More Homeowners Fall Victim to Scams

Posted on October 15, 2012 by admin

Losses of more than $1 billion from 73,000 victims across the U.S. Two hundred businesses shut down. Charges filed against 530 people.

These are some of the results of the Distressed Homeowner Initiative recently released by the Department of Justice, the FBI, the Department of Housing and Urban Development and the Federal Trade Commission. The FBI launched the initiative last October to protect homeowners from fraud schemes and raise awareness about them.

During the press conference where the results were released, Associate Deputy Director Kevin Perkins said, “In contrast with previous initiatives, where the fraud victims primarily were lenders, the focus here is on individual homeowners, many times at their most vulnerable point.”

While these numbers are alarming, they also prove that when federal, state and local law enforcement agencies join forces they can crack down on these con artists that take advantage of vulnerable homeowners.

Cal Haupt, president and founder of Southeast Mortgage

The Distressed Homeowner Initiative focused on fraudulent activity that specifically targeted homeowners. This fraud included primarily foreclosure rescue schemes presented to vulnerable homeowners who had fallen behind on their mortgage payments and were at risk for making modifications and potentially going into foreclosure.

It isn’t difficult to see how easily the con artists succeeded given the market’s difficulty a year ago and the number of people that found themselves in dire situations with their mortgage payments.

Distressed homeowner schemes previously accounted for about four percent of mortgage fraud cases in the United States. Today, that number has risen to 20 percent, making distressed homeowner schemes more common than displaced loan-origination fraud.

The mortgage schemes not only affected those deceived, it ultimately affects the health of our economy and our ability to move forward. Falling victim to a scheme not only puts someone further into debt than they previously were, but a domino effect occurs as that debt widens to other aspects of their finances.

Officials have said that while the results of the Distressed Homeowner Initiative are meaningful in showing their active pursuit, it is difficult to prevent future scams from occurring. The results of the Distressed Homeowner Initiative could serve as a deterrent for future con artists but it is still imperative for every homeowner to take precautionary measures to ensure they do not fall victim to a scheme.

In a previous post on Saporta Report, Kathy Gyselinck mentioned an Atlanta area woman that was sentenced to 18 months in prison for running a scam similar to those run by people recently indicted by the DOJ. Kathy’s post cited some steps suggested by the FBI advisory to avoid becoming a victim of mortgage fraud. Be sure to familiarize yourself with those steps in light of the recent indictments.

As with any industry or business, there will be those who take advantage of others and deceive them – causing skepticism about the rest of the people in the industry who are conducting business honestly and with integrity.

When making any important financial decision – such as with your mortgage – always seek professionals with a proven, honest reputation.

Posted in From the Desk of Cal Haupt | Tagged , , , , , , , , , , | Leave a comment

Better to Buy Than Rent in Atlanta

Posted on October 8, 2012 by admin

CNN Money recently crunched the numbers on 10 major cities to determine whether consumers should rent or buy. In Atlanta, the report stood firmly on the side of buy.

Using data from Zillow, the conclusion was based on how long a homebuyer would have to own a home to break even and have the investment make sense financially.

Kathy Gyselinck is Senior Vice President Human Resources & Legal Compliance for Southeast Mortgage

Atlanta now has a lot of inventory of bank-owned properties and short sales, with a median home price of $176,200. The average monthly rent is $1,950, and as we mentioned in the Thought Leadership column last week, rental rates continue to rise at a rate of 7% a year.

The report took into account the expenses of buying and owning a home, including commissions and fees, mortgage payments, maintenance costs and property taxes, and factored in the benefit of a tax deduction. The forecasted home value was also factored in.

On the renting side, costs such as rental payments, rental price increases and commissions were considered.

The numbers showed that if you live in Atlanta and choose to buy rather than rent, you would break even on investing in a home in 5.9 years and it makes more financial sense to buy rather than rent.

The recommendation was to buy in five other major U.S. cities: Chicago, Dallas, Miami, Philadelphia and Washington D.C. For Boston, Los Angeles, New York and San Francisco, it makes more financial sense to rent.

