FHA Streamline Refi's = Cash Cow for LO's

cpappraisal: (August 16, 2010 7:29pm)

Ancient Appraiser-This may be a little late but- REPORT THESE APPRAISER/NONAPPRAISERS TO THE STATE AGENCY THEY WILL CARE. I have found that FHA doesn't care about much. I told them that I was not being offered reasonable and customary fees per their regulations and they didn't care...

Ancient Appraiser (Retired): (August 16, 2010 2:36pm)

Daggone- You're welcome to use anything I write. Like you I am at my wits end when it comes to this kind of incompetence. You can add to that another appraisal for FHA where the guy that inspected the property wasn't even licensed. When I complained to FHA they informed me that unless the AMC complained there was nothing they would do. The AMC would not respond - what a surprise! That was about 15% low as well! I was an appraiser for over 25 years so I know the reports were absolutely bogus !!

Daggone: (August 16, 2010 1:40pm)

Ancient Appraiser I want to post your appraisal story on my facebook account. Everyone needs to know how these AMC's operate and prevent so many loans from closing. I hate your story for you sake, but I love to know I'm not the only one who is dealing with these bozos.

Koolaidspitter: (August 16, 2010 12:36pm)

Clulessdad...can you clarify for bfennell that YSP is what his big bank is keeping from his pay check to pay for all his indoctrination...errr, I mean training/high performance sales, etc.

Clulessdad: (August 16, 2010 12:17pm)

Streamline refi with no appraisal-must have a 5% reduction in payment. All 3rd party costs paid by YSP. Require Borrower to bring in their mortgage payment 2 weeks earlier into escrow. If they plan a month out, they can always do it. Then credit them the impounds thru YSP and collect the impounds from the borrowers after they receive the check from the previous lender. Works on loans over $250K. Refi them at 4.5-4.75% and you can get 2-3pts YSP. You will make 1-2 pts on everyone.

GreenvilleLoanGuy: (August 16, 2010 12:11pm)

"bfennell" – NO ONE is more ignorant than you! You claim to be certified by your big bank employer and smart enough to pass the NMLS test, so you don’t need to be held accountable? NOT TRUE. Don't stand behind the curtain saying you and your other Bank LO buddies could pass the NMLS test. I understand why you would think that you are trained well enough to pass, but I got news buddy, you wouldn't – not without studying and/or taking the 20hr required S.A.F.E. course. How do I know? I know because me and 6 other top LOs with 10+ yrs experience just walked out of the Wells Fargo pit last month and moved over to a mortgage banker model. We all had to get licensed thu NMLS first. We all passed the test but we had to study a good bit - this after taking hours and hours of corporate training with Wells. I learned things in the 20hr SAFE course that had never been mentioned by Wells. Now this may say as much as about the test content as it does the fact that Big Banks are immune. But some of the things we learned were very good info. So –though you may be offended, the facts are still the facts – you are an LO; and do the same job that I do, but you ar

Gilbert: (August 16, 2010 11:54am)

How are the LO's doing a lot of FHA streamlines dealing with closing costs and escrows. The way taxes are collected in texas, if the borrower doesn't have the money to pay their escrows at closing, they often lose the benefit of doing the refi

W.R.Buchanan: (August 16, 2010 11:17am)

Here's a question for all of you brainiacs out there: If a Bank receives TARP compensation on a short sale, shouldn't the "recorded price" of that sale include that compensation? Seems like the markets would immediately go up in value about 30% if that were true.

Florida Agent: (August 16, 2010 11:08am)

A couple of questions that I am waiting to hear back from an attorney on, i will pose to you. 1) If the third party agrees to "step out of the way," is there, to your knowledge any law that precludes my buyer from paying a "finder's fee" to the third party? 2) The listing brokerage never disclosed the third party "arrangement" until we had made the offer. Is that some sot of violation? in any case, it is frustrating as my buyers really want the house but I and they do not want to do anything that remotely resembles fraud. The only possible solution it seems is one where the third party removes themselves from the transaction and allows a direct contract between my buyers and the actual owners. Any additional thoughts or guidance will be appreciated.

