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By Jane La Trace | Agent in Los Angeles, CA
  • Prevent Tenant Legal Action To Recover Security Deposit - SB90 Compliance

    Posted Under: Agent2Agent in California, Rental Basics in California, Moving in California  |  September 17, 2012 2:29 PM  |  312 views  |  No comments

    Last week I read an article in the LA Times Rental Section that reminded me of the importance of following the SB90 action steps process. This process is imperative for Landlords and Property Managers to follow to prevent legal action by the tenants. See Civil Code Section 1950.5


    Use the following guidelines when processing a Move Out in the State of California for compliance with Senate Bill 90 (SB90) – Security Deposit Receipts.


     Upon Resident’s Notice of Intent to Vacate

    •   Receive Notice of Intent to Vacate from resident.

    •   If the Resident gives the notice in the mail or drop box, mail/post the resident the Acknowledgement of Notice to Vacate form.  Provide the Standard Cleaning and Repair Charges form to the resident when delivering the Acknowledgement of Notice to Vacate.

    •   Provide the resident with Notice of Right to Initial Inspection form with the Notice of Intent to Vacate and Acknowledgement of Notice to Vacate forms.

    •   Make three (3) attempts to schedule the initial inspection if the paperwork was mailed to the resident. If you cannot contact the resident, give them a 48-hour notice of entry of inspection, two (2) weeks prior to move out.

    At the Apartment

    •   Pre-inspect the unit using the Standard Cleaning and Repair Charges form and Estimated and/or Actual Summary of Charges form.

    •   Give the Resident a copy of the Estimated and/or Actual Summary of Charges form.

    •   Schedule turnover items, i.e. carpet/vinyl replacement that may be needed.

    After the Apartment is Vacant - FINAL INSPECT

    •   Collect the Estimated and/or Actual Summary of Charges AND the resident’s original Acceptance of Premises / Move-In Inventory form.

    •   Return to the unit (with the vacating resident if they elect to participate).

    •   Complete the final inspection checking for changes to previously noted items or new items. Verify there are no duplicate items and there is a clean set of estimated charges.  DO NOT GIVE THE RESIDENT ANY CHARGES AT THIS POINT.

    After the Apartment is Vacant – WORK ITEMS

    •   If the work is to be completed by an Alliance Service Associate, begin completing the work items as scheduled. Record time spent and supplies used for completed items on a new Estimated and/or Actual Summary of Charges form.  Attach copies of individual Apartment Supply Price Sheets for all supplies used, listed the actual cost of the items used.

    •   If the work is to be completed by an outside vendor, confirm the work will be completed with 10 days according to the Make Ready Schedule.  Receive receipts (in triplicate) for all work completed on that individual apartment.  File receipts in the residents’ file for SODA processing.

    Administrative (SODA Processing)

    •   Collect and review the following documents relative to the vacating apartment.

    ◦                      Acceptance of Premises / Move-In Inventory

    ◦                      Estimated and/or Actual Summary of Charges

    ◦                      Any/all vendor invoices and/or estimates

    ◦                      Copies of any/all Standard Cleaning and Repair Charges forms

    •   Verify the following items:

    ◦                      All work items on the Acceptance of Premises / Move-In Inventory form have corresponding documentation.

    ◦                      Only items related to Damages/Repairs are included (no regular Make Ready items)

    ◦                      Any invoices or estimates are on designated vendor’s letterhead (must include company or associate’s name, address and telephone number).

    •   Prepare the Statement of Security Deposit Accounts (SODA).  Use the SB90 Checklist to ensure all items are in compliance with SB90 and all charges are applied, i.e. final utility bill.

    •   Ensure all supporting documentation including the SODA form, Itemized Disposition of Security Deposit, invoices and/or charge sheets are mailed to the resident whenever damages and/or cleaning charges are applied to the resident's security deposit.

    •   Note: The owner/agent is not required to provide receipts or other documentation if:

    ◦                      The total deductions for repairs, cleaning and replacement do not exceed $125; or

    ◦                      The resident has waived his/her right to receive documentation in writing.

