Archive for 'home loans'

WOW! This could be huge. My experience has been borrowers can only get a 30 year loan when the lender has the opportunity to “sell the loan” to Fannie Mae or Freddie and get “reimbursed” the money loaned.

Many local banks have worked with investors by offering “in house” loan products with shorter terms and calls.

Mike Butler

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How might home buying change if the federal government shuts down the housing finance giants Fannie Mae and Freddie Mac?

The 30-year fixed-rate mortgage loan, the steady favorite of American borrowers since the 1950s, could become a luxury product, housing experts on both sides of the political aisle say.

Interest rates would rise for most borrowers, but urban and rural residents could see sharper increases than the coveted customers in the suburbs.

Lenders could charge fees for popular features now taken for granted, like the ability to “lock in” an interest rate weeks or months before taking out a loan.

Life without Fannie and Freddie is the rare goal shared by the Obama administration and House Republicans, although it will not happen soon. Congress must agree on a plan, which could take years, and then the market must be weaned slowly from dependence on the companies and the financial backing they provide.

The reasons by now are well understood. Fannie and Freddie, created to increase the availability of mortgage loans, misused the government’s support to enrich shareholders and executives by backing millions of shoddy loans.

Taxpayers so far have spent more than $135 billion on the cleanup.

The much more divisive question is whether the government should preserve the benefits that the companies provide to middle-class borrowers, including lower interest rates, lenient terms and the ability to get a mortgage even when banks are not making other kinds of loans.

Douglas J. Elliott, a financial policy fellow at the Brookings Institution, said Congress was being forced for the first time in decades to grapple with the cost of subsidizing middle-class mortgages. The collapse of Fannie and Freddie took with it the pretense that the government could do so at no risk to taxpayers, he said.

“The politicians would like something that provides a deep and wide subsidy for housing that doesn’t show up on the budget as costing anything. That’s what we had” with Fannie and Freddie, Mr. Elliott said. “But going forward there is going to be more honest accounting.”

Some Republicans and Democrats say the price is too high. They want the government to pull back, letting the market dictate price, terms and availability.

“A purely private mortgage finance market is a very serious and very achievable goal,” Representative Scott Garrett, the New Jersey Republican who oversees the subcommittee that oversees Fannie and Freddie, said at a hearing this week. “No one serious in this debate believes our housing market will return to the 1930s.”

Still, powerful interests in both parties want the government instead to construct a system that would preserve many of the same benefits, with changes intended to minimize the risk of future bailouts. They say the recent crisis showed that the market could not stand on its own.

“The kind of backstop that we have now, if it didn’t exist, we would have had a much more severe recession and a much sharper fall in home values,” said Michael D. Berman, chairman of the Mortgage Bankers Association, which represents the lending industry.
Hanging in the balance are the basic features of a mortgage loan: the interest rate and repayment period.

Fannie and Freddie allow people to borrow at lower rates because investors are so eager to pump money into the two companies that they accept relatively modest returns.

The key to that success is the guarantee that investors will be repaid even if borrowers default — a promise ultimately backed by taxpayers.

A long line of studies has found that the benefit to borrowers is relatively modest, less than one percentage point. But that was before the Click Here for Full Video/Article (Members Only)

U.S. Dept of Treasury Press Release

Written Testimony by Secretary Timothy F. Geithner before the House Committee on Financial Services

3/1/2011

Chairman Bachus, Ranking Member Frank, and members of the committee, thank you for the opportunity to testify this morning.
Two weeks ago, we released a report outlining our vision of the next steps for reforming the housing finance market.  My testimony today summarizes the content of that report.
There is little dispute that the financial crisis was partly the result of fundamental flaws in the housing finance market.
The consequences of those flaws, and the losses Fannie Mae and Freddie Mac have inflicted on taxpayers, make clear that we must build a healthier, more stable market that will work better for American families and our nation’s economy.
For decades, the government supported incentives for housing that distorted the market, created significant moral hazard, and ultimately left taxpayers responsible for much of the risk incurred by a poorly supervised housing finance market.
In more recent years, we allowed an enormous amount of the mortgage market to shift to where there was little regulation and oversight.  We allowed underwriting standards to erode and left consumers vulnerable to predatory practices.
We allowed the market to increasingly rely on a securitization chain that lacked transparency and accountability.  And we allowed the financial system as a whole to take on too much risk and leverage.
These were avoidable mistakes.
Their convergence, as we all know, resulted in a financial system vulnerable to bubbles, panic, and failure.  Reforming our country’s housing finance market is an essential part of our broader efforts to help ensure Americans will never again suffer the consequences of a preventable economic crisis.
Our proposal for reform breaks sharply from the past to fundamentally transform the role of government in the housing market.
We believe the government’s primary role should be limited to several key responsibilities: consumer protection and robust oversight; targeted assistance for low- and moderate-income homeowners and renters; and a targeted capacity to support market stability and crisis response.
The Administration is committed to a system in which the private market – subject to strong oversight and strong consumer and investor protections – is the primary source of mortgage credit.
We are committed to a system in which the private market – not American taxpayers – bears the burden for losses.
And while we believe that all Americans should have access to affordable, quality housing, our goal is not for every American to become a homeowner.
We should provide targeted and effective support to families who have the financial capacity to own a home but are underserved by the private market, as well as a range of options for Americans who rent.
As the housing market recovers and the economy heals, the Administration and Congress have a responsibility to look forward, reconsider the role government has played in the past, and work together to build a stronger and more balanced system of housing finance.
Reducing the Government’s Role in the Mortgage Market