The highest median home price? It’s in Los Angeles, with a median price of $393,800 followed by Washington D.C. at $379,100. The lowest median home prices were in Miami at $162,800 and Dallas at $163,100.

And of course, mortgage rates are at historic lows – last week the rate was 3.36% for a 30-year fixed rate mortgage. The Federal Reserve will continue to buy $40 billion worth of mortgage-backed securities a month until the job market improves significantly so rates may stay low for a while.

With lower median home prices, rising rents and low mortgage rates, it’s an optimal time to buy a home if you live in Atlanta.

Despite what’s happened over the last five years, remember that homes generally do appreciate in value. There’s no reason to believe that won’t be the case again.

For an estimate of what your savings might be, use the Rent vs. Own Calculator on the Southeast Mortgage website.

Don’t stay on the sidelines any longer if you’re thinking about buying a home. Get in touch with a REALTOR, get pre-approved, and get out house hunting. Now, more than ever, is the time to buy.

Click here to see the entire article, “Buy or Rent? 10 Major Cities.”

Posted in From the Desk of Kathy Gyselinck | Tagged , , , , , | Leave a comment

The Missing Ingredient in the Housing Recovery Market

Posted on October 1, 2012 by admin

There’s been good news on the housing front this past month. While many of the indicators and data we look at to determine the state of the housing industry are moving in a positive direction, the one ingredient we need to really get the market back in shape has been lagging behind: consumer confidence.

Mortgage rates hit historic lows again this week. It seems the Federal Reserve’s program to spend $40 billion a month to buy mortgage-backed securities may be working. The average U.S. rate on a 30-year fixed rate mortgage dropped to 3.4%, while the rate for a 15-year mortgage dropped to 2.73%.

Cal Haupt, president and CEO of Southeast Mortgage

An article in The Wall Street Journal this week, “Housing Market Displays New Vigor as Prices Rise,” reported, “Home prices notched their strongest year-to-date gains since 2005, climbing 5.9% through July and signaling the housing market’s steady trudge toward recovery.”

The article quoted Ivy Zelman, chief executive at research firm Zelman & Associates: “Housing is no longer a negative. It is turning positive and we see the data reflecting that,” she said.

Meanwhile, rents continue to rise, with 7% increases every year. “While it might be hard to get a mortgage, try to get an apartment or find a good rental property,” said Barry Habib of Residential Finance Corporation on the CNBC show “Squawk Box.” “They are expensive, they are not easy to find because people have been burned. They are afraid to jump back into the housing market.”

But as rental rates increase, more people will consider getting back into the market. “The financial differential is giving people the incentive,” Barry said. “They say wait a minute, I’m renting here and it costs less to own and on top of that I’m getting a tax break. People are starting to make that shift.”

As I wrote in a Thought Leadership column last month, during my 25 years in this business and in banking, I have not seen a more favorable alignment for consumers. Even as housing prices slowly inch up, the lower mortgage rates can make up for any additional cost.

The Wall Street Journal pointed to Tuesday’s Standard & Poor’s/Case-Shiller 20-city index, a favored tool of economists for measuring the state of the housing market. “The rising prices in Tuesday’s Standard & Poor’s/Case-Shiller 20-city index could play a pivotal role in changing consumer sentiment toward housing and drawing in buyers from the sidelines.”

And that’s the missing ingredient. We need buyers that have been lingering on the sidelines to jump back in the market and raise consumer confidence in the housing industry.

Overall, consumer confidence is on an upswing. According to The Conference Board Consumer Confidence Index, it increased in September by nine points.

Lynn Franco, Director of Economic Indicators at The Conference Board said, “The Consumer Confidence Index rebounded in September and is back to levels seen earlier this year (71.6 in February 2012). Consumers were more positive in their assessment of current conditions, in particular the job market, and considerably more optimistic about the short-term outlook for business conditions, employment and their financial situation. Despite continuing economic uncertainty, consumers are slightly more optimistic than they have been in several months.”

