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I wonder why there's apparent debate about this topic? It must be because I think I know everything.

http://realtytimes.com/rtpages/20080222_cashback.htm
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Cath,
By my (painful) reading of the prior thread, IP isn't saying that walk-away cash can be done today, or even that it was legal/ethical/appropriate back in the day it happened....

I'm reading her saying that she regularly observed it happening.

Now... think back a decade... put yourself back in mortgage time to 2000 - 2005. Do you remember how underwriting guidelines were so often treated as basically 'suggestions'? Do you remember how a verbal phone call of urgency could suddenly get a discretionary waive of whatever may be in the way of getting a deal closed?

Yes, we've swung from one end of the absurd to arguably far beyond on the opposite extreme today... but I think you're arguing a point that IP isn't making. Even if "buyer's cashout" was as perfectly illegal and prohibited then as it is today (and it was,) I for one have very little doubt that it regularly occured... and that most of the participants weren't even aware that it was either criminally or civilly illegal.

Dave
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Even if "buyer's cashout" was as perfectly illegal and prohibited then as it is today (and it was,) I for one have very little doubt that it regularly occured... and that most of the participants weren't even aware that it was either criminally or civilly illegal.

Yes, there was plenty of sleight of hand going on back then. I saw it myself.
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Even if "buyer's cashout" was as perfectly illegal and prohibited then as it is today (and it was,) I for one have very little doubt that it regularly occured... and that most of the participants weren't even aware that it was either criminally or civilly illegal.

Yes, there was plenty of sleight of hand going on back then. I saw it myself.


Hmm, regularly occurring illegal activities, most participants unaware of the laws, plenty of sleight of hand...

...I still can't quite grok why some people think the mortgage industry needs regulation. I wonder how they came to that conclusion?
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I for one have very little doubt that it regularly occured... and that most of the participants weren't even aware that it was either criminally or civilly illegal.

Dave, I confess I found it surprising that cash back was OK...surprising enough in fact that I emailed the mortgage broker to have him ask the lender directly and specifically, and received the reply he got in a forwarded email. Was not about to screw settlement up over a couple hundred bucks cash back.

There were many reasons to hold on to my copy of that file. The per hour commission I got on that deal was probably minimum wage!

IP
not missing that side of real estate
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I still can't quite grok why some people think the mortgage industry needs regulation. I wonder how they came to that conclusion?

I'd answer that, but I'd have to get permission from aj, since he apparently is the final arbiter of the posting habits of this board.
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I still can't quite grok why some people think the mortgage industry needs regulation. I wonder how they came to that conclusion?

I'd answer that, but I'd have to get permission from aj, since he apparently is the final arbiter of the posting habits of this board.

AJ is not a 'he' (as you've been told before). And no permission needed from me, although I do find your attempts to turn this board into your personal political rant stage with every single post very tiresome - that's what PA is for. And you'd probably get a whole lot more recs over there than you seem to get here.

However, I will point out that you have still provided only rants to support your assertion that the consumer has been harmed by additional regulation, and you have yet to provide any factual data disputing the delinquency data that shows the quality of originated mortgages seems to have improved significantly since the additional regulations and requirements started being implemented. Here, I'll provide the data again, since you seem to have missed it the first time.

From TransUnion delinquency data http://finance.yahoo.com/news/transunion-housing-analysis-fi......

Cumulative 60+ Mortgage Delinquency Rate; by Vintage  

Time since Origination
Vintage Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
2007 3.1% 8.8% 14.5% 17.2% 19.0% 20.1%
2008 1.6% 5.4% 7.7% 9.5% 10.6%
2009 0.7% 2.2% 3.6% 4.6%
2010 0.4% 1.5% 2.5%
2011 0.4% 1.2%
2012 0.2%


I don't know - maybe you think that overall consumers were better off when they paid $500 or $1000 less for a mortgage, but 2 - 4 times as many of them ended up 60+ days delinquent at least once within 3 years? If so, then I can see why you support the view that additional regulation is harming the consumer.

AJ
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I don't know - maybe you think that overall consumers were better off when they paid $500 or $1000 less for a mortgage, but 2 - 4 times as many of them ended up 60+ days delinquent at least once within 3 years? If so, then I can see why you support the view that additional regulation is harming the consumer.

