Another Rate Cut

Fed Cuts Federal Fund Rate to 3%.

Is The Rising Arson Rate Linked To Mortgage Woes?

I own a home in Wayne County, Michigan that I've been trying to sell for almost two years (two house payments, what fun). No U.S. county has been hit harder with a combination of bankruptcies and economic troubles. I've tried almost everything including major updates and severe price reductions. I've even created a blog page to provide additional photos and information. But the one thing I haven't tried is burning my house down. Have I secretly dreamt that the home would burn to ashes or that a tornado would sweep it away to Oz? You bet (no no, this is not a subtle request for you to do me a favor). Though the correlation is difficult to prove conclusively, a countrywide increase in arson seems to be clearly tied to the desperate financial situation many currently face. With Detroit as a prime example, this MSN article discusses a new breed of criminals.

Michigan Third In U.S. Foreclosures

Nearly 2% of all homes at risk. Wonderful Wayne County is up over 40% with 41,000 filings. What county am I in you ask? Um, that would be Wayne County. Happy, happy, joy, joy.

Update 01/30/08: Nationally, U.S. foreclosures in 2007 were up 75% from 2006.

And Now, Back To More Bad News

New home sales dropped by over 25% in 2007, the biggest decline on record. The 2007 figure surpassed the previous record of 23.1% in 1980.

Drastic Rate Cut By Feds

The Federal Reserve Board cut the federal funds rate by 3/4 of a point to 3.5% in a dramatic move amidst worldwide worries about the U.S. economy. The move was the first intermeeting cut since immediately after the 9/11 disaster, and the single biggest rate cut in over 25 years. The Feds are scheduled to meet next week, where further cuts may be announced. Prior to the announcement, stocks had plummeted in the U.S., Asia, and Europe, with the Asian market suffering its worse loss since 9/11/2001.

Meanwhile, Bank of America, which earlier this month announced plans to buy ailing Countrywide, reported their fourth-quarter 2007 shares at 5 cents per share, a 95% nosedive from the $1.16 per share BofA earned in the fourth quarter of 2006.

Would You Live In A Giant Golf Ball?

World's most extreme homes.

What? Some Good News?

Mortgage applications soar to a near four year high as interest rates continue to drop (No Stephenville, the spaceship photo is NOT real).

Citigroup Announces Major Losses, IndyMac Cutting 2400 Employees

Citigroup Bank posted a jaw dropping $9.83 billion loss (yeah, that's billion with a b) for the fourth quarter of 2007. In addition, Citigroup is also cutting its stock dividend by 41 percent, obtaining $12.5 billion in cash to try to strengthen its balance sheet ($12.5 billion, hmmm, that should last about five months), and taking severe cost cutting measures that could result in 4000 layoffs.

In other cheery news, IndyMac Bancorp announced that it will cut its work force by almost 25%, laying off more than 2,400 employees. The cuts include temporary vendor staffs located mostly in India (sorry, no tears here). IndyMac already lost around 1,600 workers last year, and in addition to these announced cuts, they anticipate laying off another 500 - 1,000 more employees worldwide in the first half of 2008.

Blogger In Draft - Try Some Cool Features Before Your Blogger Buddies

Blogger in Draft allows bloggers to try out new Blogger features before they're available on regular Blogger. You can add a You Tube video bar which allows you to pick videos to display on your sidebar based on any topic or keyword you choose. The newsreel feature allows the same kind of customization. And for those of you who know about widgets and gadgets, Blogger in Draft allows you to add any of the thousands of available Google widgets to your Blogger sidebar. I've chosen two other new features:

The Google search bar I added allows you to search any term on this blog as well as any term on any of the other blogs I link to on my blogosphere sidebar. So if you're searching for an article but you're not sure if you read it here or on one of the other blogs, you can easily find it. The Google search bar can also be set to search an entire site or the entire web.

And if you use a reader to keep up with your favorite blogs whenever a new post is added, I've added a feature that allows you to add this blog to any one of five different readers, Google, Bloglines, Atom Feed, Netvibe, Newsgator, & MyYahoo.

Since these features are beta versions currently being tested, understand that Blogger in Draft features can be changed or pulled at any time.

Note: I've decided to delete the reader feature from Blogger and replace it with something else. The reader feature was making the site load too slowly. I found a fantastic alternative. What is it? I'll let you know in my next post. Be patient my dears.