Florida Agent: (August 16, 2010 11:02am)

"msmammypie", thanks for the response. Regarding the potential issue of "disclosure," it is hard for me to know for sure if there was proper disclosure to the seller, much less the sellers' lender. However, based on the behavior of the listing brokerage's agents involved and the representative broker herself (evasive and non-responsive to direct questions regarding the third-party contract), it certainly has me believing that, more likely than not, the sellers' bank is unaware of the full details of the transaction process (e.g., the imminent resale to another party, my buyer, at higher price immediately following closing of the contract that they, the lender, are aware of between their seller/borrower and the third party). At a minimum, I have confirmed that, the buyer's lender, a Fannie Mae re-seller, will not provide financing for what, in this case, they see as a "flip." (cont.)

ssfranny: (August 16, 2010 11:00am)

I think most on this board would agree that a large part of their business in 2009 was FHA streamlines. When the rules changed regarding the appraisal being needed if you wanted to roll closing costs in that pretty much stopped the streamline business. Many of the FHAs I did in the low to mid 5 in last couple of years can't appraise high enough to roll any closing costs into loan. If I have to pay closing costs out of rate to not require appraisal, I can't get a low enough rate to pay for all them you need at LEAST 3-4 YSP to make even a little on them and pay costs. At that point if you need an appraisal why go streamline? I have one now and lender stillasked for a paystub and bank statement???

msmammypie: (August 16, 2010 10:30am)

FloridaAgent - as a real estate regulator in Idaho, we would take a look at that transaction to make sure everything had been properly disclosed to the bank. There is no law against making money on a flip, but we often see folks who mislead or purposely fail to disclose all details to a lender so they can line their own pockets on a short sale. (In Idaho, we don't like crooks and we take these things seriously.) You might want to see who holds the mortgage and ask them if they were aware this was going on? Could be fun times - I'd also get the names of all the players and notify your state's real estate commission and department of finance. It is possible there are unlicensed practice or fraud issues that might be of concern to one or both of those agencies (or possibly the consumer protection division of your attorney general's office).

joe: (August 16, 2010 10:26am)

@Brian: no reason to apologize, bud! Yeah, calling those who failed the tests the first time out "stupid" might have seemed a tad harsh (to someone who didn't pass the first time out), but your closing clearly showed that the first statement was made for, um...dramatic effect. Now that I have taken (and passed) both tests, I conclude that both exams are designed to *fail* as many people as possible. There are irrelevant questions (how many R.E. Salespeople need to know about trust account handling, and how many brokers would even consider having one?), pure memorization questions (when was the Unruh act enacted?), along with trick double-negative, fuzzy-logic questions (Which of the following is LEAST likely to be considered a predatory lending practice?). The point of your segment was the continuing unequal treatment of independent LOs and federally chartered banks, like B of A and Wells Fargo. I kind of like that, actually; it makes it far easier to compete with the big guys.

W.R.Buchanan: (August 16, 2010 9:58am)

Brian and Frank: Gosh maybe you guys could join the CCAP?! That way you could tell everybody what a bang up job we are doing pounding our legislators both State and Local to pass legislation that is favorable to the people actually doing the work, and reigning in all of the ones who just taking profit at everyone's expense. We could use your support! Randy www.cacap.org.

W.R.Buchanan: (August 16, 2010 9:52am)

TBWBRIAN: No need to apoligize for telling the truth! Were all adults here, I don't even mind if you say F the banksters. I have been harping on the very point of loan personel licensing for 4 years now. The fact that I have to deal with Ex McDonalds employees on their way up the corporate ladder, irritates me no end. The fact that Wells and BofA weaseled some favorable language into the finance bill just shows how corrupt our system really is. They are doing cost cutting but everybody that has to deal with these idiots has to pay the price. I'm sorry but the only way to fix this issue is at the State level where we can get legis passed to require licensing complete with continuing education and nice fat fees just like appraisers have to endure.When I say licensing I mean "EVERYONE" that even touches loan documents all the way from the underwriter down to the girl who answers the phone. Be nice if you guys took the same stance!We appraisers have the CCAP fighting for us. Randy

Clulessdad: (August 16, 2010 9:51am)

Here is a great article-Looks like the govt really screwed up. LOL "Average mortgage closing costs have jumped 40 percent in Illinois this year, according to an online survey by personal finance company Bankrate Inc. The origination and third-party fees on a $200,000 mortgage added up to $3,505 in the the 2010 survey, up from $2,486 a year ago. Illinois was not alone in the dramatic rise. Nationally average closing costs increased 36 percent to $3,741. Bankrate said one of the reasons for the increase has to do with new regulations implemented in January. Lenders are now required to provide an estimate of title and closing fees within 10 percent of what the final cost will bd, or they’ll risk penalties. The regulations require more labor in getting a loan together." Protect the consumer? LOL

SoCal Mortgage Broker: (August 16, 2010 9:49am)

Neal the Deal: In California you don't have to be a Broker to do FHA loans. You have to be licensed and work for a broker.

