New FHA Short Sale Rules Could Kill Your Deal - Careful! 12.21.09
HUD has some new rules with respect to short sales and FHA loans (that Frank fully understands). Marc Savitt starts new trade association. Fannie, Freddie BofA and Chase all relax for Christmas. David Shirmeyer gives this weeks market highlights
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CHUCK THE APPPRAISER: (December 23, 2009 3:07pm)
ALLISON APPRAISER...WHAT DO YOU HAVE AGAINST APPRAISERS FROM SO CALIF....I AM 73 YEARS OLD 32 YEARS IN THE BUSINESS AND I AM IN THE PROCESS OF LOSING EVERYTHING
Allison Appraiser: (December 22, 2009 11:56am)
broke appraisers:
e-mail me for some full fee management companies
as long as you're not in So CAL
there are some good ones out there!
[email protected]
mpattco: (December 22, 2009 11:32am)
Is NAMB dead? I havn't heard what there plan is. Are they supporting the new association.
Gmoney: (December 21, 2009 6:33pm)
Hey your boy David is very seldom right and his time frames are always off. Sorry guys.
Keane: (December 21, 2009 6:27pm)
Wow, David could not be more wrong on rates! At least for today. Hopefully David's right and rates go back before the Holiday. Come on David!
NORTHERN CALIFORNIA APPRAISER: (December 21, 2009 4:56pm)
After 32 years as an appraiser, it appears that I will be out of business. I have had no orders in December, so there will be no checks in January. I had been surviving on FHA. After the HVCC went into effect, I never did another appraisal for a conventional loan, as I refuse to work for AMC's. Their low fees hardly cover my overhead. Now that FHA's will be ordered through AMC's, that is gone. Even with the repeal of the HVCC for conventionals, some lenders will still use AMC's anyway. I may have to apply for food stamps. I am 56 years old & I live in an area with very high unemployment, continuing job losses & no prospects. Andrew Cuomo destroyed a business I had built up after many years of hard work. Worst Christmas of my life.
Deedie: (December 21, 2009 3:51pm)
brokeokappraiser: ME TOO. No Thanksgiving No Christmas
brokeokappraiser: (December 21, 2009 3:37pm)
This month is probably it. I have lost all my clients, and refuse to work for pennies. The fees the AMC's offer dont even cover the expenses. I like how the orders specifically state "Do not discuss fees with borrower or anyone involved". This is so they can charge the appraiser a minimal amount, about half of an appropriate fee, and pocket the rest, for doing nothing but causing problems, and delaying closings. I have had 2 this week that when I call to schedule the client has told the borrower that if its not an appriaser on their list to decline the appraisal, and the appriaser loses out more work. Wheres the supposively IVPM website for appraiser support and complaints. We have nothing. Even the State boards wont help/support us. I have lost everything! Dont know what's next for me and my family, but with 15 years in the appriasal industry, I'm sure God has a plan and will guide us in the rest direction. Best of luck to the rest of my colleagues.
Atlanta LO: (December 21, 2009 2:08pm)
To Clulessdad - The GFE is for everybody. We have been doing software work and several training sessions over the last 2 months.
Chris - California Mortgage Advisors, Inc. A Mortgage Broker and Banker Firm: (December 21, 2009 1:33pm)
SoCalApprs2- The most success I am having with AMC is when I run a deal through our Mortgage Bank division. The AMC we have partnered with is really good and we don’t get any more conditions if we used a Landsafe or Rels Valuation. On the broker side we have also been successful in negotiating the use of our AMC with other Bankers doing Third Party Lending (Wholesale). We have First Cal, Icon Residential and now Amtrust is allowing us on a trial basis. As always CMA is constantly looking for more advantages for all of the agents.
Chris - California Mortgage Advisors, Inc. Broker/Banker: (December 21, 2009 1:23pm)
Clulessdad- I believe that is one of the differences in regards to broker vs. banker and the GFE. I don’t fear the new GFE as we are simply going to have to "adjust" just like we did on HVCC, Til Act and all other industry changes recently. I don’t envy the conversations I can see us as originator having with our clients in regards to page 2 of the GFE where YSP is called and considered a "credit".
Clulessdad: (December 21, 2009 1:15pm)
Is the new GFE just for brokers or is it to be used by brokers and bankers? Is just the difference that brokers need to include their YSP?
