Ever since the mortgage meltdown, there has been a
trend to go back to the traditional mortgage products
that served the marketplace well for many years.
Loan products that included stated income, negative
amortization, and high-leverage vehicles that asked
the borrower to put little down payment have been
eliminated.
To a large degree, the products that are currently
offered include 30-year and 15-year fixed rate loans
and FHA and VA loans. This is the "vanilla" in the
mortgage world: stable, predictable, no surprises,
nothing exotic.
These are the loans that readily marketable among
lenders and investors. When these loans are packaged
properly and their risk ratings are accurate, they
are sold to FNMA and FHLMC and pooled into mortgage-
backed securities that investors can buy into.
There are some alternatives that lenders are still
offering to the standard menu. These lenders are
often classified as portfolio lenders, because they
tend to keep the new loans in their portfolio instead
of selling them to FNMA and FHLMC or in a mortgage-
backed security.
* There are still adjustable rate loans where
the initial interest rate is fixed for the first
3, 5, 7 or 10 years of the 30-year loan term. These
loans tend to offer lower interest rates in the
beginning, and then provide the lender an opportunity
to adjust the rate to something competitive in the
marketplace at time of adjustment.
The interest rate adjustment is determined by a formula
that includes a market-based index, e.g. LIBOR, Treasury
Bills, or a Cost of Funds index, plus a margin that is
set in your loan contract.
The best use of these loans is to match up the time you
expect to be in the home with the length of time that
the interest rate is fixed. For example, if you had a
5 year time frame in mind to own the home, than a couple
of suitable suggestions would be to look at the 5-year
and 7-year products. It would not make sense to select
the loan where the interest rate adjusts after 3 years
because you may be facing a substantially higher interest
rate at time of adjustment.
* Interest-only payment loans are still available,
but with a twist. No longer will the lenders allow
just the interest to be paid in the first few years of
the loan and then put the borrower into a higher payment
at that point.
The most innovative use of the interest-only payment
loans is one where the term of the loan is 40 years,
the interest-only payment and rate is in effect for
the first 15 years, and then there is an adjustment
to the rate, and the payments are amortized over the
remaining 25 years.
This allows the borrower to do some significant long-
term planning, and reduces the risk to both borrower
and lender with regard to "payment shock" when the
interest only feature no longer continues. Many
borrowers that initiated interest-only payment loans
in 2002-2005 faced hardship when the loans moved
into fully amortized payments.
* There is a loan product that has significant
advantages for borrowers who have healthy cash flow
each month, and who do not spend more than they make.
This loan is a line of credit that is tied to a
checking account and debit card. The idea behind it
is to merge your home loan and banking into a fluid
system that allows you to save on the interest accrual
each month.
Let's take a look at an example: Borrower has a need
for a $500,000 loan on their home. They make $20,000
per month, and have expenses of $12,000. They opt for
this line of credit loan.
In the first month, they deposit their entire check
against the line of credit, dropping the balance to
$480,000. Since interest is calculated daily and
accumulated for posting at the end of 30 days, you
can already see that for that one day, there is a
benefit to the borrower of having interest accrue
on $480,000 instead of $500,000.
During the course of the month, bills and living
expenses need to be paid. The balance will grow
from $480,000 to $492,000. But, the benefit still
is significant. With a traditional loan, the
borrower has 30 days interest accruing on $500,000.
On this loan, interest is accruing based on balances
ranging from $480,000 to $492,000.
Each succeeding month works in a similar fashion,
and the money that the borrower used to have sitting
in a checking or savings account is now working for
them by reducing the amount of interest that is owed
on their home mortgage.
If there ever was a need to cover some bigger expenses
in a given month, the unused portion of the line of
credit is available to be drawn upon. In this example,
you could take the balance up to $500,000 again.
Not all of these products are suitable for every
borrower. There are many instances where the "vanilla"
product is the right one, but for more sophisticated
borrowers, or who have a special need, it's good to
know that there are lenders willing to serve that
market.
I am here to help you get the most suitable loan product
that you can qualify for. Please be sure to get in
touch with me so I can put my resources to work for you.
Wednesday, October 21, 2009
Wednesday, October 7, 2009
The State of Jumbo Lending
After the mortgage meltdown, the availability of jumbo
loans has been vastly diminished.
Jumbo loans have traditionally been defined as those
above the FNMA/FHLMC conforming limit of $417,000.
In 2008 and 2009, Congress has allowed for FNMA and
FHLMC to purchase what are defined as "high-balance
conforming loans". The maximum loan amount varies
from county to county, and currently in San Diego
the limit is $697,500 for a single-family home.
Before Congress created this category, loans above
the $417,000 limit were usually funded through lenders
who packaged them into mortgage-backed securities (MBS).
Investors on Wall Street would buy into these pooled
mortgages so that they could obtain a higher rate of
return than Treasury bills, as an example.
One of the biggest problems with the MBS pools was that
investors were told that they were investing in pools of
loans that were underwritten to a high standard. When
the mortgage market began to unravel, the investors
realized that they had actually purchased into pools
that contained lesser quality loans that went into
default at an alarming pace.
Based on that experience, investors through Wall Street
have abandoned their interest in buying into newly
created MBS pools. They suffered losses because they
discovered too late that they could not trust the ratings
that were provided to them as an inducement to purchase
into the MBS pool.
We have had a three-tier lending system in place through
2009:
1. Conforming loans - those sold to FNMA and FHLMC with
a maximum loan limit of $417,000 for a single-family
home.
2. High-balance conforming loans - eligible to be sold to
FNMA and FHLMC up to a maximum of $697,500 for
a single-family home in San Diego.
Currently, Congress has authorized this only through
the end of 2009. If it is to continue into 2010, they
will need to enact legislation for that to happen.
As a reminder, Congress failed to continue it at the
end of 2008, re-enacted it in early 2009, and by the
time we were given the guidelines and authorization
to create these loans again, we had lost about 4-5
months to that process.
3. Jumbo loans - for the most part, those loans above
$697,500. These loans are either created for the
lender's own portfolio, or are sold on the secondary
mortgage market, which is not as active as it once was.
So, where are we headed going into 2010?
First, if you have need for a loan between $417,000 and
$697,500 (in San Diego), you would be wise to push toward
getting it closed in 2009. As of this writing, there is
no guarantee that that category will continue into 2010.
I would find it hard to believe that the government would
let the housing industry flounder while they are still
seeking an economic recovery, but we are talking about
the government here.