    ◦    Mail the resident a copy of the SODA with a stamp on it to inform them of Refund to Follow or Balance Due.

  • Government Sponsored Enterprise aka Failed Mortgage Market

    Posted Under: Financing in California, Foreclosure in California  |  November 4, 2010 10:24 AM  |  247 views  |  No comments
    The article attached gives news that the former GSEs (Fannie/Freddie) are trying to blame the Investor Lenders for the astronomical defaults by saying the Lenders did not properly underwrite the loans. Unbelievable. The truth is the GSE and the Investor Lenders were greedy and caught up in unethical business practices. Common sense went out the door when it came to money making, and by the time they chose to seriously address the issue it was too late; for the entire American Nation! I have no pity for the Investor Lenders or the GSE, they're a disgrace in an industry I am a part of.

    As a veteran in the mortgage lending field I have worked in the Broker, Volume Lender and Private Lender platforms. From A Paper to D Paper the
    mortgage lenders happily took advantage of the American's dream by allowing such greed to continue in the housing market.
    When the economy was thriving and consumers were over indulging, With inflated property values, and credit card debts compounding daily, the immediate opportunity to "cash out" was creatively made available to almost anyone. In 1998 I recall selling the "125% LTV Debt Consolidation Home Improvement" loan to people struggling, behind on payments, barely maintaining a 580 fico. Wow. That product inevitably was removed from the market for obvious reasons. However, that was not the end of unsafe loan products. In 2000 the negative amortization or "1% Pick a Payment" loan really was a marketing masterpiece. The phones rang off the hook with inquiries. Interesting that I received no formal, comprehensive tutorial on how to "sell" that loan. When I took it upon myself to understand how it worked I was thrown back. What if the people never make their fully indexed payment? Will they understand that the rate is going to change each month? Is this person gonna lose their home if I let them choose this option? It was a no brainer. The loan was scary...
    By Jeff Horwitz and Kate Berry

    During the boom years, mortgage lenders paid Fannie Mae and Freddie Mac a small fee for accepting stated-income loans. Today those lenders are paying a whole lot more.

    Loan-buyback requests from the government-sponsored enterprises are mounting, and alternative-A loans are at the center of many disputes. At issue are the terms of the GSEs' reduced-documentation programs and who should be responsible for a loan product that most industry experts now concede never should have been mass marketed in the first place.

    Originating lenders and the GSEs are arguing about such sticking points as whether the lender should have caught borrowers who were lying about their incomes and whether having performed the requisite due diligence is a justification for rejecting the buyback demand.

    "The dirty little secret was that the investors all knew this stuff was garbage, and they bought it anyway," said Michael Pfeifer, a managing partner in the Pfeifer & DeLaMora LLP law firm in Orange, Calif., which represents mortgage lenders and banks. "The buyers were just economically stronger than the sellers, but they are not innocent victims."

    Representatives of Fannie and the Federal Housing Finance Agency, now the conservator of both GSEs, reject the lenders' claims. Even if the bar for diligence on alt-A loans was low, they said, lenders were still responsible for vetting the information provided by the borrower (or, in many cases, the broker who arranged the loan.)

    "Lenders should be reviewing the customer's position, industry, and years on the job to determine if the stated income appeared plausible and accurate," Fannie said in a statement to American Banker. "They should also determine whether their assets and credit history support the stated income as well." (Freddie did not return a call seeking comment.)

    When the housing market was humming along, the GSEs supplied guidelines explaining to lenders precisely what types of loans they would buy. After the loans went into default, the investors forced the lenders to buy the loans back — even though they were originated according to the guidelines, lenders now say.

    A key sticking point in such disputes is that many stated-income loans now being pushed back to originators failed not because of problems with the original underwriting but because the real estate market tanked or the borrower lost his or her job.

