Time is running out on the Home affordable programs: HARP and HASP. One recent change that may get some borrowers back in the game on this program is the effective date of your existing mortgage.
Until recently, your loan had to be PURCHASED by Fannie Mae or Freddie Mac before 6/1/2009. Freddie Mac announced recently that they changed this and now the NOTE DATE needs to be on or before 6/1/2009.
What this means is those of you who may may have closed on your loan before 6/1/2009 but it wasn't purchased by Fannie Mae or Feddie Mac until after 6/1/2009 (it takes some time to deliver a loan once it's closed to the secondary market and have them review and purchase the loan). I had two customers this year who called and were denied a Home Affordable Refinance and the wonderful benefits it offered. Their loans closed before that cut-off date, but weren't purchased until after 6/1/2009. One missed it by ONE DAY! The other by just a week or so.
If this happened to you, please contact your lender and try again. So, if your loan was closed prior to 6/1/2009, you may qualify for a Home Affordable Refinance. Check it out!
Monday, November 11, 2013
Here's another reason we all have to suffer with tougher regulations because of what some people did...
If you're wondering why lending guidelines have gotten so extreme -copy this link to read an article posted in MPA (Mortgage Professional America):
http://www.mpamag.com/mortgage-originator/father-and-son-admit-to-role-in-29m-mortgage-fraud-scheme-16156.aspx
I read articles like this every day and am amazed at the creative way people try and trick the system. I've always said you can't blame the lenders for making the guidelines that caused the mortgage melt-down (we don't make the guidelines), but you can blame people like this for committing the fraud that helped it along.
For those lenders who have been in the business since the late 70's early 80's you know we're almost back to the guidelines we had then. Back in the "olden days", you didn't get a loan unless you had 20% down, and it was pretty hard to get a 30 year fixed-rate loan. You were often stuck with loans from your bank -either loans that ballooned or adjustable rate loans.
Right now, acting head of the Federal Housing Finance Agency, Ed DeMarco, is trying to do away with Fannie Mae and Freddie Mac. Industry experts predict that if he does, that will be the end of 30-year fixed-rate mortgages. I agree - you'll be back to in-house loans from your banks - which will be balloon loans or adjustable rate mortgages (ARMS) that fluctuate with market rates. If this happens, what will happen to the already fragile housing industry? Wages haven't been increasing. The days of a "cost of living wage increase" are almost non-existent for the majority of the US. If we're stuck with ARM and balloon loans, the unpredictability of an interest rate increase on your mortgage will keep many borrowers from buying houses. If your rate can go up 6% from the start rate you may not be able to afford the house. On a $150,000 home, a 30 year adjustable rate mortgage at 4% could go up to 9 or 10%. That would be a payment increase of $600.24 a month. No more 30-year fixed rate mortgages would be devastating to the economy.
Why don't banks loan you their own funds for 30 years? Rates fluctuate. I've seen it myself in over 35 years in real estate and lending. I have seen 21% rates and rates below 3% for 30 year fixed-rate loans. A bank generally does not loan out their own funds where the rate is fixed for 30 years. They loan you money, but turn around and sell your fixed-rate mortgage to Fannie Mae, Freddie Mac, or Ginnie Mae, This allows them to keep loaning money at low, fixed interest rates. If a bank only had it's own money, once it's loaned out, they're out of money. Then if they've got their money loaned out at 4% for 30 years and rates go up to 10%, they're paying out a higher rate to their checking and savings customers than they are getting on that 4% loan they have for 30 years. Can't stay in business long doing that. Banks make it a point not to loan you their own money on 30-year fixed rate loans. If you don't believe me, ask your bank if they are selling that 30 year mortgage to the secondary market or if it's "in-house" funds.
If Fannie and Freddie go the way of the dinosaurs, as Mr. DeMarco wants, so may those affordable fixed-rate mortgages.
