Lending in 2010Another roller-coaster year?

Shashank Shekhar, MBA CEO – Arcus Lending

Shashank Shekhar

9+ Years of lending experience Featured on TV & Radio shows Author of 2 books, co-authoring

next book with Carole Rodoni Author of Bay Area’s leading

mortgage blog Specialize in First Time Home

Buyer and FHA Loans

Agenda

Loan Limits New Home Buyer Tax Credit Mortgage Rates GFE 2010 FHA Changes

Condo Approval HVCC Implementation 2nd appraisal requirements Min Score/Downpayment?

MBA Mortgage Finance Forecast

2009 Total

2010 Q1 2010 Q2 2010 Q3 2010 Q4 Total 2010

Total 1-4 ($ bil)

1966 323 441 408 325 1497

Purchase 719 149 230 241 185 804

Refinance 1247 175 212 167 140 693

Refi share (%)

63 54 48 41 43 46

Loan Limits for 2010

One-Unit - $ 729,750 Two-Unit - $ 934,200 Three-Unit - $ 1,129,250 Four-Unit - $ 1,403,400

New & Improved Tax Credit

$8000 for FTHB & $6500 for move up/down buyer

Max Purchase Price of $800,000 Income Caps - $125,000 and

$225,000 Deadlines

Contract Date : April 30th

COE : June 30th

Mortgage Rates

Have gone up 43 bps in 4 weeks – Now at 5.14%

Fed plans to stop buying MBS in March 2010

Rates could go up 25 bps – 50 bps overnight

How far are we from 6% - Not very!

GFE 2010 - Background

In 2005, HUD conducted a series of roundtable discussions

2.5 years later, HUD published its proposed RESPA rule in March, 2008. HUD received approx. 12,000 public comments.

New GFE went into effect on 01/01/2010 Goal was greater clarity and transparency HUD’s timing for a new rule could not

have been worse

GFE Particulars

Must be provided to Borrower within 3 business days of application

Quotes good for 10 business days, unless “Changed Circumstances”

Lender may not charge Borrower for preparation of the GFE

Delivery of the GFE

The initial GFE distributed by any loan originator in a transaction becomes the binding GFE

Lenders will be accountable for mortgage broker’s GFE

If lenders prefer to generate the GFE, they must do so within 3 days of the broker’s application date

Changed Circumstances

Only those fees can change that are impacted by the changed circumstances Loan terms or conditions change Property Value Changes Borrower changes the deal

New GFE Within 3 business days of change 10 day shopping period starts over Borrower can waive

Good Things about the new GFE

All origination charges lumped together

Is more detailed & Explains all the fees

Tradeoff Table Gives a snapshot of loan with

important dates Easier comparing of loan offers

(closing cost missing as a factor)

And Not So Good Things

Cash to Close missing Charges typically paid by the buyer have

to be listed, even if the seller pays them At least 1 provider per service required

even if the lender permits borrower to shop

What happens if you exceed tolerances? No signature 3 Pages from 1

FHA Changes - Background

Supplementary reserves fell below mandatory 2% of the loans it insures.

The extra capital cushion last year was about 3%, down from 6.4% in 2007.

Higher claims because of more defaults. 7.8% of the single-family mortgages 90

days or more overdue, up from 6.6% a year earlier.

FHA Condo Changes

Spot approvals to be eliminated on Feb 1st

50% Owner Occupied requirements <15% of the owners can be

delinquent on HOA dues Reserve study for capital expenditure

and maintenance Did I say – 90 days escrows?

Other FHA Changes

HVCC Implementation on 2/15 2nd appraisal requirement waived FHA Loan after a Short-Sale – 3 year

waiting period Min Credit Score – May go up to 640

from current 620 Downpayment – Will it go up to 5%

from 3.5%?

Underwriting Guidelines

Better Portfolio vs Lending More If Housing Prices stabilize

Mortgage Insurance requirements could get easier

Down payment requirement could be reduced

Credit Score at the top end could be reduced

Let’s connect

Shashank ShekharBroker/CEO – Arcus LendingShashank@ArcusLending.comPhone: 408.905.6261Blog: www.LendingExpertBlog.comFB:Facebook.com/LendingExpertTwitter: @ShashankTweets