by CRESTICO | Aug 2, 2013 | CRESTICO
Section 129B(d) of TILA, as added by the Dodd-Frank Act, permits consumers to bring actions against individual mortgage loan originators for violations of certain provisions of TILA. For example, while LO’s can be held personally liable for receiving compensation in violation of the Rule, they are not personally liable under TILA/LO Comp for failing to maintain the records of compensation required by the rule. The LO Comp Rule, which implements the DFA’s statutory authority confirms this personal liability through its changes to Reg. Z’s definitions. Specifically, the change to § 1026.36 (a)(1)in the LO Comp Rule clarifies the definition of “loan originator” to mean either the individual LO or the company. The following is from the CFPB’s small business compliance guide which seeks to use plain language explanations for the Rule (although it still warns you that you need to see the actual Rule for details): “A “loan originator” is either an “individual loan originator” or a “loan originator organization.” “Individual loan originators” are natural persons, such as individuals who perform loan origination activities and work for Mortgage Brokerage firms or creditors. “Loan originator organizations” are generally loan originators that are not natural persons, such as mortgage brokerage firms and sole proprietorships”
TILA is confusing for a lot of reasons, but one of the biggest areas of confusion in the LO Comp and Ability to Repay rules are the differing obligations imposed on “Creditors”, “Loan Originators”, and “Loan Originator Organizations”. These definitions are critical in determining who is responsible for any obligation under TILA. LO comp is one of the few times where the obligation extends all the way down to the individual LO, but the liability is potentially huge. I don’t know about the issue from the LO’s perspective (ask an attorney; see below) – does the borrower have a life of loan defense? As best I understand it, the life of loan defense is true as it relates to foreclosure but the remedy is not a free house, it is three years of interest and other fees (loan, attorney) – a monetary judgment. So there shouldn’t be any runs on any particular company.
Attorney Brad Hargrave (MedlinHargrave) writes, “Loan originator compensation is one area of Truth in Lending and Regulation Z wherein someone other than a creditor; namely, the loan originator, can also be held liable for a violation. The citation in support of this proposition is found at 15 USC §1639b(d)(1) which provides, in pertinent part, that ‘for purposes of providing a cause of action for any failure by a mortgage originator, other than a creditor, to comply with any requirement under this section, and any regulation prescribed under this section, section 1640 shall be applied with respect to any such failure by substituting ‘mortgage originator’ for ‘creditor’ each place such term appears in each such subsection.’ And, §1640 is that section of TILA that imposes civil liability for various TILA violations, including those sections regarding LO Compensation. (I have not addressed the recoupment and setoff issues in the event of foreclosure in the context of the LO, given that an LO would not be the party initiating the foreclosure; and thus, this section really isn’t applicable to an LO).”
Mr. Hargrave’s note continues, “The penalties are potentially severe. In an individual civil action brought by a consumer, the creditor who paid the violative compensation could be liable to the borrower for actual damages, plus twice the amount of any finance charge in the transaction (capped at $4,000), plus an amount equal to the sum of all finance charges and fees paid by the consumer (unless the creditor can demonstrate that the failure to comply is not material), plus reasonable attorneys’ fees and court costs if the borrower were to prevail. The loan originator’s exposure to such a claim (per 15 USC § 1639b(d)(2))is the greater of actual damages to the consumer or three times the total amount of direct and indirect compensation paid to the LO in connection with the subject loan, plus the costs to the consumer of the action, including reasonable attorneys’ fees. In addition, the CFPB could sue the creditor and the loan originator in Federal District Court and seek any one of a number of remedies, including restitution and/or disgorgement, and appropriate injunctive relief, as to all loans wherein the LO received unlawful compensation. It is also possible that the matter could be referred to another agency for enforcement.”
by CRESTICO | Dec 6, 2011 | CRESTICO
A new analysis suggests that the tide of home foreclosures isn’t going to recede soon. The report from the Center for Responsible Lending, “Lost Ground, 2011,” finds that at least 2.7 million mortgages loaned from 2004 through 2008, or about 6%, have ended in foreclosure and that nearly 4 million more Home Loans (roughly 8%) from the same period remain at serious risk. Put another way, “The nation is not even halfway through the foreclosure crisis,” says the report, which analyzed 27 million mortgages
made over the five years. Across the country, low- and moderate-income neighborhoods and neighborhoods with high concentrations of minorities have been hit especially hard, the report found. The report also noted that certain types of loans have much higher rates of completed foreclosures and serious delinquencies. They include loans originated by brokers; hybrid adjustable-rate mortgages, option ARMs, loans with prepayment penalties and loans with high Interest Rates (subprime). African Americans and Latinos were more likely to receive a high-cost mortgage with risky features, regardless of their credit. For example, among borrowers with good credit (a FICO score of over 660), African-Americans and Latinos received a high-interest-rate loan more than three times as often as white borrowers.
