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My good friends and associates, Brian Woody and Ian Coates of First Colonial Appraisals, Richmond, VA, traveled with the guys from www.thinkbigworksmall.com to present the petition to rescind the HVCC to Attorney General Cuomo in New York City.  Watch this clip http://www.thinkbigworksmall.com/mypage/player/tbws/20174/953322 or watch the interview later that day of Marc Savitt, President of the National Association of Mortgage Brokers on Fox News http://www.foxbusiness.com/search-results/m/27463034/home-valuation-fraud-s-impact-on-housing.htm#q=home+valuation+code+of+conduct.

As a mortgage broker, I have worked with numerous appraisers over the years and, like any other industry, while a few may not be as diligent as you’d like, most are good, honest and hardworking individuals committed to providing good service to their customers.  The HVCC implemented earlier this year has cost consumers millions in extra fees and, many times, the ability to achieve their home financing goals.  What was supposed to protect the consumer has only created more bureaucracy and higher fees. 

In addition, since HVCC regulations often prevent the appraiser from being able to use common sense and knowledge of a market, values of properties all across the country have been further depressed.  For a great overview of the issues surrounding the HVCC regulations, see Reuters article “Petition to Rescind HVCC Strikes Hot Button with Real Estate Industry and Consumers”.  The petition was presented to New York’s attorney general, Andrew Cumo, this past Wednesday with approximately 120,000 signatures.  It’s time for legislators to realize they need to really look at the problems and issues we are facing as a nation and seek appropriate solutions rather than passing ‘off the cuff’ legislation that does nothing to address the problem or protect consumer but merely creates more bureacracy. 

Last night, in a vote of 98-0, the Senate approved legislation that will extend the first-time buyer tax credit through next year and, as a bonus, is proposing a $6500 tax credit to current homeowners that have owned their homes for at least 5 years.  The legislation has been sent to the House for vote.  Other measures to meet the growing need of jobless Americans include extensions of unemployment benefits.  In states hardest hit by jobless claims, benefits could extend up to 99 weeks, a significant increase over the 65 week maximum benefit period during the 1970s.

The updated first-time homebuyer tax credit benefit also increases the income limit on a single borrower to $125,000 annually and qualified home values up to $800,000, so the new legislation not only extends the benefit, it increases the number of Americans that will qualify.

If you’ve been waiting on rates to drop to refinance or take advantage of the $8000 first-time home buyer tax credit, you’re running out of time.  Rates are down again but, for how long is anyone’s guess.  A first-time buyer wanting the $8000 tax credit must close by 12/1/09.  Most lenders are setting deadlines on when they will accept an application and still be able to guarantee closing in time to meet the 12/1/09 deadline. 

In addition to full pipelines for many lenders, there are 4 federal holidays, one of which is Thanksgiving which includes Friday as a holiday in some areas, between now and 12/1/09.  Most likely, if you haven’t already found a home to buy or are not already in process of negotiating a contract for sale, it is too late to get into the queue for closing by the deadline.  If you’re going to try or have already initiated the process, be certain that you are prepared to meet lender requests for documentation, etc. immediately to ensure your loan process is as streamline as possible. 

Rates on 30 year fixed mortgages have now dipped below 5% for the first time since May.  Many people that wanted to refinance back in May were “waiting” for rates to drop to 4.5 or lower and often were ’shopping’ multiple lenders for a better rate.  It didn’t happen.  Towards then end of May and into June, rates began to rocket upwards and got close to 6% for some borrowers and certain loan scenarios.

With these record low rates, some of those borrowers left behind in May will want to consider refinancing now.  If you were one of those that missed the last dip in rates, there are some things you know and plan for in order to take advantage of the low rates now.  A word of warning, you can not ’shop’ rates with different lenders effectively if you don’t understand the factors that are included in a true rate quote.  Rates are good only for the minute in which they are quoted.  They fluctuate daily, often many times throughout the day.  If a company ‘posts’ rates on their website, rest assured that the ‘posted’ rate is NOT necessarily going to apply to you because a true rate quote will take in a number of factors that are specific to you and your particular loan scenario.

For example, a true rate quote will be based on your credit score, loan-to-value (the amount you want to borrower versus the value of the property), where your property is located (rates are not the same nationwide), whether or not your new loan will require PMI insurance, and whether or not you will be receiving cash back at closing.