Second, recognize that there are fewer lenders than there
was a few years ago. This means that they can dictate
the terms of what will be offered to the public (with
encouragement by the federal regulators). They are
extremely risk-averse right now, and may continue on
this path for the foreseeable future.
The reality is that more than half the mortgages being
made in the US are made by Wells Fargo, JP Morgan/Chase
and Bank of America. Most of these loans are in the
conforming and high-balance conforming categories.
The US government (read: taxpayers) is standing behind
about 85% of the new loans being created in the last
couple of years.
Third, there is a real possibility that we may have
only a two-tier system in 2010. The conforming loans
should continue as we have known them. The high-balance
conforming loans may become a thing of the past. And
the second tier of jumbo loans (which would then be
defined as those above $417,000), would enjoy limited
availability, strict underwriting, and pricing models
that ensure profit to the lenders.
It is never too early to start planning. If you anti-
cipate a need for a loan above $417,000 going into
2010, please contact me and we can strategize about how
to meet your goals.
loans has been vastly diminished.
Jumbo loans have traditionally been defined as those
above the FNMA/FHLMC conforming limit of $417,000.
In 2008 and 2009, Congress has allowed for FNMA and
FHLMC to purchase what are defined as "high-balance
conforming loans". The maximum loan amount varies
from county to county, and currently in San Diego
the limit is $697,500 for a single-family home.
Before Congress created this category, loans above
the $417,000 limit were usually funded through lenders
who packaged them into mortgage-backed securities (MBS).
Investors on Wall Street would buy into these pooled
mortgages so that they could obtain a higher rate of
return than Treasury bills, as an example.
One of the biggest problems with the MBS pools was that
investors were told that they were investing in pools of
loans that were underwritten to a high standard. When
the mortgage market began to unravel, the investors
realized that they had actually purchased into pools
that contained lesser quality loans that went into
default at an alarming pace.
Based on that experience, investors through Wall Street
have abandoned their interest in buying into newly
created MBS pools. They suffered losses because they
discovered too late that they could not trust the ratings
that were provided to them as an inducement to purchase
into the MBS pool.
We have had a three-tier lending system in place through
2009:
1. Conforming loans - those sold to FNMA and FHLMC with
a maximum loan limit of $417,000 for a single-family
home.
2. High-balance conforming loans - eligible to be sold to
FNMA and FHLMC up to a maximum of $697,500 for
a single-family home in San Diego.
Currently, Congress has authorized this only through
the end of 2009. If it is to continue into 2010, they
will need to enact legislation for that to happen.
As a reminder, Congress failed to continue it at the
end of 2008, re-enacted it in early 2009, and by the
time we were given the guidelines and authorization
to create these loans again, we had lost about 4-5
months to that process.
3. Jumbo loans - for the most part, those loans above
$697,500. These loans are either created for the
lender's own portfolio, or are sold on the secondary
mortgage market, which is not as active as it once was.
So, where are we headed going into 2010?
First, if you have need for a loan between $417,000 and
$697,500 (in San Diego), you would be wise to push toward
getting it closed in 2009. As of this writing, there is
no guarantee that that category will continue into 2010.
I would find it hard to believe that the government would
let the housing industry flounder while they are still
seeking an economic recovery, but we are talking about
the government here.
Second, recognize that there are fewer lenders than there
was a few years ago. This means that they can dictate
the terms of what will be offered to the public (with
encouragement by the federal regulators). They are
extremely risk-averse right now, and may continue on
this path for the foreseeable future.
The reality is that more than half the mortgages being
made in the US are made by Wells Fargo, JP Morgan/Chase
and Bank of America. Most of these loans are in the
conforming and high-balance conforming categories.
The US government (read: taxpayers) is standing behind
about 85% of the new loans being created in the last
couple of years.
Third, there is a real possibility that we may have
only a two-tier system in 2010. The conforming loans
should continue as we have known them. The high-balance
conforming loans may become a thing of the past. And
the second tier of jumbo loans (which would then be
defined as those above $417,000), would enjoy limited
availability, strict underwriting, and pricing models
that ensure profit to the lenders.
It is never too early to start planning. If you anti-
cipate a need for a loan above $417,000 going into
2010, please contact me and we can strategize about how
to meet your goals.
Wednesday, September 23, 2009
Closing Costs - An Enduring Topic
Probably the issue that troubles borrowers the most,
and that I receive the most questions about is closing
costs.
In the scope of home transactions that are in the
range of hundreds of thousands of dollars and sometimes
millions of dollars, the closing costs represent a small
percentage.
But, when a borrower looks over their Good Faith Estimate
and sees a long list of fees that accumulate to several
thousand dollars, it's difficult to make sense of what
seems to be repetitive costs.
Let's go through a typical transaction and see where the
money goes, and what services are provided for the fees
being paid.
At the time the offer is accepted, the agents will open
escrow and the title insurance order. These services
would be needed even if there were no new financing
involved, although the title insurance requirement would
be different.
As you begin the loan application process, the first fee
that you encounter is for the credit report. This fee
is paid to a credit reporting agency, and usually costs in
the range of $20.
Next would be the appraisal fee, which is usually paid
for by you at the time it is ordered. This fee is paid
to an appraisal management company who chooses the
appraiser from an approved panel. Typical cost is
$450-$550, depending on the value of the home, and we
usually arrange payment via credit card.
Most originating lenders will have some form of
processing fee. This is paid to the originating
company and is for the work involved in putting
together a file for presentation to the lender's
underwriter. Typical processing fees are in the
$500-$600 range.
Once the file goes to the underwriting group, they
have a fee for the review of the file for approval.
Even if this fee is paid to the originating lender
as a continuation of their process, it is not
uncommon to have two distinct procedures with two
distinct companies involved. This fee is paid to
the underwriting company and is in the range of
$400-$500.
After the file is approved and it is prepared for
closing, the next step is the preparation of loan
documents. This fee may be paid to the lender or
to a contract company for this service. The
typical fee is $250-$300.
Additional fees that come into play include a
flood certification fee of approximately $20
paid to an independent company that looks over
the FEMA flood maps to determine if the property
is required to have flood insurance or not.
Also, there is a tax service fee of approximately
$85 that is designed to do one of two things: If
your loan has an impound account, they supply the
tax bill to the lender for payment. If your loan
does not have an impound account, they monitor your
property so that they can inform the lender if
taxes go unpaid.
