Mortgage rates down By Jim Woodard             As we move into the last month of 2007, mortgage interest rates are continuing to decrease.  They are now at the lowest point in more than two years, thus opening a bit wider the door of opportunity for home buyers.             The average rate for a 30-year fixed-rate mortgage is now down to 6.10 percent, with 0.5 points (fees), according to Freddie Mac, a major government sponsored buyer of existing mortgages.  It has not been this low since mid-October, 2005.  Last year at this time the rate was 6.14 percent.             The 15-year, fixed-rate mortgage has an average rate of 5.73 percent, with 0.5 points.  A year ago this rate was 5.87 percent.  It’s now at the lowest rate since January of last year.  This is a popular option for many homeowners who are now refinancing their mortgage.  The 5-year hybrid adjustable-rate mortgage (ARM) is still popular.  Its rate now averages 5.86 percent.  A year ago it was 5.95 percent.             “Interest rates for U.S. Treasury securities are drifting lower over market concerns that the housing slump and stress in credit markets could slow future economic growth.  As a result, interest rates are slipping lower,” said Frank Nothaft, Freddie Mac’s chief economist.  With Federal Reserve chairman Ben Bernanke hinting that yet another rate cut may be needed to bolster the economy, prospects look good for continuing declines in mortgage rates.__________________________Current opportunities for property buyers                   The next 18 months will be a particularly good time to buy real estate, according to Jim Wagner, an attorney specializing in real estate investments and retirement planning issues.  He notes the following reasons: Home construction starts are now at the lowest volume in the past 14 years.  Foreclosures are on the rise, providing many good buying opportunities.  Inventories of available homes are at a very high volume.  And housing prices are declining in most markets.  Also, he noted that mortgage interest rates remain at historically low levels, and could go a bit lower.  Many banks now offer non-recourse loans. He recommends the use of a self-directed retirement plan to generate capital for investing in real estate.  “The ability to access IRA monies to purchase foreclosed homes or other properties, or to offer private loans when credit is tight, puts the self-directed IRA holder ahead of the game,” Wagner said.  Whether using IRA funds or financing properties with conventional mortgages, there are strong market factors that point to exceptional opportunities for today’s real estate buyers.______________________Preference for fixed-rate mortgages           Fixed-rate mortgages are definitely the “loan of choice” by today’s homeowners seeking a refinance mortgage.  About 85 percent of refinance mortgages in recent months have been fixed-rate loans, according to Freddie Mac, a major government-sponsored buyer of existing mortgages.  Those applications include many homeowners who initially had a hybrid ARM (adjustable-rate mortgage). “Mortgage rates on 30-year fixed-rate conventional conforming loans have become more favorable to applicants of refinance loans,” Freddie Mac reported.  “The difference in rate between fixed and adjustable rate loans has narrowed.  Also, although the spread between the 30-year fixed-rate and 15-year fixed-rate mortgages has not moved significantly in recent months, more borrowers replaced their 15-year fixed-rate mortgages with 30-year fixed-rates when they refinanced.”The report also shows that refinancing into the 30-year fixed-rate mortgage among borrowers who originally had an ARM loan has been increasing.  However, fewer borrowers who originally had a balloon mortgage are switching into a 30-year fixed loan, many opting instead for an ARM or hybrid mortgage.  The proportion of borrowers who originally held 30-year fixed-rate mortgages and are now applying for a refinance mortgage of the same type has remained about the same in recent months._________________________Home prices stabilizing                         Many metro areas are now showing rising or stable home prices, according to a recent survey by the National Association of Realtors.  In NAR’s latest study, 93 out of 150 metropolitan statistical areas showed increases in median existing single-family home prices from last year.  That includes six areas with double-digit annual gains and another 21 metro areas showing increases of six percent or more.  About 54 had price declines, and three were unchanged.            Regionally, prices rose in both the Northeast and Midwest, as did the national condo price.  Even with most areas showing improvement, a disruption in higher priced sales impacted the national median existing single-family home price – down 2 percent during the third quarter of 2007 from the previous third quarter.  Median home prices in the Northeast rose about 3.2 percent during the past year.  In the Midwest, the median home price increased 0.5 percent.            The median existing home price in the South is about 3.6 percent below a year ago.  In the West, the median price is down by 3.8 percent.  