The industry needs regulation, but regulation won't stop all the fraudsters out there. Bad people will figure out a way to do bad things - it's just sad it hurts all of us.
http://www.mpamag.com/mortgage-originator/father-and-son-admit-to-role-in-29m-mortgage-fraud-scheme-16156.aspx
I read articles like this every day and am amazed at the creative way people try and trick the system. I've always said you can't blame the lenders for making the guidelines that caused the mortgage melt-down (we don't make the guidelines), but you can blame people like this for committing the fraud that helped it along.
For those lenders who have been in the business since the late 70's early 80's you know we're almost back to the guidelines we had then. Back in the "olden days", you didn't get a loan unless you had 20% down, and it was pretty hard to get a 30 year fixed-rate loan. You were often stuck with loans from your bank -either loans that ballooned or adjustable rate loans.
Right now, acting head of the Federal Housing Finance Agency, Ed DeMarco, is trying to do away with Fannie Mae and Freddie Mac. Industry experts predict that if he does, that will be the end of 30-year fixed-rate mortgages. I agree - you'll be back to in-house loans from your banks - which will be balloon loans or adjustable rate mortgages (ARMS) that fluctuate with market rates. If this happens, what will happen to the already fragile housing industry? Wages haven't been increasing. The days of a "cost of living wage increase" are almost non-existent for the majority of the US. If we're stuck with ARM and balloon loans, the unpredictability of an interest rate increase on your mortgage will keep many borrowers from buying houses. If your rate can go up 6% from the start rate you may not be able to afford the house. On a $150,000 home, a 30 year adjustable rate mortgage at 4% could go up to 9 or 10%. That would be a payment increase of $600.24 a month. No more 30-year fixed rate mortgages would be devastating to the economy.
Why don't banks loan you their own funds for 30 years? Rates fluctuate. I've seen it myself in over 35 years in real estate and lending. I have seen 21% rates and rates below 3% for 30 year fixed-rate loans. A bank generally does not loan out their own funds where the rate is fixed for 30 years. They loan you money, but turn around and sell your fixed-rate mortgage to Fannie Mae, Freddie Mac, or Ginnie Mae, This allows them to keep loaning money at low, fixed interest rates. If a bank only had it's own money, once it's loaned out, they're out of money. Then if they've got their money loaned out at 4% for 30 years and rates go up to 10%, they're paying out a higher rate to their checking and savings customers than they are getting on that 4% loan they have for 30 years. Can't stay in business long doing that. Banks make it a point not to loan you their own money on 30-year fixed rate loans. If you don't believe me, ask your bank if they are selling that 30 year mortgage to the secondary market or if it's "in-house" funds.
If Fannie and Freddie go the way of the dinosaurs, as Mr. DeMarco wants, so may those affordable fixed-rate mortgages.
The industry needs regulation, but regulation won't stop all the fraudsters out there. Bad people will figure out a way to do bad things - it's just sad it hurts all of us.
Monday, November 22, 2010
RISKS WHEN SCHEDULING A CLOSING DATE
Hello everyone! It's been a while since I blogged.
Today I want to talk about scheduling closings. If you are a seller, or the agent for a seller, scheduling a closing is not fun. As long as you are aware there is a good possibility the closing could be delayed you'll be OK. I've been in Real Estate and Lending for over 33 years. In the "old days" you didn't even schedule a closing until the lender called and said we're ready to go. This would be the way to go, except people do like to plan on a closing date. There are just so many things these days that come up and delay closings.
Reasons for delays: Loan Volume. With the economy the way it is, lenders are not hiring new staff to keep up with the refinance volume. They don't want to ramp-up staff only to lay them off if it slows down. Rates are about the best they've been EVER! Someone purchasing a home is a bit of a priority, because when you refinance, you already live there. But refinances can't be shoved to the bottom of the pile all the time. When you lock into an interest rate, you only have a certain amount of time to get the loan closed or that rate could be lost. Some lenders are taking 90 days or more to get a refinance loan closed.
Another delay could be what was presented at time of application varies from what a lender verified. Income could be less, debts could be more, assets may not be enough, there could be miscellaneous deposits, or NSF's on bank statements.