    "By creating the stated-income product, they essentially waived that representation by saying they don't care what the income is," said Brian Levy, a lawyer at Katten & Temple LLP in Chicago, who represents mostly small and midsize banks and mortgage lenders. "If the originating lender thought they were going to be held responsible for the income being accurate, they would have checked it."

    Normally such disputes would end up in a trial, with a history of case law. But litigation is rare, though stated-income loans were originated on a mass scale from 2005 to 2008. Few investors sue the originator because of the expense and difficulty of bringing such cases and the risk of losing at trial, lawyers said.

    "If the courts looked at it, they would say this is unconscionable and outrageous because the interpretations of reps and warrants are extreme," Pfeifer said. "It's a Ford Pinto problem — a product defect. They said, 'Here are the specs, build the loan exactly as we said,' and then they want them bought back."

    Instead of litigation, Fannie and Freddie and other large investors have hired armies of auditors to pore over loan files finding other errors that can justify a repurchase request, lawyers say. If Fannie determines the borrower's income was inaccurate, a mortgage insurer often will rescind coverage, which prompts a repurchase request.

    Originators claim they cannot be held responsible for the increasing debt burdens of borrowers whose loans were originated years ago in better economic times.

    "There is usually no tie between the reason why the loan went into default and the asserted breach of the reps and warrants," Levy said. "But it's virtually impossible for the investor to prove that the reason why the loan went bad is the debt ratio of the borrower is 38% and it should have been 35% and, if it had been that, the borrower wouldn't have gone into default."

    More often than not, such disputes end in protracted negotiations and stalemates.

    Overall, buyback requests are increasing dramatically. In a public filing this week, Bank of America Corp., the second-largest residential lender, said it had $11.2 billion of "unresolved" mortgage buyback requests at the end of June, a 50% spike from January.

    Both GSEs have reported steadily rising repurchase requests. According to their second-quarter results filed with the Securities and Exchange Commission, sellers repurchased $1.5 billion in loans in the quarter from Fannie and $1.4 billion from Freddie. Both institutions reported far larger repurchase-request volumes outstanding, however — in Freddie's case, a total of $5.6 billion.

    According to conversations with lenders' representatives and presentations at Mortgage Bankers Association conferences on the subject, common triggers for the buyback demands range from a borrower's undisclosed debts to inflated appraisals and occupancy misrepresentations.

    Though Alt-A loans accounted for only 10% of the GSEs' volume from 2005 to 2007, they are generating a larger share of repurchase requests. And while low-documentation loans were always considered riskier than their full-doc equivalents, Fannie was happy to guarantee them at the time.

    Fannie's handbook from 2006 states, regarding one type of loan: "Lender is not required to verify the borrower's income or assets."

    "All that language like that did was create a 'don't ask, don't tell' environment while giving Fannie Mae plausible deniability," Pfeifer said. "How would a broker know whether or not the borrower qualified for a fully documented loan unless they actually ran the borrower's qualifications under the full-doc guidelines? And if the borrower qualified, why go stated-income?"

    A copy of the Fannie handbook details the accepted variances from the company's underwriting and documentation requirements. Among them are stated incomes, which allowed the lender to rely on an oral verification of the borrower's employment (rather than on pay stubs and tax returns) and determine that the income is "reasonable," as well as the even more bare-bones no income/no asset, or Nina, loans.

    The existence of a no/low-doc channel — and the additional fees that lenders paid to participate in it — convinced many lenders that Fannie was taking on the risk of borrower misrepresentations, said Brian Chappelle of the Washington consulting firm Potomac Partners, especially since buyback requests had been exceedingly rare.

    This was not always the case. Regardless of the variances in underwriting standards, and the partial reliance on borrower honesty that stated-income loans required, Fannie Mae never abdicated its right to pass back loans because of borrower dishonesty. As one recent repurchase request to a major lender stated: "The lender's contractual warranties with Fannie Mae state that the lender represents and warrants that no fraud or material misrepresentation has been committed by any party, including the borrower, and that those warranties are not limited to matters of which the lender had knowledge."

