VA Loans Still Safest Product on the Market

The Department of Veterans Affairs issued a news release this week trumpeting the continued growth of the VA Loan Guaranty program. The agency backed just under 360,000 loans last year, a 14-percent increase from FY10 and a whopping 168-percent increase since FY07.

But that wasn’t the only good news. The release also noted that VA loans have had the lowest rates of foreclosure and serious delinquency for the past 14 quarters and 11 quarters, respectively, according to the Mortgage Bankers Association National Delinquency Survey.

Those figures are even more surprising considering that about 90 percent of VA loans come with no down payment.

“The continued strong performance and high volume of VA loans are a testament to the importance of VA’s home loan program and a tribute to the skilled VA professionals who help homeowners in financial trouble keep their homes,” Secretary of Veterans Affairs, Eric K. Shinseki said in the release.

The VA works closely with borrowers and their servicers to avoid foreclosure. Veterans in jeopardy should always contact their loan servicer first, but the VA provides services and staff to help borrowers pursue options like modifications, forbearances and repayment plans. Homeowners can call 877-827-3702 to talk with a VA specialist.

“We are committed to making even more veterans and service members aware of this important benefit and delivering the assistance they deserve when financial difficulties arise,” said VA Under Secretary for Benefits Allison A. Hickey.


H.R. 1728, Mortgage Reform Act Moves Through House

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Mortgage reform is hip and cool in a Congress that wants to be seen by constituents as “agents of change.” And change we are going to get–this will fundamentally reshape how mortgage brokers and lenders do business. I guess the most interesting story line in this is the tentative acceptance being handed out by mortgage industry associations, lobbies, and insiders.

MarketWatch reports this statement from a consumer advocacy group, Center for Responsible Lending:

“On balance we support it, and we think it’s important to have some commonsense rules for mortgage lending,” said Julia Gordon, senior policy counsel at consumer advocacy group Center for Responsible Lending. “There are many protections in the bill that are crucial to strong responsible lending. Now that we have had the biggest mortgage crisis since the Depression, it’s the time for Congress to move.”

You assumption would be that they would jump behind it with both feet, but I think there is understanding that this is a politically popular, but operationally problematic bill.

Organizations like the MBA are also soft-shoeing the impact to mortgage lending, from the same MarketWatch article:

“We are likely to see fundamental changes in how the mortgage market is regulated sometime in the 111th congress,” said Francis Creighton, chief lobbyist for the Mortgage Bankers Association. “This is such an important issue that we would expect Senate action [in committee] pretty soon.”

With a House passage by a vote of 300-114, it looks like this one is stronger than the same bill that failed in 2007. However, the Senate is expected to tack on a few amendments or even whip up a companion bill, which might slow it down or head it to another death.

At the miniumum, if you are a mortgage broker or lender, read H.R. 1728, Mortgage Reform and Anti-Predatory Lending Act and think about your mortgage business strategy in that market.

What Do You Think?

How is this going to impact your mortgage business? What are your opinions of this bill?

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Mortgage News You Should Read – 2009-05-01

SAN FRANCISCO - OCTOBER 21:  Karl Rove, (L) fo...
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Update on H.R. 1728: Mortgage Reform and Anti-Predatory Lending Act

H.R. 1728 has left the House Financial Services Community and is headed to the floor of the House of Representatives, next week. Several in the mortgage industry are cautioning the impacts it will have on the mortgage lending:

In testimony Thursday before the committee, the Mortgage Bankers Association (MBA) chairman David Kittle said a risk retention provision could make it impossible for many lenders to compete, among other faults.

Legislative sponsors and H.R. 1728 proponents are focusing on fixing current events, maybe not considering future consequences:

HR1728 would also ban yield spread premiums and other “abusive compensation structures” that create conflicts of interest, protect tenants who rent homes that go into foreclosure and encourage the market to revert back to originating fixed-rate, fully documented loans.

Get more coverage at

Is NAR Entering the Mortgage Business?

The XBroker starts the conversation on NAR’s new relationship with the Federal Credit Union.

Jay Thompson wrote about the NAR’s foray into the world of controlled finances over a year ago…Eric Stegemann brought the topic up while at RE BarCamp-Phoenix, indicating it was his understanding that after a few delays, its a go. Fascinating implications.

