For Mortgage And Real Estate Pros:The Government Will Shut Down And Here's What You Need To Know

The following is the latest information available.

 There are still many areas of uncertainty,so please be aware that this information is subject to change. Additional information will be provided as it becomes available.

The following summarizes the anticipated impact to government agencies:

FHA

FHA Connection is expected to be operational and lenders should be able to obtain case numbers, perform CAIVRS checks, obtain insurance endorsements, and pay upfront MIP premiums.

Loans with a case file number, approved appraisal, clear CAIVRS and FHA approval(if test case)may close provided all other standard requirements are met.

Potential issues include:

 System issues preventing case #s from being obtained
 Support staff may not be available to assist with loan level issues
 Uncertainty concerning loans submitted for a case number but placed “On Hold”
 Uncertainty concerning the ability to obtain FHA Project Approval if project is not FHA approved
 Uncertainty concerning the ability to have a case number transferred from another lender

VA

Loans with an approved appraisal and clear CAIVRS may close (provided all other standard requirements are also met).

The VA has issued the following statement:

Impact: The VA Home Loan Guaranty Program will continue to operate as normal in the event of a Government shutdown.

Lenders and Servicers should continue normal activities which include but are not limited to,the following:

(1) Lenders should continue to submit funding fees through the VA Funding Fee Payment System;
(2) Lenders can obtain their Loan Guaranty Certificates in the WebLGY system;
(3) Lenders can continue to order and receive appraisals and issue Notices of Value;
(4) Lenders and Veterans can continue to obtain a Certificate of Eligibility online through the appropriate systems; and
(5) Servicers can continue to perform loan modifications,submit claims and receive claim payments, and convey properties to VA.

USDA

Loans with a USDA Conditional Commitment that does not contain provisional “subject to” language and with clear CAIVRS may close (provided all other standard requirements are also met).

Potential issues include:

 May not be able to issue new commitments or Loan Note Guarantees
 May not operate GUS
 Support staff may not be available to assist with loan level issues

Additional Information

IRS Form 4506­T & TaxTranscripts

Lenders will continue to require signed IRS Form4506‐T and tax transcripts.

Loans toGovernment Employees

Loans may be closed provided all documentation required for closing or loan purchase has been obtained. However, if any pending documentation cannot be obtained (including a verbal verification of employment), a loan will not be permitted to close or will not be purchased. A verbal verification of employment is an investor requirement that must be satisfied.

Social SecurityAdministration

Lenders may not be able to verify Social Security Numbers through the SSA.

FEMA Flood Insurance

It is anticipated that most functions will not be affected, however,mapping issues or amendments may be impacted.

My Opinion on Mortgage Rates

Despite concerns about rising rates and relying on my previous readings about Monetary Policy, I can comfortably state that the Fed had used five variations of “extended period” language to restrain expectations of policy rate hikes, eventually suggesting that it would maintain its low policy rate until at least mid-2015.

Low rates are appropriate for as long as the unemployment rate is above 6.5 percent, medium-term inflation forecasts stayed below2.5 percent, and long-run inflation expectations remained anchored.

I think that the recent signaling by the Fed Chairman is a market test and has not been understood properly and I think that mortgage rates are being pushed higher only because of market volatility .

There is little room to believe that the  US mortgage rates wil go higher than 5% for a significant period of time or that the Fed can slow down its QE (quantitave easing)  in light of the Massive Japan QE over the next two years  even if the Japanese QE is mainly aimed at expanding bank reserves rather than easing credit market conditions.

Rates will head to the low to mid 4’s during volatile periods with significant  periods in the mid to high 3’s still until 2015.

An active management of pricing margins is even more crucial in the upcoming couple of years .

Nabil Farhat 

Mortgage Fraud Jumps 30%

Mortgage Bankers Report Growing and Widening Lending ProblemsMortgage fraud is a burgeoning crime that is affecting more and more companies and communities, according to a new report from the Mortgage Bankers Association (MBA). In its ninth annual report, the Mortgage Asset Research Institute (MARI), a service to MBA members, illustrates just how quickly the problem is growing. Suspicious activity reports (SARs) related to mortgage fraud have risen from more than 3,515 in fiscal year 2000 to more than 28,000 in fiscal year 2006, representing estimated losses of about $1 billion. It is important to note that this likely represents only the tip of the iceberg, as SARs are only required to be filed by federally regulated institutions, the MBA noted. The MBA's annual reports examine the current composition of residential mortgage fraud and misrepresentation in the U.S. The highlights of the new report are as follows. · The number of SAR reports in the database pertaining to 2006 originations is approximately 30% higher than the number of reports in the 2005 book of business at the same time last year. Additionally, incidents of mortgage fraud are now more evenly distributed across nearly all states, whereas in prior years, reports tended to be concentrated in relatively few states. · Florida holds the top spot for suspected mortgage fraud. While Georgia, which led the rankings in 2005, showed the greatest improvement from prior years' rankings, dropping to fourth. · California's reported fraud had been quite low in the past few years, and some industry experts had suggested that its problems were masked by high real estate appreciation. The recent slowdown in its housing market may explain California's return to high ranking (second) in this year's report. Michigan was third. And · The most common types of fraud found to date in 2006 originations are in the areas of employment history and claimed income. The current unsettled state of the subprime segment of the industry does not bode well for fraud in the coming year, the MBA noted. Subprime lending had grown rapidly in recent years. In late 2006, losses related to loan defaults and fraud greatly diminished investor funding, and subprime originations have fallen sharply. Credit standards have tightened and sources of investor funding have become scarce. Regardless of which investors fill the funding void and when, this segment of originations will continue to have an impact on mortgage fraud trends over the next few years, the MBA said. It will likely take three to five years to uncover most of the fraud and misrepresentation in the 2006 book of business, and MARI continues to receive reports on 2006 loans. During this period of time, many ARM loans will be refinanced, potentially preventing discovery of some of these issues, the MBA added.