In the wake of the financial crisis, private capital has not sufficiently returned to the mortgage market, leaving Fannie Mae, Freddie Mac, FHA, and Ginnie Mae to insure or guarantee more than nine out of every ten new mortgages.  Under normal market conditions, the essential components of housing finance – buying houses, lending money, determining how best to invest capital, and bearing credit risk – should be private sector activities.
We will work closely with the Federal Housing Finance Agency to determine the best way to responsibly reduce Fannie Mae and Freddie Mac’s role in the market and ultimately wind down both institutions.  This objective can be accomplished by gradually increasing guarantee pricing at Fannie Mae and Freddie Mac, as if they were held to the same capital standards as private institutions; reducing conforming loan limits by allowing the temporary increases enacted in 2008 to expire as scheduled on October 1, 2011; and gradually increasing the amount of private capital that risks loss ahead of taxpayers through credit loss protections from private entities and gradually increased down payment requirements.  We also support the continued wind down of Fannie Mae and Freddie Mac’s investment portfolios at a rate of no less than ten percent annually.
I want to emphasize that it is very important that we wind down Fannie Mae and Freddie Mac at a careful and deliberate pace.  Closing the doors at Fannie Mae and Freddie Mac without consideration for the pace of economic recovery could shock an already-fragile housing market, severely constrain mortgage credit for American families, and expose taxpayers to unnecessary losses on loans the institutions already guarantee.  It is ultimately in the best interest of the economy and the country to wind down Fannie Mae and Freddie Mac in a responsible and prudent manner.
The Administration is fully committed to ensuring Fannie Mae and Freddie Mac have sufficient capital to perform under any guarantees issued now or in the future, as well as the ability to meet any of their debt obligations.  Ensuring these institutions have the financial capacity to meet their obligations is essential to maintaining stability in the housing finance market and the broader economy.  During the transition, it is also important that the operations of Fannie Mae and Freddie Mac continue to serve the market and the American people, including retaining the human capital necessary to effectively run both institutions.
As we decrease Fannie Mae and Freddie Mac’s presence in the market, we will also scale back FHA to its more traditionally targeted role.  We support decreasing the maximum loan size that qualifies for FHA insurance – first by allowing the present increase in those limits to expire as scheduled on October 1, 2011, and then by reviewing whether those limits should be further decreased going forward.
We will also increase the pricing of FHA mortgage insurance.  FHA has already raised premiums twice since the beginning of this Administration, and an additional 25 basis point increase in the annual mortgage insurance premium is included in the President’s 2012 Budget and will be levied on all new loans insured by FHA as of mid-April 2011.  This will continue ongoing efforts to strengthen the capital reserve account of FHA and align its pricing structure in a more appropriate relationship with the private sector, putting the program in a better position to gradually return to its traditional and more targeted role in the market.
The Administration also supports reforms at the Federal Home Loan Banks (FHLBs) to strengthen the FHLB system, which provides an important source of liquidity for small- and medium-sized financial institutions.  These reforms include instituting single district membership, capping the level of advances for any institution, and reducing the FHLBs’ investment portfolios.
We also believe it is appropriate to consider additional means of advance funding for mortgage credit as a part of the broader reform process, including potentially developing a legislative framework for a covered bond market.  We will work with Congress to explore opportunities in this area.
Addressing Fundamental Flaws in the Mortgage Market

