Georgia FHA Home Loans - (& Opinion)

The Georgia Code states:

7-1-1016.
In addition to such other rules, regulations, and policies as the department may promulgate to effectuate the purpose of this article, the department shall prescribe regulations governing the advertising of mortgage loans, including without limitation the following requirements:
(1) Advertisements for loans regulated under this article may not be false, misleading, or deceptive. No person whose activities are regulated under this article may advertise in any manner so as to indicate or imply that its interest rates or charges for loans are in any way 'recommended,' 'approved,' 'set,' or 'established' by the state or this article;
(2) All advertisements disseminated in this state by a licensee or a registrant shall contain the name, license number, and an office address of such licensee or registrant, which shall conform to a name and address on record with the department; and
(3) No licensee shall advertise its services in Georgia in any media disseminated in this state, whether print or electronic, without the words 'Georgia Residential Mortgage Licensee' or, for those advertisers licensed in more than one state, a listing of Georgia as a state in which the advertiser is licensed. 

You and I, most insiders, know there is no such thing as a free loan. The only person who pays your closing costs is you. There is not one bank, lender or broker who can truly demonstrate they pay your closing costs for you. One obnoxious little prick has made millions convincing feeble minded people that's exactly what he does when the majority of AR readers know it's not even close to the truth.

Countrywide tried it for a minute and from my understanding the Feds got into it and CW stopped - or maybe it was when BofA started taking the reigns ... either way I haven't seen the No Closing Costs adverts lately.

But there is one particularly rude and obnoxious advertiser who has been advertising in almost every state for a few years and calling every other broker/lender every name in the book. I can't imagine why that little pipsquek never shows up at any lender functions ... hmmm. But I digress.

Keep the Georgia code number from the opening paragraph in mind and then view the following image:

Now I don't know the exact reason for this C&D order but I do know claiming to pay closing costs and not charge the client for them is misleading at best. Essentially the commentary here is my business practice: Honest, Open, Transparent, and High Integrity.

THERE ARE CLOSING COSTS AND YOU PAY THEM

They may be taken from the YIELD SPREAD. They may be taken from the SERVICE or RELEASE PREMIUM but NOBODY does loans for free.

Funny how a couple of years ago I heard this particular BROKER advertising that he, unlike any other broker, lender or bank all of who are smell green sewer scum pays your closing costs for you and it doesn't cost you one thin dime. He claimed they don't "roll it into the loan". Well, the only truth is that he pays it out of the commission he makes on your loan. Anyone can do it - we do but we don't mislead you and tell you exactly how it is accomplished. The real kicker is that immediately following his ads a couple of years ago he was advertising for help offering positions for as much as $300,000 per year. Hmmmm, hard to not make any profit and still have employees making $300k per year.

Well, what goes around comes around.

It's no secret that I think he's a bung faced roach and one of the biggest detriments to our industry still operational. But that's my opinion - he still gets a bigger number of applications and is much more successful than I measured on the dollar volume scale. 

THE OPINIONS IN THIS COMMENTARY ARE STRICTLY KEN COOK's PERSONAL OPINION AND NOT REFLECTIVE ON ACTIVE RAIN, NOVATION MORTGAGE, or ANY SPONSOR OF THIS WEBSITE. 

EDUCATION BEATS LEGISLATION EVERY TIME. Get your clients, friends and family members to a LENDER RUN home mortgage seminar as soon as possible.

If you have followed along you know that FNMA and FHLMC will be required to use a third party appraisal "company" on all loans purchased by the GSE's effective 2009. Some lenders are already requiring this - Flagstar, for example, to whom we sell a couple of loans per month - and we'ver already uncovered what is bound to be a huge comedy of BS when this goes in to full swing.

Getting a contract with a national appraisal dispatch company seems to be to appraisers what getting a government contract is to closing attorneys. You can take the best, most customer service oriented closing attorney in your area and let the be awarded the HUD contract and almost overnight they become the most horrendous, arrogant, and brainless bunch of babbling flops you've ever dealt with. Let them lose the HUD contract and a couple of years later they're back to good again. I've seen it happen far too many times not to call it a constant.

It seems that many appraisers treat being dispatched by a national dispatcher the same way. When we order an appraisal directly it costs our client about $325 to $350 and we generally have it back within 3 days. If any updates are needed in underwriting we email or fax the appraiser and get the updated appraisal back usually within a couple of hours. Not with nationally dispatched appraisers.

In our most recent PITA moment we ordered an appraisal from Flagstar's happy little approved company on Thursday, April 10th with a due date of April 15. We hadn't heard anything by April 16th so we called the company which could provide us no information except to say the appraiser had been given the order ... on the 14th. By the 17th our client still had not been contacted to allow entry to the home so we started our every 15 minute calls to the national appraisal dispatcher until we got results. Finally on Friday the 18th the appraiser calls our client AT WORK and says, "I'm at your property and I need to get inside." WTH? Right NOW??

