Archive for the ‘HUD’ Category

So I took the S.A.F.E. Act test last week and I started last week’s blog with some of the injustices of the new system. Go read it if you haven’t already.

The test is 100 questions (of which 10 don’t count. Why?) and to pass you have to get 75%. To be fair the test is designed to weed the weak people out. In other words it is HARD. As I said last week why wouldn’t HUD and the rest of the U.S. Government want all loan originators tested, not just the little guys? Didn’t the big guys have just much responsibility for the mortgage meltdown as we did? Clearly not!

Anyways, the test is very heavy on federal statutes (RESPA, TILA, FACTA, ECOA, etc.), lending practices and the new policies that have been enacted since the meltdown. Again, I want to stress something had to be done and our government did. Just like the case of the HVCC appraisal debacle, the new regulations are designed with the big guys in mind (In case you hadn’t heard most of the HVCC companies are owned by the Banks that ask for them to be used). I knew that there would be a day of reckoning when the meltdown started; I just didn’t think that such a large segment of mortgage industry was going to be exempt from feeling the pain.

The new age of the government ruling the people, not the people ruling the government (like it was in my parent’s day) is upon us. I don’t want to get too far off the topic from the SAFE Act test but I was more than a little upset…can you tell? The bottom line is this, the test, while excessive, is passable (if you study). I did pass and am happy to say I am now “S.A.F.E Act” approved. I am realistic enough to know that my opinions fall mostly on closed eyes and deaf ears.

Thanks for reading my blog Dad. But the new guidelines hit home.

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I know I haven’t updated the blog in a while but I have been stuck studying for the S.A.F.E. Act (Secure and Fair Enforcement Act) test.

For those of you who don’t know, this is the National test that the Government is requiring loan originators to take in order to continue originating loans. The new test must be passed by all originators that work for a mortgage broker or a mortgage banker (the little guys). The only originators who don’t have to take the test are those individuals who work for a federal or state chartered bank such as B of A, Wells, Chase (the big guys). I could harp on the fact that the requirements should be for everyone…but who would listen?

If you haven’t started your transition into the NMLS (Nationwide Mortgage Licensing Service) you should do it soon. It takes an immeasurable amount of time and patience. Plus you now have to get an FBI background check, submit your credit and prove that you are “solvent” (can pay your debts).

I agree that changes had to be made but it seems terribly unfair that as a little guy myself and my employees have to incur additional expenses (nothing about the NMLS is free) and headache (due to testing) and the big guys don’t have to lift a finger. However, they do have to sign up for the NMLS but are not subject to any other requirements.

I finished the SAFE act test today and I will let you know how I did and some additional information about the test and the process in next week’s blog.

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Just a quick word about the impending changes to the FHA rules that are set to take effect on May 20th 2010. Specifically two items that are going to drive all but a select few from being able to originate FHA business. The first item is the increased net worth requirement for all FHA lenders from $250,000 to $1,000,000. I agree with HUD’s net worth increase. Most warehouse line providers will not look at an applicant before they have that same amount so why shouldn’t the government be up with the times. Second, is the elimination of the FHA correspondent program.

As of the end of this year HUD is eliminating the FHA correspondent program and making the FHA lender responsible for all approval criteria for a third party originator. The most significant part of this change is that it will prohibit loan correspondents from using FHA systems like the Technology Open to Approved Lenders (TOTAL) Scorecard and the FHA Connection software systems. Both systems are crucial to the mortgage origination process. So what does this mean? Less competition for the industry in turn means higher rates and fees to the consumer. My recommendation is to increase the net worth requirement for Loan correspondents and have HUD still oversee this category of originator. I know that I am not alone in my feeling but it remains to be seen if HUD will listen.

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The Department of Housing and Urban Development or HUD has launched a new program to help with job creation through a series of grants. Armed with 150 million dollars provided by Congress the entity that is overseeing the project is the Office of Sustainable Housing and Communities or OHSC. According to HUD, W-2 employed households are still feeling financially pressured. According the Department of Labor, January saw the first unemployment decline in over a year to 9.7%. While it is a decrease we are still close to the historic highs. In addition, HUD has determined that the average household spends half of its monthly wage on housing and transportation. What this all means is the OSHC has been set up to help the average homeowner. The new office will provide grants to metropolitan planning organizations, state governments and non-profit organizations to improve access to affordable housing. It will also invest in energy efficient homes and buildings and put emphasis on energy efficient retrofitting for new home purchases. What does all of this mean? It means that President Obama is trying to make good on his promise to improve our economy through housing subsidies. Whether this plan will have any significant impact to the average home owner remains to be seen.

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