Winding down Fannie Mae and Freddie Mac and implementing reforms at FHA and the FHLBs, however, is only one side of the coin.  These steps alone will not give rise to a housing finance market that meets the needs of families and communities, nor will it guarantee that private markets can effectively play a predominant role.  We must also pursue reforms that restore confidence in the mortgage market among borrowers, lenders, and investors.
The Administration supports the strong implementation of reforms to help address pre-crisis flaws and rebuild trust and integrity in the mortgage market.  Taken together, these reforms will improve consumer protection, support the creation of safe, high-quality mortgage products with strong underwriting standards, restore the integrity of the securitization market, restructure the servicing industry, and establish clear and consolidated regulatory oversight.
The Dodd-Frank Act laid the groundwork for many of these reforms.  We will implement its provisions in a thoughtful manner to protect borrowers and promote stability across the housing finance markets.
Treasury is currently coordinating critical reforms to the securitization market that will require originators and securitizers to retain risk, including coordinating an interagency process to determine the parameters for Qualified Residential Mortgages (QRM) under the Dodd-Frank Act.  This summer, the Consumer Financial Protection Bureau will assume authority to set new rules to curb abusive practices, promote choice and clarity for consumers, and set stronger underwriting standards.
Federal regulators will require banks to increase capital standards, including maintaining larger capital buffers against higher-risk mortgages that have a greater risk of default.
Treasury is also actively participating in interagency efforts to design and implement near-term reforms that will help correct chronic problems in the servicing industry, which has proven especially ill-equipped to deal fairly and efficiently with the sharp increase in the number of families facing foreclosure.  Right now, we are working together to design national servicing standards that better align incentives and provide clarity and consistency to borrowers and investors regarding their treatment by servicers, especially in the event of delinquency.  Our work includes identifying ways to reduce conflicts of interest between holders of first and second mortgages and improving incentives for servicers to work with troubled borrowers to avoid foreclosure.
Alongside these efforts, Treasury, the Department of Housing and Urban Development, and the Department of Justice are coordinating the Administration’s interagency foreclosure task force, which is comprised of eleven federal agencies and also works closely with the state Attorneys General.  In light of reports of misconduct in the servicing industry, the task force is currently reviewing foreclosure processing, loss mitigation, and disclosure requirements at the country’s largest mortgage servicers.  Those that have acted improperly will be held accountable.
Providing Targeted and Transparent Support for Access and Affordability

Low-and moderate-income families and communities account for a large proportion of all home purchase mortgages, and 100 million Americans are renters.  The Administration stands strongly behind our obligation to support an adequate range of affordable housing options and access to fairly priced, sustainable mortgage credit for all communities and families – including those in rural and economically-distressed areas, and those with low- or moderate-incomes.
Although homeownership is not the best option for everyone, affordable opportunities should be available to Americans with the financial capacity to own a home.  Part of our efforts to reform the housing finance system will focus on helping ensure FHA is a sustainable, efficient resource for creditworthy first-time homebuyers and families of modest incomes.  We are working expeditiously with the FHA to plan and carry out reforms so its programs are more efficient and responsive to changing market conditions.  To improve and streamline other government initiatives, the Departments of Housing and Urban Development, Agriculture, and Veterans Affairs – which all operate targeted housing finance programs – will establish a task force to explore ways to better coordinate or consolidate their efforts.
We will also consider measures to help ensure secondary market participants – securitizers and mortgage guarantors – provide capital to all communities in ways that reflect activity in the primary market consistent with safety and soundness.  In addition, we will focus on making sure all mortgage market participants comply with antidiscrimination laws, and work with Congress to require greater transparency for data that tracks where and to whom mortgage credit is flowing.
Our approach should also encourage greater balance between homeownership and rental opportunities.  That means improving support to the one-third of Americans who rent their homes, and especially to low- and moderate-income families.  In the near term, the Administration will begin work to strengthen and expand FHA’s capacity to support both lending to the multifamily market and adequate financing for affordable properties that private credit markets generally underserve.  As part of our efforts, we will explore innovative ways to finance smaller multifamily properties, which contain a third of all multifamily rental units but the housing finance system has not adequately served.
Addressing long-standing problems in housing finance, like rental supply shortages for the lowest income families, will require a dedicated commitment, but it is one that can be made in a budget neutral way.  We look forward to working with Congress and other stakeholders to discuss this and other avenues for improving access and affordability in a targeted, transparent way.
Options for the Long-Term Structure of Housing Finance

