Expect IRS Delay's for Self Employed Borrowers - 01.14.11
Today's Poll: Should there be a monthly maintenance fee impounded on LMI loans?
Yes
No
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sheraldia21: (January 16, 2011 12:24pm)
Heck, they (banks) could then form Contractor Management Companies (CMC) and pay the contractors a small portion of what would be considered "customary and reasonable" for the work they do and keep a portion to cover their contractor management fees. NOT!
GODLIKE: (January 15, 2011 11:00am)
I've got a better idea than an impound fee, let's just make them qualify to prudent standards without all the subsidation of DP or closing costs. Some people don't need to own a home.
BenJohnson: (January 15, 2011 12:15am)
Thought you guys might like this news story. Check it out. http://www.homeflux.com/press/short-sales-bank-fraud-and-kick-backs-cnbc/
corvin: (January 14, 2011 5:30pm)
USCORE1 Banks got, and still are getting clobbered ????????????? The Banks have no vested interest in the properties that they service and foreclose upon. They have already been p[aid several times over. First by the MBS invertors, second by the PMI, third by the operation of the hedge funds that they used to bet against most sub primes and fourth by the tarp funds so quickly advanced by Bernanke, Bush , and Obama. Getting clobbered by profits is more like it!
kim: (January 14, 2011 3:13pm)
We are not babysitters you guys. You are either responsible financially or you are not. If not, stick with renting. There is no safety valve and there shouldn't be one forced on people. To take money to set aside for repairs and maintenance would be just money the banks would hoard and you would never see it until you sold. They would be the ones taking advantage of the interest, not you. It would be like adding another MI for them. MI doesn't benefit the buyer in any way. To avoid it, you save until you have the 20% down payment showing you are very responsible financially. This is the way it should be. Let's not add more crap to the table. We already have enough. People just need to get their act together. That is the only way to clean up this mess and not repeat it later.
PNL CFO: (January 14, 2011 2:11pm)
Let me know if this is simple enough of a solution: the banks invest some of their fees into an insurance policy which they could tap to cover the costs of fixing a property AFTER they foreclose. Oh yeah they already are. Prior to that stay out of the consumer's pocket. If they defer maintenance then they have to sell their property for less. Appraisors already look at deferred maintenance in their valuations. Well the Appraisals done in person not the new Zillow web based valuations. The market will settle up. Eliminate recycling so the theives no longer have a place to sell the copper they stole from the vacant homes! Different discussion thread.
uscore1: (January 14, 2011 1:39pm)
Fact is, if L/O's would be more impartial to understanding the risks of the lenders, there wouldn't be such a big divide in mentalities. Banks got, and still are getting clobbered and to incorporate a reserve account for old, dated homes, who's borrowers are low-to-mid income simply makes sense. If the home electrical systems needs replacing, but the borrower can't afford the repairs, the repairs are put off until there is a house fire? It makes sense to have a reasonable repair reserve requirement on homes older than 30 years old.
tblersch: (January 14, 2011 1:37pm)
Jack Maxwell, See my post from 7:08AM. No two borrowers should be treated equally. Let's keep it simple
jdunn1: (January 14, 2011 1:23pm)
Farrah Faucet poster in the back ground. gotta love these guys
joecolorado: (January 14, 2011 1:06pm)
there just wont be enough fingers and toes for them to be able to work it out..........poor things......bless their little cotton socks.
joecolorado: (January 14, 2011 1:02pm)
If you think the quality of appraising is bad NOW,just think of the amcs pet/idiot appraisers trying to work out the benefit/liability of a sinking fund and the adjustment to be made on a property,particularly where there are differing amounts per sales property in the maintenance escrow.
Divedude: (January 14, 2011 12:58pm)
A maintainence fee paid for by the consumer so the banks can foreclose on homes in better condition at no expense to them. I see the pattern. Mortgage insurance, AMC fees and now this. Isn't it hard enough to qualify a buyer now?
Jack Maxwell: (January 14, 2011 12:54pm)
How about simply using lower qualifying ratios for lower income borrowers?