GODLIKE: (August 16, 2010 9:47am)

Who would be the appropriate entity to report BofA to? I gave her the link to the Office of the Attorney General but I'm sure there's an entity with direct oversight over BofA

GODLIKE: (August 16, 2010 9:45am)

DanSchweihs I like your term Independent Mortgage Companies. Of course it does make me feel a little slimey and like a politician. That's what they do, rename offensive things and act like it's something new and positive. I just used the term with a new Realtor I've been courting and she got all warm and fuzzy over it. She liked the Independent part because it said I didn't have a particular company line to push like BofA. BofA is what got us together, or rather their lack of professionalism. She has a customer that has been at BofA for over 7 months trying to get a loan approved. He has spent over $4,000 in lock extension fees only to be told Friday that he doesn't qualify because he has 587 credit scores.

JUSTFRANK101: (August 16, 2010 8:34am)

California Coalition of Appraisal Professionals (CCAP) The California Coalition of Appraisal Professionals (CCAP) was born in February of 2010. In March, Articles were filed. CCAP exists because “appraisers must organize to protect their professional future” (16 appraisers formed the original group in 2009 to develop an action oriented advocacy group for California appraisers - CCAP is the result). Advocacy, Membership, Development, Please join, help save your profession. Please feel free to contact the CCAP and request information on the recent accomplishments that have initiated positive results towards the Appraisal profession. [email protected] - - - - - 805-241-7770

tbwbrian: (August 16, 2010 8:16am)

As per the end of the show, I used offensive language to show the odd hypocrisy that exists within our industry. The fact that different loan officers are held to different standards. That would be ok if thats how the media sold it to consumers, but its not. Truth is there's good and bad brokers and bankers and if what I said hit's too close to home.... im sorry i guess?

Neal the Deal: (August 16, 2010 8:04am)

To my understanding in California you have to be a RE Broker to be Mortgage Loan Officer. If that is correct then how do the LO's get around doing FHA loans since it is not permitted?

T Bone: (August 16, 2010 8:02am)

When is Chip Cummings going to get a hold of me for FHA Certification? I was thinking we could do lunch or something?

Ancient Appraiser (Retired): (August 16, 2010 7:57am)

Recently closed on a purchase where the appraisal was finally approved and the “Review Appraiser” failed to properly verify the construction of an additional bedroom and bathroom and the extent of remodeling (all of which were fully documented and permitted). The “reviewer” discounted the property by 16% but was unavailable to make any corrections as he was under indictment by the State of Florida and had fled the State. The bank insisted they close at the “Reviewer’s value”, or not at all. After a 60 day escrow my seller was forced to close due to financial conditions. My question is: Shouldn’t AMC’s be forced to wear masks? And is it impossible to find a banker that is allowed to make an intelligent decision?

GODLIKE: (August 16, 2010 7:29am)

For all of you guys working at the banks trying to convince the us that you are just as good as the rest of us how come nearly every deal I get that has already been to a bank and been turned down and yet I'm able to do them with minimum muss, fuss and hassle? I just recently got 2 deals that both had been turned down by BofA & Chase and the issue turned out to be that they didn't know how to gross up a tax return. The buyers were a slam dunk for me but 4 TDs for the banks. This is typical of the the follow up I have with Banks (not mortgage bankers).

lockardchris: (August 16, 2010 7:27am)

I am a mortgage banker who has taken both the SAFE test and local Kansas and Missouri Tests and had no problem passing them. Granted there have been many people I personally know and work with that haven't passed it after several attempts; But I think it is a fair test that keeps everyone in check. I too, think it is ridiculous that larger banks like BofA, Wells, NASB, etc...don't have to pass the standardized testing that we all do. I started with on of the above named banks when I first was in the business and still have close friends that work there. Simply put, nothing has changed with their business models, it is a script, it is QVC selling, and there is very little education. It still reigns true, that these larger banks still right the rules!

