As expected, the omnibus housing bill was passed by the house yesterday. There's all sorts of housing related fine print in this bill, but here are what we see as the key provisions:
1. Raises FHA required investment (down payment + costs) to 3.5%, from 3%.
2. Abolishes seller-funded down payment assistance on FHA loans credit approved on or after October 15, 2008.
3. Abolishes FHA risk based pricing (higher rates or fees for lower credit scores) on or after October 15, 2008.
4. Provides $7500 tax credit for first time homebuyers on homes purchased between April 9, 2008 and July 1, 2009.
Also worth noting: It is widely expected that Nancy Pelosi, Barney Frank, and Maxine Waters (a triumvirate of goofs if ever there was one) intend to introduce stand alone legislation to re-instate seller funded down payment assistance, and risk based pricing prior to the Oct 15th Deadline.
Next step for this Bill is Senate passage, and presidential signature, which should all happen in the next week or so.
Dominick Devito, 44, pleaded guilty in Manhattan federal court before United States District Judge Barbara S. Jones to participating in a scheme to commit mortgage fraud and insurance fraud and to obstruct justice. According to the Indictment, other documents filed in the case, and statements made during the guilty plea proceeding:
From January 2002 through November 2004, Devito was the leader of a fraudulent real estate investment scheme, which had as its …
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FHA seller-funded downpayment assistance programs (wherein the seller of a property makes a donation to a non-profit, and then this same non-profit gives this money to the buyer for their down payment) have been on Death Watch for years. HUD and FHA have tried to eliminate them at various points, only to be stopped by legal challenges from the assistance providers themselves.
Looks like these programs will finally be killed, as reported by the Washington Post:
The fate of these seller-funded down-payment-assistance programs has been in limbo for weeks. The Senate version of the housing bill would have banned them. The House version would not. Negotiators crafting a compromise bill have agreed to the Senate's position, which also is supported by the Bush administration.
"We're going to yield to the Senate on that," said Rep. Barney Frank (D-Mass.)
The root of the problem with these programs is, and has always been simple:
- They default at a higher rate.
- They have, at face value, been a legal end-run on FHA guidelines which requires borrowers to bring 3% of their own funds to the table.
- Also, in practice, the sellers aren't really paying anything, the sales price was simply inflated to cover the cost, and the buyers wind up with a larger loan.
Now, the use of these programs was perfectly OK, and many very good homebuyers used them to great advantage, so none of this should be taken as an indictment of a homeowner that used seller funded assistance to buy a home. (full disclosure, a handful of our personal clients used such programs over the years. Mortgage bankers are not to judge, only approve or deny a loan based on the allowable programs and guidelines.)
BUT as is often the case, a program that may be good for an individual family, may be a disaster when writ large across the entire spectrum of FHA borrowers (who skew toward lower credit quality in the first place.) And speaking of disasters writ large:
...seller-funded down payments present the single biggest challenge to its solvency. Borrowers who take part in these arrangements go to foreclosure at nearly three times the rate of borrowers who put their own money down, according to the [FHA]
The FHA's solvency is at risk, and for them to execute their new role as the backstop for the home lending universe (a mission they did not ask for, but are going to get out of this credit crunch, sure as the world) these programs need to go away, and should have a long time ago. The taxpayers are the ultimate bagholders here.
No word yet on when the ban will take effect, but in all likelihood they will still be available for the balance of 2008. More on this as it develops.
In the meantime, if you are an aspiring homeowner, start saving, because the last true Zero Down option is having it's epitaph chiseled.
Bradley Grant Kitchen, 41, Provo, Utah, plead guilty to conspiracy to commit mail and wire fraud in U.S. District Court. In exchange for his guilty plea, federal prosecutors agreed to drop 18 other counts in an indictment.
As previously reported by Mortgage Fraud Blog, A federal grand jury returned a 15-count indictment charging above-referenced defendants with wire and mail fraud in connection with a mortgage fraud scheme …
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Bradley Grant Kitchen, 41, Provo, Utah, plead guilty to conspiracy to commit mail and wire fraud in U.S. District Court. In exchange for his guilty plea, federal prosecutors agreed to drop 18 other counts in an indictment.