    An interview with the FHFA made it clear that the agency, which is seeking to recoup as much taxpayer money as possible through repurchase requests, would consider a buyback demand on a responsibly underwritten stated-income loan to be a gray area.

    "The onus really falls on the lender to demonstrate that they had a robust process to ensure the quality of the loans being delivered," said Maria Fernandez, the FHFA's associate director for credit risk. "If there was agreement on that, you wouldn't expect a repurchase."

    The reasonability of a borrower's income would be, at the very least, a mitigating factor, Fernandez said. An hourly wage earner applying for a $600,000 mortgage is an example of a loan that should have flagged trouble, she said.

    In some repurchase requests examined by American Banker, the trigger for the demand is precisely a lack of such "reasonability." In others, lenders verified the person's employment at a company — but not necessarily that the person had reported the correct title and salary.

    Those failings are ample justification for a repurchase, Fernandez said, adding that the FHFA is confident that Fannie and Freddie are not issuing frivolous repurchase requests.

    But in instances when the lender feels it met the GSE's guidelines in good faith, Fannie and Freddie are willing to hear the lender's case.

    "What's difficult here is that it's not necessarily black and white," Fernandez said. "There is dialogue. I will tell you that many of these repurchase requests are tough."

    That hasn't stopped some lenders and their representatives from complaining that the repurchase requests are still too draconian. Lenders contacted for this story declined to speak on the record, citing their continuing business with Fannie and Freddie and the huge volume of outstanding repurchase requests.

    Chappelle said the perception that the GSEs are not playing fairly could have a major impact on the mortgage market.

    If lenders perceive the GSEs as fickle in their standards — whether or not that perception is accurate — they are going to be more cautious with the new loans they make, he argued.

    Already, "lenders are adding their own credit overlays to GSE loans because the GSEs are using buybacks to lay off the credit risk," Chappelle said, citing a sharp drop in the number of loans made to borrowers with credit scores below 700.

    "While I am sure there is not a lot of sympathy for mortgage lenders on the buyback issue," he said, "a consequence of what lenders believe is an overzealous GSE buyback policy is that it is having an adverse impact on the housing recovery."

  • Modern Day Home Owners’ Loan Corp. Strategy = Solution for Desperate Home Owners and or Lenders?

    Posted Under: Market Conditions in California, Financing in California, Foreclosure in California  |  October 28, 2010 12:43 PM  |  254 views  |  No comments
    Seventy seven years ago,during the housing crisis of 1933, the Home Owner's Loan Corp (HOLC) was created to help borrowers retain their home, while preventing the lender from financial catastrophe. The government-sponsored corporation was a proven plan that worked successfully, and certainly could be re introduced in light of the current circumstances from the failed mortgage financing mess.

    Realty Q&A is a weekly column in which Lew Sichelman, a nationally syndicated columnist who has been covering the housing market for more than 35 years, responds to readers’ questions on real estate.

    WASHINGTON (MarketWatch) —

    Question: I know that the New Deal created the Home Owners’ Loan Corp. I have been eager to read an article by someone who has looked at the way that mortgage crisis was handled ... and compared it to government efforts in our present crisis. If you are familiar with anything written on this subject I would appreciate your informing me where to find it. If you are not aware of anything, I might suggest that you would be an excellent person to explore it. —M.N.

    Answer: Actually, you’re in luck. I do know of one such study; it was done a few years ago by Alex Pollock, a resident fellow at the American Enterprise Institute in Washington and the former president of the Federal Home Loan Bank of Chicago.

    Pollock looked back to 1933, when Congress created the Home Owners’ Loan Corp. as a temporary fix “to relieve the mortgage strain and then liquidate.”

    While the current mortgage meltdown and resulting — or corresponding, depending on your point of view — housing bust has been described as the worst since the Great Depression, it is nothing when compared to what happened in ‘33, when a financial and economic collapse occurred that is all but impossible to imagine today.

    Back then, about half of all mortgage debt was in default. Unemployment reached 25%, thousands of banks and savings and loans had failed and annual mortgage lending had fallen by some 80%. New residential construction had dropped by 80% as well.