Footer: (December 21, 2009 12:26pm)
Sorry Brian - Frank has it right on the FHA short sale letter.
SoCalApprs2: (December 21, 2009 12:04pm)
Hi Frank & Brian,
I am interested in the side bar ad spots, as I have a product that I think would be a good fit to your website. I wish to email you a sample of what the product is, get your feedback and discuss the cost to advertise on your site. I have looked all over the page and cannot locate an email address to send it to you directly. Do you have an email address I can send it to?
SoCalApprs2: (December 21, 2009 11:56am)
Remember, AMC's have been around and are not going away. I am not concerned with them. My concern is that as an independent appraiser, I cannot work on my own and develop my own client base. Next, who cares if the banks keep trying to use their system. The independent appraiser will come in more accurate, faster and with minimal underwriting conditions. This means more money for the banks. So the argument about the banks still having control is not real. They know the process isn't working, that it is illegal and they want to distance themselves from it as it stands. What will most likely happen is things will get back to where they were pre May 1st 2009. As for Union Bank, heck, they already have their own system anyway. The most important thing to remember is that it is the Brokers who get the business to us all.........homeowner, buyer, seller, appraiser and Realtor. So if my broker sends my appraisal to Union Bank, or any bank for that matter, as long as I got paid, who cares?
John: (December 21, 2009 11:46am)
Thank you Frank for link ragarding BofA. Did you see the article why lenders foreclose instead of selling as a short sale. This is crazy, bailouts for everyone but not plain people like us. This is the link. http://iamfacingforeclosure.com/blog/2009/12/01/anatomy-of-a-government-abetteded-fraud-why-indymaconewest-always-forecloses/
real appraiser: (December 21, 2009 11:38am)
I think some more thought to the government/state agencies that regulate lic/cert for appraisers. I believe that both states that I am certified are overwhelmed, I assume its safe to say most states probably are too, the fines should be increased to cover the costs of hiring investigators. As I say this, I can see issues, but at least it should fall on those doing the damage, not in lic fees, but fines for illegal behavior. I am sure a similar model for other industries could be made. I am just tired of paying the way for those that act improperly. I was damaged by HVCC as a result of others, I have never bent on a value, yet I paid for it like I was part of the problem.
mtgehamster: (December 21, 2009 11:30am)
Just finished the HUD webinar on the new RESPA/GFE/HUD-1 provided by the Denver HUD office and conferenced with a Washington, D.C. HUD official. Two things are perfectly clear: 1) the new GFE is not a GFE anymore. When a GFE is given to a client the Origination Charge, which contains all lender or lender and mtge broker origination points, YSP, processing fees and administration fees, cannot increase for any reason! Even if the loan amount changes or if there are lock extensions. Also, do not use the new GFE for purposes of pre-quals or pre-approvals because you may not change your origination charges unless you pay for them. You can't estimate with the new GFE. 2) HUD doesn't know how the new GFE works...9 days before national implementation! During the question and answer period neither HUD official could answer many practical questions, often times contradicted each other and were in contradiction of prepared FAQ's or offerred solutions that appear to violate the new RESPA.
Clulessdad: (December 21, 2009 10:52am)
HVCC is bad, no doubt, but I hope that the successor plan is created with certain objectives. 1)Eliminate the firewall between appraiser and originator. Communication needs to exist between all parties in a transaction. Lack of it creates bad valuations and a huge slowdown in the process. 2)the appraiser MUST be allowed to earn their business, not be part of a round robin allocation. 3) Understand the limitations of the AVM and how does it weigh in on the valuation process 4) Create a STRONG enforcement process to revoke licenses of originators and appraisers to all who coerce valuations for additional/removal of business.
real appraiser: (December 21, 2009 10:51am)
hopefully the business model will translate into dollars for those that go anti-hvcc. I would hope that those pro-hvcc, probably big banks, see their profits fall due to loss of business. Maybe all of us in the real estate industry should demand that any new law in the new bill include that lenders accept independent appraisals with reviews by their own appraiser panels (in house or not). The way it was meant to be done. Can anyone see a problem with this model? I know their would be headaches, but order appraisal and let lender accept or decline based on review within the same market on their dime.
