From the Editor
Inthe Past Month
When I started, you — our broker readers — had many loan options to work with, from prime
and Alt- A to subprime (aka, nonprime) and hard money. Not to mention Federal Housing
Administration and U.S. Department of Veterans Affairs loans. It didn’t matter if you had a
niche because business was yours for the taking.
but then the roof caved in, so to speak. Now, brokers, along with the rest of the industry,
are working their way back up. In doing so, many of you are finding that specializing in a
particular niche is the key to your business’ survival. You likely have found that promoting
your niche is just as important as picking it. Our tools and tips articles (starting on Page 40)
tell you how.
Also, some conditions — such as historically low fixed interest rates and increased refinancing
activity — likely are helping your business. Others — most notably, record-low levels of home
sales and tighter underwriting standards that result in fewer borrowers qualifying for a loan
— probably are not.
As we enter the last quarter of 2010, several new factors have emerged that also will affect
your business in the coming year and beyond.
reform can perhaps be seen as the buzzword of the year and is bringing about many changes.
there’s financial reform brought on by the Dodd-Frank Act and that includes the potential ban
on yield-spread premiums (NAMb president William Howe tells us the association’s view on
this on Page 14). there also are mortgage-broker licensing changes brought on by the S. A.F.E.
Act, which include stricter education requirements. Find out how adding an education expert
to your team can help you cope in our Lead Article on Page 19.
Finally, reform of Fannie Mae and Freddie Mac is probable. Even health-care reform likely will
affect you and your business in some way.
Whether these changes will have a positive or negative effect likely depends on your percep-
tion. You’ve adapted before, and I have no doubt you will adapt again as needed.
through it all, we’ve been here to help you understand industry trends and what they mean
to your business. And as Scotsman Guide’s new editor, I promise that we will continue to
provide quality educational content to help you navigate the ever-changing world of real
From October 2005’s
“Although most principal payments
on an interest-only mortgage may not
begin for 10 years, it is not acceptable
to offer this loan if it does not fit with
our customers’ situations. Payments
will increase significantly. You must
help borrowers determine if their
income will meet the demands of the
View this article and others in our free article
archive at scotsmanguide.com.
HUD launches two new programs
for struggling homeowners
WASHINGtON, D.c. — the federal government will launch
two new programs to help struggling homeowners, U.S.
Department of Housing and Urban Development Secretary
Shaun Donovan said this past August.
“We are going to be rolling out [a Federal Housing Adminis-
tration] refinancing effort to help borrowers who are under
water in their homes to get above water,” Donovan said on
cNN’s “State of the Union” news program.
“Second,” he said, “we are launching an emergency homeowners’ loan program for unemployed borrowers to be able
to stay in their homes.”
Donovan did not give details of the programs. He also said
it was too early to conclude whether the $8,000 federal tax
credit for first-time homebuyers that ended in June should
Geithner promises change
in U.S. mortgage market
WASHINGtON, D.c. — U.S. Department of the treasury Secretary timothy Geithner proposed “fundamental change”
for the financing system for the $12 trillion mortgage market this past August during a forum on the future of housing finance.
Geithner said the government likely would continue to play
a role in guaranteeing home mortgages, but that reforms
should create a system to prevent another collapse of mortgage giants Fannie Mae and Freddie Mac, which have been
in conservatorship since September 2008.
the government has invested nearly $150 billion in the Fan-
nie Mae and Freddie Mac in the past two years. the Obama
administration plans to announce its detailed proposal for
Fannie and Freddie in January, The Wall Street Journal said.
New-, existing-home sales fall in July
while pending sales, home prices increase
WASHINGtON, D.c. — Existing-home sales decreased by
27. 2 percent in July compared to June to a seasonally adjusted annual rate of 3.83 million housing units, the National Association of realtors reported. compared to July 2009,
existing-home sales decreased by 25. 5 percent.
Sales of new single-family homes also dropped in July compared to June, the U.S. commerce Department said, with a
12.4-percent decrease to a seasonally adjusted annual rate
of 276,000 — a record low. From July 2009, new-home sales
were off 32. 4 percent.
Pending home sales, however, increased 5. 2 percent in July,
the realtors association said, after dropping 29. 9 percent
in May and 2. 8 percent in June.
Despite the sales-volume declines, the Standard & Poor’s
case-Shiller report said home prices increased 4. 4 percent
this past second quarter.
Pending home sales:;Oct.;4
Existing-home sales: Oct.;25
S&P/case-Shiller Home Price Index: Oct.;26
New-home sales: Oct.;27
Mortgage rates at their
lowest level in decades
WASHINGtON, D.c. — Mortgage interest rates for 15-year
and 30-year fixed-rate mortgages set record lows this past
August, falling for nine weeks out of the 10-week period
ending Aug. 26, Freddie Mac said.
In its weekly survey for the week ending Aug. 26, Freddie
Mac said interest rates for 30-year fixed-rate contracts
dropped from 4. 42 percent with an average of 0.7 points,
to 4. 36 percent, a 39-year low.
Average interest rates for 15-year fixed-rate mortgages fell
from 3. 9 percent to 3.86 percent in that same week, with a
0.6 average for points.
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