    The prelude to the crisis might sound familiar. It was a period of grand economic growth and overconfident lending and borrowing. The 1920s featured interest-only loans, balloon payments, an assumption of ever-rising prices and the firm belief in the easy availability of a string of refinancings.

    And then came the crash, the defaults, and the markets froze.

    By comparison, only 2.95% of mortgages as of Oct.1, 2007, when Pollock wrote his paper, were labeled seriously delinquent, meaning roughly 1.5 million loans 90 days past due or in foreclosure. That’s risen to 9.11%, as of the second quarter this year, according to the latest figures from the Mortgage Bankers Association. In sheer numbers, that’s a lot of troubled borrowers. But as a percentage of a much, much larger base than in the early ‘30s, their number is relatively small.

    How to fix the problem

    Of course, if you are one of those who is unable to make mortgage payments, or are facing the prospect of an unaffordable house payment, you don’t want to hear about percentages. You want help, if not from your lender, then from your government.

    Lenders claim they are doing their damnedest to work with delinquent borrowers. But consumer groups say they need to do more, and the public discussion is full of proposals at both the state and federal levels for some sort of government intervention.

    The current debate about what to do is a common theme that follows almost all housing busts, Pollock said. “This is a recurring phase,” he wrote in his paper. “There is a political imperative to do something. History is clear that government actions are always taken. It is only a question of which ones.”

    While there is certainly no dearth of ideas on how to fix the mortgage markets, Pollock suggested that it is well worth taking a look at what was done to clean up the 1933 bust and save millions of homeowners from catastrophe.

    Pollock looked back to 1933, when Congress created the Home Owners’ Loan Corp. as a temporary fix “to relieve the mortgage strain and then liquidate.”

    While the current mortgage meltdown and resulting — or corresponding, depending on your point of view — housing bust has been described as the worst since the Great Depression, it is nothing when compared to what happened in ‘33, when a financial and economic collapse occurred that is all but impossible to imagine today.

    Back then, about half of all mortgage debt was in default. Unemployment reached 25%, thousands of banks and savings and loans had failed and annual mortgage lending had fallen by some 80%. New residential construction had dropped by 80% as well.

    The prelude to the crisis might sound familiar. It was a period of grand economic growth and overconfident lending and borrowing. The 1920s featured interest-only loans, balloon payments, an assumption of ever-rising prices and the firm belief in the easy availability of a string of refinancings.

    And then came the crash, the defaults, and the markets froze.

    By comparison, only 2.95% of mortgages as of Oct.1, 2007, when Pollock wrote his paper, were labeled seriously delinquent, meaning roughly 1.5 million loans 90 days past due or in foreclosure. That’s risen to 9.11%, as of the second quarter this year, according to the latest figures from the Mortgage Bankers Association. In sheer numbers, that’s a lot of troubled borrowers. But as a percentage of a much, much larger base than in the early ‘30s, their number is relatively small.

    Historical perspective

    Since AEI is a private, nonpartisan, not-for-profit public policy research institute, and since neither AEI nor Pollock have a dog in this fight, it seems to me to be a good idea to peer backwards before trudging forwards, if only because it is always good to bring some historical perspective to any issue of such magnitude.

    Seventy-seven years ago, with a law that took only 3½ pages of text, Congress created the Home Owners’ Loan Corp. to acquire defaulted residential mortgages from lenders and investors and then refinance them at more favorable and sustainable terms.

    In exchange for the loans, lenders would receive HOLC bonds. While the bonds would earn a market rate, the rate was lower than that of the original mortgage, But since the bond took the place of what had become a non-earning asset, and one with little prospect for ever turning a profit, banks eagerly agreed to the trade.

    In addition, lenders often would take a loss on the principal value of the original mortgage. This, according to Pollock, was “an essential element of the reliquification program, just as it will be in our current mortgage bust.”