If you negotiate an interest rate that involves a
loan origination fee and/or discount fee, these
costs are usually disclosed to you as "points".
One point equals one percent of your loan amount,
so let's say on a loan of $400,000 a point equals
$4000.
There will be a charge, paid to the title insurance
company, for the lender's title insurance. It is
based on the loan amount, and these fees are supposed
to be reguated by the California Insurance Commissioner.
At closing, you will also be requested to deposit
funds if you create an impound account for the payment
of taxes and insurance. You will have pro-rated
interest from the date the loan funds to the first
of the following month to put the loan on a standardized
30-day billing cycle.
You will be asked to prepay your first year's property
insurance premium, and may have a pro-ration of property
taxes depending on whether the seller has already paid
them covering the escrow closing date.
As you assess the closing costs, it is important to
separate them into categories:
Even if there was no new loan: escrow and owner's title
insurance.
Transactional fees that are lender related: processing,
underwriting, document preparation, appraisal, credit,
tax service and flood certification. Negotiated loan
origination and/or discount fees.
Recurring charges: interest on the new loan, pro-rated
taxes, pre-paid property insurance.
Grouping the closing costs in this manner allows you
to make better comparisons between competing lending
companies and loan programs.
Even though the list of closing costs can be rather
imposing, if the lenders were not able to collect
them in their current fashion, they would add the
equivalent to the cost of borrowing in some different
form.
Be wise in shopping for your loan, and make sure to
make valid comparisons among the many choices you
have. As always, contact me for any information that
you may need.
and that I receive the most questions about is closing
costs.
In the scope of home transactions that are in the
range of hundreds of thousands of dollars and sometimes
millions of dollars, the closing costs represent a small
percentage.
But, when a borrower looks over their Good Faith Estimate
and sees a long list of fees that accumulate to several
thousand dollars, it's difficult to make sense of what
seems to be repetitive costs.
Let's go through a typical transaction and see where the
money goes, and what services are provided for the fees
being paid.
At the time the offer is accepted, the agents will open
escrow and the title insurance order. These services
would be needed even if there were no new financing
involved, although the title insurance requirement would
be different.
As you begin the loan application process, the first fee
that you encounter is for the credit report. This fee
is paid to a credit reporting agency, and usually costs in
the range of $20.
Next would be the appraisal fee, which is usually paid
for by you at the time it is ordered. This fee is paid
to an appraisal management company who chooses the
appraiser from an approved panel. Typical cost is
$450-$550, depending on the value of the home, and we
usually arrange payment via credit card.
Most originating lenders will have some form of
processing fee. This is paid to the originating
company and is for the work involved in putting
together a file for presentation to the lender's
underwriter. Typical processing fees are in the
$500-$600 range.
Once the file goes to the underwriting group, they
have a fee for the review of the file for approval.
Even if this fee is paid to the originating lender
as a continuation of their process, it is not
uncommon to have two distinct procedures with two
distinct companies involved. This fee is paid to
the underwriting company and is in the range of
$400-$500.
After the file is approved and it is prepared for
closing, the next step is the preparation of loan
documents. This fee may be paid to the lender or
to a contract company for this service. The
typical fee is $250-$300.
Additional fees that come into play include a
flood certification fee of approximately $20
paid to an independent company that looks over
the FEMA flood maps to determine if the property
is required to have flood insurance or not.
Also, there is a tax service fee of approximately
$85 that is designed to do one of two things: If
your loan has an impound account, they supply the
tax bill to the lender for payment. If your loan
does not have an impound account, they monitor your
property so that they can inform the lender if
taxes go unpaid.
If you negotiate an interest rate that involves a
loan origination fee and/or discount fee, these
costs are usually disclosed to you as "points".
One point equals one percent of your loan amount,
so let's say on a loan of $400,000 a point equals
$4000.
There will be a charge, paid to the title insurance
company, for the lender's title insurance. It is
based on the loan amount, and these fees are supposed
to be reguated by the California Insurance Commissioner.
At closing, you will also be requested to deposit
funds if you create an impound account for the payment
of taxes and insurance. You will have pro-rated
interest from the date the loan funds to the first
of the following month to put the loan on a standardized
30-day billing cycle.
You will be asked to prepay your first year's property
insurance premium, and may have a pro-ration of property
taxes depending on whether the seller has already paid
them covering the escrow closing date.
As you assess the closing costs, it is important to
separate them into categories:
Even if there was no new loan: escrow and owner's title
insurance.
Transactional fees that are lender related: processing,
underwriting, document preparation, appraisal, credit,
tax service and flood certification. Negotiated loan
origination and/or discount fees.
Recurring charges: interest on the new loan, pro-rated
taxes, pre-paid property insurance.
Grouping the closing costs in this manner allows you
to make better comparisons between competing lending
companies and loan programs.
Even though the list of closing costs can be rather
imposing, if the lenders were not able to collect
them in their current fashion, they would add the
equivalent to the cost of borrowing in some different
form.
Be wise in shopping for your loan, and make sure to
make valid comparisons among the many choices you
have. As always, contact me for any information that
you may need.
Wednesday, September 9, 2009
New Appraisal Process Creates New Obstacles
Roger Showley of the San Diego Union-Tribune published
an article in the last week about how the Home Value
Code of Conduct (HVCC) is affecting the real estate
market. Excerpts of his article are in quotes, my
comments are without quote marks.
"New rules governing appraisals, a key step in mortgage
lending, are leading to mistakes, delays, lower home
valuations, higher costs and worse service for would-be
buyers, industry experts say."
A client’s recent appraisal reinforces this point. The
appraiser was not familiar with the area, and he failed
to include a recent sale of an identical home model
in the appraisal. This would have led to a higher
valuation of the property.
"As of May 1, a new “home valuation code of conduct”
generally bars lenders, mortgage brokers and real estate
agents from communicating directly with appraisers and
requires them to work through a middleman."
The regulation was put into place because the regulators
cannot understand how communication between an
appraiser and a lender, mortgage broker or real estate
agent could be anything but a negative influence on
the appraiser.
"Previously, some appraisers had been pressured to verify
a value or face being blackballed from further work by lenders,
brokers and agents. Some analysts believe these ever-increasing
valuations contributed to the real estate bubble and its
subsequent collapse."