Do you always bring apples into a conversation about oranges?

Today's more creditworthy consumers paying the freight (in the form of higher fees) for burdensome compliance doesn't have anything to do with lower delinquency rates. There's no causal connection between paying higher fees and improving delinquency rates. Indeed, the only thing that has produced lower delinquency rates is more stringent underwriting guidelines--which could have been imposed without regulatory strangulation.

In addition, I provided a white paper that discussed compliance costs, which was the original premise, not lenders' loan origination costs. Do you have anything to say about compliance costs?
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Today's more creditworthy consumers paying the freight (in the form of higher fees) for burdensome compliance doesn't have anything to do with lower delinquency rates. There's no causal connection between paying higher fees and improving delinquency rates. Indeed, the only thing that has produced lower delinquency rates is more stringent underwriting guidelines--which could have been imposed without regulatory strangulation.

Coulda, woulda, shoulda. I don't buy that lenders would have imposed stricter underwriting guidelines without regulators breathing down their necks. After all, if they wanted stricter underwriting guidelines, lenders could have stuck to them from 2003 - 2008, instead of providing mortgages without those requirements.

And data to support your assertion? Requiring the lenders comply with things like pulling tax returns for consumers to help document income, requiring documentation of income and assets to confirm that a borrower can actually pay for the mortgage that they are buying, and proof of the appraisal all support the stricter underwriting guidelines.

In addition, I provided a white paper that discussed compliance costs, which was the original premise, not lenders' loan origination costs. Do you have anything to say about compliance costs?

Funny, I didn't see a white paper - I saw advertising material for a compliance software vendor, including 'data' like this:

A LEADING COMPLIANCE AUTOMATION SOFTWARE

Ellie Mae’s Encompass360® mortgage management software
system includes core compliance through Encompass
Compliance Service and compliant initial and closing docs with Encompass Docs Solution™.

Powered by Mavent® technology and monitored by Ellie Mae’s in-house team of compliance attorneys and specialists,
Encompass Compliance Service automatically performs over 350 federal, state and local consumer protection compliance reviews. With consistent reviews across all loan files, the risk of variations (possible with manual reviews) is lessened.

Encompass Docs Solution™ provides a single, integrated
application incorporating both initial disclosures and closing documents, making the document preparation to closing
process more efficient and helping to assure compliance.
Encompass360 users can also participate in Ellie Mae’s Total Quality Loan™ (TQL) Program. TQL helps Encompass360 users identify compliance issues early in the origination process, gives greater insight into investor decision-making criteria and reduces exceptions and friction within the housing finance supply chain.


And I didn't see a lot of specific dollar figures for compliance costs other than a $1.8 trillion cost for all government regulations, not just the mortgage industry. Rather I saw a lot of questions like "what is the cost of lost productivity?" and "how much c-level time is spent on compliance reporting?", with no actual answers.

And I did see this comment:

“On the plus side,” says John Haring, compliance enablement manager at Ellie Mae, “having comprehensive, accurate data that documents key lending decisions can reduce the hidden cost of compliance. On the most fundamental level, it can reduce fines, penalties and the need to remediate problems. It can also shorten the length of the exams, which means fewer days and less out-of-pocket costs for the examiners. As a result, both the hard costs of penalties and the soft costs of the
examinations can be tracked back to data integrity.”


So, apparently, some of the costs can actually save money in the long run.

I also the assertion/question that, contrary to your assertion, costs are not being passed on:

Since most of these added costs cannot be passed on to the borrower, how much are the related costs of compliance reducing your profits?

But that's okay - keep up your shrill rants - they limit the believability of what you are saying.

AJ
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Coulda, woulda, shoulda. I don't buy that lenders would have imposed stricter underwriting guidelines without regulators breathing down their necks. After all, if they wanted stricter underwriting guidelines, lenders could have stuck to them from 2003 - 2008, instead of providing mortgages without those requirements.

Yeah, they would've just kept doing what they were doing.

Again, what do loan origination costs have to do with compliance costs?
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Yeah, they would've just kept doing what they were doing.

You've complained about things that the underwriters are requiring from your clients, like documentation of income, credit report fixes and documentation of deposits. Given your complaints, I highly doubt that the standards would be nearly so strict if they weren't being reinforced by the regulators.

Again, what do loan origination costs have to do with compliance costs?