While we haven’t seen a huge increase in consumer confidence in the housing industry, with lower mortgage rates, the market’s steady recovery, increasing rents and overall increased consumer confidence, consumers may be ready to make that jump back in the market.

Posted in From the Desk of Cal Haupt | Tagged , , , , , | Leave a comment

Proposed QRM Rules Bad for Recovery of Housing Market

Posted on September 24, 2012 by admin

By J.D. Crowe, Vice President of Southeast Mortgage

If there’s one thing the current financial housing crisis has taught us it’s that not everyone should be a homeowner. But owning a home is still a part of the American dream and should still be attainable for any American who wants to own a home, can afford the expenses and is willing to accept the financial responsibilities that accompany ownership.

In addition to it being part of the American dream, owning a home is a step on the path to building personal wealth. As David Bach, financial expert and author of “The Automatic Millionaire: Homeowner” wrote, “You can’t get rich if you’re a renter.”

Our unemployment rate may be hovering around 8%, but guess what? That means 92% of Americans have jobs. And many of those can afford to own a home and benefit from the many advantages that come with home ownership. And with the decline in home prices over the past few years, people who in the past may not have been able to afford a home may qualify for a loan on their dream home.

But with the proposed rules of the qualified residential mortgage (QRM) provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act, potential homeowners may be required to put down as much as 20 percent of the purchase price to buy a home. That’s a bad idea for potential homeowners. And it’s bad for the economy.

J.D. Crowe, Vice President of Southeast Mortgage

A team under Robert Quercia, director of the University of North Carolina’s Center for Community Capital, conducted a study on the payment history of qualified low-income borrowers who had 30-year fixed-rate loans. These borrowers had good credit and little debt and put down less than 5 percent. Even during the years of the housing crisis, 95 percent of these borrowers made their payments on time.

According to an article by Janis Bowdler, director of the Wealth-Building Project for the National Council of La Raza, “Under the [QRM] proposal, the average Atlanta family would have to save nearly $56,000 to cover a 20 percent down payment and 5 percent closing costs on a median-priced home.”

And a study by the Center for Responsible Lending found that a mandated 20 percent down payment would exclude 60 percent of credit-worthy borrowers and hit minority communities even harder, with up to 75 percent of African-Americans and 70 percent of Latinos unable to qualify. Their figures show that based on average home prices, it would take the typical American family 14 years to save enough money for a down payment of 20 percent.

As currently proposed, government loans are excluded from the 20 percent down payment requirement.  Right now FHA, VA, Fannie Mae and Freddie Mac loans are excluded from the limitations.  However, should Fannie and Freddie emerge from Conservatorship and continue to exist as GSEs or as private enterprises, they would then be included in the requirements and the barrier to homeownership would be insurmountable for most borrowers.  As bad as this regulation will be in its current form, it is crippling if Fannie Mae and Freddie Mac are included in its limitations in the future.

Although the period during which federal regulators were allowing comments on these controversial proposed rules has passed, I still urge everyone to contact their congressional representative to determine where he or she stands and make your opinion known.

The housing industry is showing signs of improvement and to further that along, we need more people purchasing homes. We don’t need to be making it more difficult for qualified people to realize the dream of owning their own home.

Posted in From the Desk of J.D. Crowe | Tagged , , , , , , , , , , , , , , , , | Leave a comment

Why the Housing Recovery Matters

Posted on September 17, 2012 by admin

By J.D. Crowe, Vice President of Southeast Mortgage

Recently news outlets have been reporting small gains across the country in the housing market. Home prices improved in 20 cities, including Atlanta, and reporters were quick to add that an improving housing market will benefit the economy as a whole. No one followed up with an explanation of why a healthy housing market has such an impact on the economy. If you’re not in the market to buy or sell a home, why should you care about the housing market?

J.D. Crowe, Vice President of Southeast Mortgage

Historically, residential housing has accounted for 5 percent of the United States GDP. Currently, it contributes 2.3 percent. When the housing bubble burst, the effects rippled out into the economy as a whole. The construction industry was immediately affected, as were real estate agencies, but a variety of other industries were affected as well – many that most of us don’t think about.