RBHomeLoans: (January 14, 2011 12:12pm)
they have been concerned with deferred maintenance in commercial loan for years...it is only logical
iam 2520: (January 14, 2011 11:39am)
Thinks the impound account MAY be a great idea if combined with a Home Warranty Co... for life. The premiums could cover the major loss, heating plumbing electrical ect... but the residual like a medical savings account could go towards MAINTENANCE stuff...get a national contractor aboard and have monthly specials or inspections for FUTURE projects.. keep it private and outside of the mtg. deal
PeteH: (January 14, 2011 11:20am)
I dont like to require it. HOWEVER, it would be a great selling tool if it was attached to another product. Everyone wants to keep their home and if they had this built into the loan in some form...similar to a flexible spending plan..it could work. But I dont like the idea of requiring it.
loppy: (January 14, 2011 10:59am)
Well they are too stupid to keep away from fast food, drive gas guzzling cars and don't recycle so we might as well impound repairs. Sure, in fact let's do the budget for them and then spank them if they deviate. I like it. Get back to work.
kim: (January 14, 2011 10:44am)
Absolutely NO. We don't need to give any more power to the government. I think as an alternative, we could consider counselling involved in the loan process (video, information of certain home repair costs, budgeting, etc) to educate the home buyer on the "upkeep of your house", but I don't think having anymore monthly fees being taken out would really be wise. I don't think the home owner would ever see that money. It would just stay in reserves for the bank in the event of a foreclosure while the banks make money on the interest. Look at how hard it is to have a loan modification. The banks were given all this money to help the home owners to keep their houses and the banks are doing everything they can not to. It would be like pulling teeth to get money for repairs as well. The people who know how to save for a rainy day or keep up on the maintenance of their own homes would be forced into this and they shouldn't be penalized for those who aren't responsible. We need to stop letting the few that are irresponsible set the guidelines for the rest of us. And again, keep the government out of this!
andystills: (January 14, 2011 9:57am)
Where did you find information to support the IRS processing timelines. I have a file that this will affect and I have already been preparing them for this eventuality. However, I would like to provide evidence for all parties involved.
W.R.Buchanan: (January 14, 2011 9:47am)
That 50% attitude number stated in the daily has everything to do with confidence in yourelf and your product. If you don't believe in what you are selling you won't sell it well, and you've got to sell yourself before you can sell the product. If people don't trust you they won't buy anything from you. Randy
Joebob: (January 14, 2011 9:47am)
Massah Obama hasn't paid for my car or gas yet. He hasn't put groceries on my table yet. I'm a hopeing and awaiting for the changes. I think that another govrnmt program is a good idea. He'll take all that money for maintenance, and hopefully have enough to at least fill up my tank a time or two. Maybe.
corvin: (January 14, 2011 9:35am)
The next step will be that all loans will need to carry this impound, then all impounds must be spent with a licensed contractor, (have one of those replace that broken window!) then the FED will need to have a hand in licensing the contractor, then there must be a special use tax to support the program, then we will hire city inspectors to drive about and ticket properties that (in their opinion) need a new roof or driveway, then , then,,,,,,,,,,,,,,,,,,, then ,,,,,,,,,,,,,,then,,,,,,,,,,,,,,,,,,,,, then,,,,,,,,,,,,,,,,,,,,,,,,, we will all move to Mexico to avoid the whole mess?
joecolorado: (January 14, 2011 9:21am)
LMI-in then case of possible default-if the borrower can't pay the mortgage they certainly wont be able to pay an additional monthly sinking fund for maintenance,goes back to the root of the problem,whether the borrower can afford to purchase.This has always baffled me for MIP-again if paying the mortgage is too onorous,then adding an additional monthly amount insuring against non payment doesnt help the borrower's situation.
Sandie: (January 14, 2011 8:56am)
I am not sure how I feel about the idea of a deferred maintenance reserve. On the surface it sounds like a good idea but after thinking it through I don't think it is a good idea. Adjust the borrowers price point and ratios downward would be a better idea so they have some residual income to take care of repairs. But...would they do it? Who is to say. Homeowners should be responsible but we all know that residual income in today's world mean more toys, more play, and nothing put aside for the rainy day. I think it is more important that we start teaching our young people responsiblility and get back to core values of if you want it you save for it or you don't get it. We must stop raising our children with an entitlement attitude. To me that is the bottom line. Teaching responsiblity rather than a "me" "now" attitude.
ValleyGirl: (January 14, 2011 8:53am)
What happened to a persons property rights? I'm the last one to support people trashing their home and property but lets face it, the world is full of people who for whatever psychological reasons they have, create a junk yard in every place they live. An eyesore? Yes. But it is every homeowners right to repair or not repair, to create an oasis or a junk yard. This is heading towards a Stepford Wives environment. America has never been about enforced lifestyles. Hopefully it never will be.
bobbrennerloans: (January 14, 2011 8:21am)
A maintenance impound account has all the look, feel, and smell of another government-like run program run amuck. This will likely turn into another sweatheart deal for some "Contractor Management Company" model much like the completely feckless but profiteering AMCs. Who is going to decide what needs to be fixed first and by what contractor? Homebuyer's need to be treated like adults and let them succeed or fail without a big-brother safety net to bail them out.
