Reporter’s notebook: Fog the mirror mortgages are back
Here are some of my observations from Mortgage Bankers Association convention I attended in Austin last month:
1) One exhibit hall lender offered primary residence mortgages void of any income information or any income documentation so long as you put 35% down and have a minimum 680 middle FICO score or higher.
We are talking loan amounts to $2.5 million to boot. And, your rich uncle can gift you 100% of the down payment if you can’t cough up the dough on your own.
2) Longtime housing and mortgage finance research expert Tom LaMalfa, president of TSL Consulting, conducted a detailed 68 question face-to-face convention survey of 28 mortgage executives.
My proudest convention moment as an industry insider was that 26 of 28 LaMalfa’s respondents (that’s 93%) thought FHA’s move to tighten underwriting standards (for example; manual underwriting for certain borrowers with low credit scores and high debt ratios) in March 2019 was a good move.
That’s responsible lending at its finest!
3) HUD Secretary Ben Carson’s speech moved me. He shared that the average net worth of a renter is $5,000 and the average net worth of a homeowner is $200,000. In a heartfelt and empathetic manner, Carson, among other topics, spoke of getting people out of public housing into secure, responsible mortgages to begin building their wealth.
4) “Mortgage rates are staying below 4% next year,” said Michael Fratantoni, MBA’s chief economist. Mortgage loan volume was $1.6 trillion in 2018, projects to be $2 trillion in 2019 and $1.89 trillion in 2020, according to MBA.
Taking into consideration last week’s expected Fed rate drop, Fratantoni said, “Next move will be a hike, but not until 2021.”
5) The convention’s funnest fact came from Texas U.S. Senator John Cornyn who said, “Texas is growing by 1,000 people a day.”
6) The most frightening session was about ransomware (a computer virus that evades detection) and how mortgage lenders are now being targeted.
“2018 attacks are double over 2017,” said Andrew Ward, Chairman of CyFIR.
“A good organization could be down two to four weeks.”
Even when the cyber criminals can be identified, the culprits are beyond our borders, often in countries with which the U.S. doesn’t have treaties, said Scott Riddick, senior special agent, U.S. Secret Service. “They are beyond the reach of law enforcement.”
Buyers also are at risk of “spoofing,” or the highjacking of vendor payments to real estate agents, title and settlement agents and others, said FBI supervisory special agent Holly Easter Kelley. Spoofers often use a fake email address that looks legitimate.
“Public information out there makes it easy to find out about your real estate transaction,” Kelley said.
I’m thinking for safety’s sake, Realtors should stop posting any information about pending sales and just announce closed sales a week after closing.