Bye Bye Bank of America WHolesale Lending

Bank of America announced today that it plans to exit the wholesale mortgage lending business. They state that as part of their “customer driven” business model they have decided to focus on opportunities to “deepen our relationships with existing Bank of America customers" and to offer responsible and competitive mortgage products to new customers. “By responsibly exiting our relatively low market share" (22%) “in the highly diversified wholesale mortgage market. We can redirect critical operational resources to enhance capabilities for consumers to purchase or refinance homes”

So let me get this straight, they think that by limiting distribution of their mortgage products they can somehow help consumers? It seems to me that by limiting access to product they are directly opposing what is in the best interest of consumers.

We have seen this before. In Washington Mutual's “glory days", that is the years before the whole mortgage meltdown, we watched Washington Mutual move in and out of wholesale lending time and time again. Interestingly enough their most profitable years coincided with the years that the majority of the loans they originated were through their wholesale lending relationships. We certainly wish Bank of America best success in this endeavor, after all it is a free country so why not put the squeeze on consumers if you can. Brokers, do not worry, they will be back. In the meantime, Bank of America is not the only game town

This blog was written by Brian Leavitt, Designated Broker of Northstone Real Estate Inc, and Northstone Mortgage.

Brian serves clients within the Northwest Multiple Listing Service. And specializes in residential re sale homes, condo’s and land, and is uniquely qualified as a short sale negotiator holding both real estate and mortgage licenses.

You can contact Brian directly by phone at 800-806-3145 or by email at brian@northstone.net. Click here to view his client newsletter.

Brian is licensed with the Washington State Department of Licensing and the Washington State Department of Financial Institutions License number MLO-114864 and is a member of the Seattle King County Association of Realtors and Northwest Multiple Listing Service.

Lenders Continue To Tighten Programs

As lenders continue to retreat from losses, many mortgage programs are being rapidly modified or eliminated altogether. What this means is the days of easy qualification for the minimum down buyer are numbered, at least for now. As always, the pendulum swings, and these programs will be back eventually. That's the bad news, the good news is that we still have excellent VA financing and, in targeted areas, we have the USDA rural housing program available, both of these loans offer zero down options. Another change we are seeing is revised requirements for mortgage insurance as a response to present market conditions. Because of the difficulty in obtaining mortgage insurance, one of our lenders just sent out a vendor profile eliminating half of the mortgage insurance companies that they will allow us to utilize and some other lenders have eliminated the use of mortgage insurance completely.

Watch for rapid changes as lenders drastically tighten standards for loans on condominiums. Some lenders have withdrawn from the condo market and others, as a response to losses, are moving to a much more conservative position concerning their loans on condominiums. As an example of these revised condo standards, many lenders are now requiring that at least 90% of the total units have been sold and recorded and control of the HOA has been turned over to the unit owners and the project or conversion is complete and not subject to additional phasing or annexation. In the past we could often obtain exceptions to these items but not so anymore. In addition to these changes, we are seeing tightened credit standards including loan-to-value restrictions not to exceed 80% for primary residence or 75% LTV for second homes. As always, there can be no litigation pending within a project or HOA and no more than 15% of the units may be delinquent on their HOA dues for more than 30 days. Some of these requirements are not new, but flexibility has gone away.

This blog was written by Brian Leavitt, a Licensed Real Estate Broker and Licensed Mortgage Broker representing Northstone Real Estate Inc, and Northstone Mortgage.

Brian serves clients within the Northwest Multiple Listing Service.

You can contact Brian directly by phone at 800-806-3145 or by email at brian@northstone.net. Click here to view his client newsletter.

Brian is licensed with the Washington State Department of Licensing and the Washington State Department of Financial Institutions License number 510-MB-19802 and is a member of the Seattle King County Association of Realtors and Northwest Multiple Listing Service.

Close your own loan revisited

Here we go again. Trust me, I am not trying to belabor the point from my earlier blog, but hey, they are sending this…stuff.. to me. Here is the lamest, I mean latest in their spam series that really is such a disservice to the consumer.

And I quote, "Is it realistic to expect a Loan Officer to memorize all of the details of every loan program without making a mistake? At Close Your Own Loan.com, we use a state of the art automated underwriting engine. This sophisticated computer underwriting system is able to analyze every aspect of an applicant's ability to qualify and has streamlined the loan process to the point that we no longer need an employee who reads underwriting guidelines and manuals to understand who qualifies for which loan. We have eliminated the Loan Officer.

Don't worry. You won't have to figure out how to use this system. Once you complete the online application and send the requested information to one of our experienced Processors, they will run your file through this automated underwriting engine. Your Processor will ensure the loan you selected is immediately and automatically approved and a full blown loan approval will be issued at this time. "

The person that wrote this does not even have a fundamental knowledge of how the mortgage industry operates. Yes, the "Loan Officer" as they call it, sounds so official doesn't it, in actuality a Loan Originator, is expected to ACTUALLY READ the loan application and understand the file. That is their job. And yes, they are expected to get it right. They are also expected to analyze the borrower's situation and based upon the Loan Originators training, skill and experience make recommendations that go way beyond any underwriting engine now in existence which brings me to point two: Every mortgage company that has been in business more than a week uses automated underwriting, it is the industry standard and a requirement of every Fannie Mae and Freddie Mac loan. What's so special about that? Point three: It is the underwriter whose job it is to understand underwriting guidelines and verify the findings of the automated underwriting engine. I like how they do not have employees who read the file, they have processors, what do they have for processors, trained monkeys? Here is my favorite... wait for it... "Your Processor will ensure the loan you selected is immediately and automatically approved and a full blown loan approval will be issued at this time. " No qualifying, you just get approved. OK then, why bother with applications and underwriters? Everybody out there with a 500 or lower credit score you are THERE! Go to closeyour loan.com tm and demand your approval and do it now.