Wednesday, July 15, 2015

MBA to Hold 2015 Annual Convention in San Diego

For nearly a decade, experienced mortgage banking professional Philip “Phil” LaTessa has served as managing member of The Funding Source in Syracuse, New York. Throughout his career, Phil LaTessa has maintained memberships in several organizations, including the Mortgage Bankers Association, a nonprofit trade group that supports and promotes the mortgage banking industry through a variety of programs and activities.

The Mortgage Banking Association (MBA) is currently preparing to host its 2015 Annual Convention and Expo, which will take place October 18-21 at the San Diego Convention Center in Southern California. As the largest convention for real estate finance professionals, the event will attract industry leaders from across the country for four days of networking and learning.

In addition to a robust education program, the meeting will feature a long list of well-known speakers, including former US Secretary of State General Colin Powell, comedian Jay Leno, and political commentator Tucker Carlson. Outside of the excellent presentations and learning activities, those at the MBA 2015 Annual Convention will have the opportunity to attend a concert featuring Sheryl Crow and explore an exhibit hall showcasing the latest mortgage lending products and services. For more information about the event, visit                            

Monday, May 11, 2015

Mortgage Bankers Association Designations

For more than 25 years Phil LaTessa has worked as a loan officer with companies such as Ottley Mortgage and JP Morgan Chase. Phil LaTessa recently spent six years as the city auditor for Syracuse, New York. Over the course of his career Philip LaTessa has become a member of several important industry organizations, including the Mortgage Bankers Association.

The Mortgage Bankers Association (MBA) provides members and non-members alike with a variety of educational opportunities, including four unique specialist designations that allow bankers to give proof of their expertise in a select area of banking. The MBA offers the commercial certified mortgage services (CCMS) designation to bankers who desire to gain a finer understanding of the complex and constantly evolving commercial mortgage servicing landscape. The MBA’s residential certified mortgage servicer (CMS) designation, meanwhile, features separate tracks for those interested in default administration, financial controls and investor administration, or loan administration.

In addition, the MBA provides opportunities for the certified residential underwriter (CRU) designation as well. With the CRU designation individuals are challenged by a progressive curriculum that ranges from basic to advanced. By completing all CRU levels bankers can experience a variety of benefits, including decreased error rates and increased productivity. Finally, to achieve the accredited mortgage professional (AMP) designation individuals must complete the program of the School of Mortgage Banking (SOMB).

Wednesday, April 1, 2015

The Institute of Internal Auditors Sponsors 2015 Conference in Canada

With experience in mortgage banking, compliance, and underwriting FHA loans, Philip “Phil” LaTessa founded The Funding Source in 1996. The mortgage brokering firm, based out of Syracuse, New York, contains five departments, including sales, accounting, post closing, underwriting/processing, and risk management. In his role as managing member, Phil LaTessa oversaw the processing/underwriting department as well as personally underwrote higher-risk loans. He belongs to several noteworthy organizations covering the mortgage and financial industry, including The Institute of Internal Auditors (IIA).

Created in 1941, the IIA serves as a global voice for the internal audit profession. Its members work in education, security, internal auditing, risk management, information technology, and governance. With more than 180,000 members, the IIA also offers networking opportunities, certification, career opportunities, and training.

In 2015, the IIA hosts its international annual conference from July 5 through 8 in Vancouver, Canada, at the Vancouver Convention Centre. As the IIA’s 74th annual conference, this event brings together more than 2,000 members representing more than 100 countries. Attendees learn about internal auditing changes, gain continuing education credit, and listen to keynote speakers discussing technology implementation for the industry.

Thursday, February 12, 2015

Getting a mortgage for less

Julian Castro, the current Sec for the US Dept of HUD, testified before the Committee on Financial Services on Wednesday, February 11, 2015 regarding the reduction of the Mortgage Insurance Premium

Before your eyes glaze -this is important.  A reduction in the premium has huge benefit to everyday people buying a home and financing it with an FHA loan.  About 5-years ago, HUD raised that premium and that cost borrowers a significantly higher amount to close their loans - money out of their pocket to HUD.  And, each month, their monthly payment included hefty monthly premiums that went to HUD.

Castro is seeking to reduce this amount for two reason.  1. The high premium is forcing borrowers to look at big banks offering 3% down payment mortgages with lower insurance.  2.  By reducing the premium and by offering a truce with banks who refuse to do FHA loans (by not forcing them to buy back FHA loans for immaterial defects), Castro is hoping that more people will apply for and get an FHA loan. 