In the paper the Administration released last month, we laid out three potential ways to structure government support in a housing finance market where the private sector is the predominant provider of mortgage credit.
In each option, government support would be transparent, explicit, and limited.  Each would make private markets the primary source of mortgage credit and the primary bearer of mortgage losses.  Each would preserve FHA assistance and similar government initiatives that assist targeted groups, such as low- and moderate-income families, farmers, and veterans.
The first option would limit the government’s role almost exclusively to these targeted assistance initiatives.  The overwhelming majority of mortgages would be financed by lenders and investors and would not benefit from a government guarantee.
In the second option, targeted assistance through FHA and other initiatives would be complemented by a government backstop designed only to promote stability and access to mortgage credit in times of market stress.  The government backstop would have a minimal presence in the market under normal economic conditions, but would scale up to help fund mortgages if private capital became unavailable in times of crisis.
The third option broadens access for creditworthy Americans and helps ensure stability in times of market stress.  Alongside the FHA and targeted assistance initiatives, the government would provide reinsurance for certain securities that would be backed by high-quality mortgages.  These securities would be guaranteed by closely regulated private companies under stringent capital standards and strict oversight, and reinsured by the government.  The government would charge a premium to cover future claims and would not pay claims until private guarantors are wiped out.
The report we released last month discusses the advantages and disadvantages of each approach in additional detail, and also encourages Congress and the public to evaluate each option in light of four common criteria: access to mortgage credit, including the future role of the 30-year fixed-rate mortgage; incentives for private investment in the housing sector; taxpayer protection; and financial and economic stability.
Part of our intention in providing this narrow set of options and key criteria by which they should be judged is to encourage an honest conversation about the merits and drawbacks of each approach among the Administration, Congress, and stakeholders.  We are faced with difficult choices that will involve real trade-offs.  The challenge before us is to strike the right balance between providing access to mortgages for American families and communities, managing the risk to taxpayers, and maintaining a stable and healthy mortgage market.
In choosing among these options, care must be given to designing a system that maximizes the benefits we are seeking from government involvement in the mortgage market, while minimizing the costs.  We should also be sure to consider how to utilize the existing systems and assets in our housing finance system, including those at Fannie Mae and Freddie Mac, as best as possible for the benefit of the taxpayer and the American people.
Each of the longer-term reform options we have outlined will require legislation from Congress, and we hope to work together with you and your colleagues to pass comprehensive legislation within the next two years.  Failing to act would exacerbate market uncertainty and risk leaving many of the flaws in the market that brought us to this point in the first place unaddressed.  We look forward to continuing the dialogue with consumer and community organizations, market participants, and academic experts as we work together to build a housing finance market that is stronger and more stable than it was in the past.
I want to conclude with one important point.  Housing is a critical part of our economy and we will proceed with our plan for reform with great care.  Our objective, after all, is a healthier, more stable housing finance system.  While we are confident that the steps we have laid out follow the right path, haste would be counterproductive – possibly destabilizing the housing finance market or even disrupting the broader recovery.
I’d be happy to take your questions now and, again, thank you for the opportunity to be here today.
http://www.treasury.gov/press-center/press-releases/Pages/tg1082.aspx
STARTING April 1, under a new compensation rule from the Federal Reserve, borrowers who get their mortgages through brokers will most likely pay less for their services and must be offered the lowest possible interest rate and fees for which they qualify.
The new rule also affects those dealing with small banks and credit unions, which typically do not fund loans from their own resources. But most banks and other direct lenders, including the few mortgage companies that function like banks, are exempt.
The new rule is known as the Loan Originator Compensation amendment to Regulation Z, part of a strengthened Truth in Lending Act passed by Congress in 2008.
Designed to prevent consumers from being steered into high-cost, risky loans, it covers how a loan originator — or any person or company that arranges, obtains and/or negotiates a mortgage for a client — is paid.
Under the new rule, a lender can no longer pay a loan originator a lucrative rebate known as a yield-spread premium, which is tied to the rate or terms of the mortgage. Banks and other lenders can continue to pay commissions to brokers, but these payments must now be based solely on the loan amount.
In the past, the higher the interest rate and points, the more money a broker stood to earn.

Brokerage firms typically earn a yield-spread premium of 1.5 to 2.5 percent of the loan amount, with higher-rate loans paying closer to 2.5 percent. The brokerage and its broker, or loan officer, typically split the rebate.
On a $400,000 loan at 5.25 percent, that might total $8,000, based on two points paid, with a point being 1 percent of the loan amount.
In the new system, the brokerage can earn a fixed commission from the lender, but the amount is not tied to the loan terms.
Also, the brokerage cannot pass on a part of the commission to the broker, who must now be paid an hourly wage or salary.
The exception is for loans where the lender pays the borrower’s points to the brokerage, typically for higher-rate loans. (The commission range is expected to be 1.5 to 2.5 points.)
It is also forbidden for a loan originator to collect payments from both the consumer and the lender in a single transaction.
If a broker is paid a commission by a lender (based on the loan amount), he or she cannot also charge the consumer points, or fees for application or processing.
The consumer will still, however, need to pay the broker for third-party services like appraisals.
An exception to the new rule involves lenders who finance mortgages in their own names from their own resources, a practice known as warehouse-lending, and then sell the loans to investors like Fannie Mae. The exception also applies to other companies that fund mortgages from their own resources.
Some mortgage companies originate and close mortgages in their own names through funds from third parties, typically other banks — a practice known in the industry as table funding. The new rule applies to them as well.
Thomas Martin, the president of America’s Watchdog, called the rebates “a rip-off” and said the Fed rule was “very welcome.”
Brokers who match consumers with lenders argue the rule undercuts the value they offer consumers. “It unfairly makes these brokers less competitive” against the big banks, said Mark Yecies, an owner of SunQuest Funding, a mortgage broker and lender in Cranford, N.J. “I will now get paid the same amount to process a plain-vanilla loan as I will a complex loan of equal size that requires more work.”
He added that “bigger banks will capture a bigger percentage of the origination market, and they will raise rates.”
Mike Anderson, a director at the National Association of Mortgage Brokers, said that the rule would “likely put a lot of independent brokers out of business.”