Your rate will be higher if you are paying off a first and second mortgage (considered a cash-out refinance even if you are not getting money back at closing) than if you are simply refinancing the balance on a first mortgage.  However, if your loan-to-value is below 70% and your credit score is near 800 or higher, it may not impact the rate as much so as you can see, it’s very hard to compare ‘apples to apples’ if you are trying to ‘rate shop’.  If you have multiple lenders pull your credit report because they need your credit score to provide you with an accurate rate quote, you risk your score being affected.

A much better strategy for the savvy borrower is to shop for a reputable lender.  If you select a good lender and have an experience loan office, s/he will be able to ensure that you receive the best rate available for your specific loan scenario.  Once you’ve determined which lender/loan officer you want to work with, then you can give that loan officer permission to pull your credit report and provide you with an accurate rate quote. 

Also, it is important to keep in mind that if you lock your loan before the appraised value has been determined, you will risk your rate changing as values are very difficult to predict in the current market and the loan-to-value is a key factor in your rate quote.

If you are like the fiesty Ms. Minch of YouTube fame and feel your credit card rate has been increased unfairly, there are a number of things you can do. 

First, get your documentation together, recent payment records, recent bills, any notices received from the credit card company, etc. and create a timeline of events leading up to the rate hike.  If you did, in fact, have a late payment that prompted an unreasonable jump (Ms. Minch’s rate went from 12.99 to 30% which is overkill for one late payment in my opinion), note the circumstances surrounding the late payment.  For instance, if you’d recently lost your job and were late because you were unexpectedly strapped for cash, you need to document it. 

If there was not an ‘event’ that triggered the rate hike, then make note of what ‘reason’ you were give in the written notice you received from the credit card company.  Remember, credit card companies will issue cards stating the rate you will receive on the card and it will often be presented as if you will receive that rate indefinitely, but when you read the fine print, they will state they can adjust your rate at any time.

If you are not in a bind financially and have the ability to transfer your balance to another company’s card or to pay off the account and close it, do it right away.  If you don’t have the ability to do either, with your documentation in hand, call the company.  Note the date, time and ask for the name of who you are speaking with on the phone.  Provide the explanation for late payment or ask why rate was adjusted if there was nothing in your payment history to prompt an increase.  Ask for an immediate reduction to your rate.  If you don’t feel the person you are speaking with is helping you, ask to speak to his/her supervisor or the manager.

Document the conversation especially what you are told regarding your rate if they are going to change it. 

Watch your billing carefully!  Many people utilize online bill pay and since they are not closely reviewing their statements each month or, instead of receiving a paper statement, they get an online notice of their new balance and payment due, the rate may have been changed and they didn’t know it.

There are many consumer protection agencies and legal aid offices around the country.  If you feel you are being treated in an unfair or discriminatory way, contact them and ask for assistance and/or direction.

While the old adage, “he who has the gold, makes the rules”, it is also true that unfair and/or discriminatory business practices need to be addressed and consumers should take action to protect themselves whenever necessary.   

Our hats are off to Ann Minch who creatively fought back on YouTube.com (watch “Debtors Revolt Starts Now”) when Bank of America raised her credit card interest rate from 12.99% to around 30%.  Despite the fact that poor practices on Bank of America’s part and less than stellar leadership from their executives required the US government to “bail them out”, Bank of America’s business practices haven’t improved when it comes to their customers.  This is just one example.

Ms. Minch claims her history had reflected timely payments and an effort to reduce her outstanding debt as she had already paid off one account.  In a 9/29 article on CNNMoney.com, a Bank of America spokesperson stated that a customer receives advance notice of rate hikes and, therefore, the customer has the option to pay off the card at the current rate and close the account.  In most cases, if the consumer had the ability to pay the card off, they wouldn’t have an outstanding balance in the first place.

Unfortunately, Bank of America is not the only credit card company that will suddenly raise a customer’s interest rate without warning causing a significant and often unbearable payment increase.  Many customers with steller credit histories and excellent payment histories find themselves receiving notices of ridiculous rate hikes on credit cards they’ve often had for many years. 