As previously reported by Mortgage Fraud Blog, A federal grand jury returned a 15-count indictment charging above-referenced defendants with wire and mail fraud in connection with a mortgage fraud scheme …
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Gregory Craig Sandoval, 25, and Souha Nabil Traboulsi, 40, both of Los Angeles, were charged with conspiracy to commit mortgage fraud against San Bernardino County residents. The on-going investigation into the actions of Eric Pony and his companies, Lifetime Financial, Nations Mortgage, and Green Leaf Lending, led to the discovery of evidence linking Sandoval and Traboulsi to the scheme.
On July 8, 2008, District Attorney’s Investigators from …
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Gregory Craig Sandoval, 25, and Souha Nabil Traboulsi, 40, both of Los Angeles, were charged with conspiracy to commit mortgage fraud against San Bernardino County residents. The on-going investigation into the actions of Eric Pony and his companies, Lifetime Financial, Nations Mortgage, and Green Leaf Lending, led to the discovery of evidence linking Sandoval and Traboulsi to the scheme.
On July 8, 2008, District Attorney’s Investigators from …
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Terrance D. Stradford, 46, a.k.a Wayne Sellers, Staten Island, New York, and Christina Hachadoorian, 35, Burlington City, a.k.a. Christian Hachadoorian, C.L. Doorian and Crystal Doorian, a Staten Island, New York dentist and his former employee, were sentenced for their roles in a scheme to fraudulently obtain $1.36 million in mortgages and spending the proceeds on luxury items including the purchase of a 46-foot yacht, a North Carolina residence and a …
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Terrance D. Stradford, 46, a.k.a Wayne Sellers, Staten Island, New York, and Christina Hachadoorian, 35, Burlington City, a.k.a. Christian Hachadoorian, C.L. Doorian and Crystal Doorian, a Staten Island, New York dentist and his former employee, were sentenced for their roles in a scheme to fraudulently obtain $1.36 million in mortgages and spending the proceeds on luxury items including the purchase of a 46-foot yacht, a North Carolina residence and a …
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Clifford J. Brigham, 60, Portland, Oregon, was sentenced to 10 years in federal prison according to media reports after being found guilty by a jury of mail and wire fraud, money laundering and Social Security fraud. The Judge also ordered Brigham to pay more than $279,000 in restitution. As previously reported by Mortgage Fraud Blog, the jury verdict was returned on November 7, 2007, after a seven day trial before U. …
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Clifford J. Brigham, 60, Portland, Oregon, was sentenced to 10 years in federal prison after being found guilty by a jury of mail and wire fraud, money laundering and Social Security fraud. The Judge also ordered Brigham to pay more than $279,000 in restitution. As previously reported by Mortgage Fraud Blog, the jury verdict was returned on November 7, 2007, after a seven day trial before U. S. District Judge Anna J. Brown. …
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Front page of this weeks DM News says C21 Revamps Web Strategy.
Pretty much a yawner until I read the following quote from Kevin Pollack, senior director of e-commerce marketing at Century 21
As real estate moves online, content is ultimately a commodity (that) is appearing across multiple sites.So it's about how you present those listings to consumers that matters.
Re-"spinning" the content is so Web 2.0. That is what Trulia has done. But even they have realized that unique content is what makes for a rich experience. They call it Voices. And the only way to get unique content is...drum roll please.........User generated content or owner generated unique content.
Chances are slim that C 21 will get anyone much interested in just commenting on their site. However, perhaps a Trulia clone of "Voices" may work since they have so many agents. However, one issue most franchisorss suffer from is agent/broker resistance as many do not want to build up the Franchisor website as opposed to their own.
Thus, the agents and franchisees of C21 are less than enthused at out an already fat home base.
This is the opportunity of web 2.0 as I see it. The franchisor cannot create unique content. Content publishing is something that every agent and every broker has as a unique advantage in the marketplace. In fact, it is the only thing left. It is a royal pain. Which is why most will refuse to spend the time creating content. Leaving an opportunity for those that figure out a way to create.
Web 2.0 and your unique content: It is what seperates you from your competitors. It is your voice. It is what the new media allows you to do.