have more realistic goals for emissions. So not only is California losing jobs but by our intransigence we are also INCREASING the amount of pollutants in the air.

So to get this straight, our never-held-a-job legislators passed an overarching landmark bill designed to reduce greenhouse gas emissions in the state. Notice I didn’t say pollutants – that’s not covered specifically – just greenhouse gasses which they claim will reduce manmade global warming – if you still believe in that. And the appointed-not-elected wing-nuts on the California Air Resources Board have taken on the challenge of putting teeth into all these rules. And they admit that at times they have relied on specious science to formulate their rules. In fact they admit that AB32 will not reduce global warming even if they shut down every business in the state. But according to their logic – it is a beacon that was passed to encourage other states and countries to follow California’s lead.

Oh Puh-leeze.

What my Momma used to say – ‘just cause that other knott head jumps off a cliff, you gotta go do the same thing?’ Not me. And especially when I can just as easily follow the out-migration of businesses and jobs and people to places where the politicians s still have a brain cell or two, where my congressman might actually have held a job in the not-too-distant past and where the human tragedy of job loss is not simply dismissed as ‘leakage’.

Of course that’s just my opinion – I could be wrong.


What will they call sub-prime loans next time around?

Lower conforming loan limits back to 2007 levels? Who’s bright idea was that?

Another cluster **** from a government reeling from one uninformed decision to the next. It seems every time you turn around someone from the administration is bemoaning the state of housing in the country today. Housing has pulled us out of 6 of the last 8 recessions – why not this one?

Why? Because Washington says one thing and does the complete opposite. Or one branch does one thing while another branch acts to negate the first (see: PACE Program). Is it any wonder confidence is at record lows? If you people are going to screw up, at least do it consistently so we can move forward with confidence that you’ll continue to screw up the same way – we can deal with that. It’s the multiple levels of screw-ups and misdirection that has us lost.

For those of you that live in the middle of the country, I know it makes no difference. It’s not your fight. But at least get out of the way for those of us that do have a dog in the fight, OK?

Here’s a primer – prior to 2007 GSE loan limits were low. Even though we were in higher cost California, for our county it was about $355,000. Some very high cost areas got 115% of the median price of the market up to $417,000 and some areas as high as $525,000. Problem was, in 2005 – 2007 the median price for a home in our state was approaching $600,000. In our little backwater, medians were in the low $500,000’s for 2 years. That meant that anybody coming to our area COULD NOT GET a conforming loan for even a median price home. They were increasingly pushed into the jumbo market with higher fees, tighter qualifying and higher interest rates. Use of FHA and GSE backed mortgages plummeted from as high as 55% to around 7% by mid-2007.

But where there’s a problem, there’s also an opportunity so lenders came up with ways to address people’s inability to get conforming loans by inventing a whole new category of loans – the exotics. And it worked so well, they kept inventing new features. Can’t qualify for an Alt A or subprime, how about if we ask for ‘0’ down? No? How about interest only for 3 years? Still don’t qualify? How about if we just tell you how much you need to make in order to qualify and then you tell us you make that much? Better?

And the GSE’s saw their market share falling even more and the geniuses on Capitol Hill saw that that was bad so just as things started to implode they made a corrective move to increase conforming loan limits. Had they done that 3 or 4 years earlier while maintaining the relative quality of the loan qualification process, we would not be in the trouble we are today.

Now many of the same geniuses who got us into the problem are charged with getting us back out. And they look at the higher loan limits and see that very few people are using that higher limit today. Duh. So their conclusion is not that they tanked the market, but that the higher limits must no longer be needed. And many Republicans are against the higher loan limits because they see this as a way to ‘reduce governments stake in housing’. Great time to be worried about this, ya schmendrakes. Why not just drive that stake right into the heart of the market while you’re fiddly-farting around trying to make us believe you actually have principles.

YOU DULLARDS! First of all, you are absolutely killing any nascent move-up market that may be starting to percolate. In my area we’re down from $500,000 to $355,000 as a conforming cap and sales of $400,000 – $600,000 homes, which were damnably slow to begin with have dried up completely.

It is true that it has not impacted the broader base of our business because our median price has fallen from the mid-$500’s to the high $200’s or low $300’s. But what about when the market snaps back? And it will. It always does. Even Obama can’t kill the innate drive for the American Dream of Homeownership. So what happens in my little market, or the broader California market, or the other 593 higher cost counties in 42 states when the median price again creeps over that cap?

Well, lenders are working on a solution to that even as we speak. The only question is – what are they going to call sub-prime next time? That name’s probably played out.

Of course that’s just my opinion. I could be wrong.