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Showing posts from August, 2010

Latest Real Estate Closing Disaster? Federal (flood) Disaster Declaration

Ronald Reagan famously remarked that "[T[he nine most terrifying words in the English language are: 'I'm from the government and I'm here to help.'"
I am reminded of the quote as a wave of emails and voice messages cascades through the office today. Last Thursday's declaration that Cook, DuPage and five other local counties are federal disaster areas should be a great help for the hundreds of homeowners and small business that were adversely effected by last months severe storms and flooding.
The disaster declaration however is fast becoming a disaster of its own for many Chicago area buyers and sellers hoping to close their contracts this week.  
As a direct result of the declaration of a flood-related disaster area, most mortgage lenders are requiring re-inspections on all appraisals dated August 7th, (the last date of the storm/flooding "incident" or earlier. 
How many closings will be delayed as lenders and appraisers scramble to document the ab…

Mortgage Fraudsters - if we could only harness their powers for good and not evil

I am continually amazed by the creativity and effort that goes into mortgage fraud. Ask anyone who has been through the process of trying to use a mortgage loan to buy a home or condo in the last two years. Dollars to donuts you are going to see an eye roll, hear a clucking noise, or a heavy sigh before that person describes an ordeal of verifications, re-verifications, and cross-verifications. The majority of transactions I have worked on this year have been delayed as loan originators and underwriters try to parse every bit of data presented in a loan application.

Lest your toil be for naught dear borrower, check out this story reported on Crib Chatter today that picks up on a report from Reuters about the scam running over by Back of the Yards.

How big is the problem?

In its first-quarter report, Interthinx said its Mortgage Fraud Risk Index rose 4 percent to 151, the first time it had passed 150 since 2004. A figure of 100 on the index would indicate virtually no risk of fraud.....…

FED BANS YIELD SPREAD PREMIUMS

On Monday, the Federal Reserve Systems' Board of Governors issued a final rule that places strict new limits on the way in which mortgage loan originators can get paid.

The new order:

Prohibits lenders from paying originators added compensation when borrowers agree to accept higher interest rates or other loan terms than they might otherwise qualify for  (the yield spread premium or "YSP").Disallows originators receiving compensation from lenders or other third parties if the borrower pays them too, andMandates that originators not "steer" consumers to loans that increase originator compensation but that are not in the consumer's best interest. Consumers have long been at risk when dealing with loan originators who are compensated based on the terms of the loans offered. Loan officers, having superior knowledge about various loan programs were often offered very lucrative inPublish Postcentives (i.e. more money) if they could convince (or mislead) borrowers …

Mercury Title - Closed

I was very sorry to learn today that Mercury Title Company closed its doors yesterday. Great company. Really nice staff. Another victim of the down real estate market. Mercury is transitioning all active files and post-closing matters over to Chicago Title.