The origination costs that I quoted were in the 'white paper' that you cited. Since you were the one who brought the 'white paper' into the discussion, the origination costs are fair game for discussion, whether or not they have to do with anything you said in your post. If you don't want to discuss them, just ignore the fact that I brought them up. You seem to be able to ignore parts of lots of other posts, even when they contain direct questions to you.

AJ
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I highly doubt that the standards would be nearly so strict if they weren't being reinforced by the regulators.

Absolutely positively false.

All done. I'm bored with this topic and your inane responses.
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All done. I'm bored with this topic and your inane responses.

Wow. I guess there is a first time for everything!

IP
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Absolutely positively false.

Based on what? You have no response to the fact that you have complained about things the underwriters are requiring of your customers. You then used those complaints to launch into complaints about how additional regulation is harming the consumer. Obviously, what the underwriters are requiring is linked to the additional regulation, even in your mind.

All done. I'm bored with this topic and your inane responses.

Oh, I'm sure you're not.

AJ
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I do find your attempts to turn this board into your personal political rant stage with every single post very tiresome - that's what PA is for.
Just grey her out. Life is too short to deal with people who are angry at everything all the time and want to make everything into some epic confrontation.

Back in the day cash back was common - I remember it was floated as part of my own closing, but I rejected it. Hopefully now it is less common and people realize it isn't kosher.
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But that's okay - keep up your shrill rants - they limit the believability of what you are saying.

Blah blah blah blah blah blah blah blah. That you don't know what you're talking about is of no concern to me.
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No. of Recommendations: 31
CC, you really do yourself a disservice by acting like this. When your posts are full of gratuitous insults and smarmy name-calling, you come across as juvenile.
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Wow, that was a pretty quick return, only 15 hours since you were All done. I'm bored with this topic and your inane responses.

AJ
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Catherine Coy......stop, just stop. You have good information to provide, but you muddle it up with BS. Most have P-boxed you at this point. Please use your intelligence to answer questions, but leave your personal opinions out. You muck up this board with BS. Why are you so argumentative anyway?? It's so demeaning and just makes you look stupid.
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CC, you really do yourself a disservice by acting like this.

Acting like what? Who's insulting anyone? aj doesn't know what she's stalking about. Period. End of story.
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LL, here you go.

What Small Banks and Small Businesses Are Saying About the Dodd-Frank Act

“The regulatory costs are overwhelming in our industry right now…Virtually everyone in our bank now is involved to some extent or another in complying with regulations, and so it has taken away from their ability and their resources to work with both existing customers and also to go out and solicit new customers, helping other people get businesses off the ground.” John A. Klebba, President and Chief Executive Officer, Legends Bank

“Among some of the provisions of the Dodd-Frank Act, the new CFPB perhaps carries the most risk for community banks. We are already required to spend significant resources complying with consumer protection rules. Every hour I spend in compliance is an hour that could be spent with a small business owner or a consumer.” Greg Ohlendorf, President and Chief Executive Officer, First Community Bank and Trust

“And I charge you with this, 40 years ago I did not see problems in banks and banks falling like flies, and yet the level of regulation and the cost of regulation was far, far less than it is today. As I see it from my standpoint, we will see community banks continue to decline. We simply cannot afford the high costs of federal regulation. And as one banker I will tell you this, my major risks are not credit risks, risks of theft, risks of some robber coming in with a gun in my office; my number one risk is federal regulatory risk. And I have a greater risk of harm to my bank, my stockholders from the federal government than I have anything else in this whole world. That is obscene. ” Les Parker, Chairman, President and Chief Executive Officer, United Bank of El Paso de Norte

“There’s no question that the current regulatory and examination environment is an impediment to the flow of credit that will create jobs and advance the economic recovery.” Mr. Marty Reinhart, President, Heritage Bank

“Over the last several years, banks have faced increased regulatory costs and will face hundreds of new regulations with the Dodd-Frank Act. These pressures are slowly but surely strangling the traditional community banks, and handicapping their ability to meet the credit needs of their communities.” Matthew H. Williams, Chairman and President, Gothenburg State Bank

Etc., etc., etc. @ http://financialservices.house.gov/blog/?postid=310725

I really don't care if anyone agrees with the facts. You can recc each other until the cows come home. Doesn't change the facts.
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me: CC, you really do yourself a disservice by acting like this.

