Scott Short
All I can say is WOW! This year has not been boring. Game changing events happened almost every month. We started out the year with total confusion in the mortgage industry due to the new Good Faith Estimate (aka: GFE 2010). It took most mortgage professionals at least a month or two to understand the new form and the impact it would have on the consumers and themselves. Consumers received overinflated GFEs to protect the loan officer from underdisclosing everyone’s fees in the transaction. If certain fees were underdisclosed, the loan officer would have to pay for it out of his/her pocket. One of the mysteries with the new GFE 2010 is that there is no place on the GFE 2010 to sign. There is a separate form for signatures. Now where is the consumer benefit from this change? While struggling with the new GFE 2010, HUD/FHA released a waiver that they will allow “less than 90-day flips” to be financed with FHA loans (another program with a ton of misinterpretation). Oh, did I forget to mention that HUD/FHA decided January 1, 2010 to adopt HVCC (Home Value Code of Conduct) practices for all their FHA loans. The industry thought HUD would have seen the “train wreck” Fannie and Freddie created with HVCC and steered away. But in the spirit of follow the leader, HUD jumped in with both feet. Can you say complexity, when you have HUD’s version of HVCC and the new appraisal requirements for the “less than 90-day flips?” This is just another reason the industry slowed down even more at the beginning of the year. While all this added pressure on the mortgage industry was brewing, along come the NMLS (Nationwide Mortgage Licensing System) testing requirements for all loan officers except for the Bank (Federal Depositories) loan officers. This was a test outside of most loan professionals’ DRE licenses. NMLS required loan officers to take a federal and a state test to continue in the mortgage origination for 2011. Earth Day created another federal business requirement. The EPA required a lead-based paint disturbance policy. This meant contractors had to have new special training and certification to handle lead-based paint. October 2010 was the month that HVCC was supposed to “ride off into the sunset.” The new version is called A.I.R., (Appraiser Independence Requirements) pretty much just a name change. There is a glimmer of hope with the Federal Reserve working on its own version of appraisal policy. So, if you thought you were not tough, just look back over this year and pat yourself on the back for surviving. This year could have been worse without all the hard work by NAR, C.A.R., CAMP and NAMB lobbying to keep our industry from worse issues. Flood Insurance The Mortgage Servicing News article in the November 2010 edition explained some of the reasons behind the roller coaster. The flood insurance program is $19 billion in debt to the US Treasury, and according to the Senate Banking Committee Chair Chris Dodd, not likely to repay what it owes. Earlier this year, the House cleared legislation that would extend NFIP for five years. But other members of the panel disagreed. “We need to get a permanent law in place,” said Senator Jim Bunning (R-KY). He wants to put the program on an even keel as soon as possible by requiring owners in flood-prone areas to pay their full actuarial rates for coverage. But Senator Charles Schumer (D-NY) and John Tester (D-Mont) prefer a far slower approach. Both law makers said they would support the provision in the House-passed bill that would delay boosting premiums and redrawing the flood maps for five years and then phase in premium increases over the next five years. Now for less depressing hindsight Fannie Mae announced they are extending their loan limits through 2011. If you have any questions or comments please contact me; Scott Short, First Priority Financial, 916-421-8559 or