FINREG – Grapevine Except from National Mortgage News

Written by Michael A. Foote, CMB on . Posted in Uncategorized

Found some interesting yet conflicting commentary on the bill. Here you go!


Feast your eyes on pg 1439:

ix) for which the total points and

fees payable in connection with the loan do

not exceed 2 percent of the total loan

amount, where the term ‘points and fees’

means points and fees as defined by Section 103(aa)(4) of the Truth in Lending

21 Act (15 U.S.C. 1602(aa)(4));

This relates to what is called “qualified mortgage” and is every fixed rate loan now being originated. EVERY FIXED LOAN

by frankenstyle July 14, 2010 8:53 AM


It also dictates your max rate. Line 12 on pg 1436.

by frankenstyle July 14, 2010 8:56 AM


Frank, you have a link handy to that?

by BuySide July 14, 2010 10:34 AM


It’s a bit more complicated than that. Frankenstyle, you may be looking at an older version of the measure. Below is a link to the Conference Committee version of the bill. See Title XIV of the bill starting on page 26 of that title, where it defines a “qualified mortgage”. This entire bill is a real mess, but especially the mortgage provisions. Anyone voting for it needs to be voted out of office. More can be done to fix financial regulatory problems with much less legislation and gamesmanship by politicians. Call your Senator and compain if they are voting yes on this.

(vii) for which the total points and fees (as defined in subparagraph (C)) payable in connection with the loan do not exceed 3 percent of the total loan amount;


‘‘(i) IN GENERAL.—For purposes of

subparagraph (A), the term ‘points and

fees’ means points and fees as defined by

section 103(aa)(4) (other than bona fide

third party charges not retained by the

mortgage originator, creditor, or an affil21

iate of the creditor or mortgage origi22


‘‘(ii) COMPUTATION.—For purposes of

computing the total points and fees under

this subparagraph, the total points and

fees shall exclude either of the amounts described in the following subclauses, but not


‘‘(I) Up to and including 2 bona

fide discount points payable by the

consumer in connection with the mort7

gage, but only if the interest rate

from which the mortgage’s interest

rate will be discounted does not ex10

ceed by more than 1 percentage point

the average prime offer rate.

‘‘(II) Unless 2 bona fide discount

points have been excluded under sub14

clause (I), up to and including 1 bona

fide discount point payable by the

consumer in connection with the mort17

gage, but only if the interest rate

from which the mortgage’s interest

rate will be discounted does not ex20

ceed by more than 2 percentage

points the average prime offer rate.


23 DEFINED.—For purposes of clause (ii), the

24 term ‘bona fide discount points’ means

25 loan discount points which are knowingly

paid by the consumer for the purpose of

2 reducing, and which in fact result in a

3 bona fide reduction of, the interest rate or

4 time-price differential applicable to the

5 mortgage.


7 Subclauses (I) and (II) of clause (ii) shall

8 not apply to discount points used to pur9

chase an interest rate reduction unless the

10 amount of the interest rate reduction pur11

chased is reasonably consistent with estab12

lished industry norms and practices for

13 secondary mortgage market transactions.


by oldbe July 14, 2010 10:55 AM


This is the amended version:

by frankenstyle July 14, 2010 11:00 AM


So, in a nutshell, Barney Frank has succeeded in the disassembly of an industry. Unless I’m misinterpreting something.

by wherewasi July 14, 2010 11:22 AM


correct, this basically removes any chance of a subprime product from entering back into the market based on a limit of 1.5% above the “prime offer rate”

Wasn’t it yesterday that said 25% of citizens are below 599 now? Housing market, meet your doom.

by frankenstyle July 14, 2010 11:34 AM


I think the opposite. Brokers will be limited on fees. Subprime will be originated through the finance companies that can service the loan. The Beneficials of yesterday should be making a comeback. Self Employed will be getting a cash flow loan that documents their ability to repay through bank statements. Those with big money will rule again. Originators used to today’s big splits and making big money on a loan will exit.

by the voice of reason July 14, 2010 12:04 PM

Rate Update

Written by Michael A. Foote, CMB on . Posted in Uncategorized

Clearly, rates have hit all time lows – I have been tracking rates for quite awhile and we are truly at a new low. Today’s rates are 4.625 no points for a standard purchase or refinance mortgage. Non-owner or investor pricing is down to 5.00 and almost under 55 for the first time I’ve seen ever.

If you are in a position to benefit from a lower rate, for heavens sake get your application in today.

Last year chart of the 10-Tbill

Written by Michael A. Foote, CMB on . Posted in Uncategorized

For those of you “playing the market” and waiting to time the interest rates just right – please review this chart. It’s SOOO low for the last year and you can see we’ve shot up a couple of time already this year. These swings result in mortgage rates for 30 yr products to fluctuate between a 4.6% and 5.550% for a base interest rates.

Shop for a mortgage – Pick your mortgage professional – trust your mortgage professional – and you will end up happy.

You can always apply with me here.

Rate Update and Comparable Sales

Written by Michael A. Foote, CMB on . Posted in Uncategorized

Treasury yields continued their upward trend today thereby increasing mortgage rates modestly. For those of you who had not locked you rate – I suggest you take advantage of still historically low rates. Quit trying to time the market and lock the perfect rate. It does not exist.

Comparable sales are becoming a greater and greater drag of refinance and purchase transactions. As sales for existing homes continue to drag, those sales prices are further preventing some homeowners from refinancing since depressed sales, are in fact, sales.