CC: Acting like what? Who's insulting anyone?


::sigh:: Dunning-Kruger effect. Look it up.

You are so used to being snooty and rude and insulting that you don't even realise it.

Who's insulting anyone?
You. All the time. Continually. In just about every thread where anybody differs or disagrees with you.
And in first instances when you start railing about "libruls".
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Regulation Will Begin to Strangle the Housing Recovery
http://realtrends.com/blog/real-trends-comment-regulation-wi...
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HOW GOVERNMENT REGULATION AFFECTS THE PRICE OF A NEW HOME

Regulations come in many forms and can be imposed by governments at different levels. [...] This article introduces new NAHB estimates of the impact that such regulations have on the price of a home. The estimates show that, on average, regulations imposed by government at all levels account for 25.0 percent of the final price of a new single-family home built for sale. Nearly two-thirds of this—16.4 percent of the final house price—is due to a higher price for a finished lot resulting from regulations imposed during the lot’s development. A little over one-third—8.6 percent of the house price—is the result of costs incurred by the builder after purchasing the finished lot.

More at: http://www.nahb.org/generic.aspx?genericContentID=161065&...

Rayvt, I don't give a flying flip what you think.
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Economic Impact of the Dodd-Frank Act
http://www.fsround.org/fsr/publications_and_research/files/E...

The health of the financial services industry has improved dramatically in recent months. Capital is at record highs, lending is at pre-crisis levels, and large financial companies are solvent and strong. These improvements are the result of industry initiation and financial regulatory reform. The Dodd-Frank Act imposed a variety of new requirements regarding the business activities, capital, liquidity, governance and risk-management practices of large financial institutions, to make the system safer and stronger. However, if requirements are carried too far, adverse economic consequences will far outweigh the benefits. The Financial Services Roundtable has developed a public database of over 125 independent studies and reports showing how the cumulative weight of new rules will negatively impact the economic recovery and industry. The database can be accessed on the Roundtable’s website, www.fsround.org. [...]

It is the risk that the Dodd-Frank apparatus will smother financial institutions in so much red tape that innovation is stifled and America’s economy suffers. The Economist, February 18, 2012. [...]

Dodd-Frank is the thing that is most harming the economy right now. Big business can deal with regulatory uncertainty, but it makes small businesses reluctant to take on risk and expand their operations. Todd Zywicki, Mercatus Center at George Mason University, September 21, 2011.

By 2015, U.S GDP is projected to be 2.7% lower than it would otherwise be <as a result of regulatory reform>, or 5.2% lower if reform is implemented rapidly. Institute for International Finance Report, September 6, 2011.

By 2015, 2.9 million jobs are projected to be lost in the U.S. as a result of regulatory reform>, or 5.8 million jobs if reform is implemented rapidly. Institute for International Finance Report, September 6, 2011.

Complexity risk - the burden on financial institutions and regulators of complex, cross-cutting and incomprehensible rules may now be the most significant impediment to financial-market recovery and robust economic growth. Karen Petrou, Federal Financial Analytics, Inc, November 2011.

****

I see the doppels are out in droves today.
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Regulation Will Begin to Strangle the Housing Recovery
http://realtrends.com/blog/real-trends-comment-regulation-wi......
--------------------------------------------------

You really think these are bad regulations?

"The CFPB released a proposal to expand the definition of a high-cost mortgage to include those with interest rates that are 6.5 percentage points above the average prime rate or that carry fees exceeding 5 percent of the loan’s value.

The rule would require borrowers applying for these types of loans to receive housing counseling first. It also addresses several fees associated with those loans that consumer advocates have attacked as abusive or excessive.

The CFPB proposed prohibiting lenders in most cases from charging a lump sum due at the end of the loan’s life, known as a balloon payment, and would bar penalties for paying off a loan early. It also would limit late fees to 4 percent of the amount due that month and restrict charges for providing payoff statements."
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Nearly two-thirds of this—16.4 percent of the final house price—is due to a higher price for a finished lot resulting from regulations imposed during the lot’s development. A little over one-third—8.6 percent of the house price—is the result of costs incurred by the builder after purchasing the finished lot.


It seems this should be it's own topic - I don't think this has anything to do with cash back at closing.

