President Bush Offers Assistance to Homeowners

President Bush announces modest plans to address the mortgage crisis: MSNBC

Inside Countrywide

Countrywide Home Loans seems to be the latest mortgage company that everyone is talking about. Earlier in the week, The New York Times published an extremely unflattering look at the inner workings of Countrywide. The article leans heavily on accounts from former employees.

The Mortgage Lender Implode-O-Meter

The Implode-O-Meter blog was created as a site dedicated to tracking mortgage lenders who have gone under as of late 2006. Since that time, the site has documented 143 implosions (a subjective classification which can mean a variety of things including bankruptcy and halting operations). The list is almost mind-boggling, and includes big names such as Novastar, National City Home Equity, Wells Fargo (Alternative Lending & Correspondent), Home123/New Century, H&R Block Mortgage, Ameriquest, and the latest, Allstate Home Loans.

The Implode-O-Meter site also has a forum for discussing mortgage issues.

The Mortgage Crisis & The Adjustable Rate Mortgage

At one time, the adjustable rate mortgage was credited with increasing the opportunity for individuals to become homeowners. But now, much of the current mortgage crisis stems from adjustable rates that have risen dramatically. Many homeowners claim that they were unaware of the fact that their loans were adjustable, or didn't understand what could happen when the fixed period expired. While lenders seem to continue to add documents and disclosures to their closing packages, some consumers complain that they were so overwhelmed by the amount of closing documents that they didn't clearly understand what they were signing. As signing agents, it is incumbent on us to make sure that the borrower clearly sees their important loan terms, including interest rate, monthly payment, prepayment penalties, and how and when their rate may become adjustable.

For more, see MSNBC's article on the ARMs Race.

The Reverse Mortgage

I had the opportunity to handle several reverse mortgages this week. Reverse mortgages are quite different from the conventional mortgages that most of us are used to handling. Per Title Stream's information sheet, a reverse mortgage is used to convert equity from a borrower's home into cash. Instead of making monthly payments to a lender, the lender makes payments to the borrower (either as an initial lump sum, as a monthly payment to the borrower, as a line of credit or as a combination of these). The borrower must be 62 years of age or older. No payments are due by the borrower. The loan only becomes due when the borrower no longer occupies the property (either by moving out, selling the home, or passing away) and the amount owed can never exceed the value of the home at the time the loan becomes due.

Brenda Stone of Tex Notary has compiled a comprehensive 150 page guide to reverse mortgages. Included in the guide is a quick start section that I personally found incredibly helpful. The guide can be purchased by sending $9.95 to TexNotary@gmail.com via paypal.com. You''ll receive the guide within hours.

Jurat vs. Acknowledgement - Notary 101

This is one of the first things a notary should learn, but it still seems to cause confusion. Even the Secretary of State has problems getting it right (see the comment on the Certified True Copy post). So it seems a good time for a basic refresher. A notarial act requires one of two types of wording, either a jurat or an acknowledgement.

A jurat is required when a signer is swearing to the content of the document. A notary attests that the signer personally appeared before them, was given an oath or affirmation by the notary swearing to the truthfulness of the document, and signed the document in the notary's presence. An example of this kind of wording is "Subscribed and sworn to by ______ before me on the _____ day of ___."

An acknowledgment is used to confirm the identity of the document signer and acknowledge that they signed the document. They are not swearing to the truthfulness or validity of any statement. An example is "Acknowledged by ______ before me on the ____ day of ____." Per the Michigan Secretary of State, a signer is not required to sign the document in the presence of a notary. They must, however, personally appear in front of the notary to confirm their signature.

Although it is important to know the difference, it is not up to the notary to determine the correct wording.

Certifying a True Copy of an Original

Notaries are sometimes requested by individuals to certify a copy of a document as a true copy of the original (As I was yesterday). Some states do allow a notary to perform this function (see below), but not Michigan. A Michigan notary can only acknowledge the signature of the person making the original or certified true copy statement on the document. Per the Michigan Secretary of State, in this situation an individual can print or type: "this is a true copy of my _____ " (list type of document) directly on the document. The notary would then notarize the signature. Otherwise, only the issuer of the document (ex: Secretary of State for a driver's license, a university for school records, etc.) can certify a true copy of an original.