Consumers must start taking action against this type of creditor abuse and speak up.  Consumers should make calls, write letters, go on YouTube.com or whatever it takes if they feel they are being taking advantage of like Ms. Minch.  While there are consumers that default on their unsecured debt, most people are like Ms. Minch and are simply trying to get their debt paid down or off despite difficult economic circumstances or job loss.

First time buyers wanting to take advantage of the $8000 tax credit must contract and close on their new home by 12/1/2009.  While there continue to be persistent rumors that the credit will be extended into next year, until that legislation is passed, borrowers have about another month, at most, where they could potential contract on a home and get their loan closed in time to get the credit.

There is legislation proposed in both the Senate and in the House which extend the credit time-frame and/or expand it to include all borrowers.  It has been a year since the implosion of the mortgage industry with the govenment take-over of Fannie Mae and Freddie Mac, the collapse of Lehman Brothers and many other lending institutions.  The tax credit has been instrumental in bolstering the sales of homes despite rising unemployment.

While we are approaching the slowest sales season for home sales, the holidays and winter months, proponents of extending the tax credit see it as a way to keep the housing market moving forward.  Detractors, however, see rising deficits and increased government spending as problematic for the long-term.

As the legislation stands currently, a first time buyer (defined as someone that has not owned a home in the last 3 years) with an adjusted gross income of $75,000 or less ($150,000 for a married couple) has to contract and close on their home purchase on or before December 1, 2009 to be eligible for the full $8000 credit.

Additional changes in underwriting guidelines apply to a borrower’s tax returns.  As a result of “ongoing concern with fraud and misrepresentations” Fannie Mae is making new requirements concerning lenders obtaining transcripts of a borrower’s tax returns.  The new guideline will require the lender to obtain written permission from the borrower, both at application and closing, to obtain the borrower’s tax transcripts to verify income documentation provided by the borrower with their loan application.

Verification of employment guidelines are also being made.  Previously a lender, if underwriting a loan that has received an approve/eligible through DU, was required to obtain a verbal Verification of Employment (VOE) within 30 days of the closing date.  Since many large corporations have complex and cumbersome Human Resource systems that can take up to 3 weeks to respond to a request for verification of employment, the new guidelines are going to present some serious issues since they require the VOE to be obtained by the lender not more than 10 days prior to closing.

Whether a borrower is applying for his/her first mortgage or fifth, the tightening of underwriting guidelines across the board are making lending more difficult.  Borrowers with superior credit rating are not given any ‘exemptions’ from these underwriting guidelines.  As the holidays approach and fears of recession continuing well into 2010, borrowers are left wondering if getting a new mortgage is even possible. 

There have been numerous cases recently in my own experience where highly qualified borrowers were denied financing based on unreasonable guidelines or a lack of ‘common sense’ underwriting.  When borrowers with superior credit and significant assets can not get financing due to lack of a common sense approach to underwriting then it’s safe to say those less qualified are doomed.  If borrower’s from all walks of life are unable to buy homes, the economic recovery that everyone is desparately seeking will be a long time in coming.

Fannie Mae, which purchases a great majority of the conventional home mortgages currently underwritten in the US, made recent changes in their qualifying guidelines which are the result of “a comprehensive review of current underwriting and eligibility policies with a specific focus on current market conditions.” These include “increased unemployment, stock market fluctuations, and heightened concern about fraud in the mortgage lending process,” in the policy announcement 9-19 from Fannie Mae’s selling guide.

The maximum age of credit documents is reduced for both existing construction and new construction, 30 days reduction for existing (120 to 90) and 60 days reduction for new construction (180 to 120). 

Additionally, Fannie is making dramatic changes in its guidelines for construction financing, especially construction-to-permanent loan programs.  Fannie’s announcement claims this is due to fears of change in a borrower’s financial circumstances during the construction period when utilizing a single-closing loan program.  The most significant change is the lower LTV (loan-to-value) requirements.  Now, if upon the completion of construction, the borrower’s total loan-to-value is not 70% or less, the borrower will be required to go through underwriting and closing a second time.  This change alone can cost the borrower thousands in additional closing expenses.

Lending in the US is already limited to those able to provide extensive documentation as to their income, assets and credit history.  The harder it is for qualified, A+ credit customers to get financing, the longer the economic recovery will take. 

Next, additional changes from Fannie Mae.