Florida Agent: (August 16, 2010 7:16am)

already had a contract with the owners. And, while the closing attorney is not representing the third party, he explained that they would close on the property and then immediately turn around and close on our transaction. I have yet to get any supporting documentation from the listing agent or the third party aside form the contract already sent me. 1) Is their transaction illegal? 2) Shouldn't the listing agent have disclosed this at time of our contract? Any thoughts you can provide would be appreciated. At a minimum, they are doing a disservice to the current owners, the actual sellers, and their bank.

Clulessdad: (August 16, 2010 7:11am)

Personally, I hope the Bank Lo's never have to take the tests, or for that matter get trained with the entire Real Estate process. Case in point, my local Wells office who now have 3 22 year old lo's, all on a quota!I listened the other day to one of them on the phone. He got all the things pertaining to income and assets, but when it came down to appraisals, title issues, real estate processes, etc. etc., he was clueless. The broker channel performance quality will continue to rise, as only the lifers and cream of the crop will remain under a lot of scrutiny. I use this as a weapon with borrowers. "You can choose anyone to do your loan, but do you want to use the 9-5 22 year old kid on a quota at the local bank, or an educated, licensed and always available broker, someone with thousands of deals under his belt who 9 times out of 10 has a better deal than the banks." Your choice. BTW- I remember when bank lo's said the same about the lying brokers. The pendulum is swinging!

Florida Agent: (August 16, 2010 7:11am)

Let me know what you think of this scenario. I presented an offer on behalf of my client n a short sale property. Without getting into the minutia fo the deal, I waited a full 3 1/2 weeks to get a one signature on the "seller(s) signature(s) line(s). Throughout that time the primary listing agent, to whom I originally presented the full-list offer, in person, just 1 hour after showing the property, as well as the secondary listing agent and the broker were all evasive. When I questioned as to whom the signature belonged to, I was told by the primary agent that it was the sellers' attorney's signature as it was being "sold through a trust in order that the seller could avoid a deficiency judgment." So ,I asked for trust recitals or a POA to legitimize the signature with no success. After contacting the closing attorney whom I thought was the one that signed, he explained to me that the signature was actually that of the owner/rep from a third party, a company, that (cont.)

DanSchweihs: (August 16, 2010 7:11am)

You might want to use the term “Independent Mortgage Companies” to include independent lenders and their distribution system, brokers. “Brokers” today are still being blamed for the abuses that unlicensed people (that are now working at the banks) committed in 2006. Changing the name of an industry has restarted many industries. When faced with a choice of getting a mortgage with an Independent Mortgage Company or a big bank, many will choose an Independent firm. Banks actually need to have a legislative advantage over Independent Mortgage Companies. Without the bank’s legislative advantage, the low-overhead, flexible Independent firms would dominate and banks would fail. The big banks are actually too big to fail. America cannot let them fail right now.

YourBestCASE4RE: (August 16, 2010 6:47am)

I am a Realtor whos primary business is Buyers (1st time) and REO'S, my experience with the Bank of Mafia and Wells has been horrible. The lack of knowledge and communication, from their out of area appraisers who refuse to bring it in even when their own comps justify the purchase price, to the "black hole" your loan goes into before it miraclousy pops out of underwriting. My last experience with B of A? The incompetant LO, asked me to share the Banks Appraisal with her because it was a Fannie Mae owned home. I instructed her that her client (The buyer) pays for that and she is wrong, well lets say when the Realtor is more educated about Loans than the LO, there is going to be an issue. UGH I cringed at buyers who bring me B of A loans....

bfennell: (August 16, 2010 6:29am)

I do take exception to your comments about mortgage bankers. I work for a large bank and that is not the case with our company. NO ONE trains more than my company and all rules are followed or you lose your job. The reason you are not required to take the test is that we are certified by our company and we could pass that test. Brokers do not have the funding to do the training and cannot self certify so that is the reason for the difference in requirements. Your statement is condescending and shows a lack of knowledge about all parts of the industry. Love you guys but get the facts straight.

tarheel71: (August 16, 2010 6:27am)

Banks don't have monolopy on dumb ass LOs, there's pleaty in the brokerage/mtg banks sectors also. FHA streamline refis "used" to be everything you said today. Unfortunately, low appraisals have killed over 50% of my streamline refi applications in 2010.