But the Mortgage Bankers Association says brokers would still be competitive with banks because many consumers like to work with brokers, and banks cannot handle all of the business.
by Lynnley Browning
For more: http://nyti.ms/gS6OHz

New Fed Rule for Mortgage Brokers
STARTING April 1, under a new compensation rule from the Federal Reserve, borrowers who get their mortgages through brokers will most likely pay less for their services and must be offered the lowest possible interest rate and fees for which they qualify.
The new rule also affects those dealing with small banks and credit unions, which typically do not fund loans from their own resources. But most banks and other direct lenders, including the few mortgage companies that function like banks, are exempt.
The new rule is known as the Loan Originator Compensation amendment to Regulation Z, part of a strengthened Truth in Lending Act passed by Congress in 2008. Designed to prevent consumers from being steered into high-cost, risky loans, it covers how a loan originator — or any person or company that arranges, obtains and/or negotiates a mortgage for a client — is paid.
Under the new rule, a lender can no longer pay a loan originator a lucrative rebate known as a yield-spread premium, which is tied to the rate or terms of the mortgage. Banks and other lenders can continue to pay commissions to brokers, but these payments must now be based solely on the loan amount.
In the past, the higher the interest rate and points, the more money a broker stood to earn.
Brokerage firms typically earn a yield-spread premium of 1.5 to 2.5 percent of the loan amount, with higher-rate loans paying closer to 2.5 percent. The brokerage and its broker, or loan officer, typically split the rebate. On a $400,000 loan at 5.25 percent, that might total $8,000, based on two points paid, with a point being 1 percent of the loan amount.
In the new system, the brokerage can earn a fixed commission from the lender, but the amount is not tied to the loan terms. Also, the brokerage cannot pass on a part of the commission to the broker, who must now be paid an hourly wage or salary. The exception is for loans where the lender pays the borrower’s points to the brokerage, typically for higher-rate loans. (The commission range is expected to be 1.5 to 2.5 points.)
It is also forbidden for a loan originator to collect payments from both the consumer and the lender in a single transaction. If a broker is paid a commission by a lender (based on the loan amount), he or she cannot also charge the consumer points, or fees for application or processing. The consumer will still, however, need to pay the broker for third-party services like appraisals.
An exception to the new rule involves lenders who finance mortgages in their own names from their own resources, a practice known as warehouse-lending, and then sell the loans to investors like Fannie Mae. The exception also applies to other companies that fund mortgages from their own resources.
Some mortgage companies originate and close mortgages in their own names through funds from third parties, typically other banks — a practice known in the industry as table funding. The new rule applies to them as well.
Thomas Martin, the president of America’s Watchdog, called the rebates “a rip-off” and said the Fed rule was “very welcome.”
Brokers who match consumers with lenders argue the rule undercuts the value they offer consumers. “It unfairly makes these brokers less competitive” against the big banks, said Mark Yecies, an owner of SunQuest Funding, a mortgage broker and lender in Cranford, N.J. “I will now get paid the same amount to process a plain-vanilla loan as I will a complex loan of equal size that requires more work.”
He added that “bigger banks will capture a bigger percentage of the origination market, and they will raise rates.”
Mike Anderson, a director at the National Association of Mortgage Brokers, said that the rule would “likely put a lot of independent brokers out of business.”
But the Mortgage Bankers Association says brokers would still be competitive with banks because many consumers like to work with brokers, and banks cannot handle all of the business.

by Lynnley BrowningFor more: http://nyti.ms/gS6OHz

Wells Fargo, one of the nation’s biggest banks and the largest consumer lender, said Wednesday that its fourth-quarter earnings rose 21 percent, helped by an improving loan portfolio and withdrawals from its capital reserves.

The bank, which is based in San Francisco, earned $3.4 billion, or 61 cents a share, in the fourth quarter, up from $2.8 billion, or 8 cents a share, in the year-earlier period, matching analysts’ forecasts. For the year, Wells Fargo reported net income of $12.36 billion in 2010, compared with $12.28 billion in 2009.
The bank’s full-year revenue fell to $85 billion, however, from $88.7 billion in 2009, as new federal regulations limited the overdraft fees that banks can charge on checking accounts.
Still, compared with the third quarter, the bank generated revenue growth in roughly two-thirds of its businesses.
“As the U.S. economy showed continued signs of improvement, our diversified model continued to perform for our stakeholders, as demonstrated by growth in loans and deposits, solid capital levels and improving credit quality,” John G. Stumpf, the bank’s chairman and chief executive, said in a statement.
Despite its heavy hand in the lending industry, which has been hit by losses for three years,