Some appraisers were pressured, some were not offered
additional work by lenders. Business is conducted by
parties that can get things done. If you have a service
provider who cannot meet your needs, why would you
hire them? This does not mean that you tell someone
that they have to falsify their product in order to get
more work – that isn’t right. But you seek out service
providers who can help you meet your goals.
The bubble was created because all parties in the process –
borrowers, brokers, agents, lenders, underwriters, investors
and even the easy money policies of the federal government –
all wanted things to move in that direction. Appraisers rely
on historical data, and evidence that the market had topped
out was only available after property values began to drop.
"The new code was worked out last year between New York
Attorney General Andrew Cuomo and mortgage-finance giants
Fannie Mae and Freddie Mac, which applied the rules nationally."
"In a real estate transaction, a buyer makes an offer that is
accepted by the seller, opens escrow and seeks a loan from a
lender or via a mortgage broker. The buyer pays for an appraisal,
costing $400 or more, and the lender uses the results to determine
how much to lend."
"If the appraisal is lower than the sale price, lenders typically
will not fund the difference, and buyers must increase their
down payments or sellers must lower the price to seal the deal."
"Now, buyers and their agents generally are not allowed direct
communication with the appraiser before the appraisal in completed,
and they say they are having trouble fixing mistakes."
"Because appraisers are paid a flat fee for their work, they are
not inclined to make changes, industry observers say. And lenders
do not press appraisers to raise values, remembering the freewheeling
lending of just a few years ago that resulted in millions of foreclosed
properties."
Lenders are very afraid of making any mistakes. They have bank
regulators looking over their shoulder and micro-managing their
lending operations. They are very conservative in their underwriting
so that they have no concerns about the regulators, or their ability
to sell their loans to FNMA and FHLMC. If that means more
paperwork, or answering questions about a file that really doesn’t
move the needle on any risk assessment, or accepting an appraisal
that may not be accurate because it is low, well, that’s just the
way it is going to be in this environment.
"While defenders of the new system say complaints about incompetent
appraisers amount to an “urban myth,” critics say the system could
impede the housing recovery."
"Just as the new code was going into force, some San Diego
neighborhoods were experiencing multiple offers and overbids,
sometimes prompted by low-ball listings posted by lenders hoping
to ignite bidding wars for their foreclosed properties."
"Because appraisers rely on past sales to evaluate present deals,
there is a built-in lag effect in an appreciating market, in which
sales completed several months ago are lower than current prices
being offered. So far this year, MDA DataQuick reports that the
overall San Diego County median has risen from a low of $280,000
in January to $320,000 in July."
"It takes an experienced appraiser to be able to spot a market turn
such as this, one block at a time, experts say. But agents report that
many nonlocal appraisers are submitting inaccurate valuations
because they do not know the territory or understand current pricing
trends."
"The system's new wrinkle is the “appraisal management company,”
sometimes an independent company that contracts with lenders and
sometimes is partly owned by the lender."
"To comply with the new code, lenders now typically hire these
companies to provide appraisals. The companies in turn rely on
thousands of freelance appraisers, chosen at random on a rotating
basis."
We do not “typically” hire these companies, we are required to do
so. So, we put an appraisal request into the company, they reach
into their black box of available appraisers whether they are
qualified for the assignment or not, the appraisal is performed,
and we have to deal with whatever is delivered. It is rare that the
appraisal will be inaccurate on the high side, so the lender is OK
with accepting an inferior product.
"But while the lenders have reportedly increased appraisal fees from
$400 to $500 in the past year, the increase is going to the management
companies, not the appraisers, who often get less than $200 for their
work, disgruntled appraisers say. The theory is that the appraisers
will make up the difference in more assignments now that they do not
have to spend time marketing themselves."
The appraisers are in a tough spot too. Career-oriented, professional
appraisers are being reduced to a commodity. The experience that
they have has been de-valued and they are compensated about half
of what they were previously able to earn for themselves.
"Meanwhile, real estate industry leaders are acting on several fronts.
A bill awaiting Gov. Arnold Schwarzenegger's signature would require
an estimated 150 appraisal management companies doing business in
California to register with the Office of Real Estate Appraisers. Bob
Clark, who runs the office, said the measure would allow his staff to
collect and investigate complaints concerning the state's 16,200 licensed
appraisers. In Congress, two bills would either replace the code or
impose an 18-month moratorium on its implementation. With neither
likely to pass, appraisal industry groups hope to seek modifications."
So the system has developed Appraisal Management Companies, which
in the hopes of consumer protection are no longer consumer-oriented.
And the state wants to regulate the AMC’s and appraisers (read: more
licensing fees to the state) to collect and investigate complaints against
appraisers. The state already has the ability to do that, because appraisers
are licensed currently. But we lose the freedom to conduct business
ethically, and differentiate ourselves with our experience, knowledge,
and professionalism and our abilities to coordinate a team of like-
minded service providers who work for the client: you, the borrower.
an article in the last week about how the Home Value
Code of Conduct (HVCC) is affecting the real estate
market. Excerpts of his article are in quotes, my
comments are without quote marks.
"New rules governing appraisals, a key step in mortgage
lending, are leading to mistakes, delays, lower home
valuations, higher costs and worse service for would-be
buyers, industry experts say."
A client’s recent appraisal reinforces this point. The
appraiser was not familiar with the area, and he failed
to include a recent sale of an identical home model
in the appraisal. This would have led to a higher
valuation of the property.
"As of May 1, a new “home valuation code of conduct”
generally bars lenders, mortgage brokers and real estate
agents from communicating directly with appraisers and
requires them to work through a middleman."
The regulation was put into place because the regulators
cannot understand how communication between an
appraiser and a lender, mortgage broker or real estate
agent could be anything but a negative influence on
the appraiser.
"Previously, some appraisers had been pressured to verify
a value or face being blackballed from further work by lenders,
brokers and agents. Some analysts believe these ever-increasing
valuations contributed to the real estate bubble and its
subsequent collapse."
Some appraisers were pressured, some were not offered
additional work by lenders. Business is conducted by
parties that can get things done. If you have a service
provider who cannot meet your needs, why would you
hire them? This does not mean that you tell someone
that they have to falsify their product in order to get
more work – that isn’t right. But you seek out service
providers who can help you meet your goals.
The bubble was created because all parties in the process –
borrowers, brokers, agents, lenders, underwriters, investors
and even the easy money policies of the federal government –
all wanted things to move in that direction. Appraisers rely
on historical data, and evidence that the market had topped
out was only available after property values began to drop.
