6/06/2016

Dismal Jobs Report Delivers Low Mortgage Rates



Dismal Dark Dingy and Dank May Jobs Report delivers a few pine cones.

Worry will my son coming home from college work fast food?
Or Engineering Student Seeks Summer Job in Dismal Job Market.
Good news is mortgage rates love bad news. Rates fall! Hurry get your refinance application in now!

With the U.S. economy only adding 38,000 jobs in May vs. the 168,000 economists forecasted, we've seen a swift shift in what to expect from the Federal Reserve following their meeting later this month.

Janet Yellen backs down!  No rate hike happening before Christmas. 
Worst report since 2009 after the crash
What will the Fed do now?

5/31/2016

Guild Mortgage To Go Down in Shame?


Captain's Chair hand made 1800's Who is running the ship?

United States Files Lawsuit Alleging That Guild Mortgage Improperly Originated and Underwrote FHA-Insured Mortgage Loans
The United States has filed a complaint in the U.S. District Court for the District of Columbia against Guild Mortgage Company (Guild) under the False Claims Act for improperly originating and underwriting mortgages insured by the Federal Housing Administration (FHA), the Justice Department announced today.  Guild is a mortgage lender headquartered in San Diego, California. 
“This case is another example of the  Justice Department’s continued efforts to ensure that lenders that participate in the FHA mortgage insurance program act in good faith and conduct appropriate due diligence when committing the United States to insure home loans,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “To protect the housing market and the FHA fund, we will continue to hold responsible lenders that knowingly violate the rules.”
Guild participated in the FHA insurance program as a direct endorsement (DE) lender.  As a DE lender, Guild had the authority to originate, underwrite and certify mortgages for FHA insurance.  If a DE lender such as Guild approves a mortgage loan for FHA insurance and the loan later defaults, the U.S. Department of Housing and Urban Development (HUD), FHA’s parent agency, is responsible for the losses resulting from the defaulted loan.  Under the DE lender program, neither the FHA nor HUD reviews the underwriting of a loan before it is endorsed for FHA insurance.  HUD therefore relies on DE lenders to follow program rules designed to ensure that they are properly underwriting and certifying mortgages for FHA insurance and DE lenders must certify that every loan endorsed for FHA insurance is underwritten according to the applicable FHA standards.

The government’s complaint alleges that, from January 2006 through December 2011, Guild knowingly submitted, or caused the submission of, claims for hundreds of improperly underwritten FHA-insured loans.  The complaint further alleges that Guild grew its FHA lending business by ignoring FHA rules and falsely certifying compliance with underwriting requirements in order to reap the profits from FHA-insured mortgages.  For example, Guild allegedly allowed underwriters to waive compliance with FHA requirements when underwriting a loan.  Additionally, Guild used unqualified junior-underwriters who did not have a DE certification to waive mandatory conditions on higher risk loans where HUD required underwriting only by highly trained DE underwriters. (so much for the days of processors signing off conditions)
The government’s complaint further alleges that Guild’s senior management focused on growth and profits and ignored quality.  From 2006 to 2012, Guild conducted at least 125 branch audits in which almost 40 percent resulted in either a qualified rating or unsatisfactory rating.  A qualified rating was defined as having a “significant number of findings, and/or findings noted that have more serious impact or risk to Guild,” or “Knowledge of procedures and controls; however, they appear to be inefficient.”  An unsatisfactory rating was defined as one where “serious concerns were noted: lack of knowledge, procedures, and/or controls in branch.”  The complaint alleges that, through Guild’s quality control reviews, significant defects were found in over 20 percent of the FHA loans reviewed between 2006 and 2011 and over half the loans had either significant or moderate defects.  Significant defects included fraud, misrepresentation and other serious findings while moderate defects included not following guidelines.  However, Guild did not calculate or distribute any error rate during the relevant time period, thus management was not presented with these findings.  Additionally, for many of the quarters from 2006 through 2009, Guild did not even distribute any of the quality control findings to management.  As a result, Guild management often did not review or remediate findings from quality control audits during these years.  In the quarters where Guild management actually did review quality control findings, it did so almost a year after the loans closed and failed to timely address any identified problems.  
In 2013, Guild finally began addressing the quality of its FHA underwriting, Guild’s head of quality control pointed out the ineffectiveness of its past efforts at addressing loan quality:  “I’m not optimistic about training reminders and individual follow-ups being all that effective.”
The government’s complaint alleges that as a result of Guild’s knowingly deficient mortgage underwriting practices, HUD has already paid tens of millions of dollars of insurance claims on loans improperly underwritten by Guild, and that there are many additional loans improperly underwritten by Guild that are currently in default and could result in further insurance claims on HUD.  For example, the government’s complaint identifies a mortgage loan that was improperly underwritten in violation of HUD requirements, causing the borrower to default and HUD to pay the loss on the loan.  Specifically, Guild failed to verify the borrower’s prior rental payments, overstated the borrower’s income, failed to develop a credit history for the borrower who had no credit score, exceeded FHA’s qualifying debt to income ratio without determining whether certain compensating factors were present, and failed to identify the source of a large deposit made to the borrower’s account.  The underwriter at Guild improperly waived multiple conditions and allowed an unauthorized junior underwriter to do the same for other conditions.  In sworn testimony, the Guild underwriter admitted the loan failed to comply with FHA underwriting requirements.
“The Federal Housing Administration’s insurance program is meant to encourage lenders to expand opportunity for homeownership by providing financing to prospective buyers who otherwise might not be able to enter the housing market,” said U.S. Attorney Channing D. Phillips for the District of Columbia.  “To ensure that prospective homebuyers realize the dream of long term homeownership, the program has strict rules and is not a license for lenders to carelessly subject federal dollars to risk. This lawsuit is designed to help the FHA – and American taxpayers -- recoup tens of millions of dollars in losses attributable to a lender accused of improperly underwriting FHA-insured mortgages and committing the government’s guarantee to mortgages that failed to comply with program rules.”
“The decision to intervene in this matter should serve as a reminder of the priority given to pursuing lenders that violate HUD program rules in order to hold them accountable and the value of private citizen participation, including whistleblowers, in pursuing lenders that violate the rules,” said HUD Inspector General David A. Montoya.
“FHA relies on the honesty and integrity of those lenders participating in our program,” said HUD’s General Counsel Helen R. Kanovsky.  “The action we take today should send a clear message that we will not tolerate the abuse of our programs or of the families who should benefit from them.”
Falsifying documents, white outs, blind eye, ignoring guidelines oh my oh my.
The lawsuit was brought under the qui tam, or whistle blower, provisions of the False Claims Act by a former employee of Guild.  Under the act, a private party may bring suit on behalf of the United States and share in any recovery.  The government may intervene in the case, as it has done here.  The False Claims Act allows the government to recover treble damages and penalties from those who violate it. This not a disgruntled employee to be this huge. Offices were disrupted by gentlemen in black suits, thousands of empty legal boxes and access to emails and computer files.
The investigation of this matter was a coordinated effort among HUD, its Office of Inspector General, and the U.S. Attorney’s Office for the District of Columbia and the Civil Division’s Commercial Litigation Branch.
The action is captioned United States ex rel. Dougherty v. Guild Mortgage Company (D.D.C.).  The claims asserted in the complaint are allegations only and there has been no determination of liability.  

