Realtor Coaching & Training: Rhode Island
So, we are coming out of a ‘Bubble Market’ when so called ‘Lair Loans’ were as common as people with real estate licenses in California. The Government, Lenders, Loan officers are now playing by new rules when it comes to writing mortgages……and what happens when the rules require more verifications? In other words, now that the ‘Liar Loans’ have gone the way of the SUV, guess what is happening….
Residential mortgage fraud soared to a record high in 2008, with incidents up 26 percent from the previous year, according to a report released Monday by the Mortgage Asset Research Institute.
The institute reported that mortgage fraud is more prevalent today than it was during the height of the housing boom that occurred during the first half of the decade.
Did you catch that….MORE prevalent now vs the boom when nearly anyone could get a mortgage loan….
It blamed the financial pressures of the ongoing recession for prompting many borrowers, lenders, brokers to make false statements on loan applications during 2008.
“As far as our calculations and research are concerned, this is an all-time high” since the institute began keeping records in 1990, said Jennifer Butts, one of the report’s authors.
Ah, no. Its because for the first time in years (and years) lenders are now actually forcing folks to prove their financial ability to pay their mortgage! Imagine that. So, for the first time in almost 10 years lenders have to collect full financial packages on their borrowers and the borrowers themselves must provide actual….proof!
Study results were presented during a telephone news conference from a Mortgage Bankers Association’s national meeting on loan fraud in Las Vegas. Officials stressed that mortgage scams are on the rise, “further draining lender, law enforcement, and consumer resources in the industry’s most challenging times.”
Among states, Rhode Island ranked first in the country for mortgage fraud last year, with more than three times the amount of fraud that had been expected, based on origination volume.
Despite the national surge in mortgage fraud, the rate for California in 2008 dropped to eighth place among the 50 states, from fourth place in 2007. The change was attributed to stricter law enforcement.
Florida, which ranked first among states in 2007, dropped to second place. Next in line for 2008 were Illinois, Georgia, Maryland, New York and Michigan.
The bankers association did not release a state-by-state breakdown of fraud incidents. Representatives said the totals were being withheld to protect the anonymity of lenders who participated in the study.
The ranking of the states was based on a fraud index created by comparing the number of loans issued and anticipated fraud cases to the actual number of incidents that were reported.
The top incident type nationally was application fraud, representing 61 percent of reported cases. It was the fifth year in a row that it topped the list.
Next came frauds related to tax returns and financial statements, which increased from 17 percent of reported frauds in 2007 to 28 percent in 2008.
In order of volume, other fraud types included appraisals or valuations, verifications of deposit, verifications of employment, escrow or closing costs and credit reports.
You know….all the stuff that they didn’t have to collect for loan approval only 18 months ago.
While home-loan standards have become tighter in recent months, in the years leading up to the mortgage market meltdown, underwriting was lax by historical standards.
Ya think!
Tens of thousands of adjustable-rate mortgages were issued without determining whether the borrowers had the savings or income to make their payments after their introductory “teaser” rates adjusted upward.
Edit: Millions vs tens of thousands.
Most analysts tie these weak standards to the current surge in foreclosures and the sharp decline of home prices in formerly hot real estate markets like San Diego County.
John Courson, chief executive officer of the bankers association, said loose underwriting didn’t make lenders responsible for the surge in fraud. Some people simply took the opportunity “to create fraud and take advantage of the system,” he said.
Courson acknowledged that lenders were not as careful as they should have been about screening loan applications, however.
Come on guys….lets stop this BS about how its the next guys fault. Borrowers, Loan Officers, Appraisers, Wall Street…..everyone was part of this real estate Ponzi Scheme.
“Clearly, some of the credit standards in the mortgage lending business and verification practices were not as robust as they should be,” he said.
Thanks to Emmet Pierce and SignonSandiego for this great article.
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Dear Tim and Julie
Thanks to the coaching calls and the Agent REO Secrets Coaching class I am still working hard!
I have a seller who wanted to wait until January to put her property on the market, Harris Real Estate University gave me the push to get it listed now and not to wait until the holidays were over.
