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Terri Buckman
 
Terri Buckmanspace
Terri Buckman
VP, Sales Manager

Pinnacle Capital
Mortgage Corporation
1390 Willow Pass Road
Suite 560
Concord, CA 94520
email Terri
925.822.5931
 
Shelley Thurlow
Shelley Thurlow
RVP, Branch Manager
email Shelley
925.808.7216
 
 
MY BLOG
     
Vet your 2012 Business Plan!
Bring the VA Home Loan Benefit to local employers...
The troops, almost 40,000 of them, are coming home by year's end and they don't necessarily need two years employment history to use their VA home loan benefit. Returning veterans could be buying homes sooner than you think. They are highly sought by employers as they are disciplined, physically fit, respectful of authority, highly trained, used to working under pressure and uniquely skilled at multi-tasking.

If that wasn't attractive enough to employers, the American Jobs Act, if passed would grant employers from $5,600 to $9,600 in tax credits for hiring them. Hiring our returning heroes is good business and will create great corporate good will. Be part of the process by partnering with employers to help their veterans purchase homes.

Top companies are already planning job fairs to attract them. Offer to attend and set up a booth to answer questions. Do research in your market to determine which local employers hire a lot of veterans. Perform a Google search for large employers in the largest employment center cities near you. Most cities post their largest employers, the number of employees and contact info for each. I performed a Google search on top Irvine employers and several lists popped up complete with contact info.

Most companies want their veterans and all valued employees to buy homes locally and put roots down near their place of employment. It helps them retain their talent.

Call these employer's HR departments and offer to do a 20 minute presentation on the Veteran Home Loan Benefit (be sure to refer to it this way) in the lunch room. You are not selling mortgages, you are providing their employees their hard earned benefit. Once an originator does a great job for a veteran of a big firm, word will spread fast among a large closely knit group of employed veterans and their civilian co-workers too!

Be sure to announce to your Veteran audience that the Funding Fee is going down for both new VA loans and subsequent usage per VA Circular 26-11-15 effective November 18th. The funding fee is going down from 2.15 for first time use to 1.4! This may be your foot in the door with the employers, announcing changes to their benefit. Oh, and be sure to dress snappy. Give a firm hand shake and be concise with your information. Bring the Benefit!

Fun Veteran slang and acronyms you can try:

Squared Away (all set) We've got you all squared away for funding!

90 Day Wonder (newbie) I'm no 90 Day Wonder. I've been funding VA loans for 20 years!

LPCs: No, not Lender Paid Comp, this one is Leather Personnel Carriers, otherwise known as boots!

HOOAH: Actually a shout. Signals approval! It should be self-evident when to use this
Post Date: October 25, 2011
Score Two for the Brokers!
Disparity between Brokers & Bankers continues at HUD...
Mortgage Letter 2011-34, the subject of which is titled Revised Lender Approval Requirements, issued September 23, 2011, does a couple of things which I will outline momentarily. But it does not grant parity between third party originators (mortgage brokers) that are sponsored to originate FHA loans and originators that work directly for lenders that are HUD approved mortgagees. The former can engage in selling real estate and the latter cannot. HUD does not come right out and sanction this but through their omission of mentioning it in ML 2010-20; it is generally accepted and allowed by most lenders. Many had hoped that this Mortgagee Letter would address this inequity. It did not. While this ML rescinded many sections of the current Mortgage Approval Handbook, also known as the 4060.1, it did not rescind the section that restricts originators working for mortgagees, namely Section 2-9 F&G, from engaging in any other real estate related activities outside of originating mortgages for the mortgagee that employs them.

Secondly, there was no lifting of the requirement for employees of mortgagees to be W-2'd employees vs. 1099. Mortgage brokers being sponsored for FHA can opt for 1099 reporting. So, for now, score two for the independent mortgage brokers!

Now let's discuss what this ML did address that pertains to all. Jurisdiction restrictions have been removed. Effective immediately, HUD will follow state licensing guidelines when it comes to originations. Mortgagees and their branches or sponsored brokers may originate FHA loans in any state where they hold the appropriate license. In most cases, this means three levels of licensing. For mortgagees the levels will likely be the company, the branch and the originator. For third party originators, or mortgage brokers, the levels will be the wholesale lender (mortgagee), the broker and the originator. You will want to have your appropriate licensing in place prior to advertising, taking an application, or representing yourself as an originator in any fashion. It is now a felony in several states to engage in origination activities without proper licensing. Additionally, unless you expect to have business in the next couple of weeks, if you submit your new application at the end of October and its approved after No. 1st, most states will approve your license through December 31st of 2012.
Read all the changes ML 2011-34 makes here.
Post Date: September 29, 2011
Dodd-Frankly Speaking...
QRM v. QM
Get ready for QRM (Qualified Residential Mortgage) and QM (Qualified Mortgage). Same thing you say? Well, no and ultimately yes. I'll explain how they are different first. The Dodd-Frank Wall Street Reform and Consumer Protection Act passed two items that will impact us greatly, probably commencing January of 2013. They are Risk Retention for which QRMs are exempted and Ability-to-Pay in which QMs provide the lender some presumption of compliance. Let's look at them separately first.