Written by Michael A. Foote, CMB on . Posted in Uncategorized

Well those market rates are already on the way out – well there are actually already gone. The 10 yr is at 3.29 as of this post which is a 48% pop from yesterday – If yo didn’t lock your loan you are out of luck on the lowest of rates. Still worth locking if you are purchasing a home – but if you are trying to time the lowest time – you missed it. Sorrym but as I always say be prepared – submit your loan NOW and wait to lock the rate when it is at it’s lowest, then order an appraisal and bam you are done….DO NOT WAIT TO SUBMIT YOUR LOAN APPLICATION. If you do, you will not be ready to lock when it is time.

Top Ten Dos and Don’ts While Buying a Home As a First Time Homebuyer

Written by Michael A. Foote, CMB on . Posted in Uncategorized

Top Ten Do’s and Don’ts While Buying a Home As a First Time Homebuyer

By: Michael Foote

I recently attended a seminar in which a startling statistic was thrown out. 47% of the previous months residential sales were by first time homebuyers. As a banker this is an important statistic. I need to make sure that segment of the buyers is served to the best of my ability. To that end, I want to share some of the mistakes I’ve seen during my 22 year mortgage career made by borrowers/buyers.

#10 – Do not change jobs

The purchase process is daunting enough as it is, but to compound things and get a new job during the process may just jeopardize your prospects for an easy loan approval. Hey, I am not saying you can’t take a great opportunity I am just saying it can cause issues.

Here are two examples. You have a nice W-2 job paying $75000 a year and you decide the company net door has a job similar with a smaller base salary but offers additional commission and bonus structure that you will likely earn more in the long run. Well an underwriter does not know if the job will work or not and cannot forecast earnings for you. She would likely be required to qualify you on only the base salary as there is no history of the commission or bonus income.

In another example you are a CFO for a plastics company and are hired away by another firm in another industry. Provided base salary and compensation are guaranteed there would likely be no underwriting concerns.

The best solution is to delay any job change until after your financing is complete.

#9 – Do always file tax returns and keep copies

You’d think it would go without saying but many out there still don’t file tax returns regularly. Taxes are due in April and if you delay filing you must have filed an extension prior to applying for a loan.

Delinquent tax filings will always complicate and almost eliminate any form of reasonable financing out there. So if you are going to buy a house, you need to have filed your tax returns and up to date.

#8 – Do keep your monthly mortgage statements and other monthly statements for any and all debits of credits.

I am a big fan of keeping documentation from any financial transaction where my money is involved. Well I probably keep too much, but if you are applying for a home loan, there are a whole host of reasons why you should have six months of bank statements, bills accounts statements etc. You should also have at least 3 years tax returns on hand. In the mortgage business we often need support, proof, and documentation to prove many things in a borrower’s financial picture. Having these documents handy will save you time and frustration if you have them out and available earlier.

#7 – Don’t co-sign for anyone

It is certainly possible you have the wherewithal to co-sign for another person or family member. I cannot share with you how many times I’ve seen this ruin someone’s credit scores. If at all possible avoid doing this ever. If you sign for someone else be prepared to have to qualify with those additional payments as if they were your own debts.

#6 – Don’t move money around in accounts

When you are buying a home, you are telling the bank that you are credit worthy, you have been able to properly save the money required for the down payment and closing costs and in some cases you have the reserves to show additional strength.

It is very hard to prove that you have saved properly and have “seasoned funds” if you have recently transferred or had amounts of money transferred between your own accounts and the accounts of others.

Your money should be sourced properly and seasoned appropriately or else additional time consuming conditions will be added to your application.

If you absolutely have to move money – keep every receipt small and large and the statements both with drawls and deposits.

#5- Research your monthly payments options

There is no substitution for experience when it comes to mortgage banking. I pride myself and a very good and very educated mortgage professional. In todays mortgage market it is more important than ever to be technically proficient in all forms of conventional, portfolio and government lending.

Once you do find you mortgage professional you need to consider your payment obligations versus the home and sales prices that will come with them.

While we in lending qualify using your gross wages you are paying with your net income every month. Even though you may qualify for a mortgage does not mean it makes financial sense. It is always important to heavily weigh financing and the tools available for down payment assistance and lower start rates.

#4- Do the math

Know what you are getting into. Read your disclosures we send them to you for a reason. Know what your mortgage terms are, how must it all costs, what your payments are.

#3-Do choose a bank or verified direct lender

Although I have been a mortgage broker in my career I have to say that dealing with a direct lender and/or bank is today the best way to go. The shear truth is these institutions are better able to adapt to the ever changing lending atmosphere. That is not to say there are not good brokers, you just don’t have time to figure out who is good or not.

#2-Do make sure you are ready for the commitment of ownership

Let’s face it, you are thinking about settling into a home, investment, and an anchor. Houses are a look like pets. You can’t just leave them. You have made a commitment. Are you thinking about moving to China for that job or back to Kansas, to be with Dad? If you are contemplating these things…it’s not time to buy.

#1- Do Relax

If you are lucky enough to find the right mortgage lender he or she will instill the confidence that will help get through the emotional rollercoaster of buying a home. It is the biggest financial transaction you will be part of and undoubtedly that strike fear in many. I am here to tell you it’s all going to be OK. If it is meant to be it will be. If you’ve done what I’ve said above you’ll be fine.

And congratulations on your new home!

With over twenty years experience in mortgage lending, a Certified Mortgage Banker Designate (CMB) from the Mortgage Bankers Association of America, and billions in funded loan experience, I can assist you and/or your clients with the most important financial decisions realted to your residential and commercial real estate. Please call or email me today

Michael A. Foote, CMB

Certified Mortgage Banker

949.584.4600 begin_of_the_skype_highlighting 949.584.4600 end_of_the_skype_highlighting

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