    The Home Owners’ Loan Act called for the directors of the government-sponsored corporation to liquidate the company when it’s “purpose had been accomplished” and pay any surplus or accumulated funds to the U.S. Treasury. In 1951, during the height of another housing boom, they did just that, closing the pages on a period of history that has long been forgotten.

    Eighteen years was probably a little longer than lawmakers originally expected. But during its life, the Home Owners’ Loan Corp. made more than a million loans to refinance troubled mortgages, according to Pollock, who had spent 35 years in banking when he left the Chicago Fed in 2004. That’s about 20% of all mortgages in the country at that time.

    By 1937 alone, in what the AEI scholar calls a “remarkable scale of operations,” the Home Owners’ Loan Corp. owned almost 14% of the dollar value of all the nation’s outstanding home loans.

    HOLC’s investment in any mortgage was limited by law to 80% of the underlying property’s appraised value, with a maximum of $14,000. With an 80% loan-to-value ratio, then, the maximum house price that could be refinanced would be $17,500.

    A mere pittance, by today’s standards. But that was in 1933 dollars. After adjusting the $17,500 ceiling by the Consumer Price Index, the maximum today would be about $270,000, Pollock said. And based on changes in the Census Bureau’s median house price since 1940, the limit would be something on the order of $1 million.

    Therefore, Pollock contends in his paper, a modern HOLC could very well operate all over the country, even in high-cost markets like California and New England.

    The 1933 law also set an interest rate ceiling of 5% on the new loans HOLC could make to refinance the old ones it acquired. The spread between this rate and the cost of the bonds the HOLC Corp. issued averaged about 2.5%, according to Pollock. And with long-term Treasury rates now at about 4%, an equivalent spread would lead to a loan rate of about 6.5%.

    That may be a tad higher than some borrowers would like. But at least it would be a fixed rate, never to change over the loan’s life.

    According to Pollock, HOLC tried to accommodate as many borrowers as possible. But there were some borrowers that could not be rescued, no matter what. Eventually, it foreclosed on about 200,000, or 20%, of its loans. In other words, for every four borrowers who were saved, another family lost its home.

    An acceptable outcome? Maybe, maybe not. But since each and every home owner who refinanced through this program started in default and was close to foreclosure anyway, Pollock, for one, says the result was “quite respectable.”

    “We don’t need something of the same scale” this time around, Pollock said of the HOLC, which had as many as 20,000 employees. “But I think the concept offers a pretty intriguing historical perspective. What I especially like about it is that it set up to do a job, and when it was done, it closed down.”

    By Lew Sichelman
    Taken from The Wall Street Journal Market Watch

  • Wow. The "big" lenders sure are sweating! Thank goodness Wells is able and offering "neg am" loan victims financial grace!

    Posted Under: Market Conditions in California, Financing in California, Foreclosure in California  |  October 7, 2010 4:56 PM  |  273 views  |  No comments

    WASHINGTON (AP) -- Wells Fargo is paying $24 million to end an investigation by eight states probing whether lenders acquired by the company made risky mortgages to consumers without disclosing their perils.

    The states said loans known as option adjustable rate loans, or "pick-a-payment" mortgages, were deceptive to borrowers. Those particularly toxic loans allowed borrowers to defer some of their interest payments and add them to the principal balance. Borrowers could make payments so low that loan debt actually increased every month.

    San Francisco-based Wells Fargo & Co. announced the agreement Wednesday with attorneys general in Arizona, Colorado, Florida, Illinois, Nevada, New Jersey, Texas and Washington state.

    The loans were made by Wachovia Corp. and a California company it acquired, World Savings Bank. Wells purchased Wachovia at the end of 2008. Wachovia had already stopped making those loans before the acquisition was complete.

    As part of the agreement, Wells has agreed to offer loan assistance worth more than $770 million to more than 8,700 borrowers through June 2013, though that amount will depend on how the economy fares during that time. The $24 million will be used to help states reach out to customers who took out such loans.

    The agreement includes no admission of wrongdoing by Wells Fargo. The states' investigation centered on allegations that consumers were misled about the possibility that their mortgage amounts would increase.