The largest trade organization in the United States, with all its lobbyist power, is for all practical purposes a lender.  Yes, yes, NAR and the Realtors (INSERT COPYRIGHT SYMBOL HERE) Federal Credit Union (RFCU) are separate and apart in all the right places

Weigh-in over at The XBroker.

Senate Kills Cramdown Legislation

Looks like Federal judges are out of the loan modification business. What do you think? Is this going to help or hurt the pace of cleaning up the housing market?

Comment over at the Mortgage Insider.

Lenders Slowing the Mortgage Market with Mortgage Rates

Dan Green is doing an interesting market metric lately–number of rate sheets issued per day by lenders. This seems to be a pretty good indicator of volatility in the mortgage market:

“Calm” is a relative term. For the second straight period, lenders issued just one rate sheet per day more times than they issued multiples.  This is in stark contrast to 6 months ago when lenders issued at least three rate sheets per day, on average.

And, he asks a clever question: Are lenders using this control for profit-taking and to slow the market to minimize resources?

Comment over at The Mortgage Reports.

What Does Google Tell Your Customers about Your Reputation?

Wow! This is such an important topic for mortgage and real estate professionals. No matter how nice and professional you are to your prospects–they are going to Google you.

Find out what you should be doing over at

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Quiet Demise of Warehouse Lending, Independent Mortgage Brokers, and Local Lending?

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Ever wonder why the government and consumers never saw the mortgage meltdown coming? Meanwhile, experienced mortgage bankers like Bill Dallas were closing up shop (Ownit Mortgage-December 7, 2006). As it was in late 2006, sometimes the nuances and intricacies of how mortgages are actually financed can escape the comprehension of consumers, media, politicians, and sometimes even our financial regulators.

We may just be entering into another similar quandary. One that, like the subprime crisis, may accelerate into a crisis because we lack understanding to see its emergence. Could evaporating warehouse lending capacity seize up mortgage purchase and refinance markets? Is it possible that an emerging “bottleneck” in funding will sabotage federal mortgage rescue programs (i.e., FHA mortgages) and send homeowners into foreclosure that could have refinanced that ARM reset?

The Mortgage Bankers Association (MBA) is raising the red-flag, but there is little reaction from Washington or the mainstream press. Statistics cited by the MBA in a recent letter to federal banking regulators [pdf] and similar commentary in the Washington Times seem to indicate a tempest on the horizon.

The MBA letter places in context the relationship of warehouse lending to consumer mortgage funding and the current impact of diminishing credit lines to fund mortgage refinance demand:

Warehouse lending, which provides short-term funding to mortgage banks so they can originate mortgages and sell them in the secondary market, is headed toward extinction.

The situation has already reached the point where many of the “once-in-a-generation” refinance and purchase opportunities touted in the media are not attainable by many consumers due to the fact that lenders face a cash crunch caused by the loss of warehouse credit lines.

This constriction is certainly slowing the pipeline of mortgage refinance applications to closings. Is it also reducing the opportunity for new homebuyers–critical to recovering still falling housing prices?

The National Mortgage News reports that warehouse lenders, numbering 90 in 2007, have dwindled to approximately 10; shrinking capacity and reducing competition. This is a natural market response to tightening credit and risk management policies as well as the desire to shrink balance sheets. However, the government continues to inject lending “stimulus” into the financial system. Unfortunately, without lending capacity this only increases the pressure building up in “the system” frustrating lenders and borrowers. The MBA quantifies the emerging problem in their Washington Times opinion piece:

The loss of warehouse lending is not only devastating to homebuyers, but also to home sellers, lenders, home builders, communities and every other entity involved in the homebuying process. Over the last two years, available warehouse funding has decreased from a capacity of $200 billion to a capacity of $20 billion to $25 billion.

Mortgage Industry Insight

What will the consequences be? Higher mortgage rates? Fannie Mae, Freddie Mac, or Ginnie Mae warehouse lending facilities? What is the fate of the non-depository mortgage lender?

Is this the bantering of a self-interested association or real cause for industry and US government concern? Comments and thoughts are encouraged…

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