The housing industry has an impact on plumbers and other repairmen, as well as architects, engineers, interior designers, carpenters and landscapers. A decline in the housing industry also affects people’s ability to move for a new job opportunity. Recruiters say it can be difficult to recruit candidates to relocate to a new job if their home has been devalued and is underwater. The return of a robust housing market will positively affect many sectors of the economy.

When housing values decline, tax revenues for communities decline as well. There is less money available to pay for policeman, fireman, schools, city maintenance and other government functions.

According to the National Association of Realtors, home ownership accounts for more than 2 trillion dollars of our economy, or 15% of the GDP. Its studies have shown that for every two homes sold, one job is created. Home purchases bring more money into the economy in the form of home improvements, furniture and other home-related items.

We’ve gotten to a place where many consumers view home ownership as a risky investment. If you are considering buying a home, owning a home is still – and will continue to be – a smart financial move. Renting costs more money in the long run. After years of renting, you won’t have an investment to show for it. Diligently making mortgage payments and owning your own home means lower costs after you retire, and you’re able to leave a valuable asset to your heirs. Homes do have value, and as the market improves, so will our confidence in that value.

The return to a strong housing market will help our national psyche. Good news about the housing industry is good news for all of us, whether you’re in the market for a home or not.

Posted in From the Desk of J.D. Crowe | Tagged , , , , , , , , | Leave a comment

Guarantee Fees and the November Deadline Buyers Should Know About

Posted on September 11, 2012 by admin

By Cal Haupt, President and CEO of Southeast Mortgage

On August 31st, the Federal Housing Finance Agency (FHFA) announced a 10-basis point guarantee fee increase on single-family mortgages. The guarantee fee, or “g-fee”, increase will take effect on November 1, 2012.

Guarantee fees are fees charged by mortgage-backed securities (MBS) providers to lenders. G-fees are used to fund tax cuts, mitigate risk and for various other reasons determined by Congress. In the United States, Fannie Mae and Freddie Mac are the largest MBS providers; they currently own or guarantee about 60 percent of U.S. home loans. Fannie and Freddie are government-sponsored enterprises.

In 2008, Fannie Mae and Freddie Mac were placed under government conservatorship, and are now overseen by the FHFA. The FHFA announced that the change in g-fees is meant to encourage private firms to participate more in the mortgage market. It also meant to shrink the large footprint of Fannie and Freddie.

The Fannie and Freddie g-fee increases will move their pricing closer to what it would be if mortgage risk was taken on by only private capital. The cost of higher fees will be passed along to borrowers in the form of higher interest rates.

Having previously forecasted a natural increase in rates based on economic data, we expect rates in November to be even higher due to the g-fee increase. September and October will be a time for consumers to capture lower interest rates on a purchase or refinance mortgage. Consumers should select a mortgage lender who employs Mortgage Loan Originators who are federally registered and state licensed. Licensed originators have passed FBI background screening, financial character screening as well as have passed both federal and state exams. To verify your originator is federally registered and state licensed, please visit http://www.nmlsconsumeraccess.org/Home.aspx/MainSearch.

Founded in 1993, Southeast Mortgage is the largest non-bank mortgage lender in Georgia. Please call 770-279-0222 or visit www.southeastmortgage.com to speak with a federally registered and state licensed originator.

Posted in From the Desk of Cal Haupt | Tagged , , , , , , , , , , , , , , | Leave a comment

Consumers – Data confirms Optimal Time to Buy

Posted on September 5, 2012 by admin

The Metro Atlanta Housing Market has entered a rare phase in normal housing cycles. Gradual diminishing benefit generally follows after this point is reached.

Current housing data confirms housing prices are on the rise, inventory is significantly reduced, and historically low mortgage rates although slightly higher are still available. The down side risk of single family home devaluation is now gone and you can maximize your mortgage dollar at historical low rates. If you are waiting 45 – 90 days to close, do not wait call us 770-279-0222 and close in 8 days.