Home prices generally seem to be stabilizing in most areas of the country, but nationally they have dropped about 4.5 percent over the past year.            In another survey (by S&P/Case-Shiller for the National Association of Home Builders), the nation’s 20 largest metro areas were targeted and studied.  It was determined that five of those areas are showing home price appreciation rates over the past year – seven posted  declines of less than 5 percent and eight metro areas registered losses of between 5 and 10 percent._________________________New home sales up            New single-family homes sales are finally heading in an upward direction, at least for the last reported month.  Home sales increased by 1.7 percent in October compared with the previous month, according to a report from the U.S. Commerce Department.  October’s seasonally adjusted annual sales rate was 728,000 units.            “The progressive tightening of mortgage lending during this year has been the major factor behind the setback in home sales,” said David Seiders, chief economist for the National Association of Home Builders.  “We expect home sales to begin a gradual recovery in the early part of 2008.”__________________________Growing popularity of reverse mortgages                Major changes are taking place in the reverse mortgage industry.  And with its rapid growth during the past year or so it certainly has become an industry.  First, a basic definition:  A reverse mortgage is a loan against the equity in the home owned by a senior individual or couple.  In most cases the owner(s) must be at least 62 years of age.  The loan provides monthly income for the owners, usually for the rest of their lives, or until they sell or move from the property.  It can also be taken as a lump sum, line of credit, or combination of those options. For years there have been three primary reverse mortgage plans available, the most popular being FHA’s Home Equity Conversion Mortgage (HECM).  The reverse mortgage concept has become more popular in recent months and years with senior homeowners.  This has motivated many of the nation’s large banks and mortgage lenders to start offering reverse mortgage products.  Some of those lenders are trying to edge out competitors by lowering their fees and increasing their payouts.  One lender has reduced the minimum age requirement to 60.  Others are making loans on second homes, and are offering “jumbo” reverse mortgages for high-end homes valued up to $10 million. The key reasons for the growing activity in this area are two-fold.  First, cost of living that continues to grow while seniors are often living on fixed incomes.  They need the extra monthly income to meet their rising financial needs.  Also there is a growing number of senior homeowners, with “baby boomers” now reaching retirement age.  These factors raise the antennas of banks and lender firms.  Before you start calling in representatives of firms selling reverse mortgages, discuss it with a friend, attorney or a trusted financial advisor.  Be sure it’s the right step for you.________________________Bright niche for mortgage lenders            One particularly bright facet of mortgage lending in today’s market relates to multifamily property lending.  This segment of mortgage lending grew by four percent last year and is continuing to grow, according to a report from Mortgage Bankers Association.            “The growth in multifamily lending comes amid different results for different market segments,” the report stated.  “The large and mid-size loan market saw solid growth last year, while smaller loan markets saw a decline.”________________________More buyers-sellers using professionalsA recently completed survey by the National Association of Realtors reveals that 79 percent of home buyers and sellers are using a real estate professional in their buying and selling transaction.  That’s up from 77 percent over the past three years, and nearly nine out of 10 buyers were satisfied with their agent’s knowledge of the process.   About 41 percent of home sellers found their agent as a result of a referral, while 23 percent used the agent in a previous home purchase.  The survey also noted that 43 percent of buyers relied on referrals to find an agent, while 17 percent of repeat buyers used an agent from a previous transaction.  Another interesting finding from the study:  About 81 percent of sellers use full-service brokerage, while nine percent chose limited services and another nine percent used minimal service (such as simply listing the property on a multiple listing service).  These figures are about the same as reported last year. About 34 percent of buyers said they first learned about the home they purchased from real estate agent, 29 percent said it was from searching the Internet, 14 percent from yard signs, eight percent from a friend or neighbor, eight percent from home builders, three percent from a newspaper ad, three percent from the seller, and one percent from a magazine.The typical home buyer today is 39 years old, two years younger than last year, according to the new survey.  That typical buyer earns about $74,000 annually and purchased a home costing $215,000.  