Delinquencies down, foreclosure inventory sets record high
The October Mortgage Monitor report released by Lender Processing Services, Inc. (LPS) shows mortgage delinquencies continue their decline, now nearly 30% off their January 2010 peak. Meanwhile,
foreclosure inventories are on the rise, reaching an all-time high at the end of October of 4.29% of all active mortgages. The average days delinquent for loans in foreclosure extended as well, setting a new record of 631 days since last payment, while the average days delinquent for loans 90 or more days past due but not yet in foreclosure decreased for the second consecutive month. Judicial vs. non-judicial foreclosure processes remain a significant factor in the reduction of foreclosure pipelines from
state to state, with non-judicial foreclosure inventory percentages less than half that of judicial states.
This is largely a result of the fact that foreclosure sale rates in non-judicial states have been proceeding at four to five times that of judicial. Non -judicial foreclosure states made up the entirety of the top 10 states with the largest year-over-year decline in non-current loans percentages. The October data also
showed that mortgage originations are on the rise, reaching levels not seen since mid-2010. Mortgage prepayment rates have also spiked, as much of the new origination is related to borrower Refinancing; loans originated in 2009 and later are the primary drivers of the increase. While FHA origination activity
is down, GSE and FHA originations still account for the vast majority of all new loans – nearly nine out of every 10 new mortgages.
Jobs up, looks better than it is
Job creation remained weak in the US during November, with just 120,000 new positions created, though the unemployment rate slid to 8.6%, a government report showed Friday. The rate fell from
the previous month’s 9.0%, a move which in part reflected a drop in those looking for jobs. The participation rate dropped to 64%, from 64.2% in October, representing 315,000 fewer job-seekers.
The actual employment level increased by 278,000. The total amount of those without a job fell to 13.3 million. The drop in participation rate is significant in that had the labor force remained steady, the jobless rate would have dropped to 8.8%, according to Citigroup calculations. If the labor force had
followed trend growth, unemployment would be at 8.9%. “Overall, the continued modest employment gains reflect an economy that plods along at an uninspiring pace,” Kathy Bostjancic, director
of macroeconomic analysis at The Conference Board, said in a statement. “These modest job gains are still not enough to propel economic growth to a sustainable 2%-plus growth path.” The
measure some refer to as the “real” unemployment rate, which counts discouraged workers, also took a fall to 15.6% from 16.2%,its lowest level since March 2009.
However, economists were treating the rate drops with skepticism. “When the unemployment rate declines, we want to see both employment and participation increase as discouraged workers
return to the labor force. Today, we got the former, but not the latter, making the 0.4% drop look a bit suspect,” Neil Dutta, US economist at Bank of America Merrill Lynch, told clients. “We would not be surprised to see the unemployment rate give back some of its decline in the coming month(s).” Average earnings were essentially flat, up two cents to $23.18 an hour. Private payrolls increased 140,000, considerably less than a report earlier this week showing that nongovernment jobs were up by more
than 200,000 for the month. Government payrolls fell 20,000, including a 4,000 drop in federal positions.
Long-term unemployment remains a big problem: The average duration for joblessness surged to a record-high 40.9 weeks. Stagnation in wages also continues, as more employed workers took
on second jobs. There were just under seven million multiple job-holders for the month, the highest total in 2011 and the most since May 2010. Traders offered little reaction to the report.
Futures already had been indicating a positive open but lost some ground in the ensuing minutes after the Labor Department report hit the tape. “At this pace of job growth, it will be more than two decades before we get back down to the pre-recession unemployment rate. Moreover, a shrinking labor force is not the way we want to see unemployment drop,” said Heidi Shierholz, economist at the Economic Policy Institute. “At this rate of growth we are looking at a long, long schlep before our sick
labor market recovers.”
Remember:
All these scary reports create opportunities for the investor no matter where you live.
by CRESTICO | Aug 1, 2011 | CRESTICO
Buying a home can be very exciting! It’s part of the "dream" we all have for ourselves, the marriage, the family, the pet, the white picket fence – all of these things are dependent on having a home. Having means owning, not renting; to those of us wishing to make the most of our hard-earned money. But making the most of your money is not always easy – it takes a little bit of savvy and a lot of consideration.
Consideration means research, research and some more research. You need to know the facts. Not just about the home you are buying, but also the city, community, history and future projections, to help you determine whether this investment is right for you. While buying a home is not permanent – it is long term and you need to make sure the home you select matches your long-term lifestyle choices.