Close Your Eyes & Hang On

Bankruptcy rumors, severe stock drops, record foreclosures, buyout rumors, dramatic stock gains. Ho hum, just another average week for Countrywide.

Update: It's official, Bank of America is buying Countrywide for $4 billion.

Feds Make It Clear - More Rate Cuts On The Horizon

In a prepared statement, Fed Chairman Ben Bernanke stated: “We stand ready to take substantive additional action as needed to support growth and to provide adequate insurance against downside risks.” The Feds next meet on January 29th & 30th.

Uniform Closing Instructions - Part Deux

How does the UCI affect signing agents? Well, it's not easy to say right now. Many of the items covered in the instructions are things that are already covered in other places, such as Reg. Z, but aren't always implemented properly. For example, every person that signs the RTC must be given two copies of the RTC (2 signers, 4 copies total). Also, any document that refers to an attachment, legal description, or rider must have the corresponding document attached. Nothing new there, but we've all seen it done improperly.

Here's what I see so far that affects us:

Loan documents and lender contact information must be presented to the borrower one business day before the signing. No docs one day in advance, no signing. (One of my lenders already does this. All issues are resolved prior to signing so the signings run smoothly 99% of the time)

A copy of the borrower's government issued picture I.D. must be obtained. Borrower must also sign the Borrower's Certification. (Hmm, no more credible witness?)

Borrower must sign the TIL (Truth In Lending) before signing the Note or any other documents. (Most experienced signing agents already have the borrower review the TIL before any documents are signed)

Each lender will designate a fraud prevention contact. Any suspicion of unfair, deceptive, misleading or unlawful behavior by any lender or mortgage broker employee can be reported to this contact.

If a mortgage broker attends the signing, they are directed not to overtly pressure borrower to sign, encourage borrower to sign before reading the loan documents, or suggest that the borrower use the three day RTC to read the documents to address any concerns raised at the signing.

The instructions make it clear that it is not their purpose to broaden liability of the signing agent. The signing agent must follow all laws regarding UPL (unauthorized practice of law), and in the case where a signing agent suspects fraud or misrepresentation and reports their suspicions to the fraud contact, the lender indemnifies the signing agent from any legal claims.

And The Boobie Prize Goes To....Subprime

"Subprime" is chosen by linguists as word of the year.

Uniform Closing Instructions - Part 1

In the first part of 2008, many lenders should begin implementing the Uniform Closing Instructions (UCI). The instructions are intended to provide a clear and consistent step by step process in handling loans from beginning to end. There's been a lot of debate about these instructions; will anything really change, how effective will they be, who's really going to follow them. Many of us have high hopes that these instructions, if done properly, could make the closing process a much smoother experience. But some people have their doubts as to how widespread these instructions will be utilized. Based on those that participated in the presentation of these instructions, the expectation is that these instructions will become the industry norm. The list of participants included key figures from the following companies and organizations:

Mortgage Banker Association (MBA)

Wells Fargo Home Mortgage

Countrywide Home Loans

American Escrow Association

American Land Title Association (ALTA)

First American Title Insurance

The instructions can be downloaded at the MBA website. Any comments or suggestions can also be submitted via the MBA website, and should be sent by January 30th, 2008. I'll be posting a general summary of the UCI as it affects signing agents later in the week.

PMI Defaults Set Monthly Record

According to the Mortgage Insurance Companies of America, loan defaults hit a record 61,000 in the month of November, a 35% increase from November 2006. PMI insurance is typically required when a borrower takes out a loan within 20% of the appraised value. Over the last few years, many lenders have avoided this by issuing a second loan to cover the 20%. But with record defaults, lenders have been much more reluctant to issue a second loan. PMI applications for November 2007 were up 65% from November 2006.

It's The New Year

Do you have a business plan? Now is the time to review your practices from 2007, decide what worked and what didn't, and plan out your marketing strategy for 2008. Decide on your goals; what do you want to make in 2008, how many new clients do you plan on picking up, how much do you want your business to grow, and how you're going to achieve this. Where are you going to spend your marketing money? What brought you business and what didn't?

A business plan doesn't have to be formal. Just write down what you want to accomplish and how you plan on doing it.

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.