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The VA Loan became known in 1944 through the original Servicemen's Readjustment Act also known as the GI Bill of Rights. The GI Bill was signed into law by President Franklin D. Roosevelt and provided veterans with a federally guaranteed home with no down payment. This feature was designed to provide housing and assistance for veterans and their families, and the dream of home ownership became a reality for millions of veterans. The GI Bill contributed more than any other program in history to the welfare of veterans and their families, and to the growth of the nation's economy. 

With more than 25.5 million veterans and service personnel eligible for VA financing, this loan is attractive and has many advantages. Eligibility for the VA loan is defined as Veterans who served on active duty and have a discharge other than dishonorable after a minimum of 90 days of service during wartime or a minimum of 181 continuous days during peacetime. There is a two-year requirement if the veteran enlisted and began service after September 7, 1980 or was an officer and began service after October 16, 1981. There is a six-year requirement for National guards and reservists with certain criteria and there are specific rules concerning the eligibility of surviving spouses.

VA will guarantee a maximum of 25 percent of a home loan amount up to $104,250, which limits the maximum loan amount to $417,000. Generally, the reasonable value of the property or the purchase price, whichever is less, plus the funding fee may be borrowed. All veterans must qualify, for they are not automatically eligible for the program. 

VA guaranteed loans are made by private lenders, such as banks, savings & loans, or mortgage companies to eligible veterans for the purchase of a home, which must be for their own personal occupancy. The guaranty means the lender is protected against loss if you or a later owner fails to repay the loan. The guaranty replaces the protection the lender normally receives by requiring a down payment allowing you to obtain favorable financing terms.

Kevin Lawson

The Federal Reserve Board's proposed changes to Regulation Z/the Truth in Lending Act (TILA) contained in docket No. R-1366 could harm the mortgage-brokerage business as we know it. The Fed will accept comments on the proposed change through Dec. 24, 2009.

Brokers have weathered ill-advised change after ill-advised change during recent times,  and now face the wrath of further harm at the hands of the Fed. The loss of yield-spread premiums would create many issues.

Lets begin here;  if brokers can't be paid based on the terms of deals they deliver to lenders, how are they going to be compensated? In many cases, brokers will have to charge borrowers greater fees. Many brokers make successful transactions for clients in need, and many of those are extremely difficult ones. Those deals can take months to close, and brokers must make a certain percentage per deal to stay in business.

In addition, the elimination of YSP would further tilt the playing field toward bankers, who could still receive premiums and income from marked-up rates sold to borrowers.

The loss of brokers ultimately will harm consumers, who will be faced with fewer loan options in a less-competitive mortgage market. In addition, the proposed rule could decimate the broker industry and render brokers unable to pay their loan officers. Thus, thousands of people could be out of work, with some signs pointing to Regulation Z changes as a factor.  In this economic climate, does this make any sense??

YSP's advantages

When mortgage brokers complete a loan for a client, they buy the money at wholesale -- at the par rate -- and sell it to their clients at retail, thereby earning YSP. This keeps brokers from having to charge more money upfront, which borrowers often wouldn't be able to afford. The payment of YSP allows:

  • Brokers to make a fair amount for their efforts; and
  • Borrowers to complete a transaction that fits their needs.

If clients aren't satisfied with what a broker offers them, it's their option and responsibility to seek a better deal elsewhere. None of this changes brokers' need to pay for office space, insurance, audits, licensing and bond fees, etc.

Moreover, brokers who fully and clearly disclose their firm's compensation to clients must discuss with and disclose to borrowers their collection of YSP on multiple occasions, including on the:

  • Current good-faith estimate (GFE);
  • New GFE, which takes effect this coming Jan. 1;
  • Mortgage loan origination agreement;
  • Brokerage business contract;
  • U.S. Department of Housing and Urban Development (HUD)-1 settlement statement;
  • Attorney closing instructions that borrowers normally have to acknowledge; and
  • Regulation Z/TILA disclosures that lenders send to borrowers after application.

Brokers could say directly to clients: "I get paid by banks to place your loans with them. Many lenders compete over my business as a broker, and in some cases, they pay me to place your loan with them." By and large, clients don't care and won't care.

Time to act

Now is the time for everyone in the mortgage industry to fight the Fed's attempt to eliminate YSP. The Fed already more or less owns our banks and financial markets. Are we going to stand by and let them own us, too?

First, consider joining the National Association of Mortgage Brokers (NAMB). NAMB volunteers often are small-business owners, and they want our industry to thrive. The dues members pay to NAMB help fight for our interests in Washington, D.C.

Second, you must personally speak up. Comment on the proposed rule. When you do comment, make sure to explain the destructive impact the rule would have not only on the brokerage industry but also on consumers.