Budgeting – this is key! You do not want to get yourself into a home you cannot comfortably afford, or you will end up working and never being home to enjoy it; or unfortunately even potentially risking losing it or other valuable items in your life.
•Get familiar with home buying terminology. Know the difference between the types of loans, insurance, Interest Rates and programs available to you.
•Figure out your budget. Work with your loan consultant to determine what you can actually afford to pay on a monthly basis. Remember, a mortgage payment is not just principal and interest, there are taxes and insurance that will need to be paid. Also, the community you select a home in may have a homeowner’s association that charges a monthly fee. These are all in addition to the increased utilities, maintenance and potentially security costs that go along with owning a home. Remember, there no "super" to call when that toilet gets clogged!
•Get rid of your old bills! You’ll have lots of new bills to replace those! Try to pay off all your existing credit card bills. The less debt you have, the better loan you will qualify for.
• Read your paper work. HUD has a handy booklet on its site called "Buying Your Home: Settlement Costs and Helpful Information." It describes the home buying and settlement process and explains most of the expenses you will encounter. Although your lender will give you a copy, it’s a good idea to read it before you even consider applying for a loan.
• Ask questions. Make sure your loan and Real Estate consultants are the kind of people who take the time to explain every single step of the process and answer each of your questions. They are there to serve YOU! Buying a home is a serious decision and the people helping you should appreciate the opportunity to serve you. The service you receive should be attentive, respectful and consistent!
by CRESTICO | Jul 22, 2011 | CRESTICO
Did you know that the average credit score required nowadays to get approved for a loan is 140 points HIGHER today than it was just a few years ago? That’s a lot when you consider that credit only ranges from 100 to 850.
One of the most important factors in getting a loan to buy a home has been credit, and it remains to be quite significant when filling out applications for loans. This is in large part, due to the economy. The mortgage crisis we have been witnessing over the past 4 years had major impacts on the lending industry and institutions became less willing to extend credit, even to those who are well-qualified.
Financial responsibility is key! Those with poor credit are faced with less and less options, making it harder and harder to realize the American dream of owning your own home.
Qualifying for a loan isn’t the end of the story.. it’s just the beginning. Just because you qualify doesn’t mean you are getting a good rate. The difference that just 0.25% can make on a $500,000 loan is over $1000 a year, multiplied by 30 years, that’s $30,000 that could have been saved over the life of the loan. What could you do with an extra $30,000?
In this market, many people are eager to buy a home, thinking “oh the prices are so low – we gotta get this house!” but keep in mind, while the price may seem low – the interest rate you qualify for may not be as attractive. So, tend to your financial health, clean up your credit – then start making offers on homes.
by CRESTICO | Jul 20, 2011 | CRESTICO
Are you struggling with your monthly mortgage payments? If answered yes, you must try your best to refinance your home loan as this is the best way to get back on your current monthly mortgage payments. Most mortgage loans carry high interest rates and with the unemployment rate touching a record level, an increasingly large number of homeowners are not being able to cope up with their monthly mortgage installments. Refinancing is just taking out yet another home loan with favorable interest rates and terms so that you can repay the previous loan with ease. While there are many homeowners who want to refinance their Home Loans, they all love to know the ways in which they can get the best refinance rates in the market. Have a look at the ways in which you may secure low rates on the refinance loan.
1.Check your credit score: As you know that the lenders will always check your credit sore before lending you with a new line of credit, you must try your best to boost your credit score in order to get the best rate in the market. As the credit score is the best way to track the financial history of a person, you must take good care about the financial habits that can drop down your score. Most financial experts often say that one must initially go for credit repair before applying for a home loan so as to grab reasonable interest rates.
2.Shop around among different lenders: Refinancing can be done from your previous lender and from any other lender too. If you want to change the lender from whom you want to take out a mortgage refinance loan, you must shop around extensively so as to make sure that you get the most competitive rate in the market. The lenders are waiting to offer you the loans of their companies and thus you need to make sure that you’re choosing a loan that has the perfect interest rate that can help you save your dollars on the mortgage loan.
3.Pay points on the refinance loan: Even if your credit score is not enough for you to secure a loan with an affordable rate, you can still get the lowest refinance rates. This is possible by paying points while taking out the new refinance loan. A point is1% of the loan amount that has to be paid in cash during the closing. This can lower the rates.
4.Choose a different term:If you refinance your mortgage loan at a 15 year term mortgage loan, you can get low rates on the loan. However, a 15 year term mortgage loan will require high monthly payments but will also ensure low rates at the same time.
Therefore, if you want to refinance your mortgage loans at a lower rate, you can easily follow the tips mentioned above. Get a loan at a low rate and repay the loan with ease, thereby retaining your home ownership rights.
