How Do We Get the Message Out that Mortgages Are NOT Car Loans?

Here is an interesting article written by Brian Koss of Mortgage Network, Inc. Find out what’s really going on with the industry.

There was a time in the late 90’s when all the focus was on getting the manufacturing of mortgages to mirror the manufacturing of car loans. The idea was that technology was the answer, formulas in black box models held all the answers. By eliminating expensive underwriters, appraisers and loan officers, the process would be cheaper and faster. By 2005 we were there with AUS running AVMs with online applications. A good FICO at a low LTV with “green light” and you could close tomorrow with a notary and title rundown.

Whiplash! We have gone so far back our necks are aching! Not only are we thoroughly underwriting files with every piece of FULL documentation. We are auditing and post-closing the file prior to close! 90% of the loans done today are Government loans, some of which involve Government hands touching the loan — RD underwrites, FHA Condos, VA appraisals, State Bond final approvals, FHA new construction, etc. So control is not always in the hands of even the largest lenders. This is not about broker v.s. lender; this is about double and triple checking to ensure the best chance of no buyback or compliance violation.

All trust and common sense has left the industry. By having a mortally wounded Fannie/Freddie backed into the corner as your primary lending source, it is liking forcing you into an abusive relationship. You keep coming back home but flinching every time you take a loan. This behavior cascades as it runs through the chain of lenders of every size. Add to that an unreadable and unimplementable regulatory position with an unforgiving prosecutorial mindset enforcing it, and you have a catatonic state that smothers creativity and automation. So the concept of applying for the car loan at the dealer with a mini-app and receiving a “greenlight” on a Saturday is beyond dead.

Ironically, the demand for those parties who were trying too be eliminated — good underwriters, good loan  officers, and good appraisers –has never been stronger. But you must be well licensed and thoroughly designated. If you are not a Govie expert or certified or insured etc you are not in demand. It is a new land for professionals. Professionals can also do miracles and handle emergencies well. What they will refuse to do is nothing but miracles and emergencies.

So why haven’t the Realtors been able to receive, understand and comprehend this message about the changing of our business? Why do they continue to demand unrealistic dates for their transactions? Maybe its because mortgage people are too afraid to discourage or refuse the demand to close that RD loan in 27 days or the FHA condo in 5 weeks or the 4 person investment deal in a month. Maybe, because we are afraid that if we tell them we don’t want to take that deal with the unrealistic closing dates we fear they take that as we can’t?

The fact is that we CAN do it; Hell we have closed in a few days if MDIA allows! It’s the question of protecting a deposit in case it doesn’t close and of course the managing of expectations. Every borrower says “Just do what you say you are going to do when you say you are to do it.” Why would anyone go into a transaction promising something they can’t deliver? If we were a builder we would be sued for negligence and bait and switch, but we allow ourselves to be pushed into it. That is our own fault as an industry. All the risk is ours and the customers. Their deposit is at risk and we are left with a rushed poorly manufactured loan with all the reps and warrants for the life of the loan. CRAZY!

I believe that the professional realtors out there would change their approach if they understood what they were asking for. I believe that the large majority of deals do not have to close as fast as they are requested. Its “wants v.s. needs”. We can assess each deal and let it be known up-front if the dates are realistic. But the threat of “if you cant meet this date, I’ll find someone who will” isn’t the right answer. The current and future regulatory environment wants the borrower to not be rushed and believes that 60-90 days is the right time to close. This is not your lender talking but your government on behalf of the borrower. So unless there is change in Washington don’t hang Main St. lenders out to dry….  (part 2 coming…)

Bill Nickerson NMLS #4194

Merrimack Mortgage Company     179 Great Road Acton MA 01720

Do I Really Need Title Insurance?

Title insurance is one of the important and least understood aspects of a real estate transaction. There are two types of title insurance; lenders’ coverage and owners’ coverage. Title insurance protects the lender and the owner against all types of title defects and also covers issues such as zoning, access, and protects the lender and owner against frivolous claims against title by providing legal defense against such claims.

