ATTACK OF THE PHANTOM GUIDELINE!

That's right people, its time for another episode of the "Attack of the Phantom Guideline"! What's that you say, you're not familiar with that show? Me neither, but apparently it comes on whenever i am trying to close a cream puff of a loan. You know, it's the show where lenders make up underwriting guidelines that no one (me) has ever seen or heard of before, and then have no way of backing them up.

This week's episode: "The 20% Square footage guideline."

Our show begins with our mild mannered mortgage broker, Moe Jazzei, who we find has just received his conditional loan approval from his preferred lender, Nuntrust Mortgage, who has taken eight days to underwrite his loan. Eager to close his loan, Moe quickly reviews his approval. Loan to value: 46% -check. Credit score: 795-check. Loan term: 15 year - check. Interest rate: 4.375 - check.

Now, on to the underwriting conditions. Great Scott! There is only one. But what's this? OH NO!! It's the PHANTOM GUIDELINE!!! The underwriter is requesting two new comparable sales due to square footage being off by more than 20%!!! That's right, unbeknown to our intrepid mortgage broker, apparently the square footage of the comparable can not be 20% greater or less than that of the subject property!! To make matters worse, she is quoting guideline!!

This can't be, Moe says to himself. I have never heard of this. They must be mistaken. Trying to keep his composure, Moe decides to contact his appraiser, as he realizes even though he is a very knowledgeable broker, perhaps this is a section of the Fannie Mae underwriting guide he just plain missed. But much to his dismay, his appraiser of twenty years experience is also puzzled. "Never heard of that one", he quips.

Getting no satisfaction from his appraiser, Moe decides to contact the underwriter. After several phone calls and messages (shocker) to the lender, Moe finally reached the underwriter.

He asks, "Is this a Fannie Mae guideline or a Nuntrust guideline?" "Fannie Mae", she says. Moe quickly responds, " I cant find it in the guide, do you have a copy?" " No, I don't", she quickly replies." "How am i supposed to get it then?" "Check with Fannie Mae." " I did, and i could not find it." " Well, if you don't have it, and Fannie Mae doesn't have it, how am i supposed to know it exists?" "I will have to get back to you on that one".

Will the underwriter be able to obtain the Phantom Guideline in writing? Will our broker be able to get this loan closed before his locks expires? Tune in next week kids for the exciting conclusion of " Attack of the Phantom Guideline!"

Posted by Joseph P. Mazzei at www.mymortgagebroker.blogspot.com

Refi Plus - The New Refinance Loan

Here are some of the finer points of the new refinance program being offered to lenders by Fannie Mae, and hopefully offered by lenders to brokers. That information is still forthcoming.

Maximum LTV Ratio

The maximum LTV ratio for DU Refi Plus and Refi Plus is 105 percent. There is no maximum CLTV or HCLTV; however, new subordinate financing is not permitted in conjunction with a DU Refi Plus or Refi Plus transaction.

MI Requirements (private mortgage insurance)

For new refinance transactions with an LTV ratio that exceeds 80 percent, MI may or may not be required depending on the current MI coverage on the existing loan. New refinance transactions with an LTV ratio less than 80 percent do not require mortgage insurance.

Eligible Borrowers

The borrower on the existing mortgage must be identical to the borrower(s) on the new mortgage. Borrower(s) may be added to the new loan, providing the existing borrower(s) is retained.

Ineligible Existing Mortgage Loans

Reverse, Second, and Government mortgage loans.

Loan Purpose

Limited cash-out refinances only, however, existing purchase money subordinate financing may not be satisfied with the proceeds of the Refi Plus mortgage loan.

All existing subordinate financing must be subordinated to maintain first lien priority of the new Refi Plus mortgage loan.

Credit History

No minimum credit score, but the borrower must meet the requirements for a Fannie Mae loan; and credit score will still be a factor in determining the interest rate.

Hope For Homeowners - Hopeless for brokers?