Watchingya: (January 14, 2011 8:16am)
How does want report sombody originating loans with NO NMLS number or showing up on the website?
The BLAWS: (January 14, 2011 8:14am)
Adding another bill to low-income housing? I figured this poll question was rhetorical. But then again it will allow all us licensed to perform more collection calls once our industry is completely washed out!!!
PenelopeX: (January 14, 2011 7:35am)
No need to assess still another fee on the consumer, simply adjust your DTI ratios to allow for residual. While the banks do have a vested interest in making sure the collateral on the note they're holding is secure, another solution other than trying to micro-manage a homeowner's budget is in order. Just like the ridiculous H.R. 2454 Cap & Trade's requirement that every home have a EPA-approved retrofit label before it can be sold. It's plain to see that nobody believes the average American citizen is self-governing anymore, so this kind of "let's regulate them to the gills" mentality is prevalent in the minds of both business and government, but doesn't that move us one step closer to an autocracy? I mean, what might be next? A mandate to the homeowner that deferred maintenance must be cured within a week, with gestapo-like bank-paid home inspectors coming out every year to inspect your home?! Wow...there goes privacy with liberty...nice!
frankgaray: (January 14, 2011 7:28am)
I think it's crushing the banks...
Xlender: (January 14, 2011 7:26am)
The issue with the tax returns is that the IRS won't publish the final version of the forms changed by the last-minute changes to the tax code in 2010 until February. They won't accept any returns requiring those revised forms if the new versions aren't used. Among the forms are Schedule A for itemized deductions and the forms for business returns. My accountant tells me it will be February before she will have the new forms necessary to prepare the 1065 for our partnership. that means there isn't any workaround for returns that require the new forms until those forms are available.
tblersch: (January 14, 2011 7:08am)
Most borrowers already escrow for taxes and insurance, so the general idea has been proven to work. However, creating a maintenance fund is only treating the symptom and not the problem. The ratios should be on a sliding scale that corresponds to income. Maybe the front end ratio should be as low as 25% on the very low end and as high as 40% on the high end. A $150,000 borrower is not equal to an $800,000 borrower and should not be treated as such.
Racheli: (January 14, 2011 6:53am)
At a 1st look the idea 4 deffered maintenance Looks apealling at a 2nd look NAAA cond has this line item build into the association dues... and as we know condo associations are in more truble than SFR i don't think it will work
ROSBERG: (January 14, 2011 6:50am)
First, thanks for all your great ideas and the up to date information every day. The 4506-T issue will be even worse then you have described. In the middle of December I emailed all my AE's and only 1 company out of 15 will accept tax returns stamped by the IRS. All other lenders will require validated tax returns, no exceptions. Additionally, the IRS has told me that when a borrower owes taxes the return the data is not entered until after April 15th. They process all refunds before Aptil 15th first. So a self-employed borrower who needs the 2010 tax returns could have to wait until the end of April or into May before the return will be available.
Mike8307: (January 14, 2011 6:32am)
GlennRoberts used a word we seldom see these days 'RESPONSIBILITY', where is it and when did it leave us. First of all, NO WAY, does any bank or gov't agency need to hold on to peoples money to make sure that they maintain their home. Does anyone think that the money will be safely tucked away to pay out what the gov't will term as 'benefits'. Secondly if you take someone making $250,000 a year and he has to replace the wax seal on his toilet there's a good chance he'll call a $80/hour plumber to do it, and get a bill. Someone making $35k per year might actually do the work himself. Can you be reimbursed for sweat-equity? Most likely not, yet it IS YOUR money you'd be looking to claw back. The lower income homeowner is more likely to do a LOT of work themselves, if they have pride in their home. This would just be teaching people to look to the government to solve all of their problems when it is the government that is usually at the center of creating them.
ehilliard: (January 14, 2011 6:18am)
I would have to say its a great idea to help them save to do work on their homes, just my opinion.
GlennRoberts: (January 14, 2011 5:59am)
People need to take responsibility for their own homes and that includes the choices they make to protect that investment or not. If they don't maintain, they lose. Don't collect and spend any more money on govt intervention and administration.
