My New Blog

The Safe Act went into effect on January 1, 2011. In a nutshell, the Safe Act requires mortgage loan officers to meet a national standard of qualification. This qualification includes; completion of a 20 hour training, passing a national and state exam, an FBI criminal clearance, and a credit report approval. Now, each loan officer and mortgage brokerage firm in the nation is assigned a NMLS number, which stands for Nationwide Mortgage Licensing System. All of this new requirements is for the betterment of the mortgage industry in the U.S. and the intent is to benefit the mortgage borrower. 

Now borrowers can access the Website, www.nmlsconsumeraccess.org, to verify if the loan officer and company is approved under the Safe Act. My personal NMLS number is #340179, and Legacy Mortgage NMLS number is #389862.

Prior to the enactment of the Safe Act, mortgage loan officers were mainly regulated by state agencies only. The Safe Act has made the mortgage industry a national regulated industry.

Interestingly, bank loan officers are not required to meet the NMLS requirement. They do not need a FBI criminal back ground check, no review of their credit report, no national and state exam, and definitely no 20 hours of national training. Now, the mortgage brokerage industry loan officers are more qualified than the bank loan officers.

The biggest surprise this summer is the lowering of interest rates across the board. In February 2010, all the Wall Street financial experts were expecting interest rates to increase after March 2010. This was due by the withdrawal of the Federal Reserve from purchasing Treasury bonds. And guest what happened, by late June, interest rates headed downward and all the financial experts were proved wrong.

The increase of 10 year Treasury Bond purchases has lowered the yield greatly, thus, lowering of rates. The main reason for the increase in bond purchases is basically the fear in the financial markets about the recession.

The since the end of the $8,000 buyers credit in April of 2010, homes sales volume have declined because there is just no incentive for home buyers now. The silver lining in the recent buyers credit is that the activity increased home prices in Hawaii, therefore, property values are much higher today that last year this time.

This is a perfect storm for refinance borrowers, historic low interest rates combined with higher residential values. It just does not get any better than this for homeowners.

If you always thought that you missed out on the refinance boom of 2009, interest rates are much lower and cheaper in the summer of 2010.  Do not delay, start your refinance process now.

I am asked this question many times. In short, a mortgage broker partners with many banks. Legacy Mortgage, Inc. has partnerships with more than 26 banks located in Hawaii and on the mainland. All banks have different rates, different products, different underwriting standards and different specializations or "niches." This is the reason why one bank may deny your loan, while another bank will quickly approve it. Or, one bank's closing charges are higher, while others are lower. The role of the mortgage broker is to get the borrower the best loan, at the best price, and in the least amount of time.

Overall, loan officers at banks are loyal to their bank first, then to the borrower. The best interest of the borrower is always after the best interest of the bank. Mortgage brokers are only loyal to their borrowers. Without borrowers, mortgage brokers are not paid and cannot earn a living.

The U.S. Department of Housing and Urban Development (HUD) significantly revised the lending requirements under RESPA/Regulation X. These changes impact the Good Faith Estimate (GFE) and HUD Settlement Statements (HUD-1) and will be effective with new first mortgage applications taken on or after January 1, 2010.

In a nutshell, the biggest change is how the Good Faith Estimate is calculated and presented to the borrower. Prior to this new change, a Good Faith Estimate was provided to the borrower and gave an estimate of the charges and cost for the loan. Now, much of the cost on the new GFE is binding and/or have a tolerance of 10% in change from presentation of the GFE to the final closing cost when the loan is recorded.

In the past, the borrower paid for the charges that were not listed on the GFE or were under estimated when first presented. Now, since many cost items cannot be increased, the bank or mortgage brokerage will pay for what ever cost that was not listed or increased in the original Good Faith Estimate.

The intent of these new changes are for the benefit of the borrower. Now the banks and mortgage brokers are extremely cautious and sometimes "scared" when preparing a GFE. There are stories circulating that on some loans, the banks and loan officers actually lost money in closing the loan.

Overall, mortgage originations have declined since this new law took effect January 1, 2010. Many banks and mortgage brokerage firms are still trying to adjust to these new changes. Hopefully, the industry will figure our how to efficently adjust to this new law in the coming months.

The Home Valuation Code of Conduct, HVCC, a government guideline on appraisal ordering went into effect on May 1, 2009. In a nutshell, all appraisal ordering must originate from the lending banks instead of the Mortgage Brokers. The intent of this new guideline is to stop Mortgage Brokers from influencing the appraiser on the value of properties. The HVCC will be in effect for 18 months.

REPERCUSSIONS OF THE HVCC:
1. Appraisal values are lower and more convervative.
2. Loan files cannot be transferred from one lender to another without ordering a new appraisal from the new lender.
3. Mortgage brokers and banks are canceling many loans due to low values on the subject properties.
4. HVCC is not good for borrowers, banks or mortgage brokers.