Losses to Guild could be in 100-600 millions'. 
Guild Mortgage does purchase, resale, and refinance mortgage loans. 
After decades of successful innovation and growth, Guild Mortgage Company is a mortgage banking company with more than 250 branches and satellites across the United States.

Guild may lose ability to sell loans to our government which is 99% of their business. What does this mean to the consumer? Apply somewhere else if your loan is in process. 

Martin Gleich frowns in his grave. A ship without a captain.
Mary Ann MCGarry who is at the helm?

Anyone who got a Guild FHA loan will line up for class action lawsuit next...



4/26/2016

Banker Broker Mortgage Lender


Banker Broker Lender
Tell the truth, or I’ll point it out.

Not all mortgage companies are the same.




The type of mortgage company or “shop” rules what home loans a Borrower can access. Differences in skill, speed and ability to close is hidden from the public when applying for a home loan. A variety of titles for the shop confuses consumers. Banks, lenders, Mortgage Bankers, Consumer Direct, Call Center, Retail, Wholesale, Correspondent Lenders, Direct Lenders, Mortgage Brokers and online entities are among the few styles of business.
The United States Government funds ninety five percent of mortgage loans in America. Fannie Mae and Freddie Mac purchase conforming and high balance conforming loans. Both Fannie and Freddie are U. S. owned and regulated. A bank such as Wells Fargo only sells conventional loans to Freddie and Chase only sells to Fannie. There are grey areas of rules and guidelines but Fannie and Freddie are similar in this heavily regulated industry. FHA and USDA loans are also “owned” as I like to call it “by mine government.”  I mean to say the Underwriting guidelines for all these loan types are written in a huge long form tablet, in stone.
There are now a few sources for smaller niche banks, credit unions, hedge funds and portfolio lenders that only a large based mortgage banker has access. These special exception loans are the other five percent of all loans closed in the U. S.
The systems used for approving loans are: DU, LP, GUS and manual Underwriting to a list of rules. Computer platforms also differ in mortgage companies. Some systems are web based, some rely on paper files. A loan is touched by nearly eighty people and systems that verify each piece of information on top of the eyes of Processors, Underwriters and Funders. Gurus for years said a monkey can be a mortgage originator. They thought the progress in computer automation would take out the human aspect of closing a home loan. This today is very untrue.  A person can pass the testing and background checks but good looks and salesmanship do not overcome being on an inferior platform or not having intellectual skills to match what a customer wants.
As in buying real estate, location is the most important fact. The type of shop makes a difference. What makes Mortgage Banker, Loan Officer or Mortgage Broker dissimilar is the company/stage they work upon.
Mortgage bankers work in the most flexible model. They sell loans to both Fannie and Freddie directly. Mortgage bankers offer products outside of their “in house.” This system sells loans to the U. S. government, niche secondary credit unions, hedge funds, and small banks. Mortgage bankers close loans with their own cash or warehouse line and deliver the package to the end buyer to service. Licensing for mortgage bankers is stringent. Risks are high. Loans that are not an exact fit to the end game must be bought back with cash. Mortgage banking however allows for greater speed and variety.
I sit in a Mortgage banking office alongside of Underwriters, Processors and Funders. This allows for quick closings. It also provides a landscape of a hundred thousand products and rates at any given hour. Some products we are “delegated direct.” Delegated directly is when Underwriters in my office have the vote of confidence from the end purchaser to approve, fund and deliver the loan to them for servicing in days. We don’t ship delegated direct files to end user until after closing.
Besides closing standard loans quickly we broker to other special sources using their platform to disclose, Underwrite and fund. In brokering to Union Bank, Bank of the Internet, UBS, HSBC and others the mortgage banker him or herself takes on responsibility to understand the parameters the end user will or won’t accept. The file is sent to the secondary source to grant final approval.