    Such "pick-a-payment" loans were made by many large lenders during the housing boom, but have defaulted in massive numbers after the market went bust.

    Arizona Attorney General Terry Goddard, who led the investigation, said the loans were aggressively marketed in ways that misled borrowers by not making it clear that their mortgage amounts could increase.

    This type of exaggeration caused many homeowners ... (to) take out these loans believing there were no risks," he said.

    Wells said the program will have no impact on its third-quarter financial results. It said "pick-a-payment" customers already have received about $3.4 billion in principal forgiveness.

    Borrowers who already have received a loan modification from Wells will not be eligible for the new program. For information, call Wells at 1-888-565-1422 begin_of_the_skype_highlighting              1-888-565-1422      end_of_the_skype_highlighting.

    Associated Press Writer Paul Davenport contributed to this report from Phoenix.

  • Bank of America Corporation Exits the Wholesale Mortgage Market

    Posted Under: Market Conditions in California, Financing in California, Agent2Agent in California  |  October 7, 2010 4:53 PM  |  308 views  |  2 comments

    BofA unexpectedly exits wholesale mortgage market

    Local mortgage brokers caught totally unawares; departure of second such huge lender leaves big gap.

    Bank of America Corp. has exited the wholesale residential lending market, cutting off its business with mortgage brokers, the bank announced Tuesday.

    The move came as a surprise to local mortgage providers who did business with the Charlotte, N.C.-based bank. It means that mortgage brokers and their clients will have one less option when they are looking for a loan to buy a condo or co-op in the city.

    “We used them a lot for condo sales,” said Ross Weinstein, managing partner at Exclusive Capital Consultants. “Now we will have to move that business to other lenders.”

    A BofA spokesperson said, given the opportunity in retail business, the bank preferred “to reallocate its resources to its retail channel and correspondent lending channel.” Less than 5% of the mortgages that the bank annually made came from its wholesale channel. In just the first six months of the year, BofA originated $145 billion in mortgages, according to trade publication Inside Mortgage Finance.

    Loan applications via the wholesale lending channel were accepted through the end of the business day on Tuesday and must close by Dec. 1.

    “This was not expected,” said Melissa Cohn, president of Manhattan Mortgage, adding that the bank had scheduled a conference for top mortgage brokers in the New York area and had abruptly cancelled it. “We were caught flat-footed.”

    BofA's exit follows a similar move by J.P. Morgan Chase & Co., which got out of the wholesale lending business last year.

    "It's another way for banks to cut back," Mr. Weinstein said.

    By Amanda Fung of Crains New York

  • New Purchase Loans Are Down According to Freddie Mac- but why?

    Posted Under: Financing in California  |  June 10, 2010 10:22 AM  |  212 views  |  No comments

    Interest rates for home loans continue to be remarkable, with a Freddie Mac survey Thursday finding 15-year fixed mortgages setting record lows for the fourth consecutive month.

    Yet demand for loans to buy homes has fallen by 35% over the last month, according to the Mortgage Bankers Assn.'s weekly reports.

    Is there any conclusion to draw except that the fundamental demand for housing is just plain depressed despite signs of a reviving economy elsewhere?

    Christopher Thornberg, the often-bearish founder of Westchester's Beacon Economics, sees not much to motivate home sales anytime soon after federal tax credits for homebuyers expired at the end of April.

    "The blip is that sales got so hot because of the credits," Thornberg said.

    How much longer could demand remain sluggish?

    "How about a year?" Thornberg said. "Three years?"

    With unemployment in double digits in California and close to that level nationally, and 12 million U.S. mortgage holders owing more than their houses are worth, "It sucks the life out of demand, absent something like a tax credit."

    Although something like 700,000 new households might be in the market for entry-level housing each year, demand for larger trade-up homes is dependent on people feeling confident about their earnings increasing or finding better jobs elsewhere -- both still rarities, Thornberg said. 