I'm anxious to see how long it takes to get the LEGAL DESCRIPTION corrected using the ACTUAL legal description instead of the bogus paragraph of obviously concocted information used on the actual appraisal that our client paid $450 for which from any direct appraiser in our market area would have cost only $325 for a better job. The appraisal we got is not the worst I've ever seen but for that price and that amount of time I do expect it to be perfect.

I write about this not because it happened once nor has it happened twice but over the years it has happened many times when we use a nationally dispatched appraiser. One company does stand out about the rest but their prices are 25% higher than going direct so we've spent more time over the years developing relationships with approved appraisers in every market area where we operate.

So once again a REGULATION to "FIX" what already broke is costing the end user in time, money and level of service. Way to go you scumbucket pieces of hog poopie who caused this to become a mandate.

HOW TO FIX IT

You, appraisers, you're the ones to really fix it. Demand your dispatches immediately. Demand customer service from your dispatch company. Not much you can do about the higher prices and that really stinks but WORSE service for the same product isn't going to help your cause. Stand up for your industry and tell national dispatchers if they are going to get into the business the services must be BETTER for a HIGHER PRICE not crappy like we usually get.

I am not throwing off in individual appraisers but I am biting down on the OPERATIONS DIRECTORS of these national companies. If you don't do a better job I'll open a national dispatch company and show you how to do it right. (lol as they say) 

EDUCATION BEATS LEGISLATION EVERY TIME. Get your clients, friends and family members to a LENDER RUN home mortgage seminar as soon as possible.

In an answer to the emails sent to me by many of you, and thank you, for noticing my decline in posting to AR let me respond. Occasionally I take a hiatus from blogging to do other things like run a business, write a book and get over being sick *cough* *hack*. Evidently I am not immune from whatever went around a few weeks ago and it took a lot out of me but I'm pretty much back on track now.

Also, as many of you know, I have been examining better ways to "spread the good news" and that includes multiple ideas for streaming audio and video. I now have a full audio/video studio in my home ready to connect to the network but I want it to be as good as I can possibly make it and it's simply not ready. 

I have been reading though! Just because I haven't posted doesn't mean I haven't been reading. In fact I have spent far too many hours laying on the sofa (something I rarely do) with my lap-top on my lap reading AR and seeing lots of new great postings.

But I'm okay, thanks for your concern! 

Over the next few postings I really want to focus on "Square Watermelons" and get some tried and proven marketing plans infused with something to really make them viral.  

Look, everyone is missing two very important points about YSP. By everyone I mean even NAMB is misstating. Forget YSP. Look at the RATE. I just priced a brokered loan from a wholesale only lender and included 1.5% YSP (which does NOT raise the rate the borrower QUALIFIES FOR). Where anyone gets the notion that a borrower has EVER qualified for the WHOLESALE rate is completely beyond me. But I digress. With 1.5% YSP and a little more than 1% origination and all the other fees included on a $250,000 loan I compared it with advertised rates from Bank of America, Suntrust, Countrywide and Ditech and the interest rate was similar (within .125%) and the APR on the same loan was within .05% on even the best among those when compared to the rate I could easily offer.

YSP is the brokers. The broker can do anything they want to with it. If they want to give the loan away they can. I watched dozens of brokers start doing that when the market went soft and every single one, without fail, is gone today. The idea that banks and direct lenders don't make the same or more profit on loans as legitimate brokers is asinine. This is the second point everyone is missing about YSP. They tell you and tell you and tell you to compare rate and APR. So if the rate is the same and the APR is the same should YSP even be considered?

I admit I operate mostly in Georgia where the banking and broker regulations are tougher than they are in most states. We're pretty much limited to about 2 points in YSP and Origination on loans under $200k because of the way the laws are written. When I price the way I want to price my rate and APR beats all of my competitors - locally and nationally - and I still meet the minimum required income to remain operational and serve my market area.

Licensing for originators working at BANKS, LENDERS and BROKERS must be the same. The perpetuation of thought that just because a Loan Officer works at a bank instead of a broker makes them any less likely to put the screws to the borrower is the type of thought that will quickly lead us back down the same path. In fact we're just a small local lender and I'll put our screening, training and certification program up next to ANY big bank ANY day. 

The problem is STILL a significantly large uneducated home buying public. That segment of them does not even WANT to learn the truth they just want to buy a home at any cost and let the rest of us (abbreviated G.O.V.E.R.N.M.E.N.T.)

EDUCATION BEATS LEGISLATION EVERY TIME. Get your clients, friends and family members to a LENDER RUN home mortgage seminar as soon as possible.