From my perspective, a lot of those costs are a *good* thing.
I am happy to pay an extra 8.6% more for a house that is meeting the current building codes. For example, it costs more for them to bolt the house down to the foundation because that's now required by code here - but it reduces the risk of my house falling down in an earthquake and it reduces the risk of my neighbor's house falling down - which could damage mine.

BTW - I would expect that those percentages are quite a bit too high if you were to look at the prices in my area. I would assume they're based on a nationwide average, and my area isn't close to the average.

And my experience with most zoning/permit things is that the costs incurred in fees etc. aren't really covering the work done to review the plans, do the inspections, etc. They cover some of the costs - but most permit/zoning departments are funded at least partly by taxes - most likely by property taxes.
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Hi Jeanwa,

You really think these are bad regulations?
<SNIP>
"The CFPB released a proposal to expand the definition of a high-cost mortgage to include those... that carry fees exceeding 5 percent of the loan’s value.

Depends on what the definition of "carry fees" is, right?
Does standard closing fees (like title & escrow) that occur regardless of a mortgage count? CFPB says yes.
Does monthly mortgage insurance count (which is now up to 1.35%)? What about the new non-cancellable 'lifetime" MI in FHA loans? Does this count (as does everything else involved in financing) toward the APR, which determines if a loan is "qualified" or not?
What about the 'Up Front Mortgage Insurance" (advance single premium) currently at 1.75%?

When you start looking at the minimum, non-loan-size-adjusted fees like appraisals, credit reports, title, inspections, legal work, etc.... you begin running into constraints (if a hard 5% ceiling is set) that effectively makes it impossible for loans smaller than a certain level to even be made at all.

You tell me... do YOU really think these are NOT bad regulations?

Dave Donhoff
Leverage Planner
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Dave, I really don't know. That's why I was asking.

I've never had a bank mortgage. All of the houses I purchased (and the ones I sold) were ones that the owner carried the contract.

Maybe I'm trying to make it too simple, but it sounds like people just have to be warned that they are getting a high cost mortgage and receive counseling.

It doesn't sound like a bad thing.

http://files.consumerfinance.gov/f/201301_cfpb_high-cost-mor...

"Provide you with information in advance that explains you are getting a high-cost
mortgage, and stating the terms, costs and fees associated with the loan.
Certify that you have received homeownership counseling about the particular high-cost
mortgage the lender is offering you."
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The CFPB proposed prohibiting lenders in most cases from charging a lump sum due at the end of the loan’s life, known as a balloon payment,...

Do these regulations affect private mortgages as well, or just those looking to be sold aftermarket? I have both bought and sold houses via private mortgages using a 5 year balloon, and would really hate to lose that option. Would definitely have to charge a higher interest rate in lieu of this.

IP
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Good points Dave. Thanks for actually taking the time to talk about your stand rather than just rant about the injustice of it all. I confess I tend to just hit next when the post is simply pasted material from somewhere else on the web. If it's worth discussing, then posters should point out why it is worth discussing.

IP
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Maybe I'm trying to make it too simple, but it sounds like people just have to be warned that they are getting a high cost mortgage and receive counseling.

It doesn't sound like a bad thing.


Jean,

Every contract I've ever made via a Realtor to purchase real estate, every mortgage, at least in current time, has come with an estimate of closing costs. You should already be aware of what you are spending to get the house.

IP
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Every contract I've ever made via a Realtor to purchase real estate, every mortgage, at least in current time, has come with an estimate of closing costs. You should already be aware of what you are spending to get the house.

IP
=========================================

I don't think they had you in mind when they wrote these regulations.

Do you think they would have qualified as high cost mortgages?
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I don't think they had you in mind when they wrote these regulations.

Sorry, I guess I wasn't clear. These estimates of closing costs get done for everyone, at least in the 4 states I've written a contract in. It is kind of hard to be surprised by what you need to spend. In my experience it tends to be over estimated, since it is easier to cut you a check for the excess at closing than to be sure the buyer will have extra funds on hand. And every mortgage I've gotten recently comes with the same kind of estimate of costs. You have to ignore what is already given out to be surprised...not that some people don't do just that.

Do you think they would have qualified as high cost mortgages?

Some would probably would have qualified as high cost mortgages given the fixed price costs involved in buying with or without a mortgage as Dave mentioned, and the low cost of the house. Don't know.

