FHA and Investor Specialist

     New York Senator Charles Schumer has introduced a new bill to temporarily raise the Capitalization for the portfolios of Government Sponsored Enterprises Fannie Mae and Freddie Mac.  It appears Schumer and many Democrats in Congress, including House Financial Services Committee Chairman Barney Frank,  expect Fannie and Freddie to help with the refinancing of subprime borrowers.  Apparently Fed Chairman Ben Bernanke and James Lockhart, the Office of Federal Housing Enterprise Oversight Director, disagree.  They feel that many of the current loans for refinance borrowers can be securitized and seem to want to let the market correct itself.  I feel that Fannie and Freddie don't need to raise their caps, although they could be more lenient in their (Expanded Approval for Fannie Mae) Risk Based Pricing alternatives.

     To me, the most interesting thing of note in Mr. Schumer's bill is requesting an increase in the Fannie/Freddie Loan limit to $625,000 in designated high-cost areas.  I think that would be a huge help in some areas where jumbo pricing has gone through the roof, unless you are a portfolio lender(or broker to one).  What's your take?

Michael Byrne, Mortgage Banker www.mortgageprosforum.com

     As a long time rugby player and fan, I am curious if any other Active Rainer's are following The Rugby World Cup.  Rugby is, after all, a hugely nationalistic game in the UK, France, Italy and other regions of the world.  Rugby blends some of the best aspects of soccer(running clock, constant motion) and American Football(contact, tackling, running with the ball)  Both President Clinton(while at Oxford on his Rhodes Scholarship) and President George W. Bush (at Yale) have at least played the game as well.  Are there any former players on the board, ex-patriates who follow the game, or just fans in general?  Who are you a fan of and why?  If you played, where, at what level and what position did you play?

     As an Active Rainer, I am sure we have all found that many folks use an AR List as a marketing list.  It can be a little frustrating to get solicited when you are trying "to put yourself out there" in the online world.  I guess it is to be expected and comes with the territory. 

     On the bright side it makes it all that much sweeter to see AR used as a tool for News Sources to seek out AR's for expert market commentary.  Here is a link from a recent article from Matt Carter of InmanNews featuring several members of ActiveRain.  Lenders still finding ways to finance home purchases, refis

     Have any other Active Rainers been contacted by the media as a result of being an active member?  If so, I'd like to hear about your experiences with the media.

Michael Byrne, Mortgage Banker www.mortgageprosforum.com

     I have always wanted to write a movie script about something, and it is always easiest to write about something you know.  As we all know, sometimes the truth is stranger and compelling than fiction. Such as: Truth Stranger Than Fiction: Mortgage Brokers Nabbed in Prostitution Ring  Lately I have been toying around with the idea of writing an outline, then a screenplay, about some of my experiences in the mortgage industry with a fictional twist to it. 

     My question is if anyone out there has ever tried to write a short story, play, or screenplay about the mortgage industry?  In particular, something like a comedy in the vein of The Coen Brothers type movies.  (Fargo, Raising Arizona, et.c)  If so, could you share your experience in doing so?

      Thanks.

     A funny thing I recently gave some thought to is that in many of the mortgage trade magazines, there are Loan Officers who sell their secrets on how to gain referrals and solicit business successfully from various market segments, including from real estate agents.  I always thought it would make more sense if attorneys, builders, CPA's, and real estate agents sold a series on how to capture their particular market for business.

     Typically, I try to apply the golden rule: I try to treat others as I would like to be treated.  I also try to avoid the things that annoy me when solicited. Some of these are assuming I have time right now to talk, cold calls in person, and overly pushy people.  Lame humor doesn't work too well either for me.  What I like are value added services, people willing to partner with me to improve business, and things that will help me do more business.

     What works for you, or more importantly what works on you?

Many people remember Win Ben Stein's Money or Remember Ben Stein from Ferris Buellar's Day Off.  Some may actually remember that he is quite literate and a former Richard Nixon speechwriter.  Ben recently wrote a great opinion piece about the US Credit Market and Subprime Market in Sunday's New York Times.  A couple of main points made by Ben: not all the loans made by lenders were bad loans.  Many of them, yes.  But still, many folks became homeowners for the first time because of somewhat lax underwriting standards.  Ben concedes that many Americans will have to bear the costs to help the folks put in harms way because of greed. 

Another key factor brought up is that there is plenty of blame to go around with the subprime mess, from borrowers who willingly overstated income and committed fraud, to lenders/brokers, real estate agents, etc.  One party Mr. Stein pointed out was the those who bundle loans together and sell them as securities.  The main ingredient missing in the equation is that many of the folks who had an appetite for these securities were often foreign lenders and they were mislead about how risky many of the securities were.  Without an end purchaser of such securities, mortgage brokers do not have the product to offer in the first place.

I can't help but wonder if politicians steer away from condemning Wall Street Executives, particularly in an election year with campaign money needing to be supplied by many Wall Street Types.

Michael Byrne, Mortgage Banker www.mortgageprosforum.com

     President Bush's recent announcement of the new "FHASecure" loan program sent a positive signal to homeowners struggling with mortgage payments that have recently increased.  The real question that remains, however, is how many of the folks with ARM mortgages will this program actually benefit?  From what I have been able to gather, the main clients this program will help are those that really should have obtained an FHA loan in the first place, rather than 2/28 arm financing.  This is because the program requires full documentation, a maximum 97.15% LTV, and a loan amount within the FHA loan limits.  Many of the consumer who got jumbo loans or stated income loans will not qualify for this program.  The FHA should look into why many clients were offered 2/28 loans that could have qualified for FHA financing.  I think they would find that the main reason is that many companies simply didn't have FHA financing available to offer.

     I think that the Federal Housing Adminstration should make it easier for smaller broker shops to offer FHA financing as well as raise FHA loan limits.  This will help avert any future problems where clients are steered into 2/28 type loans rather than good old FHA.

Michael Byrne, Mortgage Banker www.mortgageprosforum.com

 Edited

According to the BrokerUniverse Newsletter for 9/6/2007, the Federal Housing Administration is going to unveil in a few days a new program that is designed to help borrowers who are facing loan default due to subprime adjustable rate mortgage resets.  This new program, according to the article, is made for consumers who were on time with their mortgage payments up until the time of the subsequent rate adjustment and payment increase.  

The maximum loan to value allowed will be FHA's 97.75% LTV based on an appraisal.  Up to 6 months missed payments can be rolled into the new loan amount.  Hopefully this program will be run efficiently and be of benefit to many consumers.  It is unclear what other documentation will be required for the "FHASecure"  program.  I for one, am quite excited to see how this programs fares.

Another interesting note about the FHASecure Initiative is that subordinate financing may be allowed over and above the applicable typical FHA Loan to Value and loan limit.