Wells Fargo has quietly emerged from the financial crisis as one of the nation’s strongest banks.
The report from Wells is an important step for the bank as it looks to increase its dividend, which has been stuck at 5 cents for nearly two years.
Wells Fargo Press Release
When the financial crisis struck, Wells, JPMorgan Chase and other industry giants cut dividends as they moved to bolster their capital. Now, two years later, banks are eager to give money back to shareholders — if the government will let them. The Federal Reserve must first complete a second round of bank stress tests, whose results are expected in March.
JPMorgan, which last week reported a $17 billion profit for 2010, has said it hopes to raise its dividend as much as a dollar in the coming months.
Wells Fargo has been more coy about its plans. Mr. Stumpf, in a conference call with investors, said he was eager to raise the dividend.
But Brian Foran, a senior bank analyst with Nomura Securities International, noted, “They historically have been cagey about saying anything before they know it.”
The bank’s dividend outlook has improved on the back of its lending operation.
Wells Fargo picked up new borrowers in the fourth quarter, particularly businesses, and it released $850 million from its reserves, thanks to the improving loan portfolio.
The bank’s provision for credit losses was cut nearly in half, to $2.99 billion in the fourth quarter from $5.91 billion a year earlier.
Shares of Wells Fargo fell 68 cents, or 2.1 percent, on Wednesday, closing at $31.81.
Although the bank’s mortgage shop reported a 19 percent drop in income from 2009, it originated $128 billion in home mortgages in the fourth quarter, up from $94 billion in the fourth quarter of 2009.
“You can see the momentum building as economic activity is returning,” said Marty Mosby, a managing director at Guggenheim Partners.
Yet Wells Fargo still faces problems surrounding its mortgage portfolio.
On Jan. 7, the highest state court in Massachusetts ruled that Wells Fargo and US Bancorp had wrongly foreclosed on two homes, because they could not prove they owned the mortgages.
Regulators in all 50 states have begun investigations into whether hundreds of thousands of foreclosures made in recent years were invalid.
Some banks temporarily suspended foreclosures last year during the controversy.
Wells Fargo officials say they have largely avoided the documentation problems and have decided not to halt foreclosures.
“At the end of the day, the litigation will be less of an impact on Wells Fargo than people fear,” said Lawrence Remmel, a partner at the law firm Pryor Cashman, where he leads the firm’s banking and financial institutions group.
Wells Fargo has also moved to distance itself from litigation over soured loans that banks securitized and sold to investors.
Fannie Mae and Freddie Mac, the government-controlled mortgage finance companies, are demanding that Wells Fargo and other big banks buy back loans sold at the height of the mortgage bubble.
In the fourth quarter, the bank recorded a $464 million provision for future mortgage repurchases, up from $370 million in third quarter.
But the bank’s chief financial officer, Howard I. Atkins, said Wednesday that Wells Fargo did not plan to settle its dispute with Fannie and Freddie. Mr. Atkins said the bank’s mortgage securities were of higher quality than those generated by its competitors.
“This is a diminishing issue, not an increasing issue,” Mr. Atkins said in an interview.
Eric Dash contributed reporting.
By Ben Protess
For more: http://nyti.ms/eP7Rd8

Stay Tuned, the financial tsunami is not over. 157 Banks failed in 2010. This is why banks are so reluctant to make loans, especially to investors. The Federal Bank Examiners are actually doing their job now when compared to how they were so laid back a couple of years ago during the “Fog This Mirror and You Are Approved” lending bonanza.
– Mike Butler

By THE ASSOCIATED PRESS
Published: January 7, 2011

Regulators on Friday shuttered a Florida bank, the first closure of 2011 after 157 banks succumbed last year to the struggling economy and mounting bad loans. The Federal Deposit Insurance Corporation took over First Commercial Bank of Florida, based in Orlando, with $598.5 million in assets and $529.6 million in deposits. First Southern Bank, based in Boca Raton, Fla., agreed to assume the assets and deposits of the failed bank. The failure of First Commercial Bank of Florida is expected to cost the deposit insurance fund $78 million.

Mike Butler Shares How You Can Pay Off Your Loans FASTER without Making Any Extra Payments. Not a Misprint. This is True.

Mike shares one simple example of this with his daughter in her new home.

Click Here for Full Video/Article (Members Only)

Thanks to Nick Capra in Vegas for this very informative and interesting report.

Pass the word and share this one

—————————————————————

Hey Mike,

 The attached report is very good.

88 Page Fraud Assignment Report

(Click Above Link to View / Download)
Even more trouble is coming because, Mers conducted some of their fraudulent assignments to avoid recording fees, now local recorders all over the country are going after them as well.
 
Fraudulent recordings are also considered to be a crime committed directly against the state… so a real can of worms.
 
