How Did We Get Here?

Thanks to Rebecca Fair for posting this on Notary Rotary - The Washington Times reviews the circumstances behind this year's housing bust and talks about how lenders have responded.

What Ever Happened To The Vantage Credit Score?

Last year, credit companies were touting a new credit scoring system that was in the works. The VantageScore was supposed to simplify credit scores. The system was based on an easier to understand scoring model.

901-990 = A
801-900 = B
701-800 = C
601-700 = D
501-600 = F

So, what happened? I've yet to see these scores on any credit report and I've heard nothing about the VantageScore this year. Is it still in the works? Or was it more hype than the Y2K panic? Fair Isaac has introduced a new scoring model for 2008, but the scoring system will still range from 300 - 850.

Does The Detroit Free Press Read The Detroit Notary Blog?

Two weeks ago I introduced a new feature on my site called Driving Metro Detroit, a picture diary of the best and worst of the Metro Detroit area. Yesterday, the front page of the Detroit Free Press revealed an exciting new 5-part series entitled.......drum roll please........Driving Detroit (subtitled: It's worse than you think - but better, too). The series will feature the best and worst of Detroit. Hey, great idea! Doesn't somebody owe me some royalties or something? A free subscription? A tour of the facilities? Anything?

Random Conversations From This Week

Yield Spread - This week, I overheard a loan officer talking to a borrower about yield spread. He explained to the borrower that if he qualified for a 6.5% interest rate, he could get him a rate an eighth of a percent higher, it would make his payments $5 to $10 more, but he could use the difference to cover the closing costs. Wow. That's the first time I've ever heard an originator take the time to explain a YSP to a borrower and use it for the benefit of the borrower and not as a way to increase their commission on a loan. Maybe there's hope for our industry yet.

Identifying a borrower - Did I say there may be hope for us? Twice this month, I called borrowers to confirm an appointment and make sure they had proper i.d. only to have them tell me that their i.d.s expired several months, even years ago. And both borrowers refused to go to the Secretary of State before the scheduled appointment to get it renewed. Interestingly, this particular mortgage company requires their originators to obtain a copy of the i.d. and social security card up front. So both appointments had to be postponed. Now, how did it even get to this? Someone does their job properly at the start, this never happens. But the mortgage brokers aren't upset with themselves for not following or ignoring their own required procedure. Nope, it's the notary that takes the hit. Have we really learned nothing this past year? It's probably just a slow week for the title company that handles this lender, but I can't help but sort of wonder how a company that usually sends me five or six signings a week sent me none last week. Is it because they'd rather deal with someone who doesn't bother with the little things like making sure the proper person is signing? I hope not. It's too bad that we as signing agents still have to worry that doing things right, protecting the lender, the title company, and preventing fraud, can possibly cost us a regular client.

Backdating - I guess I'm not the only one. A signing agent colleague was recently asked to backdate a document from a company that he works with regularly. Of course he refused, but his immediate thought was, "there goes that business." Thankfully it did not cost him his relationship with this client, but the fact that we still worry about it shows the industry has a long way to go. Integrity sometimes comes with a cost.

Mortgage Crisis Takes Its Toll On Families

For all the talk of the mortgage crisis and the financial burden that have hit so many families, here's one thing I haven't heard mentioned until now: The toll it has taken on family relationships. In addition to an increase in homeless families, divorces and reports of abuse are increasing as the pressure takes its toll.

See the MSN article

Lions & Tigers & Spiders?

I love pets. Some signing agents hate being disturbed by pets at an appointment, but I think they add life to a home. I love hearing the sound of a dog bark when I ring the doorbell. Oh boy, a friend to play with! I keep hand sanitizer and a hair roller in my car, so I don't mind the mess. During signings I've had dogs on my lap, cats on the table sitting on the loan docs, and birds on my shoulder. But yesterday was a first. One of my borrower's had a lizard and a tarantula. And both came out to play (one at a time, since the tarantula would have made a meal out of the lizard). The lizard was amusing; he could leap all the way up my arm in one or two hops. And he changed colors as he got warmer. But the tarantula, that was really a unique experience. It's hard to describe the feeling of this thing creeping around my hand and up my arm. And who knew tarantulas were affectionate? He found a warm spot on my hand and curled up in my palm like he was going to take a nap.

Sometimes one workday can just blend into the next. But yesterday was one of those days I'll remember.

Feds Cut Fund Rate - Again

For the third time in three months, the Federal Reserve cut the federal funds rate. The rate was cut by a quarter point to 4.25%. The Feds also reduced its discount rate by a quarter-point as well to 4.75 percent. The discount rate is the interest the Feds charge to make direct loans to banks.

White House To Reveal Mortgage Plan

Under the plan led by Treasury Secretary Henry Paulson, interest rates would be frozen for five years on certain subprime loans. Only borrowers who are up to date with their payments can qualify. The plan allows borrowers and lenders more time to refinance or modify their loans.

New Blog Features

As I've crisscross my way through the Metro Detroit area for my daily loan signings, I've always found the contrast to be fascinating. I've seen some beautiful areas and neighborhoods like Milford, Northville, Ann Arbor, Bloomfield Hills, Royal Oak, my own hometown of Plymouth (one of the top 50 places in the U.S. to live), and yes, Detroit (especially downtown). I've also seen the worst of what Metro Detroit has to offer. Dilapidated homes, industrial areas, neighborhoods that look like ghost towns, etc. With my digital camera in hand, I've decided to share all of that with you. Pretty or not so pretty. So at the top of the sidebar I've added a photo diary. Sorry, pictures of my borrowers not allowed.

At the bottom of the sidebar, I've added links to mortgage and real estate industry related blogs that I think are relevant and interesting reads. Some like Source of Title, Radical Talk, and Title-Opoly you may already be reading or familiar with. The Truth About Mortgage is not only an interesting read, but it might be the most visually pleasant mortgage blog there is, using vivid pictures to help illustrate points. Also, their left sidebar contains a wealth of information and tips. Two others I've added, Lenderama and Bloodhound Blog, are unique in that they have numerous contributors from across the industry. You really get a perspective from several points of view.

Enjoy.

Fitch Ratings Forecast

I finally got the opportunity to read over the recent Fitch Ratings report on the U.S. Title Industry. Fitch Ratings is an agency that provides independent reports and credit opinions regarding the world's credit markets.

Here's the bad news: The title and mortgage industry are both expected to see further declines in 2008. The MBAA (Mortgage Bankers Association of America) expects to see mortgage originations fall by about 20% in 2008, with housing starts estimated to decline by 15%. Home values are predicted to continue their decline as well.

Here's the good news: Fitch continues to give the title insurance industry a stable rating. Taking into account the cyclical nature of the industry, Fitch believes the industry is well positioned to weather current market conditions. The one exception? First American Corporation and its subsidiaries, downgraded to negative from stable due to poor relative performance.

The full report can be download here.


ADD ON TO POST 12/04/07: Fitch has also released a special report entitled:
The Impact of Poor Underwriting Practices and Fraud in Subprime RMBS Performance.