Chris - California Mortgage Advisors, Inc.: (December 21, 2009 10:27am)
Clulessdad- I hope so for our industry's sake. In some regards if you are a Mortgage Banker you already get to call the shots on the appraisal process. At the same time though, Union Bank of California just announced that starting the new year they are going to adopt the HVCC rules and comply. Again I hope this changes as I truly believe that it affects the borrower the most.
real appraiser: (December 21, 2009 10:26am)
Clulessdad: I agree, any model that makes money will be followed by others. It might take a while or be quick, depending on the money that the old model brings in. Here is hoping to what you say comes true!
Clulessdad: (December 21, 2009 10:24am)
Just a quick nod about Marc Savitt-if he is starting up a new org, count me in. He is a good guy and a great leader. He has fought for all of us and is a great choice for the industry. I hope that he sets a very low barrier to entry so that all the appraisers, loan originators (banks included), realtors, escrow officers, title agents and even AE's get to join. Times are tough and we need a strong population of people to join. Count me in!
Clulessdad: (December 21, 2009 10:18am)
Chris-I have also heard the same tone from some other wholesalers. However, I am sure that the market will change all that. At least one wholesaler will allow the old rules to apply and when that happens, they will get a lot of loans. Then see how fast the others change.
GetSerious: (December 21, 2009 10:15am)
You still have time to comment on the regulation that will impact your livelihood more than any other single piece of work from the Federal Reserve Board. The comment period for the FRB’s proposed changes to Regulation Z closes Thursday, December 24th. Come on Mortgage Brokers save our YSP
Calboy: (December 21, 2009 9:03am)
Aloha,
did i miss something.. what happened to the charts on bond yields??
Chris - California Mortgage Advisors, Inc.: (December 21, 2009 9:00am)
Dear Central CA Appraiser - It is funny you bring up that topic. We just had a meeting with our biggest investors and the head of the AMC we use here in San Rafael, CA (Axis Appraisal Mgmt- Great Company) and the impression that I got was that even though they might do away with HVCC, the lenders may still impose it as we have all adapted to how it works. This also is another stream of income for some of these companies that they are not going to get rid off.
Wog: (December 21, 2009 8:57am)
Continued:
However, there is a caveat here! They can’t use the Short Sale to reposition to a similar or better property. So… Downsize!!!
You can refer to HUD Handbook 4155.1 4.C.2.l. for more details. If you would like a copy of that section of the HUD handbook just let me know.
Wog: (December 21, 2009 8:54am)
At first glance this Mortgagee letter appears ominous. But when you compare it to the previous HUD position on Short Sales it is actually good news.
No foreclosure or “short sale” on principal residence within the past 3 years (unless documented extenuating circumstances)
This rule applied regardless of whether or not the borrower was current on their payments at the time of the Short-Sale.
Borrowers are considered eligible for a new FHA-insured mortgage if
• they were current on their mortgage and other installment debts at the time of the short sale
of their previously owned property, and
• the proceeds from the short sale serve as payment in full. ( so no continuing guarantee)
So, I think this means that before the borrower had to wait three years regardless, now, if they were current on their payments when the property was sold short and there was no continuing guarantee, they don’t have to wait the three years.
MortgageAngel: (December 21, 2009 8:47am)
bobbi loan officer - FNMA 8.0 at your service! It's one messed up deal, I agree! Your borrower appears to be prudent as the day is long (kudos to your borrower!) and so this may not be any help But at 51% you're almost home. Is there an installment account that could be paid down to leave just 9 months remaining?
Frank Garay: (December 21, 2009 8:46am)
John... Here is the link regarding BofA: http://www.housingwire.com/2009/12/18/bofa-chase-halt-foreclosure-evictions-until-jan-3/
Central CA Appraiser: (December 21, 2009 8:38am)
http://realtytimes.com/rtpages/20091221_washingtonreport.htm
Kenneth Harney reports that the House has voted to eliminate HVCC, Frank & Brian's delivery of signatures is also mentioned in the article. I'm kind of concerned about the new "director of the new Consumer Protection agency. The legislation requires the director to quickly come with new national appraisal rules and standards covering all transactions." (that is wrapped up in the bill) I can't wait to see what that brings. Looks like we'll probably need you for the next fight. Hey, thanks guys, we appreciate all that you do. You have really made a huge difference in the Real Estate cause.
stan the man: (December 21, 2009 8:31am)
Seems like Savitt's "All Inclusive" Association would be good news to appraisers. As it is now we don't have any power to change even our minds by our selfs.
