Mister VA's Mortgage News

Following the Rules

A few years ago, I picked up where I left off many years earlier, and I started officiating basketball games again.  Although my playing days are long since past, I do enjoy getting out on the floor again.  I often joke that "Officiating doesn't necessarily keep me in shape, but it keeps me in the same shape."  Each spring, the rules committee votes on proposed rule changes for the upcoming season.  And this season, there were very few changes.  Going over existing rules as well as new ones in the form of a refresher test helps to prepare us for the new season.  And doing several scrimmages before the season starts, helps us to put those new rules into practice.

I think a secondary interest for me is the rules themselves.  The rules of basketball are simple, yet complex.  A fan might THINK they know the rules, but they really only know a few basic concepts.  An official must take classes and pass a rigorous written test in order to qualify for a floor test, which gives a prospective official a chance to employ what was learned in the classroom.  The same holds true for other observers of the sport which would include many sportswriters and sportscasters.  Slide a written test of the rules in front of them.  Very few would come close to a passing grade of 86.

In the mortgage business, we have faced changing laws, changing underwriting rules, and in some states, the need to test our knowledge.  It is not the consumer's job to know all of the rules.  It is ours.  And we should be well versed in changes.  And we must be sure we do not cross into gray areas as we originate loans.  Just like in basketball, we should be following the rules.

Enough Is Enough

A lot has happened in the financial world over the last 60 days.  The TARP program's passage chief among them.  Through much arm twisting and Chicken Little behavior by Fed Chairman Ben Bernanke & Treasury Bossman Henry Paulson, a great swindle has occurred.  And now even more of the taxpayers' money is gone to rescue Citigroup.  This is the same Citgroup whose subprime arm CitiFinancial has not slowed down a bit in the past 18 months when most subprime lenders closed up shop.  This is the same Citigroup that has long been a part of the Dow Jones Composites 30.  This is the same Citigroup that attempted to buy troubled Wachovia and spin off bad assets to you-know-who and then tried to sue when they couldn't.  And this is the same Citigroup whose stock price plummeted to nearly 2 bucks a share.

The picture above represents the new home of the New York Mets.  Citigroup paid big bucks for naming rights.  Remember the original name of MinuteMaid Park in Houston?  That's right, Enron Field.  Taking down that logo and replacing it with the word TAXPAYERS wold seem to be the least they could do for that sizable chunk of bailout money afforded them over the weekend when hardly anyone was looking.  In fact, wasn't it only last week that Mr. Paulson said he would not use any more of the bailout money?  Mr. Paulson is a modern day Marvin K. Mooney.  He needs to go and he needs to go now.  We can all chip in for the Crunk Car.  Enough is enough.

 

Bullwinkle Revisited

In one of the most memorable sequences, Bullwinkle plays a magician to an audience of one--Rocky.  The exchange goes something like this: "Hey, Rocky!  Wanna see me pull a rabbit out of my hat?" "Sure!" "Nothing up my sleeve! [as Bullwinkle rips off the sleeve of his tux and shirt]  "PRESTO!" Only instead of a rabbit, Bullwinkle has a grip on the head of a roaring lion.  Always quick with a quip, Bullwinkle mutters,  "No doubt about it.  I gotta get another hat!"

You might be wondering why Bullwinkle is in a mortgage blog.  If you have been following the foibles of our Treasury Secretary Hank Paulson of late, then you will see the connection.  Paulson, along with Fed Chairman Ben Bernanke, went hat in hand to the Congress asking for $700,000,000,000 to help with the foreclosure problem.  [I did not abbreviate the number for illustrative purposes.]  Paulson indicated that having a blank check for that amount and maybe more later would allow the government [us] to buy troubled assets [bad loans & securities tied to them] and then when the market improved, they could be sold at a profit and funds returned to the government [us].  Met with some skepticism, the House of Representatives listened to their constituents and turned down the request.  After a few days of groveling and arm twisting and minor changes, a deal was reached.

But then, the money [only $350,000,000,000 was released] started to be used to shore up financial firms in other ways.  Acquisition of other banks for some.  Capitial infusion for others. Twice in the case of insurance giant AIG which still ended up spending lavishly on a corporate function.  And now, everyone from car companies to municipalities are lining up with their hand out for some of the magic beans.  And our Fearless Leader [Paulson] is back before Congress saying that the TARP [Troubled Asset Repurchase Program] might be too complex to be used for the initial purpose [the rabbit] and instead the monies would be needed to prevent financial disaster by using it for capital infusion [the lion].

To his credit, House sub-committee chairman Dennis Kucinich, has been grilling Treasury, calling them on the about face and strongly suggesting that the balance of the funds may indeed be directed to HUD which would be used for the purposes intended--foreclosure intervention and relief.  Although it would be best for investors to take their lumps for poor investment decisions and lenders to take them for unwise credit decisions, it is apparently not going to play out that way.  Hopefully, Congress will get an earful from constituents, and will turn a deaf ear to Mr. Paulson.  The fat cats may not like it, but things are tough all over.  Maybe dividend suspensions, bonus elimination, and other cost cutting measures should be considered instead of being awarded with taxpayer dollars for being incompetent.

 

New Online Buyer Ed Program

As many of you will hear, Fannie Mae has joined Freddie Mac in requiring homebuyer education for first time homebuyers.  There are several options out there for folks.  The best ones are the ones offered buy Neighborworks HomeOwnership Centers.  But sometimes, work schedules will confilict with the ability to attend the class.  MGIC has introduced a class that can be taken online complete with testing and a certificate that can be sent directly to the Loan Officer.  The test can be taken multiple times and the class can be re-visited.  Only one party of a buying couple needs to complete the test, though it is a good idea to have both take the class.

The only thing lacking from what you would see in a HBE class from Neighborworks is the credit counseling piece.  But, that can be covered by the Loan Officer.  Loan Officers may want to take the class as well.  It is never a bad thing to say, "I took the class myself.  I think you will learn a lot from it."  This could be a compensating factor for FHA & VA loans as well.  Encouraging all first time homebuyers to take the class would be a great idea.

Thank you, Veterans!

       In Flanders Fields

In Flanders fields the poppies blow
Between the crosses, row on row,
That mark our place; and in the sky
The larks, still bravely singing, fly
Scarce heard amid the guns below.

We are the dead. Short days ago
We lived, felt dawn, saw sunset glow,
Loved, and were loved, and now we lie
In Flanders fields.

Take up our quarrel with the foe:
To you from failing hands we throw
The torch; be yours to hold it high.
If ye break faith with us who die
We shall not sleep, though poppies grow
In Flanders fields.

— Lt.-Col. John McCrae

Where To Get Complete Mortgage News?

If you are like me, then having a single site that can provide everything from MBS Data, to access to breaking news stories affecting our industry, to interaction with some of the sharpest minds in the business [like YOURS], a Q&A section, consumer inquiries, etc., is worth its weight in gold.  I have been involved in beta testing of such a site in the past few weeks and I have seen it evolve into something that should meet the needs of all mortgage professionals.  Although some features of the site are fee paid, those features are well worth it.  Wouldn't YOU like to have access to live MBS Data?  Of course, you would.

One fellow who has gained a lot of respect in the analysis of MBS and has brought humor to an often humorless subject is Matt Graham.  His insight into what affects MBS [and in turn mortgage rates] is both timely and invaluable.  The site is MBSDaily and I am sure that visiting the site a few times will prove to be a help to your business in this time of struggle in the housing industry.  Anything we can get to help us is a bonus.  And if you want to look to be more intelligent in your discussions with your clients, this site could help you in that regard as well.