On the other side of the spectrum the mortgage officer sitting in a bank has far less products and control to offer consumers. Banks employ loan officers. L. O.’s are paid less commission in exchange for promise of leveraging the bank brand, in house referrals and walk in traffic. Big box banks sell all loans to our government. Banks no longer earn large profit from selling home loans (credit cards make more and require less labor costs). Banks centralize all the people and systems that check and triple check a loan for truth. Although a consumer may meet the sales person (L. O.) in a bank branch the information is packaged and shipped often out of state to be processed, then to another location to be underwritten, a third for funding and fourth to audit. Banks work a loan in a production line and measure the speed of each of the employees who touch the loan. For example, a complex file of a self-employed borrower is triaged and separated to bottom of stack because it is better to close three files of w-2 earners than hog the utility of skilled employees. Banks do not hire additional employees with the flux of business. Mortgage applications increase when interest rates fall and turn time at a bank slows.
Call centers catch consumer’s eyes with advertising on Zillow, Realtor.com, radio and print. This type of mortgage origination platform is an online presence with a boiler room. Quicken loans regional call centers take applications on a production line. This works for a Borrower who only receives a w-2 from same employer past three years with good credit. Sales persons on the phone must take a greater number of applications to make a living. Call Centers can work through simple loan applications but often are unable to overcome any glitch or variation from the cookie cutter loans.

As a consumer ask questions about who and how your loan is reviewed. When things
get sticky, and they do with the pile of paperwork needed to close, it is good to know
the person you are applying with can give answers and close.

Thanks for reading
Caroline Gerardo NMLS 324928
(949) 784-9699




images are your reward for reading

4/10/2016

Steps To Downsize Your Home


Not Politically Correct Shirt for sale $5.00
Downsizing all stuff I bought to fill up 3500 square feet.
Funny, I filled up my Laguna Niguel home with garden
tools, art supplies, antiques, and duplicate clutter.
This is a process to succeed at my goal.
To live a more simple life.
With my youngest is away at college most of the year, I
found myself rattling around in a big house, completing
weekend warrior chores and hating the leaves in the pool.

Have your family take what they will first.

I next tried selling items on eBay. Ebay is fine if your
item is worth a hundred dollars and it is small. Take good
photographs, check emails, pack and ship the item. If your what-cha-
ma call it is only going to sell for eight dollars you won't make
minimum wage. Read all of eBay's return policy rules, not fair to seller
and their shipping estimates are too low. Etsy is good for small collectibles,
Amazon also has a resale department. I found local consignment stores
weren't a fit as they wanted $400 in advance to pay for the pick up.One
consignment store took items and went out of business, oops.

I had one garage sale and planned to do one this weekend but
rain postponed that idea. Run a free ad on Craig's List. Have small 
change, grocery bags for customers, and lock your house.
Compile your stuff and place on tables.
It's easy to label: "everything here is one dollar." The objective
is to get a little money out of the clutter.
Garage sales are hectic. I know that sounds silly. A lump of people arrive. 
They sift through, pick up the china monkey figurine totem that grandmother
left you. The sounds of your stuff breaking or being pocketed 
(yes people steal small shiny items - go figure) puts you on edge. Most Home
Owner Associations in Orange County frown on or don't allow garage sales. 
Mine doesn't have this written in the C C R's; but neighbors knocked my signs 
down. I know they think it is crummy. Call it "estate sale" to give the aura 
of classy.

Donate what remains. In Orange County there are three great charities
that will send a truck. Bag or box the items and leave in front of garage with
a note. They leave a receipt. You can write off on your tax return up to 50%
of your adjusted gross income. More than 50% can be carried forward for
five years. Take photos, make a list, store the information in the cloud
for next tax season
Saint Vincent de Paul (714) 542- 0448 With Women (800)  990-1772
and Vietnam Veterans (800) 775-8387 are three local non profit organizations
that will pick up your things. 


Turtle with Top Hat no need for the Aquarium only $10

helicopter, military
Vintage Military Shirt Worn By President X only $10