- The $8000 first time home buyer tax credit that didn’t have to be paid back is introduced.
- Foreclosures declined but short sales were on the rise.
- Stated income loans went away, making it difficult for self-employed income borrowers to get a new mortgage.
- New mortgage guidelines tightened up.
- Large investors (unless they are cash buyers) got bumped out of the market.
- Resurgence of the small/first-time investor.
- Resurgence of the USDA 100% financing mortgage for rural areas.
- The Government injected lots of capital into the mortgage backed securities keeping interest rates low.
- The Government injects billions into the banks in the form of the TARP (Troubled Asset Relief Program) with the intent to modify existing mortgages. The banks modify only a very small percentage of these mortgages.
- Fannie Mae and Freddie Mac introduce the DU Refinance + and the Home Access Programs designed for home owners to refinance who initially had 20% equity when they first got their mortgage and have seen their home values decline. Program is a moderate success.
- Rates went up and rates went down.
- The Home Valuation Code of Conduct (HVCC) is introduced in May. Appraisals must now be ordered through Appraisal Management Companies (AMCs). Many reports indicate this system is very flawed and has lead to higher costs to the borrower in obtaining a new mortgage.
- The Mortgage Disclosure Improvement Act (MDIA) is introduced in August. It gives borrowers more information upfront before any money can be collected, but adds costly time to the mortgage process.
- The Government extended the $8000 First Time Home Buyer Tax Credit to June ’10 and added a $6500 repeat home buyer tax credit. Experts say there will not be any more extensions.
Posts Tagged ‘HVCC’
On Your Marks, Get Set…Wait!
September 24th, 2009Anybody that has tried to get anything done with their mortgage recently understands that things have been moving a little slow. Well good news, the politicians in all their infinite wisdom decided that you the consumer need EVEN MORE TIME to make a proper decision about your mortgage. The fact that on average a mortgage takes 3-4 weeks to complete and that after you sign documents on a refinance; you still have an additional 3 days to decide whether or not you want the new loan.
The Home Economic Recovery Act (See the name even sounds good) or HERA as it is also known, went into effect on July 30, 2009. On average we are expecting that HERA will add 5 to 10 days for your new mortgage to close. What that really means is that now instead of being able to lock rates for 30 days, many loans will have to be locked now for 45 days. The longer the lock, the more it costs.
Now I understand what the intention behind this new law was to try and protect consumers but they are going about it the wrong way. There are enough laws on the book. What would be more helpful to consumers would be to enforce the existing laws. All the laws in the world mean nothing if they are not enforced.
Something that would make more sense is giving the consumer a way to file a complaint if they feel they were tricked or lied to. If the Department of Real Estate received enough complaints, then they could investigate a particular broker’s business, instead of changing the rules to punish everyone. Because as I have stated before, those people who obey the existing laws will obey the new laws and those who don’t obey the existing laws, will not obey the new ones either. They will just figure out a way around them.
What is the HVCC?
September 24th, 2009HVCC is the acronym for Home Valuation Code of Conduct. While this is a law that pertains to how both mortgage brokers and lenders run their business, HVCC directly affects you, the consumer, by driving up costs for getting a new mortgage.
The HVCC is a law that was created with the intention of making sure that appraisers were not being influenced by lenders or mortgage brokers. This law came about because the New York State Attorney General, Andrew M. Cuomo sued Fannie Mae and Freddie Mac (the two larges purchasers of mortgages) saying that they did not control the appraisal standards enough on loans they were purchasing. As a result of the lawsuit all loans that would be purchased by Fannie Mae and Freddie Mac after May 1st must have the appraisal ordered through an appraisal management company or AMC. (Just a note, these AMCs are not regulated in any way.)
The whole idea behind the HVCC is the government is trying to prevent lenders/brokers and appraisers from conspiring together on mortgage transactions, but here is what we have seen HVCC do so far:
- Average cost of an appraisal has gone up.
- Appraisers are getting paid substantially less per appraisal which is causing a mass exodus of good appraisers from the industry.
- Many appraisals are being done be inexperienced appraisers who don’t even know the area they are appraising.
- Many appraisals are coming in undervalue, not because the value is not there, but because the appraiser did a poor job on the appraisal.
- Turn around times on appraisals have at least doubled, so this adds lots of time to the loan process.
- If there is a problem with the appraisal, no one except the AMC can talk to the appraiser about it.
- Because these AMC companies are nothing but order takers, they do not have the ability to communicate challenges to the appraisal so changes are very unlikely.
- HVCC has done nothing but cost consumers more time and money and has not made the mortgage industry any safer.
There is a light of hope here though. On June 26th, H.R. 3044 was introduced into legislation. H.R. 3044 calls for an 18 month moratorium on HVCC. The hope would be that after the 18 months, HVCC will be thrown out all together or at least changed in such a way that it achieves what it intended too.
