Here we go … FHA constantly changing their standards on borrower quality, broker & lender responsibility/acceptance; Fannie/Freddie stuffing buy-backs down everybody’s throat while making it harder and harder to do business with them … plus the OBAMA Administration’s indifference to ‘reform’ them until late in the 3rd quarter 2011 … while most in the origination side of the industry struggle with these ever-shifting sands and hold their collective breath HOPING they can stay around long enough for the future of our industry to finally get here … what’s a person to do?
Let me take a moment and explain something the industry media are not focusing on whatsoever (and I know some of them personally): There are more than 12,000+ small to mid-sized community banks, thrifts and credit unions in the USA as we speak. Forgetabout Wells, Chase, BofA, Citi, etc. they’re not necessarily in the business to help their customers, they operate more like ‘traders’ where their goal is to profit first above all else (and frequently at the expense of everybody else)! They ‘originate to distribute’ and engineer a method to pass the risk on to the next guy (and make side-bets to make even more $$$) … instead of: you take the risk and you face the good or bad news of your decisions like 'real' lenders should do.
Now (take FHA, Fannie & Freddie out of your mind for a moment), I know those 12,000+ know their customers and members want and need residential mortgage loans all the time … so what do you think they do? MOST of them do what they have always done, and that is they approve and fund loans which meet their own guidelines; take the gamble to earn future interest and face possible losses from time to time, just like lenders should do! Most of them are not ‘traders’ who ‘originate to distribute’ – those folks were once labeled portfolio lenders who made nonconforming, B/C, subprime (not the junk done this past decade BTW) … sensible lending to middle-America (where most of the Country is) which met the decades old - sound - Three C's of Credit
If you think anything like me – THEY are the ones who will lead us out of this mess we’re in today, I for one am personally banking on that. Because that old-fashioned notion is what’s smart.
Case-Shiller Reading Brings Good News: Annual Prices Gains
Housing prices in February posted their first annual increase in more than three years, according to a new reading of the closely watched Standard & Poor's/Case-Shiller home price index. However, not all was rosy in the new numbers. Despite the 0.6% increase on a nonseasonally adjusted basis, 11 of the 20 cities in the index experienced declines. Las Vegas-one of the hardest hit cities in the nation in terms of price declines-saw the largest annual drop at almost 15%. Tampa saw prices fall 6.1% with Seattle down 5.6%. Among cities showing a gain, San Francisco was on top with a 12% improvement year-over-year. The last time prices rose on a year-over-year basis was in late 2006. On a sequential basis, the index declined from January by 0.1%. Before that, there were eight consecutive monthly increases. Some housing economists think home prices may have bottomed out in the fourth quarter, but few are predicting any significant gains in equity during the year ahead, especially with federal tax credits tied to home purchases expiring this month. Things are lookin' up :-)
FBI Swamped by Mortgage Fraud Cases
The Federal Bureau of Investigation is currently juggling 3,000 open mortgage fraud cases, but is facing challenges managing its resources. Speakers at an industry trade show on mortgage fraud told attendees that rather than spend more money to prosecute fraud, government agencies must utilize their available resources to be as smart and as effective as possible. Ninety-three U.S. attorneys across the nation are working to determine enforcement efforts to fit the needs of individual cases in local communities, said John D. Arterberry, executive deputy and fraud chief of the Justice Department's criminal division. "Each U.S. attorney has the opportunity to tailor his or her enforcement," he said. "The needs in the Northern District of Illinois are going to be different than Fargo, N.D., compared to what is happening in Phoenix or Washington, D.C.," said Arterberry. Speaking at the same show, which was put together by the Mortgage Bankers Association, FHA officials said they are spending an increasing amount of their time focusing on risk while carefully reviewing early payment defaults for signs of fraud. Vicki Bott, deputy assistant secretary for single-family housing at FHA, said the agency is stepping up enforcement through its Mortgagee Review Board. "We are not afraid to take action on lenders who are doing fraudulent activity," she said. "We are looking at how principles of lenders jump around. We are really beefing up our process around loan-level review. We are bringing delinquencies into our cycle of reviewing." We need more enforcement and WAY more punishment ....
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