"The new code was worked out last year between New York
Attorney General Andrew Cuomo and mortgage-finance giants
Fannie Mae and Freddie Mac, which applied the rules nationally."
"In a real estate transaction, a buyer makes an offer that is
accepted by the seller, opens escrow and seeks a loan from a
lender or via a mortgage broker. The buyer pays for an appraisal,
costing $400 or more, and the lender uses the results to determine
how much to lend."
"If the appraisal is lower than the sale price, lenders typically
will not fund the difference, and buyers must increase their
down payments or sellers must lower the price to seal the deal."
"Now, buyers and their agents generally are not allowed direct
communication with the appraiser before the appraisal in completed,
and they say they are having trouble fixing mistakes."
"Because appraisers are paid a flat fee for their work, they are
not inclined to make changes, industry observers say. And lenders
do not press appraisers to raise values, remembering the freewheeling
lending of just a few years ago that resulted in millions of foreclosed
properties."
Lenders are very afraid of making any mistakes. They have bank
regulators looking over their shoulder and micro-managing their
lending operations. They are very conservative in their underwriting
so that they have no concerns about the regulators, or their ability
to sell their loans to FNMA and FHLMC. If that means more
paperwork, or answering questions about a file that really doesn’t
move the needle on any risk assessment, or accepting an appraisal
that may not be accurate because it is low, well, that’s just the
way it is going to be in this environment.
"While defenders of the new system say complaints about incompetent
appraisers amount to an “urban myth,” critics say the system could
impede the housing recovery."
"Just as the new code was going into force, some San Diego
neighborhoods were experiencing multiple offers and overbids,
sometimes prompted by low-ball listings posted by lenders hoping
to ignite bidding wars for their foreclosed properties."
"Because appraisers rely on past sales to evaluate present deals,
there is a built-in lag effect in an appreciating market, in which
sales completed several months ago are lower than current prices
being offered. So far this year, MDA DataQuick reports that the
overall San Diego County median has risen from a low of $280,000
in January to $320,000 in July."
"It takes an experienced appraiser to be able to spot a market turn
such as this, one block at a time, experts say. But agents report that
many nonlocal appraisers are submitting inaccurate valuations
because they do not know the territory or understand current pricing
trends."
"The system's new wrinkle is the “appraisal management company,”
sometimes an independent company that contracts with lenders and
sometimes is partly owned by the lender."
"To comply with the new code, lenders now typically hire these
companies to provide appraisals. The companies in turn rely on
thousands of freelance appraisers, chosen at random on a rotating
basis."
We do not “typically” hire these companies, we are required to do
so. So, we put an appraisal request into the company, they reach
into their black box of available appraisers whether they are
qualified for the assignment or not, the appraisal is performed,
and we have to deal with whatever is delivered. It is rare that the
appraisal will be inaccurate on the high side, so the lender is OK
with accepting an inferior product.
"But while the lenders have reportedly increased appraisal fees from
$400 to $500 in the past year, the increase is going to the management
companies, not the appraisers, who often get less than $200 for their
work, disgruntled appraisers say. The theory is that the appraisers
will make up the difference in more assignments now that they do not
have to spend time marketing themselves."
The appraisers are in a tough spot too. Career-oriented, professional
appraisers are being reduced to a commodity. The experience that
they have has been de-valued and they are compensated about half
of what they were previously able to earn for themselves.
"Meanwhile, real estate industry leaders are acting on several fronts.
A bill awaiting Gov. Arnold Schwarzenegger's signature would require
an estimated 150 appraisal management companies doing business in
California to register with the Office of Real Estate Appraisers. Bob
Clark, who runs the office, said the measure would allow his staff to
collect and investigate complaints concerning the state's 16,200 licensed
appraisers. In Congress, two bills would either replace the code or
impose an 18-month moratorium on its implementation. With neither
likely to pass, appraisal industry groups hope to seek modifications."
So the system has developed Appraisal Management Companies, which
in the hopes of consumer protection are no longer consumer-oriented.
And the state wants to regulate the AMC’s and appraisers (read: more
licensing fees to the state) to collect and investigate complaints against
appraisers. The state already has the ability to do that, because appraisers
are licensed currently. But we lose the freedom to conduct business
ethically, and differentiate ourselves with our experience, knowledge,
and professionalism and our abilities to coordinate a team of like-
minded service providers who work for the client: you, the borrower.
Wednesday, August 12, 2009
Mortgage Lending and Property Flipping
In the go-go days of rapid price appreciation, there
was a big wave buyers who made property purchases,
maybe did some cosmetic improvements, and then offered
the home for sale at a vastly increased price.
This practice became known as "flipping", and there
were even TV programs devoted to the trials and
tribulations of people involved in the practice!
In today's environment, flipping properties by
buying them at close to market values and counting
on the appetite of new buyers to pay higher prices
for the home as waned.
However, those buyers who are always looking for a
fast profit have found another way to put themselves
in that position.
With the rash of homeowners who are in financial
trouble, short sales, foreclosures, and bank-
owned properties, there are a lot of sellers who are
extremely motivated to unload their burden and their
homes at give-away prices.
Buyers are forming syndicates and paying cash for
properties, many times buying in bulk from lenders
who have a portfolio of homes that they want to get
off of their books.
What does this have to do with new mortgage lending?
We are seeing that the federal regulators want to
put some restrictions on flipping properties by putting
more requirements on new loans.
Specifically, FHA currently prohibits insuring a
mortgage on a home owned by the seller for less than
90 days. They are presenting this limitation as a way
to protect the borrower from overpaying for a new home.
But, FHA already has appraisal requirements in place,
that when performed properly, can serve to give the buyer
a fair opinion of the value of the property. It would
make sense to disclose to the buyer the date the property
was purchased by the seller and ascertain their purchase
price. This information, coupled with the appraised
value should give a buyer enough information for them to
make an informed decision as to whether to proceed with
the transaction.
It seems inappropriate to tell a buyer that they cannot
buy a home using FHA financing if the seller has owned
the property for such a short time. There are plenty of
instances where a buyer wants to negotiate a good value
for themselves and chooses not to concern themselves with
the profit a seller is making.
We are also seeing situations on VA (and some FHA)
transactions where the lender will require a second
appraisal to verify value in an effort to control
flipping. In this case, I suppose the theory is that
if the first appraiser was part of an organized group
to participate in fraud, the second appraisal would be
a way to cross-check all the facts. These come into
play when the property has been recently acquired by
the seller.