Now, we’ll see, with all of the hard evidence; will the government support the People, or will they find some way to let the criminals off the hook.
 
The more people that are aware of what’s going on, the harder it is for them to continue committing such blatent crimes
 
 
"…justice should not only be done, 
but should manifestly and undoubtedly 
be seen to be done." 
 
Lord Chief Justice Hewart, CJ 
 
God Bless,
Nick

 F.H.A. Rule Changes for Mortgage Borrowers

 
HOME buyers with sketchy credit who are unable to qualify for conventional mortgages may now find it more costly and difficult to obtain loans insured by the Federal Housing Administration. 
 
New rules that went into effect this month adjust the two types of mortgage insurance paid by consumers for loans insured by the F.H.A., which is part of the Department of Housing and Urban Development.
 
One change raises the annual insurance premium, paid monthly by the borrower, setting it at 0.85 percent to 0.9 percent of the loan balance, depending on the down payment or equity owned; the amount used to be 0.5 percent to 0.55 percent. The other change lowers the one-time upfront insurance premium that borrowers must pay, to 1 percent of the loan balance from 2.25 percent.
 
The upfront premium is paid in a lump sum at closing or added to the loan balance, unlike the monthly premium, which is paid over the life of the loan in addition to the interest and principal.
 
The decrease in the upfront premium, welcome though it might seem to some customers, does little to offset the effects of the monthly increase, which Andre Harriott, the president of the Access Mortgage Corporation in New Haven, Conn., called “really pretty hefty.”
 
“Everyone is really living paycheck to paycheck,” he said.
 
F.H.A. loans are usually taken out by buyers who cannot qualify under the stiffer down-payment requirements of Fannie Mae or Freddie Mac, the government-controlled buyers of loans. F.H.A. requires 3.5 percent, while Fannie Mae typically requires 5 to 15 percent or more, depending on the type of loan.
 
The changes, under an example provided by the F.H.A., mean that a borrower who puts 3.5 percent down on a $154,000 house with a 30-year fixed-rate mortgage at 5 percent (such a consumer typically earns a gross annual income of $54,000, according to the agency) and who finances the upfront premium into the loan will see monthly mortgage payments, including taxes, interest and the two insurance premiums, rise to $1,238 from $1,205. The example is based on median data, including property taxes put at about 2.5 percent of home value. That increase includes the drop in the upfront mortgage insurance, to $1,486 from $3,344 — but also includes the rise in the monthly insurance premium, to $111 from $68.
 
Last August, President Obama signed into law a bill authorizing the F.H.A. to increase premiums to shore up its insurance funds; the agency had been authorized to raise the annual premium to as much as 1.55 percent.
 
Conventional loans, which conform to Fannie and Freddie underwriting guidelines, do not require upfront mortgage insurance. But some may require monthly private mortgage insurance, if the borrower puts less than 20 percent down toward the purchase, or has less than 20 percent equity in a refinancing.
 
F.H.A. borrowers, meanwhile, can stop paying the monthly mortgage insurance only after five years and when their loan-to-value ratio reaches 78 percent, at which point they have 22 percent equity in their home.
 
F.H.A. loans are typically offered by niche direct lenders, and because of the insurance, they often carry interest rates equal to or slightly below those of conventional loans.
 
In October, the F.H.A. set a minimum FICO score of 500 for borrowers who want an F.H.A.-insured loan — the first time a minimum was set. It also introduced a new minimum down payment of 10 percent for borrowers with FICO scores below 580. (Those above 580 still pay a minimum 3.5 percent.)
 
The issue for the F.H.A, Mr. Harriott said, is that the realm of borrowers has widened. “We see executives of little companies, teachers, people making $200,000 a year, doing an F.H.A. loan, because they’ve gotten into a financial situation,” he said, adding that F.H.A. loans are perceived as safe by investors because of the insurance.
 
By LYNNLEY BROWNING
For more: http://nyti.ms/h22leV
Question: What’s worse than having your house foreclosed upon?
 
Answer: having your house foreclosed upon twice . Unless, of course, you get it back the second time.
 
Homeowners in Massachusetts are now facing "back-to-back foreclosures," due to problems with property titles. When lenders are unable to get title insurance for the property on which they have foreclosed, they are now opting to try the whole process again. In Massachusetts, where the issue has affected at least hundreds, and "possibly thousands," of homeowners, it has become common enough to merit its own name: "re-foreclosure."
 
It sounds pretty awful. But the “re-foreclosure’’ storm clouds may have a silver lining for some homeowners: Sometimes, the banks lose the second time around.
 
From the Boston Globe article:
 
"Zepheniah Taylor lost his Dorchester three-decker to foreclosure two times in 17 months. Now the 59-year-old grandfather has returned home to stay. The scenario, once implausible, is becoming more common in the crazed and fast-changing world of foreclosures."
 