Income: These days, STABLE income is essential. Over-time, bonus, and commissions need a consistent 2 year history. If 2009 was less than 2008 and year-to-date is less, you won't be using this income to qualify. Anything "decreasing" is not good. If someone says they work 40 hours a week, but the recent pay stubs show less than 40 and the year-to-date income doesn't support 40 hours a week, you'll have problems.
Job history: If someone doesn't have a 2 year work history this could cause problems.
Cash to close: Lenders used to get a verification of deposit. If it showed a two-month average balance consistent with the current balance, it was all good. Now it's a requirement to look at the last 2 months of bank statements. On these statements you look for NSF's. More than one NSF or so and it could cause a denial. Consistent NSF's are considered bad credit. Deposits other than payroll could cause problems. Any deposits should be documented and the source of the deposits provided. Lenders are looking for "loans" that may not show up on the credit report when there are "unsubstantiated deposits" in an account.
Credit reports: If there are accounts that are "disputed" it may cause a loan denial. Disputed accounts are not calculated in credit scores, so if the disputed account would turn out to be accurate, the credit score may be less and the loan could be denied. Borrowers should get loans out of dispute before the apply for a mortgage.
Credit inquiries: Any inquiries on a credit report could delay a loan closing. A credit report is only good for a certain amount of time. If a borrower is getting pre-approved, and they find a house and plan on closing and it's been 5 months, we need a new credit report. If they've applied for new credit since the initial report was pulled, the pre-approval may not be any good if new debts show up. If you're thinking of applying for a mortgage, DO NOT APPLY FOR NEW CREDIT! No % off store purchase if you apply for a card (happens a lot during holiday shopping). No buying appliances for your intended home purchase before you close on 90-day same as cash. If a credit report update is needed right before closing, this could cause a delay while the new debt is verified and could even cause a denial if another debt puts you over the allowable ratios.
These are just a few thoughts I had today. If you have any mortgage questions, just give me a shout and I'll try and help.
Happy Thanks Giving!
The opinions expressed here are the views of "Jolyn the Mortgage Expert" and do not necessarily reflect the views and opinions of Guaranty Bank.
Today I want to talk about scheduling closings. If you are a seller, or the agent for a seller, scheduling a closing is not fun. As long as you are aware there is a good possibility the closing could be delayed you'll be OK. I've been in Real Estate and Lending for over 33 years. In the "old days" you didn't even schedule a closing until the lender called and said we're ready to go. This would be the way to go, except people do like to plan on a closing date. There are just so many things these days that come up and delay closings.
Reasons for delays: Loan Volume. With the economy the way it is, lenders are not hiring new staff to keep up with the refinance volume. They don't want to ramp-up staff only to lay them off if it slows down. Rates are about the best they've been EVER! Someone purchasing a home is a bit of a priority, because when you refinance, you already live there. But refinances can't be shoved to the bottom of the pile all the time. When you lock into an interest rate, you only have a certain amount of time to get the loan closed or that rate could be lost. Some lenders are taking 90 days or more to get a refinance loan closed.
Another delay could be what was presented at time of application varies from what a lender verified. Income could be less, debts could be more, assets may not be enough, there could be miscellaneous deposits, or NSF's on bank statements.
Income: These days, STABLE income is essential. Over-time, bonus, and commissions need a consistent 2 year history. If 2009 was less than 2008 and year-to-date is less, you won't be using this income to qualify. Anything "decreasing" is not good. If someone says they work 40 hours a week, but the recent pay stubs show less than 40 and the year-to-date income doesn't support 40 hours a week, you'll have problems.
Job history: If someone doesn't have a 2 year work history this could cause problems.
Cash to close: Lenders used to get a verification of deposit. If it showed a two-month average balance consistent with the current balance, it was all good. Now it's a requirement to look at the last 2 months of bank statements. On these statements you look for NSF's. More than one NSF or so and it could cause a denial. Consistent NSF's are considered bad credit. Deposits other than payroll could cause problems. Any deposits should be documented and the source of the deposits provided. Lenders are looking for "loans" that may not show up on the credit report when there are "unsubstantiated deposits" in an account.