Mortgage lending in the past was fairly singular in
purpose: lenders used good judgment to provide
financing to qualified buyers to encourage home
ownership.
Now we are seeing that mortgage lending is another
device that the regulatory agencies manipulate to
meet other goals.
This contributes to the frustration that originators
and borrowers are feeling right now. Guideline
changes used to have a linear quality that made some
sense as lenders loosened and tightened their criteria.
Now, guideline changes come into play from many directions,
and they are confusing, hard to interpret, and many
times contradictory. Lenders and originators are
struggling to develop procedures and policies that
adhere to the new regulations and keep us all in
compliance.
In the old days, we used to talk about the modified
"golden rule" of lenders: Those that have the gold
make the rules.
This still holds true, but instead of the lenders
having the gold and making the rules, it is now the
federal government who have taken over that role.
was a big wave buyers who made property purchases,
maybe did some cosmetic improvements, and then offered
the home for sale at a vastly increased price.
This practice became known as "flipping", and there
were even TV programs devoted to the trials and
tribulations of people involved in the practice!
In today's environment, flipping properties by
buying them at close to market values and counting
on the appetite of new buyers to pay higher prices
for the home as waned.
However, those buyers who are always looking for a
fast profit have found another way to put themselves
in that position.
With the rash of homeowners who are in financial
trouble, short sales, foreclosures, and bank-
owned properties, there are a lot of sellers who are
extremely motivated to unload their burden and their
homes at give-away prices.
Buyers are forming syndicates and paying cash for
properties, many times buying in bulk from lenders
who have a portfolio of homes that they want to get
off of their books.
What does this have to do with new mortgage lending?
We are seeing that the federal regulators want to
put some restrictions on flipping properties by putting
more requirements on new loans.
Specifically, FHA currently prohibits insuring a
mortgage on a home owned by the seller for less than
90 days. They are presenting this limitation as a way
to protect the borrower from overpaying for a new home.
But, FHA already has appraisal requirements in place,
that when performed properly, can serve to give the buyer
a fair opinion of the value of the property. It would
make sense to disclose to the buyer the date the property
was purchased by the seller and ascertain their purchase
price. This information, coupled with the appraised
value should give a buyer enough information for them to
make an informed decision as to whether to proceed with
the transaction.
It seems inappropriate to tell a buyer that they cannot
buy a home using FHA financing if the seller has owned
the property for such a short time. There are plenty of
instances where a buyer wants to negotiate a good value
for themselves and chooses not to concern themselves with
the profit a seller is making.
We are also seeing situations on VA (and some FHA)
transactions where the lender will require a second
appraisal to verify value in an effort to control
flipping. In this case, I suppose the theory is that
if the first appraiser was part of an organized group
to participate in fraud, the second appraisal would be
a way to cross-check all the facts. These come into
play when the property has been recently acquired by
the seller.
Mortgage lending in the past was fairly singular in
purpose: lenders used good judgment to provide
financing to qualified buyers to encourage home
ownership.
Now we are seeing that mortgage lending is another
device that the regulatory agencies manipulate to
meet other goals.
This contributes to the frustration that originators
and borrowers are feeling right now. Guideline
changes used to have a linear quality that made some
sense as lenders loosened and tightened their criteria.
Now, guideline changes come into play from many directions,
and they are confusing, hard to interpret, and many
times contradictory. Lenders and originators are
struggling to develop procedures and policies that
adhere to the new regulations and keep us all in
compliance.
In the old days, we used to talk about the modified
"golden rule" of lenders: Those that have the gold
make the rules.
This still holds true, but instead of the lenders
having the gold and making the rules, it is now the
federal government who have taken over that role.
Wednesday, July 29, 2009
Update On New Government Regulations
A few issues back, I wrote about a new government
regulation called the Mortgage Disclosure Improvement
Act (MDIA). It calls for new procedures to tighten
the Truth In Lending disclosures and provides the
borrower with times to digest the information they
are provided before they can close the transaction.
The regulation takes effect with applications that
are begun on or after July 30, 2009. Our lenders
have provided more detailed procedures that will
offer some clarity to everyone's expectations on
how escrow closings will now be handled.
Here are some of the key provisions of MDIA:
* No fees except a bona fide and reasonable credit
report fee may be collected from the borrower
until the lender has mailed the Initial Disclosure
and three full days have passed. The day the
disclosures are mailed is not counted as day 1.
Key Point:
This will, in most cases, delay the ordering of
the appraisal that a borrower pays for until after
the time requirement has been met.
* The law requires that the lender is responsible for
the disclosures. In those cases where we broker the
loan to the ultimate lender, the time frames will be
determined by the lender's disclosures. In the case
of our creating the loan using our mortgage banking
capabilities, we are the lender for this purpose, and
we control the disclosure timing exclusively.
Key Point:
Real estate agents have recommended for a long time
that potential buyers go through a loan application
and get pre-qualified and pre-approved, before engaging
in a home purchase. Now, more than ever, borrowers
need to heed this advice so that we can be beyond
some of these time limits and move quickly, or plan
on much longer escrows to close their transactions.
* Any time there is a change in loan terms causing the
Annual Percentage Rate (APR) to vary by 1/8% or
greater (up or down) from the previous disclosure,
the lender must re-disclose.
Key Point:
All parties are going to need to work together and
commit to their fee structures for things to go
smoothly. Escrow fees, title insurance and endorse-
ment fees, notary fees, messenger costs, in addition
to the lender fees need to be as precise as possible
to stay close to the 1/8% APR variance. A big
variable that may be difficult to nail down originally
is the pro-rated interest for the portion of the
month in which the loan funds. This figure also gets
calculated into the APR and may trigger additional
disclosures.
* If there is a re-disclosure that is necessary due to
the APR changing by 1/8% or greater, loan documents
cannot be signed until another specific 3 business
days have passed from the borrower's receipt of the
re-disclosure. The term specific business day is
defined as Monday through Saturday, with Sunday and
Federal holidays being excluded.
Key Point:
Most of the regulatory provisions talk about the
Truth In Lending documents being delivered by US
Mail. The presumption is that once mailed, they
are considered received by the borrower three days
after. So if a re-disclosure is required, three
days will pass before "receipt" and another three
days for review of terms will transpire before loan
documents can be signed.
We are seeking clarification to see if e-mail
delivery can be meet the delivery requirements to
shorten the initial 3-day "mailing" period.