This is important to HUD and frankly to the US.  First, HUD has seen a large drop in FHA loans for the reasons cited above.  Consumers don't want to pay and banks don't trust FHA to punt loans back to them for small defects that don't affect the material soundness and quality of underwriting a borrower.

But, FHA loans provide borrowers who can't get a 3% down loan at a bank with the ability to get a mortgage.  Those much talked about low down payment loans at major banks and bankers come with tougher credit, employment and asset requirements than an FHA loan

Since the 1930's FHA has played an important role in housing - providing loans to people who otherwise would not get one.   So, HUD is an important player in the US economy.

The US Congress cares about this reduction because not so long ago FHA and HUD ran out of money as the foreclosures went through the roof.   Castro stated that in response to this HUD increased the insurance amount from borrowers and toughened underwriting which brought in a 21 billion improvement to the insurance fund.

HUD remains under the limit required to have in reserve - a violation that a regulatory like HUD would not tolerate in a lender.  Congresspersons grilled HUD about this very fact in light of the reduction of the insurance premium, which goes to increase their reserves. 

Monday, February 9, 2015

Subprime lending back

Subprime mortgages are back

Subprime mortgages - what most consider the epicenter of the financial meldown - are coming back.

Sub prime mortgages were meant for borrowers with less than prime credit.  It started out that a subprime loan came with a higher interest rate and a larger down payment.  It slid into not requiring any income verification of the loans, then no asset verifications (with yet higher rates and higher down payments) to offering literally lowering the down payment and increasing the rate higher and higher.  In fact, lenders were so hungry for the returns that they offered adjustable loans with teaser interest rates and moved into "interest only" mortgages  - requiring the borrower to only pay the interest and never pay the debt off.  If not bad enough, there were negative amort loans - which allowed the borrower to pay less than was required to pay the mortgage, which meant that their mortgage debt increased, not decreased.  And, let's not forget that lenders got into giving out home equity loans with the subprime loans - so you got two mortgages.  One for 80% of the value and one for 10%, 15% of the value - which meant you only put down 5%.   It actually got worse when lenders came out with the "125's".  Those were 125% loan to value loans - which meant if you bought a 100,000 dollar house, the bank would happily lend you 125,000.00 to buy the house..... The appetite for those loans by investors was voracious.  Big banks bought sub prime lenders and got in the game.  It got huge.  In fact, in 2006 and 2007, more people were doing subs than doing your normal Fannie Mae or Freddie Mac loans.  And, forget FHA - they required too much verification and too much insurance premiums - and Realtors steered borrowers away from an FHA for fear of the appraisal - which was more stringently done on an FHA financed property.

Subs are back.  Now they are being hawked to borrowers who have fallen outside the tight lending criteria that came into place after the crisis.  When lenders would lend without regard to income, now they lend with regard to ability to pay and most won't lend to someone with less than a 640 credit score - and that credit score will cost you in points and fees.  Over 700 and maybe you won't have points.  So, young people starting out are locked out of the housing market.  And, we wonder why the housing market has stumbled and stumbled since 2010.

The new subprime loans come with higher interest rates than being offered to borrowers with 640 abd higher credit scores.  The loans can not have rates that increase if a borrower defaults nor any pre payment penalty should the borrower pay off their mortgage sooner (inheritance, sale, re-finance).   And, the borrowers do need to complete homeownership housing counsling.

But, while not as wild as before, they are back.  Some do not call them sub prime, they call them alternative mortgage products.  They argue it opens to doors to people who in other days easily qualified.

What ever happened to the days when common sense underwriting was done on each loan?  No two borrowers and no two mortgage applications are the same.  With automated underwriting and investment firms seeking every higher returns - all that went out the window.  For every borrower who lied and fabricated supporting documentation for their loans - lending became a nightmare.  In the good days, those who say got hit with a medical emergency were approved because an underwriter underwrote the loan and got the documentation proving they were on time with their payments prior to the emergency, have stable income and all that portends stability and ability to pay.  But, that is all gone now and those and new home buyers are the ones aone's who today are paying the price.

Friday, November 14, 2014

Loosen lending?