Third, educate your peers, business partners and clients about how the proposed rule will harm small businesses and consumer lending activity, and about how it will increase costs for consumers. Ask your partners and clients -- past and current -- to comment on the proposed rule. Note that without their help, your business and the opportunities offered by mortgage brokers could disappear.

Kevin Lawson & Scottsman/Guide

The VA loan began in 1944 through the original Servicemen's Readjustment Act, also known as the GI Bill of Rights. The GI Bill was signed into law by President Franklin D. Roosevelt, and thus provided veterans with a federally guaranteed home with no down payment. This feature was designed to provide housing and assistance for veterans and their families, and the dream of home ownership became a reality for millions of veterans.

VA guaranteed loans are made by private lenders, such as banks, savings & loans, or mortgage companies to eligible veterans for the purchase of a home, which must be for their own personal occupancy. The guaranty means the lender is protected against loss if you or a later owner fails to repay the loan. The guaranty replaces the protection the lender normally receives by requiring a down payment allowing you to obtain favorable financing terms.

Kevin Lawson

Thanks to record low mortgage rates, tax credits, and improving consumer confidence, the annualized volume of existing home sales has increased sharply in 2009, from a trough of 4.5 million units in January to a recent level of 6.1 million units. As a result, existing home inventories have been coming down, however slowly,  but remain about one million units above their 20-year average .

It may be that that the worst is indeed behind us in the housing market, especially since the government seems prepared to do almost anything to prevent any further decline in home prices. However, it would be naïve to characterize the housing market as healthy or normal.

Approximately 14% of homeowners are delinquent on their mortgages or in foreclosure. This is the highest level ever recorded by the Mortgage Bankers Association. Almost a quarter of homeowners owe more on their mortgages than their houses are worth.

In addition, the housing market faces another wave of mortgage distress in 2010 resulting from interest rate resets on “Alt-A” and “Option-ARM” mortgages. This will put upward pressure on the supply of homes on the market, and quite possibly lead to renewed problems in the financial sector and debt markets.

Two additional key risks for the housing outlook are the prospect of higher mortgage rates and a continuing weak job market. If mortgage rates begin to rise from their current record lows levels , which is likely in 2010 as the Fed withdraws its intervention in the mortgagebacked and government bond markets, housing affordability will suffer and housing prices may decline again.

Once tax credit incentives expire, housing demand may wane, especially if the job market does not generate enough traction in the private sector to reduce the unemployment rate.  So one thing is for sure.......were not out of the storm by any means.  We have seen good indicators that the market could shift in a positive direction.  However the economy needs a longer duration of positive swing.......so for now nothing is for certain..... but Uncertainty.

Kevin Lawson

Thanks to record low mortgage rates, tax credits, and improving consumer confidence, the annualized volume of existing home sales has increased sharply in 2009, from a trough of 4.5 million units in January to a recent level of 6.1 million units. As a result, existing home inventories have been coming down, but remain about one million units above their 20-year average .

It may be that that the worst is indeed behind us in the housing market, especially since the government seems prepared to do almost anything to prevent any further decline in home prices. However, it would be naïve to characterize the housing market as healthy or normal.

Approximately 14% of homeowners are delinquent on their mortgages or in foreclosure. This is the highest level ever recorded by the Mortgage Bankers Association. Almost a quarter of homeowners owe more on their mortgages than their houses are worth.

In addition, the housing market faces another wave of mortgage distress in 2010 resulting from interest rate resets on “Alt-A” and “Option-ARM” mortgages. This will put upward pressure on the supply of homes on the market, and quite possibly lead to renewed problems in the financial sector and debt markets.

Two additional key risks for the housing outlook are the prospect of higher mortgage rates and a continuing weak job market. If mortgage rates begin to rise from their current record lows levels , which is likely in 2010 as the Fed withdraws its intervention in the mortgagebacked and government bond markets, housing affordability will suffer and housing prices may decline again.

Once tax credit incentives expire, housing demand may wane, especially if the job market does not generate enough traction in the private sector to reduce the unemployment rate.  So one thing is for sure.......were not out of the storm by any means.  We have seen good indicators that the market could shift in a positive direction.  However the economy needs a longer duration of positive swing.......so for now nothing is for certain..... but Uncertainty.