QRM/Risk Retention

Item number one is risk retention or skin in the game as it is referred. Sponsors securitizing mortgages will be required to keep an economic interest (nicer way of saying skin in the game) of 5% if the security includes mortgages that do not meet the definition of a QRM.

Where it hits home for us originators is the act allows for these sponsors to require participation in the 5% at the originator level. That being said, we should all understand what defines a QRM. The collective agencies (OCC, FED, FDIC, SEC, FHFA, and HUD) issued their joint proposal and the comment period runs until June 10th, but was just extended to August 1st, 2011. Their definition of a QRM is by their design very narrow. It is the agencies collective opinion that keeping QRM narrowly defined will keep the non QRM securities healthier and more viable. The MBA among others don't agree with this. More on that later.

I will bullet point a few of the more pertinent proposed items for you that would define a QRM :
  • 20% down payment requirement on purchases 80% max LTV (MI will NOT make a 90% loan a QRM)
  • 75% LTV Rate and Term/70% Cash out
  • No Piggybacks or secondary financing at time of close
  • 28/36 ratios
  • No Neg Am, prepay penalties, IO, payment shock (2% max adjustment/12 mos & 6% life)
  • A residual income test after all monthly obligations are paid
  • 3% cap on points and fees paid by consumer
  • Term not to exceed 30 years
And, you may take comfort knowing that many powerful entities are pushing back on this. Perhaps the most powerful housing lobby, NAR issued this statement.

Other voices that spoke out in a congressional hearing on this proposal:

Bob Ryan from HUD said, "downpayments only tell part of the story and FHA uses both downpayment and FICO scores to allocate credit assistance, which together, we have found tobe a much better predictor of loan performance than just one of those components alone."

Ellen Harnick, from the Center for Responsible Lending, said "low downpayment loans without...risky features have generally performed well."

Gary Cunningham from the MBA said "the QRM definition is so restricted that 80% of loans sold to FNMA or FHLMC over the past decade would not meet these requirements" and "the QRM's 20% downpayment requirement alone would provide nearly an insurmountable barrier to most first-time and low/moderate income borrowers achieving homeownership." 

Read the letter several congressmen and women sent to the heads of the
joint agencies that issued the proposal to define QRM. They make it clear that it was not the intent of the Dodd-Frank Act to so narrowly define QRMs.

An alternative proposal is out for comment to include 90% LTV purchases with MI and to expand qual ratios to 33/41 when the payment cannot increase by more than 20% over the life of the loan. Read a couple of attorney's overviews on QRM/Risk Retention.

Patton Boggs Allregs

QM/Ability to Pay

The second item in the Dodd-Frank Act is the ability to pay. Lenders are being held accountable that they have determined a borrower has the ability to pay the loan being made. A loan meeting the definition of a "qualified mortgage" affords the lender the presumption of compliance with the borrower's ability to pay. The Dodd-Frank Act put jurisdiction of this definition under the Federal Reserve. The board issued their proposal for the definition of a QM on March 31st. The comment period runs to July 22nd. The CFPB takes over TILA on July 21st and will finalize the proposal on ability-to-pay.

Some of the items included briefly listed here:
  • Term not to exceed 30 years
  • No NegAm, IO, Balloon payments
  • Qual at fully indexed rate
  • Qual at max rate in first 5 years
  • Points and Fees capped to 3% (with a couple of alternatives for higher fee tiers on small loans)
The Dodd-Frank Act states that the definition of the QRM cannot be broader than the definition of the QM. Thusly, these two definitions will be tied at the hip. So, yes technically they are different but in terms of how they may impact us in 2013, they will be quite similar.

3% Fee Cap

One item we all want to watch and comment on is what will comprise the 3% fee cap. Dodd-Frank gave one proposal, but the agencies have proposed differing alternatives. For example, QM offers expanded tiered options for smaller loans and QRM does not. Read all you can on this topic and make your own voice heard through our trade organizations, CAMP, NAMB, CMBA and MBA and through your congressional representation. I'll cover this specific issue more fully in the near future.

Read more industry commentary on QM/Ability to Pay.

Patton Boggs Allregs

Post Date: June 8, 2011
 
    Read Past Blog Articles    
   
 
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LQI new fact of life as of June 1st 6/18/10
LO Compensation 2011-Still a little Merkley... 5/23/10
CAIVRs is NOT a spelunking term! 4/26/10
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Happy CAMPers hit Capitol Hill 2/26/10
Mini-Eagle going way of Dodo Bird! and expected HUD changes Q1.... 1/12/10
Forget Red Flags, where’s my White Flag?! 12/19/09
Notes from the FHA Lender Training in Atlanta 9/23/09
Sneak Preview new MLs coming on Condos… 9/21/09
HUD may send a SWAT team to your shop! 4/2/09
I joined a support group for cable news junkies.... 4/2/09
Will Wholesale Lending Pull Through this year? 2/2/09
   
         
       
         
 
 
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  DISCLAIMER:
My Blog solely represents my own personal opinions and commentary and does not represent the opinions of any corporate entity or other individual. The intent of this blog is to start conversation on topical mortgage issues. This is not advice and should not be acted on accordingly. Further, this information is intended for mortgage professionals only and is not intended for consumers.
 
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