In Massachusetts, a real estate attorney examines title to a property and must certify title to the lender and owner. However, this certification is based only upon a fifty year title search and is based only on the documents that are recorded at the Registry of Deeds.  There are many situations where an attorney has done his or her job perfectly, and yet title issues could exist. For instance, if there is a forgery in the chain of title or if there is an heir who was erroneously omitted from a probate notification, title to a property could be defective.  Additionally, if a document is improperly indexed at the Registry of Deeds or if a signatory to a deed is a minor or is incompetent, this could also make the title defective. These defects are called hidden defects and this is what makes title insurance so important to protect one’s interests.

The lender’s title insurance is required in practically every closing.  It is a common misconception on the part of buyers that if there is a lender’s policy in place, the owner’s policy adds little value, particularly where the mortgage is a high loan to value mortgage.  In fact, the lender’s policy does not protect the owner at all, as it only comes into play if the property is foreclosed by the lender and the lender is then unable to resell the property due to a defect.   In recent years, owner’s policies have saved the day when documents such as mortgage discharges and mortgage assignments have not been properly recorded at the Registry of Deeds, and the title insurance companies have provided the necessary assurances and guarantees to allow the closing to take place.

Each buyer should consult with his or her attorney to learn more about the costs and benefits of title insurance.  All title insurers provide a substantial discount when the lender’s policy and the owner’s policy are purchases simultaneously.

Courtesy of: 

Mark L. Scheier Esq.

Scheier & Katin P.C., Acton MA

MScheier@skactonlaw.com

Pumpkin Patches and More

I love autumn in New England!  The colors, the apple picking, Halloween and the pumpkin carving.  I’ve included some information on how to make your carved pumpkin last longer.  Also check out this link, Pumpkin Patches & More, for great local pumpkin patches, recipes and the history of Halloween.

How to Preserve Your Carved Pumpkin to Make It Last Longer!

A little simple Halloween magic with household items will make your Jack O’ Lantern last a week longer!

Did you carve a great pumpkin last year only to have it rot days before Halloween? Here’s how to preserve and protect it!

What causes the pumpkin to decay?

There are several primary causes heartbreak of “pumpkin rot”

• The intact skin of a pumpkin protects it until you carve it.  But then various organisms (fungi, bacteria, molds, fungi, protozoans, insects – scientifically know as “those little buggers!”) can get inside and start to break it down.
• Oxygen in the air can also easily enter and break down the pumpkin (oxidation).
• Simple dehydration (drying out) will will begin the moment the pumpkin is carved.

All of this will turn your carved young happy pumpkin face into a sad old man in several days time!

How to stop pumpkin aging:

Get Dad’s Rogaine and Mom’s Botox…. no, just kidding!  What we need to do is

• Sterilize the pumpkin’s carved surfaces (to kill fungi, mold, bacteria, bugs)
• Seal the surfaces to prevent drying and to keep out new “little buggers” and reduce drying

Essentially, we’re going to embalm your Jack O’ Lantern, just like the ancient Egyptians did their mummies! (Hey, maybe they practiced on pumpkins!)

Here are the simple steps:

1. Make a bleach solution of1 tablespoon of bleach (typical brand name “Clorox) per quart of water and put it in a spray bottle.
2. Remove dirt: Wipe the exterior surfaces of the pumpkin clean using a damp cloth.
3. Spray the pumpkin inside and all cut areas of the pumpkin with the solution.  This will kill much of the surface bacteria and mold that cause rotting.
4. Let it penetrate and dry for about 20 minutes
5. Next, rub all of the carved or cut surfaces with petroleum jelly. This will keep out new bacteria and molds as well as dramatically reduce the dehydration!
6. Wipe away excess with a paper towel!
7. Now, keep your pumpkin out of direct sunlight and try to keep it as cool as possible (but above freezing!) and you should get at least a week’s enjoyment out of it! Then when it’s time to go, you can employ several thousand laborers to build a giant pyramid in your backyard to entomb your Jack O’Mummy!