Reuters reports BOA won’t take the bait from government policy makers to loosen credit
Here’s the rub.  While government leaders bemoan the real estate market lackluster recovery and go on Sunday morning talk shows ginning up need for looser mortgage underwriting credit --  one wonders if they are surprised that banks are not only ignoring their cries, but are openly saying “no”.
First, the government called for more home ownership in the 1990’s and pushed for greater capacity by increasing the amount of one’s income used for housing expenses (higher DTI).  Then, the government enticed that by tying the higher DTI to handing out candy to banks via CRA credits.  Without those CRA credits, banks could not operate fully.  So, out came “Low to Moderate Income” loans (“LMI”) and the slippery slide to no income verification loans and the sub prime was greased all the way to 2008 when it crashed.  
During the crash the government sold banks on acquiring the now defunct banks.  The Banks followed through.  BOA took over Countrywide.  Wells took over Wachovia.  You remember the famous picture of the banks lined up alphabetically in a room with government regulators looking for bail outs for failing banks?
Fast forward from 2008 to 2013 and 2014 and the regulators created by the government went on a PR campaign to blame banks and then fine banks – billions of dollars – for the acts that the government asked them to do.
Politicians felt pretty good.  They had banks save the failing banks (and they lent a large sum of money to failing banks themselves) and the went on a new PR campaign blaming banks (not themselves) for the reckless lending, tying it to high profits over sound lending.
So, lending got tight.  Now the economy is not recovering as quickly as they would like. So, now they want the banks to loosen up again.
So – after creating the mess, blaming it on the banks, lending untold billions to bail everyone out, failing to tell anyone they got their money back with interest, now the government wants banks to loosen lending?
JP Morgan Chase already said they are re-evaluating FHA mortgages and may exit from it.  HSBC pretty much has throttled back.  Mortgage brokers are for the most part, extint.  Small mortgage bankers are closed.  Mid sized mortgage bankers are seeking out marriage partners to survive.  Big banks won’t loosen lending.  Bank of America said “
In October, the top regulator for the U.S. housing market announced plans to allow many more Americans to buy homes by making a down payment of as little as 3 percent of the purchase price.
But Bank of America CEO Brian Moynihan said at an investor conference his bank hosted on Wednesday that it will require borrowers to make larger down payments "to make sure that can withstand the bumps in the road" of homeownership, such as "unemployment, divorce or sickness."
"I don't think there's a big incentive for us to start to try to create more mortgage availability where the customers are susceptible to default," Moynihan said.
"I know that that doesn't sound good for an instant housing recovery and faster housing markets but it's actually good because in the long term it keeps the housing more fundamentally based," Moynihan added.
Now, is that not what the regulators and government screamed on top of Mount Rushmore about?  Isn’t Moynihan giving them what they demanded?  As one said, be careful of what you ask for – you may get it.
Harsh?  Perhaps.  The losers?  Sound borrowers with credit scores in the low to mid 600’s who had an issue that they got past and want to buy into a home – who just a few years ago a good underwriter would have worked hard to get them approved for their mortgage.  Today – no way without a large down payment and higher credit score. 
Why after paying billions of dollars, facing exuberant regulators who do not know the 5-C’s of underwriting but are quick to judge a file’s compliance to underwriting.  Years of regulators issuing out “Sanctions” that lenders have to sign or face more severe penalties.  Years of dealing with regulators like the North Carolina Commissioner of Banks who simply make decisions and issue out findings without rationale or the New York State Financial Services Department who literally employs individuals who not only have no clue about lending; but can not speak English.   Yet, these people can and will close down a company or fine another or issue out edicts.  And, that’s the state level.  Try facing the feds.
Why would anyone lend a penny more that could default or comes within 10 feet of what was “wrong” two-years ago?
That is like you being told by a policeman that you went 35 miles an hour three years ago when the speed limit was 35 mph, so now you face a 10,000 dollar fine and they release your mug shot.   Then, the mayor complains that people are literally doing 30 miles an hour and encourages people to take it up to 35 MPH, the posted speed limit.
I’d be the first to keep it at 30MPH, below the posted high speed limit and above the minimum – just in case someone gets in an accident at 35mph and the police go backwards in time to issue out more tickets again……
Silly?  That’s what happened.  And, now we must live with that irrationality.

Wednesday, November 5, 2014

Cost of Regulations

According to the MBA,  higher costs and concerns about buybacks are driving the decline in mortgages for home purchases. It will slow to $635 billion this year, a 13 percent drop from 2013.
Banks have constrained home lending to many borrowers deemed creditworthy by mortgage finance companies Fannie Mae (FNMA) and Freddie Mac. Applicants approved for mortgages to purchase homes had an average FICO credit score of 755 in August, according to Ellie Mae, a company that makes software used to process mortgage applications. In contrast, Fannie Mae and Freddie Mac guidelines allow for credit scores as low as 620 for fixed-rate mortgages in some cases.
Lenders reported a 30 percent median increase in compliance costs this year from 2013, according to a survey by Fannie Mae released this month. And 72 percent of lenders surveyed said they spent more on compliance this year compared with last year