Kevin Lawson

As I am arrranging my current files in my office I realize that 80% of all my current purchases are short sales.. A total of 14 offers to purchase. I have approval, ( verbal- not worth much) on some, some are in the waiting game ( months now) and some at the very beginning of the process.  Closing short sale offers can be a very dicey proposition... A short sale is when,  as an example the home owner owes 200k on their  home and can only sell it for 170k  so the  homeowner is 30k short of having  enough to pay off the existing lien or liens on the property. Here is where the fun begins! A buyer comes along as says fine, I will pay 170k for the home as that is what it is worth now. The seller says great I will take that offer of 170k and we are off an running. The bank or banks that hold the liens on the first and second ( most short sales have a first and second) have to agree on the purchase price and how the amount the sale will be short of covering the existing liens will be handled. ( How much first and second lien holder agree to take in funds or from amount short of  full payment of liens). The fact that you get a seller to sign a contract on their home when it is a short sale really doesnt mean much at all, just that they will agree to the price if the bank does. The decision is completely the bank or banks involved as to whether they are OK with the price. Their will be a negotiator from the bank, there will be a BPO (Broker Price Opinion) done by the bank to see whether the price being offered by the new buyer meets their minumum for current market conditions.  Now when the bank says OK if they do...then the sellers will be presented options from the bank/ banks on how in this case the roughly 30k short to cover existing liens  will be addressed. The bank,banks can forgive the debt, the sellers may have to pay income tax on the 30k   as it is income if the bank forgives the debt, could be a lien which would   have to be paid back some how. Any number of things can happen in the end game. So after waiting for 1-6 months the deal can be off in a matter of minutes if the seller balks or is not willing to go along with the terms the bank / banks offer. Here is a couple examples that have happened to me in the month of Novemeber. With one buyer we waited for 4 months and got the offer approved with the bank and were going to be able to beat the looming foreclosure that would occur if not closed by a specific date. On this home there was a small first mortgage and a large second mortgage. The bank that owned the first mortgage took out a mortgage insurance policy on the second to protect their interest in the property. So... in the eleventh hour after a verbal approval but before the written approval was issued the bank that held the first withdrew their approval and decided to let the home go into foreclosure. This is a business decision and really can not fault the bank for proceeding this way as now they can get the insurance money and most likely collect more money in the final sale of the property  than what my buyer was offering.  My second example was a transaction that had one condition left to get the loan documents out to title... the seller decided to file bankruptcy in the 12th hour which terminated all proceedings in the sale of the home. Now it will be up to a judge. I speculate that the terms the bank offered the seller were not possible for the sellers to meet. Probably figured that better to file Bankruptcy and wait a few years and buy again. So in short .... Short Sales are very time consuming and have a lower chance of funding than a  bank or seller owned property. Tomorrow I will write about what the Feds are doing to put the pressure on banks to expedite,  and standardize the procedure for selling Short Sale Properties.

Michael Frakes

First of all I would  highly recommend going to any pre-move briefing available on your base.  Your military husband/wife  most likely must go to this and spouses are encouraged to attend as well.  One of the most valuable things you can do as a moving military family is get connected with a distinguished, professional realtor.  

A realtor with military familiarization, and PCS'ing  in there past is going to afford you a sense of peace when it comes to safely arriving at your intended destination.   In Spokane you have options obviously but Jeannette Karis with Re/Max of Spokane should NOT be overlooked.  Having the 2009 designation of Spokane Association of Realtors President, its my belief that you will be hard pressed to find a more highly qualified candidtate for the job of respresenting you in your transaction.

Jeannette Karis has many designations, awards, educational hours and Spokane Association of Realtors designations as well;  however what makes Jeannette Karis unique, is her passion for what she does.  Not only does she strive to insure that a active military person or a veterans transaction is smooth the entire way through, but she also sincerely cares about people that she works with.  All you have to do is spend a few minutes with Jeannette and this becomes increasingly evident.  This is but a glimpse into the reality of Jeannette's world, as I could go on for quite sometime. 
To get to the point one must be organized in the PCS move process or you'll soon be in over your head, you could owe money, have lost goods and have a terrible overall experience.  One way to avoid all of this is to do pro-active homework.  Get a class under your belt and locate a very professional realtor...... if your looking for one of the best.  Look no further than Jeannette Karis.

Kevin J. Lawson

Well....if you haven't heard.  Robin is having a most unusual 55th year.  It seems that the Army couldn't live with out him and thus Sgt. First Class Robin E. Conrad was mobilized in May 2009, and reported to Fort Polk, LA September 30, 2009.  HORAH!!

Now to bring you up to date, he has been at Fort Polk during this time learning all sorts of stuff a middle aged white male dreams of.  How to drive a M-rap, ( a vehicle that has two doors each weighing 900 lbs. each), being flipped over while buckled in a HUM-V, and then told to crawl out...pack around his body his personal body armor, and let's run 4 miles....  I think the one that I love best is let's do PT in a rain storm when not 50 yards away is a covered pavilion.

In any case he was able to come home for Thanksgiving where I personally saw he is 15 pounds lighter and those youngsters walk on the other side of the hall.  He is now back in Fort Polk where he will graduate December 10th, and then ship to Iraq.

Pam Conrad/Office Manager