As published in Scotsman Guide's Residential Edition, November 2009.
The focus of this month's Scotsman Guide is legislation. And even for the least-cynical among us, it seems recent verdicts passed down from high that impact the mortgage industry fall into three categories:
Those increasing reliance on government
Those increasing constraints on third-party originators
All of the above
Each is equally significant. Take the government conservatorship of Fannie Mae and Freddie Mac, the future of which likely will be decided next year, or the near-necessity to be a part of the Federal Housing Administration (FHA)-loan channel to survive. Or the clampdown on yield-spread premiums and on brokers ordering appraisals, post-Home Valuation Code of Conduct. Or the confluence of interventions, such as the FHA increasing the net-worth requirement for lenders to from $250,000 to $1 million.
Perversely, those aren't even the tip of the iceberg, as new rules go. But a number of articles in this edition attempt to silence the confusion about many of the changes impacting you most.
Good-faith estimate (GFE): The U.S. Department of Housing and Urban Development (HUD)'s latest handiwork, required as of Jan. 1, is three pages long. HUD's GFE FAQ: 43 pages. Thankfully, Joshua Weinberg of Calyx Software's page-by-page analysis and American Acceptance Mortgage Inc.'s Richard Smith's look at charges are a bit easier to digest. (Editor's note: On Nov. 13, the U.S. Department of Housing and Urban Development (HUD) announced it would "exercise restraint" in enforcing its new good-faith-estimate and HUD-1 rules through May 1. Info: sctsm.in/HUDrest.)
Appraisals: As of Jan. 1, the FHA will no longer allow broker-ordered appraisals. But Coester Appraisal Group's Brian C. Coester breaks down how brokers can help clients prepare for valuations. We also reconnect with the Appraisal Institute's Jim Amorin — who predicted a "lower-quality appraisal" climate in July 2008 — in our Q&A.
Licensing: Some states are a part of the National Mortgage Licensing System, some are transitioning to it and some are dragging their feet. Regardless, all must adopt its standards by Aug. 1 or have the standards adopted for them. But what should you know now? Gronsky Law Office's Robin M. Gronsky tells us.
Also: As the year winds to a close, we'd like to end on a celebratory note. With help from former Mortgage Originator Magazine editor David Robinson, we'll soon be compiling our Top Originators list of the best brokers, bankers, originators, etc., in 2009 for publication next year. Be the first to know: Sign up for updates at scotsmanguide.com/TOlist.