Also of note, homeowners are able to purchase their houses back at "current market value" — which means if the property value has deteriorated, as is often the case in neighborhoods with high foreclosure rates, the homeowner may be able to benefit by buying the property back at a cheaper price.
 
In the words of one such beneficiary: "I’m starting over fresh…It feels good. It is a new chance. "
 
But the whole process can be a little unsettling. In the words of Zoe Cronin, an attorney with Greater Boston Legal Services, a group that represents low income people: "They are weirded out…What is this? I got a letter saying I own my house again."
 
At the moment, it is still unclear how many properties and homeowners could be affected by these types of issues in the future.
 
By: Ash Bennington, writer for CNBC
 
For more: http://bit.ly/a7mX5v
When Michael Gazzarato took a job that required him to sign hundreds of affidavits in a single day, he had one demand for his employer: a much better pen.
 
Lisa Krantz for The New York Times
Linda Almonte of San Antonio has filed a wrongful termination suit against JPMorgan Chase, where she flagged defects in a portfolio of debt Chase was trying to sell.
 
Luke Sharrett/The New York Times
In July, the Federal Trade Commission, led by Jon Leibowitz, issued a report critical of the debt-collection system, saying banks were selling account information that can be riddled with errors.
“They tried to get me to do it with a Bic, and I wasn’t going — I wasn’t having it,” he said. “It was bad when I had to use the plastic Papermate-type pen. It was a nightmare.”
 
The complaint could have come from any of the autograph marathoners in the recent mortgage foreclosure mess. But Mr. Gazzarato was speaking at a deposition in a 2007 lawsuit against Asset Acceptance, a company that buys consumer debts and then tries to collect.
 
His job was to sign affidavits, swearing that he had personally reviewed and verified the records of debtors — a time-consuming task when done correctly.
 
Sound familiar?
 
Banks have been under siege in recent weeks for widespread corner-cutting in the rush to process delinquent mortgages. The accusations have stirred outrage and set off investigations by attorneys general across the country, prompting several leading banks to temporarily cease foreclosures.
 
But lawyers who defend consumers in debt-collection cases say the banks did not invent the headless, assembly-line approach to financial paperwork. Debt buyers, they say, have been doing it for years.
 
“The difference is that in the case of debt buyers, the abuses are much worse,” says Richard Rubin, a consumer lawyer in Santa Fe, N.M.
 
“At least when it comes to mortgages, the banks have the right address, everyone agrees about the interest rate. But with debt buyers, the debt has been passed through so many hands, often over so many years, that a lot of time, these companies are pursuing the wrong person, or the charges have no lawful basis.”
 
The debt in these cases — typically from credit cards, auto loans, utility bills and so on — is sold by finance companies and banks in a vast secondary market, bundled in huge portfolios, for pennies on the dollar. Debt buyers often hire collectors to commence a campaign of insistent letters and regular phone calls. Or, in a tactic that is becoming increasingly popular, they sue.
 
Nobody knows how many debt-collection affidavits are filed each year, but a report by the nonprofit Legal Aid Society found that in New York City alone more than 450,000 were filed by debt buyers, from January 2006 to July 2008, yielding more than $1.1 billion in judgments and settlements.
 
Problems with this torrent of litigation are legion, according to the Federal Trade Commission, led by Jon Leibowitz. The agency issued a report on the subject, “Repairing a Broken System,” in July. In some instances, banks are selling account information that is riddled with errors.
 
More often, essential background information simply is not acquired by debt buyers, in large part because that data adds to the price of each account. But court rules state that anyone submitting an affidavit to a court against a debtor must have proof of that claim — proper documentation of a debt’s origins, history and amount.
 
Without that information it is hard to imagine how any company could meet the legal standard of due diligence, particularly while churning out thousands and thousands of affidavits a week.
 
Analysts say that affidavit-signers at debt-buying companies appear to have little choice but to take at face value the few facts typically provided to them — often little more than basic account information on a computer screen.
 
That was made vividly clear during the deposition last year of Jay Mills, an employee of a subsidiary of SquareTwo Financial (then known as Collect America), a debt-buying company in Denver.
 
“So,” asked Dale Irwin, the plaintiff’s lawyer, using shorthand for Collect America, “if you see on the screen that the moon is made of green cheese, you trust that CACH has investigated that and has determined that in fact, the moon is made of green cheese?”
 
“Yes,” Mr. Mills replied.
 
Given the volume of affidavits, even perfunctory research seems impossible. Cherie Thomas, who works for Asta Funding, a debt buyer in Englewood Cliffs, N.J., said in a 2007 deposition that she had signed 2,000 affidavits a day. With a half-hour for lunch and two brief breaks, that’s roughly one affidavit every 13 seconds.
 
By DAVID SEGAL
 
For more: http://nyti.ms/9TxTra
 
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