I am an advocate of the “American Dream”, home ownership, and understand our country’s tax code rewards those that own homes with mortgage interest tax deductions and the itemization of other expenses once certain levels are obtained. Being a home owner facilitates all the benefits of being a citizen of our great country.

At Southeast Mortgage, August 2012 confirmed the high demand for home mortgages and housing in Georgia. Now is the time to act on any housing needs you may have been considering. Although we have reached an optimal point and a rare alignment of events, owning your home and meeting your families housing needs no matter the rate or home price should be in the forefront. During my 25 years in this business and in banking, I have not seen a more favorable alignment for consumers.

Since 1993, Southeast Mortgage has provided competent advice and great service to our clients. Keeping our clients informed of historical events that benefit them is part of our fiduciary duty as their life cycle lender. Our client’s are our passion.

If you do not have a Realtor, please call us at Southeast Mortgage and we will refer you to one of our fantastic Real Estate Agent Partners in your area. Call 770-279-0222 or email clientservices@southeastmortgage.com.

Posted in From the Desk of Cal Haupt | Tagged , , , , , , , , | Leave a comment

3 Common Misconceptions About Buying a Home

Posted on August 27, 2012 by admin

By J.D. Crowe, Vice President of Southeast Mortgage

J.D. Crowe, vice president of Southeast Mortgage

Working in the mortgage industry, I can’t believe how many customers are pleasantly surprised at their ability to purchase a home. Likewise, it is unnerving to hear how many misconceptions there are about what it takes to purchase in this economy. Here are some of the most common ones.

To buy a home, I have to put 20% of the purchase price down.
I don’t know where this idea came from. If you thought that you had to have that much, you might not believe what I’m about to tell you: you’re required to put down only 3.5% of the purchase price. In certain circumstances, you can actually buy a home for as little as $100 down. In all cases you can put down more than the minimum, of course. And putting 20% down will eliminate your need for private mortgage insurance, but don’t let the idea of a 20% minimum keep you out of the market.

With new government regulations, it’s very difficult to get a loan.
For five or six years, getting a mortgage was way too easy. Buyers were able to simply state their income and assets without any proof (SISA Loans). There were even loans that did not require income, assets or even a job history (NINJA Loans). Obviously this practice was unsustainable and led to the overextension of credit and ultimately to the housing bust because borrowers were not able to repay the loans.

When you come in for a loan today, you’re required to present proof of income with W-2s, recent pay stubs and, in some cases, tax returns. You also have to prove that you have the required amount of money for whatever down payment you have chosen to make. Imagine that – no more SISA or NINJA loans. Underwriting guidelines such as these actually protect buyers, the mortgage industry and the economy as a whole. It’s just common sense.

My credit isn’t perfect – I’ll never get a loan.
Perfect credit isn’t necessary either. The higher your score, the better your interest rate will be, but a score lower than 720 won’t consign you to renting forever. To get approved for a conventional loan, you must have a credit score of at least 620. For a Federal Housing Administration (FHA) loan, you must have a credit score of at least 640 for most lenders. If you’re thinking about buying a home, you should take a look at your credit. Improving your score is a smart financial move, and worth the time and effort to get a better interest rate.

If you’d like to learn more about mortgage loans, please visit our website at SoutheastMortgage.com.

Posted in From the Desk of J.D. Crowe | Tagged , , , , , , | Leave a comment

New Consumer Financial Protection Bureau Rules will Help Protect Consumers

Posted on August 21, 2012 by admin

By Cal Haupt, president and CEO of Southeast Mortgage

Earlier this month, the Consumer Financial Protection Bureau (CFPB) announced their proposed rules to protect homeowners and increase mortgage servicer accountability. The CFPB asked consumers, a Small Business Review Panel and mortgage industry professionals for their input while developing their proposed rules. The public has 60 days, until October 16, 2012, to review and provide their comments.

