Looking Backward and Forward

As we close out 2009, it gives me an opportunity
to look back and also make some acknowledgements.

This last year put us further along a path that began
a few years back.

There is no debate that there were lots of abuses in
the mortgage business. Originators took advantage
of borrowers. Borrowers blindly followed without
questioning where they were headed. Lenders
created these loans knowing that they were not
being looked at closely and passed them along to
investors without caring about the outcome. Investors
sold pieces of these mortgages to other investors,
representing them as solid investments.

Everyone wanted to believe that the loans were good
for the borrowers and good for the investors. Some
deluded themselves into thinking that property values
would never go down. And there was a lot of pain
that will continue for the forseeable future.

The government does not want this to happen again.
So, where previously the pendulum had swung far
in the direction of little scrutiny, now it has swung
in the direction that everything is checked and re-
checked.

In addition, many loan products are no longer avail-
able. For example, stated income loans and loans that
allowed for deferred interest. Equity loans, and interest-
only loans are vastly reduced in availability.

Through the course of 2009, we have seen the intro-
duction of new appraisal ordering systems that remove
direct contact between the originator and the appraiser.
This was done in an effort to keep originators from
exerting undue influence on the appraisers to "hit a
number".

We saw the introduction of new disclosure requirements
that protect the borrower from paying for services
such as the appraisal until they have had an opportunity
to review their truth-in-lending disclosure. And if the
Annual Percentage Rate (APR) changes more than
.125%, you are entitled to a new disclosure and a
mandatory 3-day waiting period before you can proceed
to the next step. This may delay closing transactions
on time.

Coming in 2010, are even more disclosure changes.
You will now see that some fees are set at the beginning
of the disclosure process and cannot be changed, some
fees can be changed based on changes in the market,
and others can be changed but have a cumulative limit
of 10% change. They are also tying these advance
disclosures to your final settlement statement that you
will receive at closing so that the comparisons are
crystal clear.

Be prepared for these changes. Don't think that because
you have experience with buying or refinancing that
you won't have a new learning curve. And be prepared
for possible delays and some confusion. All of these
changes are new to everyone and it will take a little
time to work through all the new requirements.

Acknowledgements:

I want to say "Thank You" to all of you with whom I
worked in this past year.

Being a mortgage professional is how I feed my
family, and I never want to take your confidence in
me and your loyalty for granted.

With that being said, please let me know how I can
improve my service to you. Send any suggestions
to me at doug@dougbrennecke.com.

I want to continue to earn your business.

Have a safe and healthy Happy New Year! I will
talk to you again in 2010.