Scotsman Guide - July 2012 Residential Edition

From the editor

BY JENNIFER E. GARRET T, EDITOR

In the Past Month

MOrTgAge OrigiNATiONS Are exPecTeD TO reAch MOre ThAN $1.28 TrilliON ThiS yeAr, AccOrDiNg TO FOrecASTS FrOM The MOr TgAge BANkerS ASSOciATiON (MBA). This would be a small increase over the $1.26 trillion originated in 2011, but MBA predicts this difference will be largely the result of refinances.

The refinance boom doesn’t seem to be abating, and interest rates continue to hit record lows. This past june 1, interest rates on the 30-year Treasury bond declined to 2.54 percent, their lowest level since December 2008. The 10-year Treasury note hit 1.46 percent, a level not seen in the last century. These rates likely mean that homeowners and homebuyers will continue to enjoy low-cost credit — if they elect to enter the market.

Although mortgage brokers and lenders alike are using low interest rates to lure clients to purchase — or refinance — a home, cheap credit doesn’t mean deals aren’t being closely scrutinized. On the contrary, today’s loan applications are being reviewed at every step of the process, particularly during underwriting. Brokers and originators must present nearly perfect loan packages if they want to close. Navigating through the rough waters of today’s under writing can be a tricky undertaking, but zIngenuity Inc.’s Tisha D. Hartman offers tips on how to make it through on Page 21.

And although slow and steady may win the race, faster — and smoother — approvals mean happy clients. Learn seven ways to streamline underwriting and speed up the loan process from Liberty First Capital’s Michael Mekler on Page 32.

Knowing what goes into the underwriting of any type of product — from government-backed loans to hard-money funding to conventional financing — is critical for all mortgage brokers and originators. Learn what hard-money lenders are looking for in a loan package from Fairview Commercial Lending’s Glen Weinberg on Page 30. And Argus Lending’s Darrin Stobaugh offers insight into U.S. Department of Veterans Affairs refinancing loans on Page 44.

Of course, under writers aren’t the only ones heavily scrutinizing the mortgage industry today. Brokers and originators have to deal with a whole host of regulations, and the Financial Crimes Enforcement Network (FinCEN) is adding to that list. On Page 66, associate editor Raymond Fleischmann investigates what FinCen’s new regulations on suspicious activity reports and anti-money laundering programs mean for your business.

No matter what scrutiny comes your way — for your deals or your business — being prepared will help you handle it and come out on top.

Featured top originator

jenniferg@scotsmanguide.com

risha Kilaru, prospect mortgage
no. 12 Fha Volume (2011)
BY JENNIFER E. GARRETT

Risha Kilaru takes her business one loan at a time. “I never look at
numbers,” she says. “It’s never about the money. Whether it’s a $50,000
loan or a $1 million loan, it’s never about the commission — it’s just close
one loan as perfectly as you can.”
And although Kilaru may not be watching the numbers, her results are unquestionable:
She closed 220 loans this past year, totaling more than $77.7 million in overall volume.
Purchase loans accounted for nearly 80 percent of her business, and that is intentional. “If
you’re in it for the long haul, it’s got to be purchases,” she says.

A loan officer with Prospect Mortgage, Kilaru doesn’t market to a particular product or demographic, but she closed more than $23.2 million in Federal Housing Administration (FHA) loans in 2011. “I got nicknamed the FHA Queen,” she says, “but I do pretty much every product you can think of.” Kilaru’s clients come primarily from a strong real estate agent base, as well as repeat and referral business. “It’s just great, great service that gets us the repeat client,” she says. “We will not sell them something that’s not right. I will tell a client if they should not buy or if they should get a smaller loan.” Before becoming an originator, Kilaru worked for several years as an underwriter, and she credits her success to this background. “I think that’s my secret,” she says. “I make the toughest deals work.” View Scotsman Guide’s Top Originators 2011 rankings at scotsmanguide.com/Top2011.

housing starts increase, but permits slide

WASHINGTON, D.C. — New home construction starts in the U.S. increased this past April, but permits that predict future business fell, according to the Commerce Department.

Housing starts rose to a seasonally adjusted annual rate of 717,000, up 2.6 percent over March.

The rate of single-family housing starts in the month was 492,000, which was 2.3 percent above the revised annual rate for March of 481,000.

Permits issued for privately owned housing units decreased 7 percent this past April to an annual rate of 715,000. Despite the monthly decline, this represents a 23. 7 percent year-over-year increase.

Next;release

Housing starts: July 18

Tracking home sales and prices

WASHINGTON, D.C. — Existing U.S. home sales increased 0.9 percent from this past March to April, according to the National Association of Realtors (NAR).

Sales of single-family homes, townhomes, condominiums and co-ops rose 3. 4 percent to a seasonally adjusted annual rate of 4. 62 million in April, up from a downwardly revised figure for March of 4. 47 million. Sales also are 10 percent higher than the 4.2 million level of April 2011.

The Pending Home Sales Index fell month to month this past April, but increased year over year, NAR reports. The index declined 5. 5 percent from March’s downwardly revised 101.1 to April’s 95.5. The index climbed 14.4 percent from 83.5 a year earlier, however.

U.S. house prices increased modestly this past first quarter, according to the Federal Housing Finance Agency (FHFA). The FHFA’s seasonally adjusted purchase-only house price index increased 0.6 percent over fourth-quarter ’ 11.

Next;release Existing-home sales: July 19 Pending home sales: July 26 FHFA house-price index: July 24

Foreclosures hit pre-recession level

IRVINE, Calif. — This past April, U.S. properties in foreclosure fell to their lowest total since before the recession, according to Realty Trac.

One in every 698 U.S. housing units was involved in foreclosures in April, a 5 percent decrease from March and a 14 percent decrease from April 2011.

In the month, 188,789 U.S. properties were involved in foreclosure proceedings, which was the lowest total since july 2007.

Although foreclosures declined overall, 26 states saw foreclosure starts rise from March to April and 27 states saw foreclosure activity rise from April 2011.

For the 18th consecutive month, lenders completed fewer foreclosures than in the previous month. This past April, 51,415 foreclosures were completed, a drop of 26 percent from April ’ 11.

homeownership rates down

WASHINGTON, D.C. — This past first quarter, homeownership fell to 65. 4 percent, the lowest rate since 1997, the U.S. Census Bureau said. The percentage of homeowners in the first quarter fell 1 percentage point year over year.

Homeownership has dropped across the board for all age groups, all races and in every U.S. geographic region.

Concurrently, vacancy rates for rental properties decreased from 9. 7 percent in first-quarter ’ 11 to 8. 8 percent this past january through March. Vacancy rates dropped despite a recent trend of investors buying distressed properties and renting them out.