Click to edit Master text styles
Second level
Third level
Fourth level
Fifth level
‹date/time›
‹footer›
‹#›
------=_NextPart_01C8ED8A.A56F1750
Content-Location: file:///C:/E461D8E2/JUL23_GNVUPDATEB_files/master03.xml
Content-Transfer-Encoding: quoted-printable
Content-Type: text/xml; charset="utf-8"
![](3D"slide0017_image002.jpg")
The
Great North Valley
Real Esta= te Investment = Club
Real Esta= te Investment = Club
Pres=
ented
By Connie Wright
=
;
Sponsored by The Wright Mortgage Company
![](3D"slide0017_image004.jpg")
1166
Esplanade Suite 2
GREAT NORTH VALLEY
REAL ESTATE INVESTMENT CLUB
REAL ESTATE INVESTMENT CLUB
Club
meeting No. 7
Wedne=
sday
July 23, 2008
Cash
Flows – The Key to Successful Investing
CURRENT EVENTS
When
Prices are Too Good to be True
Foreclosures
Can Represent Opportunity, Risk
Foreclosures present a tremendous opportunity for
professional Realtors and investors,
but there are still real risks. A first-time foreclosure buyer can suffer =
=
significant losses due to the lack of title insura=
nce at
foreclosure auctions.
Consumers seem to crave information on foreclosure=
s. It
is a need that Realtors have
really failed to embrace. Realtors are far better positioned t=
han any
Web site to help cons=
umers
make real estate purchase decisions -- foreclosure or not.
Study
Questions RESPA's Reliance on ‘Sunshine‘
Clarity,
Reform is Needed in Closing Process
=
The naivety of believing any anticipated saving wo=
uld be
passed on to the consume=
r at
any level is both mildly and sadly amusing. There are lots of changes RESPA needs, but special interests will in=
sure
that any benefits will be completely
rhetorical.
Buyers and sellers never see the HUD-1 until closi=
ng and
rarely get final figures until
very late the day before or the day of closing -- often without enough tim=
e to
obtain certified funds, let alo=
ne
verify the accuracy. There is no reason buyers and sellers can't receive a copy of the HUD-1 at l=
east
48 hours prior to closing. Fees
could be reviewed without the pressure of closing.
In
Illinois, the title insurance company is selected by the seller's side. Bu=
yers
have no idea what the costs to =
them
will be. Closer fees have gone up nearly 300 percent in the past five to six years. Title costs=
have
gone up about twice a year. Fees
for endorsements have escalated like amounts.
Closing
procedures vary greatly by state. It is unlikely any meaningful regulation=
can take place from the federal level. Closing
procedures, services and fees can only
be effectively regulated at the state level.
At
the federal level, regulation of lender fees and services could be effecti=
ve,
but the golden rule of
'those with the gold make the rules' will render any attempt at =
meaningful change to be rhetorical.
No
surprise that people manipulate the system and take advantage of consumers. Meaningful change to 'ensure' benefits =
to the
consumer are easy if you get =
the
politicians out of it and let a little common sense get involved.
<=
span
style=3D'font-family:Arial;mso-ascii-font-family:Arial;mso-bidi-font-famil=
y:
"Lucida Sans Unicode";font-size:91%;color:black'>A Tough Road to Financial=
Responsibility
Bringing back t=
he
'80s
Imagine housing wi=
thout
a secondary market
"My
thinking though is that we are headed to a mortgage lending style <=
/span>reminiscent more of 1980 than 1970. We had a fairly
dynamic secondary market by
then, though it will seem much more primitive than it really is.
"There
are still folks around who remember how to do traditional mortgage =
lending and if we would allow them to take over the
reins we could help restore order.
We can start by ditching FICO and teaching our young people how to =
=
make credit decisions.
"Part
of the problem is that much of our real estate community did not know that=
easy credit such as we've experienced for over 20 =
years
is not normal. It was like mainlining
a hard drug, and getting used to lives of financial responsibility might <=
/span>be hard but we can do it."
=
--Diane Cipa
The changes to Regulation Z, which spells out
enforcement of the Truth in Lending
Act, also include several measures that will apply to all mortgage =
loans. There are new prohibitions against coercing
appraisers to inflate a home's
value and a requirement that lenders provide a good faith estimate of loan costs within three days after a consumer appl=
ies
for a mortgage. The Fed i=
s also
banning certain deceptive or misleading advertising practices such hiding the fact that a rate or loan payment c=
an
change.
With states like New York and North Carolina alrea=
dy
adopting similar or more
stringent measures, the Fed's actions were largely welcomed by the =
lending industry, which sees a patchwork of confli=
cting
regulations at the state =
and
local level as cost prohibitive.
"I think nationwide, we've seen a muddle arou=
nd the
regulation of predatory lending,"
said David Hamermesh, research director for consumer lending for the consulting firm TowerGroup. While the Fed's ru=
les
may not stop states and ci=
ties
from putting their own rules in place, "Anything that can clear up the patchwork of regulation that the absence of fe=
deral
guidance has created is a g=
ood
thing."
At the Mortgage Bankers Association, "Our
preliminary assessment is that it's
a tough rule, but one which to a large extant is codifying what's already =
happening in the marketplace," said Steve O'C=
onnor,
senior vice president of
government affairs for the MBA.
Consumer
groups also welcomed the changes as a step in the right direction.
"I think that the final fed rules are clearly=
a
step forward to returning lenders to common
sense business practices in the sub-prime market," said Paul Leonard =
of the Center for Responsible Lending. "While
certainly a number of specific provisions
fall short of what states are already doing, we think they've taken some key steps forward."
The Fed withdrew a proposal to require that mortga=
ge
brokers enter into written agreements
with borrowers before collecting yield spread premiums. Yield spread premiums are rebates paid by lenders when l=
oans
carry higher interest rates =
than
borrowers might otherwise qualify for. While many borrowers choose =
loans that come with rebates to help them pay their
closing costs, critics say mortgage
brokers may pocket yield spread premiums without the consumer's =
knowledge.
The National Association of Mortgage Brokers has a=
rgued
that loans originated by ban=
k loan
officers carry similar fees. Although the fees are charged when the loans are sold into the secondary market, they are
ultimately born by the consumer,
but not disclosed to them, the group argues.
The group's president, Marc Savitt, said that if y=
ield
spread premiums are singled out,
"It doesn't really do anything to help the consumer shop -- it only
causes more confusion. It=
's
better if everybody discloses (the fee) or nobody discloses it. =
Consumers must be able to compare apples to
apples."
=
The Fed said it backed down from its proposal for =
yield
spread premiums because
consumer testing had shown it could prove confusing. But the Fed said it will continue to consider alternative approache=
s to
regulating the rebates to consumers.
As part of proposed changes to the Real Estate
Settlement Procedures Act, or RESPA,
the Department of Housing and Urban Development has proposed that <=
/span>yield spread premiums be automatically credited ag=
ainst
closing costs in the good fa=
ith
estimate provided to borrowers (see story).