JDrobeck: (August 16, 2010 6:22am)

You guys are way off on FHA streamlines. Every since HUD changed the policy about not exceeding the current mortgage amount. Typically, the customer doesn't have any money there needs to be a large lender credit to make the deal work. Bottom line, streamlines are real skinny in the revenue department. Yes if your trying to get a lot of units streamlines are the way to go, but if you want to actually make a profit doing a loans LOS are much better off doing purchases. I'd like to compare my paycheck with 9 purchases to that LOs with 9 streamlines. It be at least double.

dcfinance1: (August 16, 2010 6:21am)

Why??? Do they not have to meet the same "competence" standard? WHY????? Let's search for the Answer. Let's get them on record. Can you help us get this Frank and Brian?

billytommy: (August 16, 2010 6:18am)

im posting for first time to tell you that banks are indeed prepping LO's for the SAFE test and expect to take the test. i work at a major bank and can tell you that we have nothing but pro's in our office (contrary to bitter postings i have seen) that WANT to take the test and expect to take it by end of year. we are also endlessly trained on compliance subjects, which im sure is not currently the case for the average broker out there. we have to go through non-stop training or we get let go. something to consider as you post.

Brit Broker Banker: (August 16, 2010 6:09am)

With 15 years experience as a loan originator including owning my own mortgage company in LA with a California Brokers license and with a North Carolina Loan officer license and having passed the NMLS national test and 2 state test - I take great exception to the completely false misconception that mortgage bankers simply take orders. I can assure you that originating and closing a loan with B of A requires every bit of knowledge, experience and professionalism that was required when I was a broker/owner/employer. I love the show but enough of the cheap shots please. You're better than that.

GaryP: (August 16, 2010 6:05am)

If the level of competence at the big banks is so great, why did the big banks spend so much time effort lobbying to have their LO's exempted from NMSL? Do you think that it might be because their employees wouldn't meet the requirements or be able to pass? No, probably not, you're right. They just did it for the heck of it. Again, you're the product of the broker channel and using you as an example is hardly a fair comparison.

GaryP: (August 16, 2010 6:00am)

Rodder: How would you knw how hard the national test was? Did you take it for fun? You may be an exception to the general rule at Wells because you came from the side of the business where you had to be educated, experienced, and tested, but you have to admit that the level of experience and knowledge for the branch based LO's is nothing to brag about.

Rodder: (August 16, 2010 5:36am)

GaryP: You're an idiot! I've been with Wells for more than a year now and I'm no glorified 'order taker making min wage'. Sure, the comp plan is less than what I was making on the broker side the last 5 years, but my volume has increased by 2-3 times yet I'm making MORE money. The State and National tests were not hard so quick crying about taking a relatively simple test. Maybe you and Frank should take your heads out of the sand and get a grip. Love the program guys and keep up the good work. Peace!

GaryP: (August 16, 2010 5:22am)

Just an FYI. I recently closed a USDA loan for an Asst. Manager at one of the big four banks. First, she was told that they didn't do USDA. Then she was steered into a FHA loan and told that it would take 3 months to close through their "special employee program." To top it all off, she was shocked to find that the bank, that didn't do USDA loans, ended up as the investor of the loan. Go figure.

GaryP: (August 16, 2010 5:18am)

Let's face it, a loan officer at one of the big banks is nothing more than an application taker anyway. Most of them see it as a career move up from being on the teller line and making min. wage. That's the degree of professionalism, experience, and service that you can often expect from a big bank LO.

Old School Mortgage Banker: (August 16, 2010 4:52am)

Nice touch guys! I love the bit of "Rush" you added to the end today! By the way, rock on with your railing against the Bank LOs that don't have to take the test. What a crock of S*@t that is! Too bad the general public isn't more aware of this. The incompetent will flock to the banks to originate while us independent mortgage BANKERS will be cast among the 'outlaw' mortgage brokers and neither of us deserve the tarnish that Washington has placed on us.

williamk2v: (August 16, 2010 12:44am)

If LO's don't take the NMLS test seriously, and that means they have to study, they don't deserve to pass the first or second time. Fannie Mae never clarifies anything until problems crop up, and then they just might offer a FAQ that may or may not address the problem.