I think a lot of us brokers were looking forward to the H4H loan last year as a possible life line to help us stay in business. Oh yeah, and there's that helping the borrower thing too. Well, i think on both accounts, this program is a bust. This program was seriously flawed from the beginning, and it seems after some minor tweaking by the powers that be, it is still just as undesirable.

I know that I thought this could be a way to keep afloat in this horrific market all the while helping borrowers keep their homes. I am in the Tampa Bay area, what i call ground zero for declining values (i realize there are other areas that are probably worse, but i live here). With rates still being relatively high last year, this seemed like a viable way to keep doing business in spite of the lack of value, credit, and income.

Well, as most of you know, no wholesale lender has made this program available to brokers, and I don't think they are going to. Here is a quote right from FHA's website in regard to how a borrower is to obtain this loan:"It is envisioned that the primary way homeowners will initially participate in this program is through the servicing lender on their existing mortgage". I can't help but think this was the intention right from the word go, a subtle way of saying" brokers beware, your days are numbered". We brokers have targets on are backs, and scarlet letters on our chests. All i can say at this point is fellow brokers beware, cause the winds of change are a blowin'. I just hope they don't blow us out of the industry!

Posted by Joseph P. Mazzei at www.mymortgagebroker.blogspot.com

Treasury Department Considers Plan to Lower Mortgage Rates

I think the FDIC is beginning to get finally get it. Either that, or they are reading my blog.

AP

WASHINGTON -- Financial industry lobbyists are urging the Treasury Department to take steps to lower mortgage rates in an effort to stabilize the housing market.

Under the proposal, Treasury would seek to lower the rate on a 30-year mortgage to 4.5 percent, Scott Talbott, a vice president at the Financial Services Roundtable, said Wednesday.

That's about one percentage point below the current rate of 5.6 percent.

Treasury would do so by purchasing mortgage-backed securities from Fannie Mae and Freddie Mac, Talbott and other industry sources said. While details of the proposal are in flux, the program could be similar to the effort announced last week by the Federal Reserve to purchase up to $500 billion of mortgage-backed securities from the two mortgage giants, Talbott said.

Mortgage rates dropped steeply in the wake of the Fed's announcement. Additional purchases could drive mortgage rates down further, and enable Fannie and Freddie to purchase or back more home loans. Fannie and Freddie, which were seized by federal regulators in September, own or guarantee about half of the $11.5 trillion in U.S. outstanding home loan debt. Treasury is strongly considering the proposal and could announce a decision as early as Monday, industry sources said.

Treasury spokeswoman Brookly McLaughlin said she would not comment on speculation about actions the department may take in the future.

Treasury could make the proposal as part of a request for the second $350 billion of the $700 billion financial rescue fund, industry sources said.

Treasury Secretary Henry Paulson has been criticized by members of Congress for using the bailout money to shore up Wall Street banks, while doing nothing for homeowners facing foreclosure.

The proposal was reported Wednesday on The Wall Street Journal's Web site.

In recent weeks, a diverse set of industry groups from real estate agents to carpet makers have called on lawmakers and the incoming administration of President-elect Barack Obama to subsidize lower mortgage rates and beef up tax credits to help stimulate housing demand.

The National Association of Realtors has been pushing a plan under which the federal government would spend $50 billion to lower mortgage rates. It says doing so would yield about 500,000 more home sales.

The National Association of Home Builders is leading a new "Fix Housing First" coalition to push for aid to the ailing housing sector, including a tax credit of up to $22,000 for anyone who buys a home before the end of 2009.

"The goal is drive mortgage rates so low that home prices not only stop falling but begin to rebound," said Greg McBride, senior financial analyst at Bankrate.com.

While the plan, if enacted, will help anybody looking to buy or sell a home, or refinance out of an expensive mortgage, it may not help those whose credit is so damaged that banks don't want to lend to them.

"It may change the number of borrowers seeking loans but it won't change the qualifications for who gets those loans," McBride said.