TheREALTYgram Blogger

NAR Gets Ready For The Main Event;Will Banks Get The Green Light To Enter Real Estate?

Michael Oxley (R-OH) and Barney Frank (D-MA) have introduced a bill that would allow certain financial firms to engage in real estate brokerage activities. The bill would amend the Bank Holding Company Act to clarify that real estate brokerage and real estate management activities are authorized financial activities for financial holding companies and financial subsidiaries of national banks. The legislation would allow those firms to act as agents for buyers and sellers of property and to list property for sale.

This bill runs counter to the National Assn. of REALTORS®' perennial favorite “Community Choice in Real Estate Act,” which would permanently bar banks from the real estate business.

Federally chartered mega banks that are allowed to conduct real estate will be exempt from state regulation. Their agents and employees would not need real estate licenses to buy or sell property. They would not have to pass licensing exams or pay licensing fees. They could ignore state laws or regulations governing the business of real estate such as consumer disclosure, environmental protection, and dual agency. Nor would these banks have to comply with state banking regulations, including those covering predatory lending.

We confess to some confusion about Barney Frank's involvement here considering that this bill seems to fly in the face of another bill that he  is sponsoring, very consumer-friendly legislation that will stem predatory lending.

We predict that the Oxley/Frank effort will fail but we think that NAR would have a more plausible argument if the group was not also engaged in strong lobbying efforts that will strip states' authority in health care benefits and delivery, and predatory lending,

Maryland Bill Stems Foreclosure Scams

Gov. Robert Ehrlich of Maryland has signed into law a bill that aims to prevent "foreclosure rescue consultants" from stripping the equity of cash-strapped homeowners who turn to them for help, reports The Washington Post.

When these consultants require homeowners to turn the deed over to them while they make the overdue mortgage payments but then take permanent ownership of the home before the rightful owner has a chance to buy it back, they will face misdemeanor charges carrying jail sentences of up to three years.

The legislation also requires lenders to inform homeowners of pending foreclosures within two days of filing the necessary paperwork. Previously they had to make the notification only 10 days before the actual foreclosure sale.

Are NAR Policy Wonks Having Second ThoughtsAbout Supporting Predatory Lending Legislation That Works?

The following article from today's edition of The Washington Post appeared in REALTORS®' inboxes today as part of the National Assn. of REALTORS® Online Daily News program for members:

Standards for Mortgage Lending Debated

(May 25, 2005) --   Consumer advocates and representatives of the mortgage industry butted heads at a recent congressional hearing on predatory lending practices, which saddle homeowners with exorbitant payments and fees that ultimately push them into foreclosure.

While the lending community supports national legislation that would preempt state laws and provide home-finance education to prospective buyers, consumer groups want to preserve the stringent consumer protections imposed at the state level.

North Carolina's six-year-old predatory-lending law, which has become a model used by other states, restricts fees, prepayment penalties, and flipping to protect the equity of borrowers with high-cost mortgages.

Incoming Mortgage Bankers Association President Regina Lowrie expressed concern that a patchwork of state laws will lead to a drop in subprime lending or higher interest rates on conventional loans, but North Carolina banking official Joseph Smith Jr. said his state's legislation has not dried up financing for subprime borrowers.

Earlier this month we were told that NAR was leaning toward a very consumer-unfriendly bill. While NAR has not explicitly stated today that it will throw its weighty support to consumer-friendly legislation,  we still hope that the group will support a bill that will help consumers.

US Bank Institutes 'Anti-Flipping' Policy

US Bank has announced a new "Anti-Flipping" policy that calls property flips "a threat to the integrity of the residential real estate industry" and institutes a 90-day seasoning requirement on new home purchases, according to Behind the Mortgage blog.

Watch Out For Predatory Lenders;They Are Running Rampant Among Us

The U.S. Dept. of Housing and Urban Development has an excellent web site that covers all aspects of  Real Estate Settlement Procedures Act. RESPA is a consumer disclosure and anti-kickback statute designed to inform consumers of their settlement costs and to prohibit kickbacks that can increase the cost of obtaining a mortgage.

Different players in the lending game operate under different rules.  For example: mortgage lenders and bankers are NOT required to disclose yield spread premiums; mortgage brokers ARE required to offer those disclosures. The yield spread premium is the  "refund" or "commission" given to the loan officer/mortgage company for selling the loan above the going interest rate. Most loan officers conveniently "forget" to tell consumers about  this charm. Ask the loan officer for copy of the "lock sheet" . If the loan offer declines, DEMAND a copy of the lock sheet!

A consumer with a complaint can use the following format for a letter (taken from HUD web site). (I would highly recommend that the consumer speak with an attorney who is familiar with RESPA and the intricacies of the Act.)

Attention Customer Service:

Subject: [Your loan number]
[Names on loan documents]
[Property and/or mailing address]

This is a "qualified written request" under Section 6 of the Real Estate Settlement Procedures Act (RESPA).

I am writing because:

• Describe the issue or the question you have and/or what action you believe the lender should take.
• Attach copies of any related written materials.
• Describe any conversations with customer service regarding the issue and to whom you spoke.
• Describe any previous steps you have taken or attempts to resolve the issue.
• List a day time telephone number in case a customer service representative wishes to contact you.