Credit reports: If there are accounts that are "disputed" it may cause a loan denial. Disputed accounts are not calculated in credit scores, so if the disputed account would turn out to be accurate, the credit score may be less and the loan could be denied. Borrowers should get loans out of dispute before the apply for a mortgage.
Credit inquiries: Any inquiries on a credit report could delay a loan closing. A credit report is only good for a certain amount of time. If a borrower is getting pre-approved, and they find a house and plan on closing and it's been 5 months, we need a new credit report. If they've applied for new credit since the initial report was pulled, the pre-approval may not be any good if new debts show up. If you're thinking of applying for a mortgage, DO NOT APPLY FOR NEW CREDIT! No % off store purchase if you apply for a card (happens a lot during holiday shopping). No buying appliances for your intended home purchase before you close on 90-day same as cash. If a credit report update is needed right before closing, this could cause a delay while the new debt is verified and could even cause a denial if another debt puts you over the allowable ratios.
These are just a few thoughts I had today. If you have any mortgage questions, just give me a shout and I'll try and help.
Happy Thanks Giving!
The opinions expressed here are the views of "Jolyn the Mortgage Expert" and do not necessarily reflect the views and opinions of Guaranty Bank.
Friday, July 16, 2010
FIXED RATES UNDER 4%
Every rate is a custom rate-quote. Just because your friend may have gotten 3.875% on a fixed rate, doesn't mean you can get less than 5.375%. Why? You've got to be careful. Deal with someone you can trust or that was referred to you. On-line brokers and internet sites can be verey dangerous. This doesn't mean you can't find a legitimate one by any means, but be very cautious. It's always better to deal with someone you were referred to.
Rates can be different from one borrower to the next. For example: If a 10 year fixed happenes to be 3.875% there are several things that you should know.
The APR - This is not the rate you get for the term of the loan but it's very important. It tells you if there are a lot of fees attached to the loan. The APR will always be higher than the note rate you get because some of the closing costs are "finance charges". The more charges you have, the higher the APR. Keep an eye on the APR figure. It goes up if you need mortgage insurance because you don't have 20% equity. If it's considerably higher, then the rate they quoted you isn't as low as you though. I can give you a 3.75% fate fixed for 30 years, but you'll be paying so many points to get that rate, you really aren't getting a 3.75% rate because you paid THOUSANDS in fees to get it.
Rates start at a certain percentage. With all the changes in the mortgage industry, there are pricing "hits". Some examples that may make your rate higher than the low rate your friend said they got:
1) Credit scores: Today, lenders want over 720 for credit scores. Anything less can cause your rate to be substantially higher and may rule out getting a loan entirely. It's almost impossible to get a loan with a credit score less than 620 right now.
2) Purpose of the loan: Your best rate is going to be if you are purchasing a home or refiancing the existing balance and you have some equity and a great credit score. Your rate started going up as the equity is less, and if you are taking any cash out of the transaction to consolidate bills, combine a 1st and 2nd, or do home improvements, you will pay more.
3) Waiving escrows: There is almost always a fee to waive escrows (Pay your taxes and insurance on your own and not with your payment).
4) Loan size: The smaller the loan, the higher the rate. Doesn't sound fair, but the amount of work is the same, so to cover the costs of lenders doing the loan, on small loan sizes, there may be a higher rate or more fees.
5) Credit scores: You get hit twice for credit score. There is a straight hit depending on credit score, and then on a cash-out refinance, there is an additional hit based on your equity and credit score too.
You might actually get a better rate if you have a lower score and mortgage insurance than the same score and 20% equity.
Costs are another thing that's hard to compare. Rates change daily, if not several times per day. If you got one rate on a Monday and call another lender on Tuesday, the Monday lender can't give you that rate on Tuesday anyway.
One good thing about the rediculously hard-to-understand new good faith estimate is that once a lender gives you a good faith estimate, there are restrictions on them changing these fees. That's why until you lock into a rate with a lender, you'll probably not get a good faith estimate. Even though it's called an estimate, lenders are bound by these figures and there is little or no opportunity to revise them.
