The Rich Get Richer

The longer we are in the economic mess the clearer it becomes what's really happening. Here is a great example. Indy Mac Bank went under and closed the doors in July of 08 the FDIC ceases all assets. The FDIC then sold all those mortgages to OneWest Bank in March of 2009. The 1st mortgages were sold for 70% and the helcos for 58%. The FDIC sweetened the deal insuring the loans for 80-95% from any losses or short sales. Here is a prime example of why it's so hard to get a loan modification and why banks are so quick to foreclose. FYI the loss is calculated from the original balance (or balance and payments due)not the amount OneWest Bank paid for the loan.
So, here we go:
Loan amount $478,000.00 + 6 months late payments = $485,200
One West Pd $485200*.7 = $334,600 for the loan
Short sale offer = $241,000
FDIC formula is $478,000.00 - $241,000.00 = $244,200 "adjusted gross loss to OneWest bank"
So, the FDIC writes a check (thanks to us the tax payer) for 80% of $244,200 = $195,360.00
$195,360.00 + amount of short sale $241,000.00 = $436,360 - what they bought the loan for $334,600.00 = $101,760.00 PROFIT!!!!!!!!!!!!!!!!!!
Any comments? This is truly unbelievable!

FHA wants 5% down instead of 3.5%?

Well it's just mostly talk at this point, however talk is how it all starts. If you are trying to get into a home using an FHA program you may be looking at a higher down payment in the near future. Be advised, FHA is considering increasing the minimum down payment from 3.5% to 5%!

Home Buyer Tax Credit at a Glance

$8,000 First-time Home Buyer Tax Credit at a Glance

- The $8,000 tax credit is for first-time home buyers only. For the tax credit program, the IRS defines a first-time home buyer as someone who has not owned a principal residence during the three-year period prior to the purchase.
- The tax credit does not have to be repaid.
- The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000.
- The tax credit applies only to homes priced at $800,000 or less.
- The tax credit now applies to sales occurring on or after January 1, 2009 and on or before April 30, 2010. However, in cases where a binding sales contract is signed by April 30, 2010, a home purchase completed by June 30, 2010 will qualify.
- For homes purchased on or after January 1, 2009 and on or before November 6, 2009, the income limits are $75,000 for single taxpayers and $150,000 for married couples filing jointly.
- For homes purchased after November 6, 2009 and on or before April 30, 2010, single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000qualify for the full tax credit.

The $6,500 Move-Up / Repeat Home Buyer Tax Credit at a Glance

- To be eligible to claim the tax credit, buyers must have owned and lived in their previous home for five consecutive years out of the last eight years.
The tax credit does not have to be repaid.
- The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $6,500.
- The tax credit applies only to homes priced at $800,000 or less.
- The credit is available for homes purchased after November 6, 2009 and on or before April 30, 2010. However, in cases where a binding sales contract is signed by April 30, 2010, the home purchase qualifies provided it is completed by June 30, 2010
-Single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit.

Triple Dip

Looks like banks are trying to triple dip. Feds are artificially keeping rates low with the flooding of our currency in the world market (which is why gold silver etc. are raising in value). While rates are low, banks are making a killing on margins, bail out money and now with excessive credit card rates. With the new extension(until February) banks have been granted to keep credit card rates under control, banks have JACKED rates as high as 30% for those that have NEVER been late on a single bill...... and just in time for Christmas. A couple things you can do. When you receive the rate trigger letter in the mail:
1. Stop using the card.
2. Contact the bank and opt out.
This will freeze your current rate on the card.
Good Luck!

Hmm...Brokers Are The Good Guys?

Valuation fraud (or in other words appraisal fraud) rose 46% in the third quarter compared to the same period a year ago, according to a new report from risk mitigation firm..... The only difference this year as compared to last year has been HVCC. HVCC was impletemented to keep the "dirty" brokers "clean" when it comes to inflated values, however with brokers out of the picture and having zero contact with appraisers we are still seeing fraud increase....HOW? If this report is true, we have to speculate that the only way values are continuing to be manipulated is by those who have access to AMC, or bank run AMC's. Is valuation fraud up? If it is banks can only be those to blame..... and here we thought banks were the good guys.

Some Good News

Sources claim the Senate will extend the tax credit until April 2010. The credit will remain at $8,000 for first-time homebuyers with a separate $6,500 credit for second home purchases

AND

Appropriations committees in the House and Senate are proposing to extend the temporary limits for conforming jumbo loans. The proposed extension of the conforming minimum of $729,750 for mortgages in higher-priced markets would run through the end of 2010.

Why Our Industry Is Where It Is

The mastermind behind the fraud, HUD and the Justice Dept. claim, is Mike Ashley.The DOJ claims Ashley fostered an environment that encouraged Lend America sales staff to originate FHA loans, even when borrowers were not eligible.Sales staff could make 10 times the commission on FHA loans than on standard mortgages and almost four times the commission than a subprime mortgage.The suit further claims Ashley’s employment agreement required he be paid equivalent to one-half of a percentage point of the principal of every mortgage Lend America originated. Lend America originated nearly $1.1bn in loans in the financial year ending September 30, 2008. Accordingly, Ashley was entitled to nearly $5.4m in compensation during the year. In the suit, Justice claims this arrangement is a violation of HUD regulations.The suit claims Lend America also created a slush fund of cash to fund delinquent mortgages for borrowers to conceal their inability to keep up with payments during the first two years of the loan, the period of time that HUD monitors its Direct Endorsers’ delinquency and default rates.According to the Justice Department lawsuit, Ashley’s worked in a number of positions at mortgage firms, and by his own admission, committed his first act of mortgage fraud in 1989.

I am in no way justifying Ashley’s actions; however I see two faults here. Instead of penalizing the rest of the honest mortgage industry with ridiculous hoops and impossible regulations just take some time to enforce the current laws you have. If Ashley was in jail his fraudulent activity would’ve ceased in 1989 sparing millions if not billions in now default loan investments.