Cal Haupt, president and CEO of Southeast Mortgage

In May, I wrote about the uneven playing fieldfor mortgage loan originators (MLOs).Under the current rules, Bank and Savings Bank MLOs must be only registered with the Nationwide Mortgage Licensing System. But MLOs that aren’t employed at an FDIC insured bank or savings and loan must comply with more stringent rules that provide additional protection for consumers.

MLOs at businesses like Southeast Mortgage must qualify for a state license, a process that includes a background check, passing state and national exams, 20 hours of pre-licensing education, eight hours of continuing education a year, and Character and Fitness Requirements: All loan originators would be subject to the same standards for character, fitness, and financial responsibility.  Consumers should feel confident that they are working with an MLO that are responsible in their own financial matters.  Southeast Mortgage MLOs complies with current and proposed rules.

Inequity in consumer protection between Bank and Non-Bank MLO requirements could be solved by the proposed rules. The CFPB proposed rules to implement Dodd-Frank Act requirements that all MLOs be fully qualified. This proposal benefits all businesses in the mortgage industry as well as the consumer. With all MLOs subject to character and fitness requirements, criminal background checks and training requirements, the consumer can be confident any originator they work with will be ethical and knowledgeable.

In June, I applauded the CFPB’s efforts to combine the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA) into one easy-to-understand form. The new form is open for public comments until November 6, 2012. You can view the proposed document here.

The CFPB is continuing efforts to help demystify the mortgage industry. The newly proposed rules include a requirement that lenders make a no-point, no-fee loan option available to consumers. Comparing loans can be difficult for consumers, who don’t fully understand the different combinations of points, fees and interest rates. This new option simplifies the process for consumers by helping those buying or refinancing better compare offers.

We’ll be making our own comments to the CFPB. If you’d like to make a comment, or learn more about what the CFPB does, please visit http://www.consumerfinance.gov/notice-and-comment/.

Posted in From the Desk of Cal Haupt, Thought Leadership | Tagged , , , , , | Leave a comment

Should You Pay Off Your Mortgage Early?

Posted on August 13, 2012 by admin

By Cal Haupt, president and CEO of Southeast Mortgage

In Samuel Coleridge’s epic poem, “The Rime of the Ancient Mariner,” the narrating sailor details a stalled voyage on the sea: “We stuck, nor breath nor motion; as idle as a painted ship upon a painted ocean.”

Cal Haupt, president and CEO of Southeast Mortgage

Our debts weigh us down, and can make us feel trapped. In times of economic uncertainty our debts feel heavier. To borrow another famous image from Coleridge’s poem, debt can feel like the albatross hanging around your neck.

Some homeowners, concerned with their debt, have begun making extra payments on their mortgages. Paying off debt is smart, but prepaying your mortgage isn’t always a good financial decision. Whether or not to pay off your mortgage early depends on a variety of factors, including your age, other debts, and mortgage rate, among others. Here are a couple factors to consider when deciding whether or not to prepay your mortgage.

• Debt you owe on a home isn’t classified as a “bad debt.”
Despite what the markets have done over the past few years, take a long view. Homes generally appreciate over the years. The interest you pay on your mortgage is typically tax deductible, too. Consider paying other debts, such as money owed on credit cards or on student loans. Interest on credit card debt grows quickly, while the items purchased with your plastic card usually depreciate in value.

• Think about opportunity costs.
Extra payments towards your principal might be better spent in an investment. If investing money will bring at least a 3% higher return than paying the mortgage early, invest. Do you have enough money put away in case of an emergency or unemployment? Remember that a savings account is a more liquid asset than a house, and that you should strive to always have enough put away to see you through six months in case of a crisis. Young families with children have childcare and education expenses to budget for; it may be beneficial for such a couple to keep mortgage payments as low as possible. Conversely, empty nesters may benefit from extra payments.

• Carefully weigh all the benefits and potential downsides to accelerating payments on your mortgage.
Calculate how much interest you can save. Before you decide to make extra payments towards your principal each month, speak with a financial advisor. Otherwise, you could end up hurting your overall financial health.

Posted in From the Desk of Cal Haupt, Thought Leadership | Tagged , , , , | Leave a comment