It's a very confusing industry, and I feel for all you borrowers out there trying to get a clear picture of what rates are and what financing will cost.
Just remember - IF IT SOUNDS TOO GOOD TO BE TRUE - IT IS !!!!!!!!!
Mortgages are relatively standardized now, so everyone has these adjustments to rate. If you would like help trying to manouver through this confusing minefield we call mortgage financing, just shoot me an e-mail. I'm not going to feed you a line of bologna to get your loan. My advice is free.
Jolyn the Mortgage Expert
The views and opinions of Jolyn Oelfke are not the views of Guaranty Mortgage or Guaranty Bank.
Rates can be different from one borrower to the next. For example: If a 10 year fixed happenes to be 3.875% there are several things that you should know.
The APR - This is not the rate you get for the term of the loan but it's very important. It tells you if there are a lot of fees attached to the loan. The APR will always be higher than the note rate you get because some of the closing costs are "finance charges". The more charges you have, the higher the APR. Keep an eye on the APR figure. It goes up if you need mortgage insurance because you don't have 20% equity. If it's considerably higher, then the rate they quoted you isn't as low as you though. I can give you a 3.75% fate fixed for 30 years, but you'll be paying so many points to get that rate, you really aren't getting a 3.75% rate because you paid THOUSANDS in fees to get it.
Rates start at a certain percentage. With all the changes in the mortgage industry, there are pricing "hits". Some examples that may make your rate higher than the low rate your friend said they got:
1) Credit scores: Today, lenders want over 720 for credit scores. Anything less can cause your rate to be substantially higher and may rule out getting a loan entirely. It's almost impossible to get a loan with a credit score less than 620 right now.
2) Purpose of the loan: Your best rate is going to be if you are purchasing a home or refiancing the existing balance and you have some equity and a great credit score. Your rate started going up as the equity is less, and if you are taking any cash out of the transaction to consolidate bills, combine a 1st and 2nd, or do home improvements, you will pay more.
3) Waiving escrows: There is almost always a fee to waive escrows (Pay your taxes and insurance on your own and not with your payment).
4) Loan size: The smaller the loan, the higher the rate. Doesn't sound fair, but the amount of work is the same, so to cover the costs of lenders doing the loan, on small loan sizes, there may be a higher rate or more fees.
5) Credit scores: You get hit twice for credit score. There is a straight hit depending on credit score, and then on a cash-out refinance, there is an additional hit based on your equity and credit score too.
You might actually get a better rate if you have a lower score and mortgage insurance than the same score and 20% equity.
Costs are another thing that's hard to compare. Rates change daily, if not several times per day. If you got one rate on a Monday and call another lender on Tuesday, the Monday lender can't give you that rate on Tuesday anyway.
One good thing about the rediculously hard-to-understand new good faith estimate is that once a lender gives you a good faith estimate, there are restrictions on them changing these fees. That's why until you lock into a rate with a lender, you'll probably not get a good faith estimate. Even though it's called an estimate, lenders are bound by these figures and there is little or no opportunity to revise them.
It's a very confusing industry, and I feel for all you borrowers out there trying to get a clear picture of what rates are and what financing will cost.
Just remember - IF IT SOUNDS TOO GOOD TO BE TRUE - IT IS !!!!!!!!!
Mortgages are relatively standardized now, so everyone has these adjustments to rate. If you would like help trying to manouver through this confusing minefield we call mortgage financing, just shoot me an e-mail. I'm not going to feed you a line of bologna to get your loan. My advice is free.
Jolyn the Mortgage Expert
The views and opinions of Jolyn Oelfke are not the views of Guaranty Mortgage or Guaranty Bank.
Tuesday, June 29, 2010
RATES ARE AWESOME!
A 10 YEAR FIXED UNDER 4% - WOW! The homebuyer tax credit may be gone (if you didn't close by June 30th unless they pull off a Hail Mary pass and get it extended at the last minute) but interest rates are so low you may want to make a move now and take advantage of motivated sellers, great deals on properties, and affordable mortgage rates.
