Lending in 2010Another roller-coaster year?
Shashank Shekhar, MBA CEO – Arcus Lending
Shashank Shekhar
9+ Years of lending experience Featured on TV & Radio shows Author of 2 books, co-authoring
next book with Carole Rodoni Author of Bay Area’s leading
mortgage blog Specialize in First Time Home
Buyer and FHA Loans
Agenda
Loan Limits New Home Buyer Tax Credit Mortgage Rates GFE 2010 FHA Changes
Condo Approval HVCC Implementation 2nd appraisal requirements Min Score/Downpayment?
MBA Mortgage Finance Forecast
2009 Total
2010 Q1 2010 Q2 2010 Q3 2010 Q4 Total 2010
Total 1-4 ($ bil)
1966 323 441 408 325 1497
Purchase 719 149 230 241 185 804
Refinance 1247 175 212 167 140 693
Refi share (%)
63 54 48 41 43 46
Loan Limits for 2010
One-Unit - $ 729,750 Two-Unit - $ 934,200 Three-Unit - $ 1,129,250 Four-Unit - $ 1,403,400
New & Improved Tax Credit
$8000 for FTHB & $6500 for move up/down buyer
Max Purchase Price of $800,000 Income Caps - $125,000 and
$225,000 Deadlines
Contract Date : April 30th
COE : June 30th
Mortgage Rates
Have gone up 43 bps in 4 weeks – Now at 5.14%
Fed plans to stop buying MBS in March 2010
Rates could go up 25 bps – 50 bps overnight
How far are we from 6% - Not very!
GFE 2010 - Background
In 2005, HUD conducted a series of roundtable discussions
2.5 years later, HUD published its proposed RESPA rule in March, 2008. HUD received approx. 12,000 public comments.
New GFE went into effect on 01/01/2010 Goal was greater clarity and transparency HUD’s timing for a new rule could not
have been worse
GFE Particulars
Must be provided to Borrower within 3 business days of application
Quotes good for 10 business days, unless “Changed Circumstances”
Lender may not charge Borrower for preparation of the GFE
Delivery of the GFE
The initial GFE distributed by any loan originator in a transaction becomes the binding GFE
Lenders will be accountable for mortgage broker’s GFE
If lenders prefer to generate the GFE, they must do so within 3 days of the broker’s application date
Changed Circumstances
Only those fees can change that are impacted by the changed circumstances Loan terms or conditions change Property Value Changes Borrower changes the deal
New GFE Within 3 business days of change 10 day shopping period starts over Borrower can waive
Good Things about the new GFE
All origination charges lumped together
Is more detailed & Explains all the fees
Tradeoff Table Gives a snapshot of loan with
important dates Easier comparing of loan offers
(closing cost missing as a factor)
And Not So Good Things
Cash to Close missing Charges typically paid by the buyer have
to be listed, even if the seller pays them At least 1 provider per service required
even if the lender permits borrower to shop
What happens if you exceed tolerances? No signature 3 Pages from 1
FHA Changes - Background
Supplementary reserves fell below mandatory 2% of the loans it insures.
The extra capital cushion last year was about 3%, down from 6.4% in 2007.
Higher claims because of more defaults. 7.8% of the single-family mortgages 90
days or more overdue, up from 6.6% a year earlier.
FHA Condo Changes
Spot approvals to be eliminated on Feb 1st
50% Owner Occupied requirements <15% of the owners can be
delinquent on HOA dues Reserve study for capital expenditure
and maintenance Did I say – 90 days escrows?
Other FHA Changes
HVCC Implementation on 2/15 2nd appraisal requirement waived FHA Loan after a Short-Sale – 3 year
waiting period Min Credit Score – May go up to 640
from current 620 Downpayment – Will it go up to 5%
from 3.5%?
Underwriting Guidelines
Better Portfolio vs Lending More If Housing Prices stabilize
Mortgage Insurance requirements could get easier
Down payment requirement could be reduced
Credit Score at the top end could be reduced
Let’s connect
Shashank ShekharBroker/CEO – Arcus [email protected]: 408.905.6261Blog: www.LendingExpertBlog.comFB:Facebook.com/LendingExpertTwitter: @ShashankTweets