All of our lenders are struggling to define procedures
that they can administer to be in compliance. Many of
the terms outlined above only came to us in the last
couple of days.
If you are involved in a new transaction over the next
30 to 60 days, you may find that your transaction will
be a test case to work out all the details.
All of us need to give realistic forecasts to help
our clients develop their expectations. It would not
be surprising to see modifications to these procedures
and all of us having to adapt to unanticipated changes.
Stay tuned...!
regulation called the Mortgage Disclosure Improvement
Act (MDIA). It calls for new procedures to tighten
the Truth In Lending disclosures and provides the
borrower with times to digest the information they
are provided before they can close the transaction.
The regulation takes effect with applications that
are begun on or after July 30, 2009. Our lenders
have provided more detailed procedures that will
offer some clarity to everyone's expectations on
how escrow closings will now be handled.
Here are some of the key provisions of MDIA:
* No fees except a bona fide and reasonable credit
report fee may be collected from the borrower
until the lender has mailed the Initial Disclosure
and three full days have passed. The day the
disclosures are mailed is not counted as day 1.
Key Point:
This will, in most cases, delay the ordering of
the appraisal that a borrower pays for until after
the time requirement has been met.
* The law requires that the lender is responsible for
the disclosures. In those cases where we broker the
loan to the ultimate lender, the time frames will be
determined by the lender's disclosures. In the case
of our creating the loan using our mortgage banking
capabilities, we are the lender for this purpose, and
we control the disclosure timing exclusively.
Key Point:
Real estate agents have recommended for a long time
that potential buyers go through a loan application
and get pre-qualified and pre-approved, before engaging
in a home purchase. Now, more than ever, borrowers
need to heed this advice so that we can be beyond
some of these time limits and move quickly, or plan
on much longer escrows to close their transactions.
* Any time there is a change in loan terms causing the
Annual Percentage Rate (APR) to vary by 1/8% or
greater (up or down) from the previous disclosure,
the lender must re-disclose.
Key Point:
All parties are going to need to work together and
commit to their fee structures for things to go
smoothly. Escrow fees, title insurance and endorse-
ment fees, notary fees, messenger costs, in addition
to the lender fees need to be as precise as possible
to stay close to the 1/8% APR variance. A big
variable that may be difficult to nail down originally
is the pro-rated interest for the portion of the
month in which the loan funds. This figure also gets
calculated into the APR and may trigger additional
disclosures.
* If there is a re-disclosure that is necessary due to
the APR changing by 1/8% or greater, loan documents
cannot be signed until another specific 3 business
days have passed from the borrower's receipt of the
re-disclosure. The term specific business day is
defined as Monday through Saturday, with Sunday and
Federal holidays being excluded.
Key Point:
Most of the regulatory provisions talk about the
Truth In Lending documents being delivered by US
Mail. The presumption is that once mailed, they
are considered received by the borrower three days
after. So if a re-disclosure is required, three
days will pass before "receipt" and another three
days for review of terms will transpire before loan
documents can be signed.
We are seeking clarification to see if e-mail
delivery can be meet the delivery requirements to
shorten the initial 3-day "mailing" period.
All of our lenders are struggling to define procedures
that they can administer to be in compliance. Many of
the terms outlined above only came to us in the last
couple of days.
If you are involved in a new transaction over the next
30 to 60 days, you may find that your transaction will
be a test case to work out all the details.
All of us need to give realistic forecasts to help
our clients develop their expectations. It would not
be surprising to see modifications to these procedures
and all of us having to adapt to unanticipated changes.
Stay tuned...!
Wednesday, July 15, 2009
Customer Service in Today's Mortgage World
If you have participated in a mortgage transaction
in the last year, you probably found it to be a
frustrating experienced.
I know that those of us with long mortgage careers
have found it to be particularly annoying. In my
32 years of doing home loans, I don't think I have
ever seen the overall service in our industry drop
to this level before.
The mortgage business is not simple. But it can
be made easier to navigate when you get all of the
service providers pulling in the same direction. A
seasoned professional can make it look simple when
they have a team of service-oriented professional
seach doing their job, and being mindful that there
is always a client who has a need that must be met.
Let me go through a typical transaction to give you
an idea of what is going on today.
THE CLIENT: You have a goal or a need. You want to
purchase a home with financing, or want to refinance
your existing loan to take advantage of lower rates,
or availability of equity, or both. You use your
past experience or network of acquaintances to find a
loan originator to help you.
THE LOAN ORIGINATOR: This is my role. I succeed by
cultivating and maintaining a relationship business.
I want to be and need to be responsive to your requests
and questions. I need to have an understanding of what
loan programs are available, what it takes for a client
to qualify for them, and how to adapt your personal
qualifications to the lender's underwriting guidelines.
I need to be able to anticipate any problems, help you
brainstorm solutions, and make appropriate suggestions
as to what I think will be the best solution for you
based on your risk tolerance, time horizons, and quali-
fications.
THE LOAN PROCESSING STAFF: To put a face on it, this
would be my assistant and support staff in our loan office.
She works with me (and several other loan originators) to
facilitate the paperwork for presentation to the lender.
She and I work closely together, sharing information
about your particular circumstances and details about
the proposed lender's guidelines. We each bring to
the other's attention new information that we have
received about loan program changes so that we can
make the most efficient and thorough case for you that
we possibly can.
We are both on the same page about providing the best
possible service that we can to you, the client. Very
rarely is there a customer service breakdown at this
level, and when there is we make sure we correct it
quickly.
THE LENDER: This is where the customer service disconnect
begins. The lenders have been inundated with loan
requests. They have been slow or unable to hire sufficient
qualified staff to move the loan request through the
pipeline efficiently.
Add to this bottleneck the reality that lenders are coming
out of a troubled lending environment. Many bad
loans were created when underwriting was very lax, and
as far as the pendulum had swung toward laxity, it now
has swung the other direction to rigid enforcement of
guidelines. The lenders are very nervous about making
mistakes when approving loans.
We have even had some of our lenders tell us that every
loan needs to be reviewed by a senior underwriter. This
puts the entire pipeline through the eye of a needle!
It also creates the situation where we receive written
loan approval by the underwriter, and make plans with
you to finalize the paperwork that has been requested.
Then, a day or two later, we get an updated approval
that asks for additional paperwork, or expressing a
concern that we were not originally aware of. It is
always troubling to have to ask the client for more
last-minute paperwork, or to back-pedal on what we
thought was a solid loan approval.