The mortgage industry is still a little crazy, and they'll make you run the guantlet of the approval process, so be prepared to jump through hoops up until the day you close on your loan, and perhaps even after. Investors are so paranoid about loans going bad they really scrutinize buyers and properties. Don't take it personally - they make everyone jump through these hoops to get a loan.
I've been in the mortgage business for over 24 years now, and the company I was with for the past year closed their doors after 42 years because of the current lending environment. Now I'm with Guaranty Bank out of Brown Deer, Wisconsin, as Guaranty Mortgage. They are a family-owned bank that has been around since 1923. This means I've got more programs, great service, and as always - my vast experience to help you manover the landmines of home financing.
If you want to check on the low rates, get a mortgage check-up to see if refinancing or debt consolidation is right for you, just give me a call. You can go to my website: http://www.jolynthemortgageexpert.com/ for helpful information and apply on line. I'm here to help.
The mortgage industry is still a little crazy, and they'll make you run the guantlet of the approval process, so be prepared to jump through hoops up until the day you close on your loan, and perhaps even after. Investors are so paranoid about loans going bad they really scrutinize buyers and properties. Don't take it personally - they make everyone jump through these hoops to get a loan.
I've been in the mortgage business for over 24 years now, and the company I was with for the past year closed their doors after 42 years because of the current lending environment. Now I'm with Guaranty Bank out of Brown Deer, Wisconsin, as Guaranty Mortgage. They are a family-owned bank that has been around since 1923. This means I've got more programs, great service, and as always - my vast experience to help you manover the landmines of home financing.
If you want to check on the low rates, get a mortgage check-up to see if refinancing or debt consolidation is right for you, just give me a call. You can go to my website: http://www.jolynthemortgageexpert.com/ for helpful information and apply on line. I'm here to help.
Tuesday, May 25, 2010
I've joined SHELTER MORTGAGE
What perfect timing! If you didn't hear, the company I was working for, UNIVERSAL MORTGAGE, sent an e-mail on April 22nd and told us the company was shutting it's doors. This came as a total surprise to us. This left me in a pinch as I had 5 loans closing the next week. I was only able to close one of them, but with help of other lenders in town, I got all my loans placed and closed with little or no delays. Unfortunately, I lost all the income I would have gotten on them. C'est Le Vive.
Even though no bank, credit union or mortgage lender is safe from the perils of this economy, I decided to work locally for a bank founded in 1923 in Milwaukee. I will be working for Guaranty Bank as Shelter Mortgage. 4 of us from the Onalaska Universal Mortgage office have made this move. So basically, the Universal team is now Shelter Mortgage.
It's perfect timing, as there are a lot of fantastic homes out there at great prices, and mortgage rates are at a 50 year low.
Shelter Mortgage has great rates, and I now have more flexible loan programs I can offer. We have the usual fixed rates, Federal and State VA, FHA, WHEDA, Rural Housing (when they get funds again).
We're in search of office space, as we still have access to the old Universal Office, but I don't know for how long. We're all working out of our homes, so you can take a nice drive and do an application at my house, or I'm totally mobile and can meet you for an application.
Give me a call at 608-779-1519 today.
Even though no bank, credit union or mortgage lender is safe from the perils of this economy, I decided to work locally for a bank founded in 1923 in Milwaukee. I will be working for Guaranty Bank as Shelter Mortgage. 4 of us from the Onalaska Universal Mortgage office have made this move. So basically, the Universal team is now Shelter Mortgage.
It's perfect timing, as there are a lot of fantastic homes out there at great prices, and mortgage rates are at a 50 year low.
Shelter Mortgage has great rates, and I now have more flexible loan programs I can offer. We have the usual fixed rates, Federal and State VA, FHA, WHEDA, Rural Housing (when they get funds again).
We're in search of office space, as we still have access to the old Universal Office, but I don't know for how long. We're all working out of our homes, so you can take a nice drive and do an application at my house, or I'm totally mobile and can meet you for an application.
Give me a call at 608-779-1519 today.
Tuesday, April 27, 2010
I'm jobless!