GaryP: (January 14, 2011 5:48am)
The maintenance reserve reminds me too much of a 203K loan. Every time I close one of these I end up fielding phone calls for weeks or months from the contractor wanting to get paid on the final draw. By this time the loan was sold to someone like BoA who is not exactly known for doing anything in a timely manner. Why would we expect anything different on a maintenance reserve? This is just another example of an idea that sounds good on the surface, but on an operational basis could just turn into a nightmare for everyone involved. I don't suppose the homeowner would be paid the interest accrued on this reserve, would they? The banks would profit from holding these funds, just like they do on escrowed insurance and property taxes. Of course they will just say that just offsets their management costs.
MiamiSalesAndRentals: (January 14, 2011 5:47am)
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njaramillo: (January 14, 2011 5:44am)
That is what 203K are for, because not all house need repairs.
jerryk: (January 14, 2011 5:13am)
I think that Obama will fix everything LOL. He has all the answers. On a serious note there is a way to file directly with the IRS and have the 4506 hit the system right away I'm not sure of the process I had a realtor recently do this where a borrower forgot to file a w2. It hit the system immediatly.
barbara: (January 14, 2011 5:12am)
OMG, don't let Maxine Waters anywhere near it!
PNL CFO: (January 14, 2011 5:08am)
My experience with these Replacement Reserve accounts on government subsidized multi-family loans makes my skin crawl. The client pays $20 per month per unit into the Reserve. Then when they need work done they have to pay for it (again) and then submit for reimbursement. Believe me the response time over the last 2 decades was slow I could not even imagine how much slower it would be with them administering additional accounts. So the client who is tight on cash already ends up costing them twice as much.
Jersey Girl: (January 14, 2011 5:05am)
I say no-no-no also. Anyone buying a house should know it's a huge responsibility. If a borrower can't afford to take care of it long term, they should't be buying a house. We all need to be responsible for our own actions...gee, what a concept? ;) Happy Friday!
barbara: (January 14, 2011 4:28am)
I agree with Zorro. The thought of one more slush fund being managed by the gumment guys makes me shudder. Maybe a home warranty for 3 years might compensate.
McKinneyTexas: (January 14, 2011 3:47am)
Zorro1540 has it nailed. Something else for people to feel they have no personal responsibility in their lives. "The repair fund will take care of it," goes right up there with the government will take care of it.
Swarm The Banks: (January 14, 2011 3:01am)
meant to write mortgage interest rate reduction. (perhaps a government funding incentive program that actually works)
Swarm The Banks: (January 14, 2011 2:59am)
Why not incentivize your proposal. 1/2% reduction in the mortgage rate in exchange for the deferred maintenance fee you are proposing. I really like the Crush Short Sales photo, however, I don't know who that is being crushed. I would rather be uncrushed than crushed, just sayin.
Bill, "Reocvering CPA": (January 14, 2011 2:21am)
Good Morning! (Couldn't sleep, so excited to watch "Casual Friday"! lol). Regarding the 4506-T issue, of course I can't speak for all underwriters, but when we faced a similar issue this past October 15 filing deadline, some underwriters would accept a tax return taken down to an IRS office and stamped as "Received". One caveat is the IRS is REALLY pushing tax preparers to e-file this year, in which case you would NOT want to also file manually. The workout we came up with, and accepted by the underwriter, was to get a copy of the "E-File Report" from the CPA. It shows the exact date and time filed and shows if "Accepted" or not by the IRS (and the state agency). I hope this helps!!
zorro1540: (January 14, 2011 2:01am)
Monthly Maintenance Fee impound? No, no, 1,000 times no!!! The last thing this country needs is one more "thing" to keep track of and administer! There is always "slippage" and unintended consequences. Just like HVCC and AMCs.. consumer pays more and gets less. So, let's say i have a MMF impound and i need, what, a roof? "Someone" has to approve the disbursement, right? based on, what, "someone else's" opinion or report, right? Those two "someones" have to get paid from the MMF, right? Leaving my MMF impound account handicapped and shortchanged. NO THANK YOU! And besides, who needs yet one more reason for an underwriter to deny a loan because the housing ratio just went from including PITI/PMI/HOA to PITI/PMI/HOA/MMF!!! Please do not let this MMF idea see the light of day! Bury it 6' under before Washington gets wind of it as yet another failed program to "fix" the housing industry and "reduce" foreclosures. All it would do is further choke the dwindling pool of buyers