Loan Think

Very few mortgage brokers have ever had the money to advertise on television, even on one of the now many ubiquitous cable television outlets.

Well, we have us a regulatory reform bill. Some factions of the mortgage banking industry were popping champagne this morning while others were moaning about a socialist takeover of the mortgage industry, one in which anything that isn't plain vanilla won't be funded at all. In some quarters Ayn Rand's name was being invoked. But let's get one thing clear: when it comes to MBS risk retention and the 5% rule, the key will be what exactly is a "qualified mortgage." On that score, we know that balloon payment loans and negative amortization are out. And quite a bit of it will be left up to regulators. In other words, the war is over, but there's still a lot to sort out....

You are what you eat. Right? If that is true, what are you? A cholesterol and grease saturated hamburger or a healthy reflection of food that you decided to eat?

THE VERY BIG PICTURE: We got us a new mortgage industry. Well sort of. It's hard to say without taking into account the future of Fannie Mae and Freddie Mac which probably won't be decided until the end of 2011. (Full coverage of the final language of the bill can be found on the National Mortgage News website at: http://www.nationalmortgagenews.com/) But before I get into the nitty-gritty, keep in mind that the final bill is 2,000 pages long and there's a lot to go over. The obvious winners will be lenders and securitizers of 'A' credit quality loans, especially those of the FHA variety. Loan brokers could be big losers because of the HVCC and yield spread premium language. As I write this salesmen and women who are members of the National Association of Mortgage Brokers are meeting in Phoenix for their annual convention and you can bet reg reform will be 'Topic A' throughout the convention. NAMB chiefs might have a lot to answer for, namely that brokers became a punching bag (along with Fannie Mae and Freddie Mac) for ignorant politicians who keep forgetting that if it weren't for Wall Street's key role in banking subprime lenders and securitizing their poorly underwritten loans (was there any underwriting?) this mess (and housing bubble) would not have happened. But you've heard that from me before. One thing the new bill does is slam the door on subprime lending and securitization. That game has been over for two years anyway, and isn't coming back. I would guess that if the subprime ever returns it will mirror what it was in the 1960s and 1970s: high equity loans, high rates with the paper held by finance companies that get their backing from private (rich) individuals, hedge funds or Wall Street. It's back to the future...

The irony of it all: mortgage rates have fallen to the lowest level on record, giving consumers a new incentive to buy a home or refinance. But wait. There's a catch: first, you must be employed to get a mortgage (or refi). And if you have a job, the next question you need to ask is the scary one: "Will I have a job, three-, six-, 12 months down the road?" And currently, real estate experts and analysts are trying to figure out if home prices have hit bottom. Some say yes, some say no. What's a consumer to do, but sit on the sidelines and wait it out until they see a clear signal on where prices are headed. Meanwhile, several lenders were writing new loans like crazy in May and early June. But come September...

In Part 1 of this series we talked about holding a sales strengths event.Now that tax season is over-and agents' tax returns memories are still fresh, it's a great opportunity to partner with a certified public accountant and present a tax planning session for your real estate agents.Work with several CPA's and create a series of three distinct workshops. Here are some ideas:Topic: How Real Estate Agents Can Get The Most Tax DeductionsWhile you could hold the workshop for all agents, you'll get more face-time mileage if you set up meetings in individual real estate offices.Ask the accountant to create a PowerPoint, along with a checklist of tax-deductible items. One of the topics that should definitely be covered is automobile expenses (i.e. depreciation vs. mileage expense and which is better), how to write off office equipment-things that are unique to real estate agents.Topic: How to Explain the Tax Benefits of Home OwnershipI'll bet my first-born child that real estate agents don't how to "effectively" explain the tax benefits of home ownership to their clients. Show them how to explain interest and property tax write-offs and how their clients can file a new W-4 with their employer to have less income tax deducted because of the additional tax benefits.Ask the accountant to come up with a generic form, where agents can give to their clients. Add the accountants info to the form so if clients have question, they can contact the CPA (but be sure to add a disclaimer too).Topic: Benefits of Buying Investment PropertyThere are huge tax write offs for investment property owners (both single family and commercial real estate). It could be for their own portfolio or for clients who want to invest in real estate.Invite a different accountant and financial planner for each topic (you create six relationships). Before you schedule, ask them to audition. You want to make sure that the information relevant-but more importantly, they are not boring or afraid of speaking in public.Karen Deis is president of LoanOfficerTraining.com. She can be contacted at Karen@LoanOfficerTraining.com.

The nonperforming loan market can turn on a dime, or so we're told. It appears that some investors are now trying to trade portfolios but aren't getting the prices they want in regard to 'BPO' or broker price opinion. We can't name names but it's well known that PennyMac and Deutsche Bank have NPL offerings out there in the market. Meanwhile, rumors abound that PennyMac has signed Impac Mortgage Holdings to be a correspondent for its conduit...

MORE ON THE FINAL RULE FOR THIRD PARTY ORIGINATORS OF FHA LOANS AND THE NEW REQUIREMENTS

It's that time of the year. We're halfway there. That's right, hard as it is to believe we are halfway through 2010 already. Have you hit your goals? I read just recently that reverse mortgage applications are increasing in number. What about your own business? This is a good time to take stock and assess what you have done so far and decide if you need to make adjustments.

It appears that House Financial Services Committee chairman Barney Frank has signed off on the idea of placing the Consumer Financial Protection Agency inside the Federal Reserve. After all, in years past the Fed has done such a wonderful job of enforcing mortgage-related laws, it only makes sense. Right? Actually, non bank mortgage lenders and even depositories may not have much to fear from the creation of a CFPA because such an agency will only have oversight over very large institutions, that is, firms with $10 billion or more in assets. (At least, that's the last number I saw, but the asset threshold may've changed by now.) In the pending legislation, mortgage bankers are keeping a watchful eye on language related to loan underwriting, yield spread premiums, appraisals, "qualified" mortgage assets, and risk retention on MBS...