The U.S. State Department compiled a list in 2005 (found on Wikipedia) indicating which states are allowed to certify copies and under what circumstances.

Countrywide's Rocky Ride

With rumors flying about the instability of Countrywide Financial, the week ended on a somewhat better note as the Federal Reserve cut the discount rate by 1/2% and Countrywide borrowed $11.5 billion in bank credit lines to secure short term liquidity concerns. The moves triggered a rise in the Dow of 233 points on Friday, including a 13% rise in Countrywide's stock and an upgrade from "sell" to "neutral" . Still, Countrywide's stock is down 50% for the year, and they face the possibility of several cost cutting measures. In addition, the future of Countrywide's subprime lending unit, Full Spectrum, remains uncertain.

New Home Construction Slowest in Decade

From MSNBC - Construction of new homes and apartments dropped 6.1 percent last month. The drop of 20.9 percent from a year ago is the slowest pace since January 1997.

Fannie Mae & Freddie Mac Plan Rejected

Fannie Mae & Freddie Mac, who hold or guarantee a combined two-thirds of all U.S. home mortgages, have been denied a request to take on more debt. The Office of Federal Housing Enterprise Oversight refused their requests to relax investment caps. The move was seen as a way to provide liquidity in the market for mortgage-backed securities. But the OFHEO argued that the risk of allowing the two companies to take on more debt was too great.

Loan Options Diminish

Less loan options have become another consequence of the slow housing market. Many companies are eliminating products or raising what's needed to qualify for certain loans, with more companies sure to follow. On Tuesday HomeBanc announced that it would not be issuing any more loans, and Impac Mortgage Holdings shut down their Alt-A loans, which are typically non traditional type loans with limited documentation, credit issues, or expanded debt-to-income ratios. Read the full article at MSNBC.

Wayne County Register of Deeds Eliminates Backlog

The Wayne County Register of Deeds made national headlines last year. Not the good kind. Title companies complained that Wayne County had a gap of up to six months between when a document was filed at the county office and when it was available to someone searching land records by computer. Although the office denied the length of the backlog alleged in the federal lawsuit filed by seven land title companies, Bernard Youngblood of the Register of Deeds office announced that the backlog has been eliminated. The county claims that documents are now registered within minutes, and mailed documents are registered the next day.

When Your Lender Goes Under

Several major lenders have gone bankrupt in 2007. Although most have been sub-prime lenders, other lenders are not immune, as evident by the recent bankruptcy of American Home Mortgage. What happens when your lender goes under? Will you lose your loan? Your house? As Jeremy Herron of the Associated Press explains, your loan would likely end up with another financial institution. Read his article here.

More on American Home Mortgage at MSNBC Real Estate News.

Add Your Business to Google Maps

If you've used Google Maps, you're aware that you can find businesses by entering querys directly in the search bar. Did you know that you can add your signing agent listing for free? Go to Google Maps, http://maps.google.com/maps, choose "add or edit your business," then "add new business." Provide your location (full address, just a street, or just the city) and a description of your services. Once you're finished, Google's automated system calls you to verify your listing. That's it. To see an example of what it might look like, you can do a search for "notary plymouth michigan." You'll see my Detroit Signing Agent listing on the left.

Prepayment Penalty Limits

Despite the fact that most states have set limits on prepayment penalties (1% for three year in Michigan), you've probably seen the occasional loan that has a penalty above and beyond this limit. I've asked several knowledgeable people in the industry how this can occur, but I've never received a clear answer. Until now. In an article published in the Detroit Free Press on 07/22/07, Real Estate expert Ilyce Glink explains that federally chartered lenders are permitted to circumvent state limits. This applies to "any lender that has established its charter as a federal savings bank or under federal law." For more information, you can visit Ilyce's website:
http://www.thinkglink.com/Prepayment_Penalties_Persist.htm

In The Beginning...

This notary signing agent blog was created as a means to keep you informed of critical issues affecting the mortgage and notary signing industry. Comments are welcome.