Good thing because their is already alot of interest in the home by buyers. It is motivating me to try to get 2 more listings that the sellers are also waiting until after the holidays! I hope it all works out and that December becomes my best money month!
Thanks,
Michelle Lussier
Prudential Prime Property
Michelle Lussier
Realtor , Reo Specialist
Thank You for you Referrals
Helping people buy or sell a home in Massachusetts,Rhode Island, and
Connecticut
–
Michelle Lussier REALTOR
Certified REO
Prudential Prime Properties
971 Providence Road, Whitinsville, MA 01588
508-612-5144 Direct * Office Fax * 508-234-0005
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Realtor coaching clients be ready for what you are about to read…this is actually a historical event. 9% of all homeowners are behind in a mortgage payment.
Understand that there never has been a time…and probably never will be another time when home owners have been in so much need of a caring, competent and skilled Realtor. Learn the skills that this market demands. Have the mindset of service, focusing on what you are hear to give.
When you have the skills and the service mindset…..you will find sellers (and buyers) lining up to work with you. Don’t be afraid of this market. Embrace this market for what it is…an opportunity. Start by learning exactly how to take REO Listings. Download our Free 7 Part Agent REO Secrets Guide Book Now.
This is part of an Associated Press article that will be the headlines of all the major newspapers this weekend…
More than 4 million American homeowners with a mortgage, a record 9 percent, were either behind on their payments or in foreclosure at the end of June, as damage from the housing crisis worsened, the Mortgage Bankers Association said Friday.
All indications are that the number of homeowners missing a mortgage payment will only increase over the next few quarters. This means that millions of homeowners will have to hire a Realtor who knows how to successfully close a short sale listing. Learn how-to now. Download the free 7 Part Agent Short Sale Secrets Crash Course. Instant Free Download Now.
But the source of trouble in the mortgage market has shifted from subprime loans made to borrowers with poor credit to homeowners who had solid credit but took out exotic loans with ballooning monthly payments.
“The problem that policymakers and Wall Street once assured us was ‘contained’ to subprime mortgages has proven to be anything but,” Mike Larson, a real estate analyst with Weiss Research, said in a research note.
The trouble is concentrated in a handful of states, the worst being California and Florida, which had some of the riskiest lending practices and rampant speculation.
“We are unlikely to see a national turnaround until we see a turnaround in the two largest states,” with the most outstanding home loans, said Jay Brinkmann, the association’s chief economist.
New foreclosures rose dramatically in eight states: Nevada, Florida, California, Arizona, Michigan, Rhode Island, Indiana and Ohio, but actually declined in Texas, Massachusetts and Maryland.
Almost 500,000 homeowners, or about 1 percent, entered the foreclosure process in the second quarter.
But for the first time since the mortgage crisis started, delinquencies on subprime adjustable-rate loans declined. While more than one out of every five homeowners with a subprime ARM is still in default, that portion dipped 1 percentage point from the first quarter to 21 percent.
What’s driving the delinquency rate up now is the number of homeowners with risky, adjustable-rate prime loans made with little or no proof of the borrowers’ income or assets.
More than one out of 10 borrowers with a prime adjustable-rate loan is now delinquent or in foreclosure. That portion, 11.3 percent, was up from 9.7 percent in the first quarter and is expected to continue to rise as more homeowners see their monthly payments spike.
Many of these loans allowed the borrower to pay only the interest on the loan for a fixed period. Others gave the borrower the option to “pick-a-payment,” adding any unpaid interest to the principal balance.
Defaults on these mortgages, which earned the nickname “liar loans,” are costing Fannie Mae and Freddie Mac billions of dollars. The Treasury Department has even pledged to bailout the mortgage finance companies if necessary.
With home prices plummeting, particularly in California, Nevada, Arizona and Florida, many borrowers with these exotic loans now owe more on their home than it is worth.
And nearly half of these pay-option loans are expected to reset to higher monthly payments by the end of 2010, Fitch said.
Realtor coaching, real estate coach, real estate training, bank owned homes, bank owned properties, real estate owned by banks, short sale coaching, short sale training, reo coach.
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