Beryl: (December 21, 2009 8:03am)
Is there any kind of RSS feed for your Daily Shows...you guys are a rip and during these difficult times, thats a rare find...you're do'in the right thing...Frank for Prez....Brian you got to lighten up on poor ole Frank --- Consider the source when you gave him the business about HUD...another Obama-Gram via my former State Governor, Gary Locke
Anonymous: (December 21, 2009 7:58am)
Besides B of A and Freedom, doesn anyone know of a good 203k company? I'm in Illinois
CV Broker: (December 21, 2009 7:19am)
Bobbi - go Freddie - still 55%
Scottsdale Lender: (December 21, 2009 7:11am)
The FHA letter is WILD!!!
Let us look at this a tad closer: How does one determine if the short sale was to "take advantage" of the declining market? That's more open ended than an incontinent elephant.
But that's nothing. The second line is the mushroom cloud maker..... "Purchased at a reduced price, a similar or superio…."Stop. You had me at “how low”.
Let me get this straight. The three categories that deny access, if the next purchase happens to fall into them, are as follows:
1) Can't be Cheaper 2) Can't be Same 3) Can't be Better
Does that not disqualify ALL houses except crappier more expensive ones across town?
JOHN: (December 21, 2009 7:08am)
I couldn't find any information on Bank of America stoping foreclosure, they foreclose on my home on Friday.Can post a link to it?
Frank Garay: (December 21, 2009 7:02am)
That's the double bypass burger.. it has a pound of meat, a couple eggs, like three pieces of cheese, bacon, lettuce, tomato, onions and each bun is a grilled cheese sandwich. How could we not try to eat that! Looking forward to it...
Nuke 'em 'til they Glow: (December 21, 2009 6:48am)
After you eat your way through Atlanta don't forget to make that Appointment for Angio Plasty! :-)
azrelochic: (December 21, 2009 6:46am)
I have closed several short sales with the homeowner being current on the mortgage. It depends on the bank. Citi, Aurora and First Horizon have approved the short sales with the mortgage being current. B of A, no such luck
Frank Garay: (December 21, 2009 6:23am)
Thank you HUD Translator! Matt... Yes you can do a short sale, especially in this market, even though you're not behind, and that's what HUD is addressing in this Mortgagee letter. They don't want you do be able to get an FHA loan on the home you're buying if you sold your home via short sale, just to take advantage by buying that McMansion for $300k that used to sell for $800k...
Matt: (December 21, 2009 5:47am)
In all reality: how many people are able to successfully short sell their house without needing to miss a payment? The short sale negotiators are requiring it before they will even order a BPO.
Ex full time Realtor in Florida: (December 21, 2009 5:41am)
This may sound stupid, but will any lender let you do a short sale if you are current on your mortgage?? Doesn't sound possible in my market.
bobbi loan officer: (December 21, 2009 5:30am)
c6sweWell they have done it again Fannie and Freddie obviously running out of money AGAIN 45 DTI SOUNDS LIKE IT SHOULD BE OK BUT YOU TELL ME 802 SCORE POLICE OFFICER 15 YEARS 200,000 LIQUID WANTS TO REFI RATE AND TERM 51 % DTI nO gO WHAT A BUNCH OF CRAP
HUD Translator: (December 21, 2009 4:04am)
Mortgagee letter 9-52 is saying if you MUST sell your primary residence AND your mortgage payments are CURRENT, then you are eligibile for new FHA financing even if your the current residence is a foreclosure. Frank's suggestion such as a job relocation would be an example of a having to sell vs wanting to sell. HUD simply doesn't want you to force a loss because you can upgrade for less.
Short sales for mortgagees who are delinquest now must wait 3 years from the time HUD pays the claim. The old rule was 2. Of course if there are the typical circumstances, death, divorce, etc. there are case by case exceptions to the time line.
Short refis were addressed in the 4155, where they had not been addressed previously.
In short:
MUST move and current on a short sale - New FHA OK
CHOOSING to move to get a "DEAL" NOT ok for New FHA Financing
NOT current on the mortgage and a short sale occurs, eligibility extended from 2 year to 3 years from the date HUD paid the claim.
NJDLMKR: (December 21, 2009 4:00am)
AND ... Freddie and Fannie continue to tighten guidelines.
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