2010 Is Upon Us

Few people in the real estate or mortgage industries are sad to see 2009 slip in to the history books. Our company actually had a record volume year but there was nothing easy about it. The changes that took place this year were a challenge to say the least.

Next year is going to have some major adjustments right out of the chute, a new Good Faith format and corresponding booklet kick off January 1st. The new GF is supposed to be simpler for the consumer, so much for that. The old version was one page and the new one is four pages. The information I received from HUD explaining this simplified version of the Good Faith Estimate is 85 pages long! But guess what, I actually like the new version. It is going to make it difficult for loan officers to bait-and-switch which has been my biggest pet peeve with the industry. Hopefully, that is going to change next year because of this form.

HUD’s Settlement Cost Booklet has grown up as well, the old version is 20 pages and the new one is 49 pages. I am not a conspiracy buff, but the paper industry sure looks guilty.

Here is some really good news; FNMA is predicting stable rates throughout the year. They predict the 30 year fixed will remain about where it is now for the first half of the year and then trend up very slightly the last half. Click Here to see the entire chart.

I expect the low rates, extension and expansion of the tax credit to have a very positive impact on the first quarter. The sharp spike we saw in September and October should continue until April.

In another report they state:

The mortgage market should turn into more of a purchase market next year. With projected increases in home sales and more moderate declines expected in home prices, purchase mortgage originations are expected to increase about 12 percent in 2010.

Click Here to read the full report.

Fannie Mae Changes

There are a few more changes that could impact borrowers that have recently applied for mortgage financing. In the underwriting release notes mentioned in the last post I found a huge change. FNMA no longer counts trailing spouse anticipated income. This could be a very big problem for the thousands of relocation homebuyers next year.

Another change, Fannie now requires IRS Form 4506-T instead of the Form 4506. My company has been doing this for a long time. Both forms allow the lender to receive a transcript of tax returns from the IRS for documenting the borrower’s income. The difference is the 4506 is for the previous year and the 4506-T is for the previous two years. In the past, these forms were used after a loan closed and only for a fraction of the transactions. Today we order them on every loan and the transcript must be received prior to closing! This is a really big change and it is expensive. Each transcript cost $50 and thankfully can not be passed on to the borrower. It costs us an additional $100 to process every loan even if they do not close.

Biweekly Mortgages On The Way Out?

My Calyx application software was updated on Monday and it looks like there were several changes. This morning I received an email regarding the changes in Desktop Underwriter®. The one that caught my eye concerns biweekly mortgages being sold to Fannie Mae. This was announced back in September in FNMA Announcement 09-29:

“Due to a lack of demand and increased operational costs, Fannie Mae is retiring the biweekly payment mortgage product, which requires the borrower to make biweekly payments in accordance with the note. Fannie Mae is also discontinuing the standard first-lien notes and riders that were used in connection with the biweekly payment mortgage.” CLICK HERE to read the entire announcement.

Lenders can still offer the option on portfolio loans, but it sounds like the largest player is out of the game on these.