IP
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I guess it was me that wasn't clear.

It's not a requirement that is starting to give the closing costs.

It's that if they are over a certain percent the mortgage is classified as a high cost mortgage and require more steps.

That said if the closing costs are already given to everyone what would be the problem with formalizing the requirement?

Jean
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That said if the closing costs are already given to everyone what would be the problem with formalizing the requirement?

There is so much time wasted putting together "new" requirements to deal with a supposed lack of existing requirements. I would much rather see enforcement of current regs than duplicates.

These duplicates make me question how much these people requesting them know what is going on. This isn't just about real estate. The debate over regulations for gun licensing post Sandy Hook comes to mind. Just an example...not looking to discuss that topic!

I confess I get very tired of the gov't anticipating the stupidity of the people. It used to be that we were expected to understand the consequences of signing on the dotted line before doing so, but it seems as though we've become conditioned to expect that Nanny Sam will kiss our boo boos and make them better when we do something stupid, so why bother making the effort to prevent our own stupidity?

IP
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There is so much time wasted putting together "new" requirements to deal with a supposed lack of existing requirements. I would much rather see enforcement of current regs than duplicates.

Let me explain better. More and more regulations have resulted in a FLOOD of documents that we need to "understand," some of those documents being explanations of others. There is so much paperwork that IMO we would be much better off streamlining the process and cutting back on the number of docs we need to comprehend. Maybe if the paperwork was not such a towering pile more people would actually take the time to read what they sign. Too few do that now, and I don't think adding more steps will encourage more to do so. Instead, they will let others take the responsibility to feed them pablum.

IP
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Hi Jean,

Maybe I'm trying to make it too simple, but it sounds like people just have to be warned that they are getting a high cost mortgage and receive counseling.
It doesn't sound like a bad thing.


If *ONLY* giving straightforward, clear, easily-understood disclosure and then allowing all consumers to proceed as adults was the end of the regulatory constrictions, it would not only be 'not bad', it would be outstanding...

But its not.

The industry-side faces literally *unknown* ambiguous risks and penalties of litigation for undefined offenses relating to these byzantine regulations.

It is not longer sufficient to sincerely "do the right thing" and proceed in confidence that you have made superlative efforts to take great care of your consumers. All industry participants are at risk of seemingly-arbitrary future litigious attack without any regard at all for how well they dealt with their buyers originally or along the path. The laws, and proposed laws, remain extensively ambiguous, and open to interpretation (which seemingly often swings on the whims of politicians seeking votes of torch-bearing lunatics.)

I realize my writings, above, are somehat vague... and I apologize for that. If I trotted over here with each daily piece of 'insider baseball' that has us clench our sphincters, most folks here would be bored to tears and/or I would be officially grayed out or unofficially tuned-out by most of our regulars (but I know I'd get at least a rec each post from Cath ;~)

Its truly abso-frikking-lutely *INSANE*... there is not only no logical/comprehensive rhyme nor reason to the legislative wandering and bloat... there is no way of knowing if following the rules (as best as they can possibly be interpreted today) will prevent you from having everything sued away from you next year.

From the grassroots producer-level, to the highest banking operations levels, the industry is on tenterhooks, very literally wondering WTF to do next (not excluding pack it in & change career entirely... and *NOT* for lack of success, but for lack of any sense of constrained/defined systemic/political risk.)

<Cutting myself off from a diatribe, and deleting several paragraphs away now, for brevity...>

In my more cynical suspicions... I sense certain idealogues trying to covertly destroy the lending private markets so that the central bankers can take over the business directly on non-flexible, non-competitive terms. We've already seen this take-over in the student loan realm.

If this occurs... we can all (as the TMF demographic tends to be folks sophisticated & successful enough to care about our money) kiss most of our achieved success goodbye.

==================

‘Throughout history, poverty is the normal condition of man. Advances which permit this norm to be exceeded — here and there, now and then — are the work of an extremely small minority, frequently despised, often condemned, and almost always opposed by all right-thinking people. Whenever this tiny minority is kept from creating, or (as sometimes happens) is driven out of a society, the people then slip back into abject poverty.

This is known as “bad luck.”’