I understand that under Section 6 of RESPA you are required to acknowledge my request within 20 business days and must try to resolve the issue within 60 business days.

Sincerely,

[Your name]

REMEMBER: This letter SHOULD NOT be included with your mortgage payment, but should be sent separately to the customer service address.

You SHOULD continue to make the required mortgage and escrow payment until the request is resolved.

You may bring a private right of action under Section 6, if you suffer damages due to the lender's servicing of the loan. See the RESPA statute and regulations.

More links:
BEWARE of the BAD "Good Faith Estimate"
Questions to ask your mortgage broker
Junk Fees
"Mean" questions to ask your loan officer
Predatory lending legal specialists (excellent attorneys)

NAR Backpedals On Predatory Lending Stance;Will Support Bill That Lets Predators Off The Hook

WHOREMASTER 103 Lesson Plan: It's all in the name of the bill, stupid! Inside sources tell us that the National Assn. of REALTORS® will announce support for a bill that is fiercely opposed by civil rights leaders and consumer activists. The announcement will be made at the group's mid-year meetings this week in Washington, D.C. The "Responsible Lending Act" co-sponsored by Reps. Robert W. Ney (R-Ohio) and Paul E. Kanjorski (D-Pa.) will curb some abusive lending practices but it will also preempt state and local laws that afford additional substantive protections, and wipe out a recent regulatory ruling mandating that state-chartered thrifts and independent mortgage companies cannot evade state limits on late fees and prepayment penalties on adjustable-rate mortgages and other alternative loans.

There is another bill before legislators that champions consumer and civil rights concerns, cuts predatory loans and makes it easier to obtain a home loan. This bill is co-sponsored by Democratic Reps. Brad Miller and Melvin Watt, both of North Carolina, and Barney Frank (Mass.), that sets more stringent rules. It is modeled on North Carolina's state law, which has been copied by New York, New Mexico, Illinois and New Jersey.

Let's hope our inside sources are wrong on this one.

Real Estate Blogger Ignores Creative License

This work is licensed under a Creative Commons License. Technorati and Feedster users are seeing double today. Double posts of TheREALTYgram Blogger articles are showing up since an anonymous blogger at Real Estate Blog started posting my articles in full, complete with headlines and text, sans source material and without any attribution to the author (Frances Flynn Thorsen).  It appears that the "new" host for my material is using RSS feeds for its blog;  I will make an appropriate change to my setup to restrict the length of the articles that can be appropriated in this fashion. There is no "contact" point or information about the author of the Real Estate Blog, although there is a column of Google ads to accompany the "found news." Tacky, tacky, tacky.

Whoremaster Lobbyists Plan Victory PartyAs Bankruptcy Bill Nears Passage In House

Bankruptcy bill proponents are putting their champagne on ice as they wait for this week's vote by the U.S. House of Representatives. Passage seems imminent. After passage, credit card companies and other "Tony Soprano" genre lenders can turn to federal courts empowered to act as "enforcers" for unpaid debt.  Broken lives will follow.

National Fair Housing Alliance Issues Fair Housing Report;Housing Discrimination Complaints Increased in 2004

Racial segregationists continue to exploit minorities in growing numbers, and minority home owners continue to be steered to  minority-dominated neighborhoods where real estate does not appreciate as quickly as in majority white neighborhoods, according to the National Fair Housing Alliance. Housing discrimination complaints to state, federal and nonprofit agencies rose 8.6 percent in the past year, climbing to 27,319 in 2004 from 25,148 in 2003, according to the group.

"Some commentators say integration has failed. I say integration has yet to happen," declared Shanna L. Smith, NFHA president and chief executive.

Lending figures due to be released later this week  will answer the group's concern that there are discrepancies between loan rates offered to white and to minority home buyers.

Justice Prevails In Pacific Northwest;Mortgage Fraud Culprits Sent To Prison

John Hansen, a Washington State real estate appraiser, was the final culprit in a mortgage fraud ring to be sentenced (MortgageFraudBlog). He was ordered to spend 18 months in federal prison followed by three years of supervised release and ordered to pay restitution of $287,796. Hansen pleaded guilty to conspiracy to commit wire fraud last year in connection with the Century Mortgage fraud in Washington.  According to authorities, Hansen inflated appraisals on homes purchased by vulnerable homebuyers. The Seattle Times reports the following:

Former Century Mortgage co-owner Dale D. "Sage" Gibbons was sentenced to five years in prison and ordered to pay $449,953 in restitution. He was convicted in July on 16 counts of wire fraud.

Former real-estate agent Sally L. Gibson, who sent home buyers to Century Mortgage for financing, was sentenced to 30 months in prison and ordered to pay $264,406 in restitution. She was convicted of a dozen counts of wire fraud.

Co-defendants Ronald Lee Burger and Cathy M. Patrick pleaded guilty to wire fraud and testified against Gibbons and Gibson.

Burger, also a co-owner of Century Mortgage, was sentenced to 37 months in prison and ordered to repay $423,011. Patrick, a closing agent, was sentenced to 60 days in jail and three years' probation and was ordered to repay $148,340.

In the home-sales fraud conspiracy, scores of people bought houses for far more than market value, then found themselves facing balloon payments, high interest rates, foreclosure and even bankruptcy.