Well - isn't this a fine how-do-you-do! In 24 years in mortgage lending, I have never been out of a job. What's scary is what happened to us could happen to any bank, credit union or mortgage broker without notice.
Last Thursday afternoon, April 22nd, we were notified that our warehouse line was pulled and we no longer had the ability to funds loans. This basically means, we can't do mortgages.
My employer made a decision to exit the mortgage business. This left me in a very precarious perdicament as I had 4 loans scheduled to close the week of April 26th.
I had to place these loans with other lenders, and tell the 4 borrowers who thought they were buying their homes this week they wouldn't be closing. I was able to arrange to close the WHEDA loan on time as scheduled, but had to delay the other 3. I also had to find homes for the numerous May and June closings I have in my pipeline.
In this "recovering" economy (It's not recovered yet - believe me!) everyone is at risk. Banks, Credit Unions and Mortgage Bankers and Brokers don't have millions of dollars sitting in their vaults waiting to close loans, they have warehouse lines. These lines of credit can be from the Federal Reserve, or other lending institutions. They fund the loans from these warehouse lines, then when the loans are delivered to secondary market (Fannie Mae, Ginnie Mae, Freddie Mac) they are reimbursed the loan amounts and can then loan to the next borrower.
What's happening throughout the US that's causing the situation at my employer? Wth all the foreclosures and bad loans, the regulators are requiring more assets be placed in loan-loss reserve accounts to cover projected loan losses. Lenders transfer the required assets to the reserve account. That takes funds away from their net worth, as this loan loss reserve acccount can not be included in an institution's net worth. This drops their "rating" down maybe to a C or D and makes them ineligible for their line of credit. No warehouse line, not much money available to fund loans and you're out of business.
I was talking to a stock-broker friend of mine who said you don't hear about it, but it's happening all over the US. The FDIC is coming in right before 5:00 in the afternoon with their suits and brief cases, informing everyone that the doors are closed and here's the new owner that's taking over your bank. Scary isn't it.
I'm weighing my options. I'd like to work somewhere I can apply my vast knowledge to turn around a mortgage department and make them one of the top lenders of choice. I've got a few in mind - I'll keep you posted.
Last Thursday afternoon, April 22nd, we were notified that our warehouse line was pulled and we no longer had the ability to funds loans. This basically means, we can't do mortgages.
My employer made a decision to exit the mortgage business. This left me in a very precarious perdicament as I had 4 loans scheduled to close the week of April 26th.
I had to place these loans with other lenders, and tell the 4 borrowers who thought they were buying their homes this week they wouldn't be closing. I was able to arrange to close the WHEDA loan on time as scheduled, but had to delay the other 3. I also had to find homes for the numerous May and June closings I have in my pipeline.
In this "recovering" economy (It's not recovered yet - believe me!) everyone is at risk. Banks, Credit Unions and Mortgage Bankers and Brokers don't have millions of dollars sitting in their vaults waiting to close loans, they have warehouse lines. These lines of credit can be from the Federal Reserve, or other lending institutions. They fund the loans from these warehouse lines, then when the loans are delivered to secondary market (Fannie Mae, Ginnie Mae, Freddie Mac) they are reimbursed the loan amounts and can then loan to the next borrower.
What's happening throughout the US that's causing the situation at my employer? Wth all the foreclosures and bad loans, the regulators are requiring more assets be placed in loan-loss reserve accounts to cover projected loan losses. Lenders transfer the required assets to the reserve account. That takes funds away from their net worth, as this loan loss reserve acccount can not be included in an institution's net worth. This drops their "rating" down maybe to a C or D and makes them ineligible for their line of credit. No warehouse line, not much money available to fund loans and you're out of business.
I was talking to a stock-broker friend of mine who said you don't hear about it, but it's happening all over the US. The FDIC is coming in right before 5:00 in the afternoon with their suits and brief cases, informing everyone that the doors are closed and here's the new owner that's taking over your bank. Scary isn't it.
I'm weighing my options. I'd like to work somewhere I can apply my vast knowledge to turn around a mortgage department and make them one of the top lenders of choice. I've got a few in mind - I'll keep you posted.
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