Robert Heinlein

Cheers,
Dave Donhoff
Leverage Planner
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Hi IP,

Do these regulations affect private mortgages as well, or just those looking to be sold aftermarket?
The answer is; Nobody knows. The regulatory lawyers' interpretations don't agree.

I have both bought and sold houses via private mortgages using a 5 year balloon, and would really hate to lose that option.
At present, you can go for it... at an undefined risk of being deemed a "predatory lender" at some future time. (And I'm not "fear mongering"... I have several professional real estate investor friends who have gone to great lengths contacting the state and federal regulators to get clarity of the legislative interpretations, because their business relies on their ability to seller-finance their sales, and their ability to negotiate seller-financing on their acquisitions.)

They've all basically been told "we offer no guarantee that what was allowed yesteryear will be honored today, although we also won't formally say its prohibited either."

Would definitely have to charge a higher interest rate in lieu of this.
'Higher' relative to what? Remember, as a lender (public or private) you *TOO* are subject to the 'high cost' and lifetime interest rate ceilings. Balloon terms *can* be calculated bizarrely and completely illogically, making the rates/fees you have collected to date on an assumed 20 or 30 year schedule appear as though they were an APR on a 2, 3 or 5 year schedule (whatever the maturity of your balloon,) making you a "predator."

Virtually everyone in the directly-dealt real estate and lending business has their ass flapping out in the wind today... whether you are a truly good operator, or a scoundrel, you must live in perpetual risk... and the regimes in power almost seem to like it that way.

Dave Donhoff
Leverage Planner
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Rayvt, I don't give a flying flip what you think.

You just can't stop with gratuitous insults, can you.
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None of this incurs any extra cost. Uh huh.

http://files.consumerfinance.gov/f/201307_cfpb_mortgage-impl...

That's right, rayvt...I STILL don't care one iota what you think, say or do.
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Wow Dave, our decision to just leave our capital with our financial planner and back off real estate investing is looking better and better. Thanks for your post.

IP
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Announcement from one of my best lenders: Due to the increased costs required to underwrite and fund loans and the increasing cost of compliance, XXX Funding will be increasing our Admin (or UW) Fee to $1195. This will be effective Monday, August 12th for loans with an initial GFE dated on or after 8/12. Files previously disclosed will not be affected. We appreciate your business and we remain committed to providing you with outstanding service.

***

I expect most lenders to follow suit.
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Announcement from one of my best lenders: Due to the increased costs required to underwrite and fund loans and the increasing cost of compliance, XXX Funding will be increasing our Admin (or UW) Fee to $1195. This will be effective Monday, August 12th for loans with an initial GFE dated on or after 8/12. Files previously disclosed will not be affected. We appreciate your business and we remain committed to providing you with outstanding service.

I certainly wouldn't expect them to actually send out an announcement that said:

Due to the increased costs required to underwrite and fund loans and the increasing cost of compliance, we figure we can blame increases on them and get some more money for ourselves....

Kinda like when people blame the computer for the error when it was really human error.
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Due to the increased costs required to underwrite and fund loans and the increasing cost of compliance, XXX Funding will be increasing our Admin (or UW) Fee to $1195.

Increased from what?
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Kinda like when people blame the computer for the error when it was really human error.

I don't follow you here.

Underwriting has become more and more complicated over the years. Taking more hours/loan, therefore costs rise. Pretty simple.

--
whyohwhyoh
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Underwriting has become more and more complicated over the years. Taking more hours/loan, therefore costs rise. Pretty simple.

--
Just that I've seen companies/people blame increases in prices in things for price increases rather than state the fact that the market can absorb the increase.

"Taxes are going up so I have to increase your rent. Really rent is going up, so I can increase what I charge."

I'm not saying compliance isn't costing more, just that it may not be the only reason for the increase in the amount charged.
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Increased from what?

$895.
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Underwriting has become more and more complicated over the years. Taking more hours/loan, therefore costs rise. Pretty simple.

This is very true. In addition to running the file through governmental compliance filters (Dodd-Frank Act), there are HMDA (Home Mortgage Disclosure Act) audits, HVCC (Home Valuation Code of Conduct) audits and GSE (Fannie Mae/Freddie Mac) audits.

Here's a list of some of the other Acts that apply when a home mortgage is being sought.

http://www.federalreserve.gov/bankinforeg/reglisting.htm
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