    A note: Thornberg is among the lucky homeowners whose personal situation is solid enough for a refinance. He said he's getting his replacement mortgage -- a jumbo loan, made at a higher rate because it is too large for Freddie and Fannie Mae to buy -- at 5.25% fixed for 30 years while paying no discount points to buy down the rate.

    Mortgage rates are being kept low because they tend to track the yield on the 10-year U.S. Treasury bond, which has fallen again because of surging demand for Treasuries, as my colleague Tom Petruno discussed here Wednesday.

    The weekly Freddie Mac survey calculates what lenders are offering to people with solid credit and 20% down payments or home equity, and can run slightly higher than what savvy borrowers are able to negotiate. It tracks smaller conforming mortgages, not a jumbo loan such as Thornberg's.

    Freddie said the average 30-year fixed rate was at 4.72% early this week, the lowest level this year and nearly as low as the record for the survey, 4.71%, which was set last December.

    The 15-year fixed loan was at 4.17%, the lowest since Freddie Mac began reporting on such loans in 1991. The borrowers would be paying the lender 0.7% of the loan balance in upfront fees and discount points to get the 15- and 30-year fixed rates.

    -- E. Scott Reckard
    Taken from LA Times Business

  • The Thirteen Housing Markets That Will Never Recover – 24/7 Wall St.

    Posted Under: Market Conditions  |  May 14, 2010 4:06 PM  |  226 views  |  No comments

    New RealtyTrac numbers show that in April there were well over 300,000 foreclosures and the figure in on track to be higher in 2010 than in 2009. Several research firms say that underwater mortgages have moved above 11 million. The National Association of Realtors found that “in the first quarter, 91 out of 152 metropolitan statistical areas showed higher median existing single-family home prices in comparison with the first quarter of 2009.” But some cities posted double-digit drops for the period.

    24/7 Wall St. reviewed the NAR data for the first quarter along with Bureau of Labor Statisticsunemployment levels by city. The two databases should match one another very well. Each has municipalities defined by metropolitan statistics areas (SMA) as set by the US Office of Management and Budget in 2004.

    City unemployment rates are compared to a 9.9% national rate for purposes of this article. Government numbers for joblessness do not include part-time workers looking for full-time jobs or people who have become “unattached” from the work force. These additions would bring the national unemployment rate to 17.1%. That means that if a city has unemployment of 14%, joblessness could be closer to 21%

    Home prices were based on NAR indexes for the first quarter of 2010 compared with the full-year 2007, near the top of the housing market.

    There are some areas where housing prices have dropped but unemployment has improved, so home values may recover.  Honolulu is an example of this. But, most cities with sharp drops in home values are also the hardest hit by the recession’s impact on employment. These areas may take years to get back to “normal” unemployment rates of 5%. In the meantime, home prices will continue to stagnate, or worse, continue to fall because of a lack of buyers.

    These are the thirteen cities where, based on home values in 2007 and current unemployment, housing will never return to the levels of three years ago:

    1. Riverside, CA. Housing prices are down 52% and unemployment is at 18%

    2. Lansing, MI. Housing prices are off 38% and unemployment is 11.8%

    3. Palm Coast, FL. Housing prices down 63% and unemployment is 16%

    4. Sacramento, CA. Housing prices down 47% and unemployment is 17.5%

    5. Orlando, FL. Housing prices down 49% and unemployment is 15%

    6. Fort Meyers, FL.  Housing prices are down 65% and unemployment is 14.2%

    7. Grand Rapids, MI. Housing prices are down 30% and unemployment is 14.3%.

    8. Reno, NV. Housing prices are down 44% and unemployment is 13.3%.

    9. Toledo, OH. Housing prices are down 30% and unemployment is 13%.

    10. Boise City, ID. Housing prices are down 34% and unemployment is 9.9%

    11. Rockford, IL. Housing prices are down 16% and unemployment is 17.9%

    12. Las Vegas, NV. Housing prices are down 51% and unemployment is 13.8%

    13. Providence, RI. Home prices down 27% and unemployment is 13.2%

    article by Douglas A. McIntyre

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