Government regulations have not helped either. Since
May, we have had a new appraisal system that was
dictated to us by way of FNMA and FHLMC, the Attorney
General of New York. The lenders have been doing their
best to give us reliable procedures to follow. But they
have bank regulators looking over their shoulders, and
because they are concerned about being compliant, every-
thing has been moving more slowly. And the supportive
team that included competent service-oriented appraisers
has been dismantled and replaced with a panel of
appraisers with various levels of qualifications and who
have no commitment to me to perform with the care that
you deserve.
A big part of my professional approach to creating loans
for you was to have a network of representatives from
my roster of lenders with whom I could discuss your loan
file and make sure that what I was proposing was do-able
with them. This allowed me to get reliable answers at the
inception of the transaction and help you have a clear idea
of what to expect.
In today's environment, even my lender representatives
are gun-shy about offering opinions that won't be countered
when the file reaches the underwriter (or review under-
writer!). The typical answer I get now is "Just submit
the file and the underwriter will tell you if it will
work or not".
Before all of the bad loans came to light, the lenders
were very nurturing of their relationship with us loan
originators. Now that they are buried with business,
extremely conservative, nervous about the regulators,
and unsure of how to comply with the new requirements,
their focus is to have a file that leads them to a defensible
decision, whether that is an approval or adecline. So,
they put much less value on providingservice than they
do on covering their 'bases'.
Doing business in this manner is contrary to how I
have built my business. I don't like not having
answers for my clients, or to feel like we are just
twisting in the wind while we await a decision from
the underwriters.
I do appreciate those of you who have maintained confidence
in my services. I hope you know that I have not changed
my approach to business, but things have radically changed
behind the scenes. I make mistakes, but I do everything
I can to rectify them as quickly as possible, and your
interests are always in the forefront of my mind.
in the last year, you probably found it to be a
frustrating experienced.
I know that those of us with long mortgage careers
have found it to be particularly annoying. In my
32 years of doing home loans, I don't think I have
ever seen the overall service in our industry drop
to this level before.
The mortgage business is not simple. But it can
be made easier to navigate when you get all of the
service providers pulling in the same direction. A
seasoned professional can make it look simple when
they have a team of service-oriented professional
seach doing their job, and being mindful that there
is always a client who has a need that must be met.
Let me go through a typical transaction to give you
an idea of what is going on today.
THE CLIENT: You have a goal or a need. You want to
purchase a home with financing, or want to refinance
your existing loan to take advantage of lower rates,
or availability of equity, or both. You use your
past experience or network of acquaintances to find a
loan originator to help you.
THE LOAN ORIGINATOR: This is my role. I succeed by
cultivating and maintaining a relationship business.
I want to be and need to be responsive to your requests
and questions. I need to have an understanding of what
loan programs are available, what it takes for a client
to qualify for them, and how to adapt your personal
qualifications to the lender's underwriting guidelines.
I need to be able to anticipate any problems, help you
brainstorm solutions, and make appropriate suggestions
as to what I think will be the best solution for you
based on your risk tolerance, time horizons, and quali-
fications.
THE LOAN PROCESSING STAFF: To put a face on it, this
would be my assistant and support staff in our loan office.
She works with me (and several other loan originators) to
facilitate the paperwork for presentation to the lender.
She and I work closely together, sharing information
about your particular circumstances and details about
the proposed lender's guidelines. We each bring to
the other's attention new information that we have
received about loan program changes so that we can
make the most efficient and thorough case for you that
we possibly can.
We are both on the same page about providing the best
possible service that we can to you, the client. Very
rarely is there a customer service breakdown at this
level, and when there is we make sure we correct it
quickly.
THE LENDER: This is where the customer service disconnect
begins. The lenders have been inundated with loan
requests. They have been slow or unable to hire sufficient
qualified staff to move the loan request through the
pipeline efficiently.
Add to this bottleneck the reality that lenders are coming
out of a troubled lending environment. Many bad
loans were created when underwriting was very lax, and
as far as the pendulum had swung toward laxity, it now
has swung the other direction to rigid enforcement of
guidelines. The lenders are very nervous about making
mistakes when approving loans.
We have even had some of our lenders tell us that every
loan needs to be reviewed by a senior underwriter. This
puts the entire pipeline through the eye of a needle!
It also creates the situation where we receive written
loan approval by the underwriter, and make plans with
you to finalize the paperwork that has been requested.
Then, a day or two later, we get an updated approval
that asks for additional paperwork, or expressing a
concern that we were not originally aware of. It is
always troubling to have to ask the client for more
last-minute paperwork, or to back-pedal on what we
thought was a solid loan approval.
Government regulations have not helped either. Since
May, we have had a new appraisal system that was
dictated to us by way of FNMA and FHLMC, the Attorney
General of New York. The lenders have been doing their
best to give us reliable procedures to follow. But they
have bank regulators looking over their shoulders, and
because they are concerned about being compliant, every-
thing has been moving more slowly. And the supportive
team that included competent service-oriented appraisers
has been dismantled and replaced with a panel of
appraisers with various levels of qualifications and who
have no commitment to me to perform with the care that
you deserve.
A big part of my professional approach to creating loans
for you was to have a network of representatives from
my roster of lenders with whom I could discuss your loan
file and make sure that what I was proposing was do-able
with them. This allowed me to get reliable answers at the
inception of the transaction and help you have a clear idea
of what to expect.
In today's environment, even my lender representatives
are gun-shy about offering opinions that won't be countered
when the file reaches the underwriter (or review under-
writer!). The typical answer I get now is "Just submit
the file and the underwriter will tell you if it will
work or not".
Before all of the bad loans came to light, the lenders
were very nurturing of their relationship with us loan
originators. Now that they are buried with business,
extremely conservative, nervous about the regulators,
and unsure of how to comply with the new requirements,
their focus is to have a file that leads them to a defensible
decision, whether that is an approval or adecline. So,
they put much less value on providingservice than they
do on covering their 'bases'.
Doing business in this manner is contrary to how I
have built my business. I don't like not having
answers for my clients, or to feel like we are just
twisting in the wind while we await a decision from
the underwriters.
I do appreciate those of you who have maintained confidence
in my services. I hope you know that I have not changed
my approach to business, but things have radically changed
behind the scenes. I make mistakes, but I do everything
I can to rectify them as quickly as possible, and your
interests are always in the forefront of my mind.
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