Buyers searched for about eight weeks and visited 10 homes before making a decision.  These national figures vary widely from region to region._________________________Neglected real estate market niches               Many Realtors and their associates are neglecting important and growing niches in today’s real estate market, according to Frances Martinez Myers, one of the speakers at the recent Realtors Conference & Expo.  For example, immigrants represented 40 percent of new household formations between 2000 and 2005, and their numbers are still growing dramatically, it was noted.   In the 25-to-34 age group, about 20 percent of the population is now foreign-born.  And about 14 percent of recent homebuyers are immigrants.  Those immigrants value homeownership as much as native born citizens. It’s interesting that immigrants usually put more money down than native-borns.  On average, they put down seven percent of the total price, compared with four percent by native-borns.  And immigrants allocate more of their income for housing – 39 percent on average compared with 28 percent for natives.  Hispanics are the largest and fastest-growing minority group.  Their purchasing power is projected to equal the third largest economy in the hemisphere by 2010. Single women is another major overlooked market niche.  They now represent 20 percent of recent homebuyers – a 50 percent jump over the past eight years.  Surprisingly, about 83 percent of single women homebuyers choose single-family homes rather than condos.  About 28 percent of all households will be headed by women by 2010, it was projected.  Women now own 23 percent of homes._________________________Mortgage closings confusingMortgage closings can be confusing and inconsistent from company to company.   The nation’s leading mortgage bankers group, title insurance and escrow associations have teamed up to structure a uniform set of mortgage closing instructions.  Participating in the project are the Mortgage Bankers Association, American Land Title Association and American Escrow Association. Their objective is to improve efficiencies and lower costs to the industry and consumers by replacing countless sets of instructions with two standard sets, a spokesperson for the group announced.  The instructions will also help stem mortgage fraud and facilitate automated mortgage origination.  The new general instructions will detail the requirements for all transactions and the specific instructions will provide a standard format for the details of each individual transaction, such as names, property address, loan type, etc.  When these instructions are finalized they will not be required to be used by lenders, but they are likely to be widely accepted, it was reported. The new instructions will be discussed during an online workshop in early December.  This session will provide input for finalizing the set of instructions.  “It’s critical that companies across the industry understand the instructions and provide useful comments so we can move forward to finalize the project for industry use,” said Ken Markison, MBA’s senior director and regulatory counsel.For more information about the project, visit: www.campusmba.org or phone 800-348-8653.________________________New guidelines for mortgage brokersResidential mortgage brokers may soon have a new set of guidelines to follow when dealing with their borrower clients.  At least that’s the objective of a new resolution approved by the Residential Board of Governors of Mortgage Bankers Association.  The board wants more transparency and accountability in transactions handled by mortgage brokers.  They also want more net worth and bonding requirements for brokers.  It’s an attempt to minimize broker-related problems and enhance the quality of service to consumers, thus boosting their public image as credible professionals.             “This resolution is a step in MBA’s call for better disclosures and more transparency in mortgage transactions,” said MBA’s chairman, Kieran Quinn.  “The borrower is best served when he or she has a clear understanding of who their mortgage broker is working for and how their broker is compensated.”             The new resolution calls for legislative or regulatory action requiring brokers to maintain a minimum financial net worth consistent with FHA requirements – currently $63,000 plus $25,000 for each branch office.  MBA also wants brokers to carry bonding worth $75,000 or an amount equal to ten percent of the broker’s annual loan volume (whichever is higher).             There should be timely and improved disclosures about the services to be performed by the mortgage broker, the resolution stressed.  Brokers should disclose the total compensation they receive from the transaction before the borrower commits to the mortgage broker.  Disclosures should include how much of the compensation will be derived from the lender based on the loan terms and how much will be paid by the borrower in direct fees.  Finally, it should be disclosed to borrowers whether or not the broker is acting as the borrower’s agent, and if the broker is acting as such he should be treated as an agent under the law, the MBA resolution stated._________________________New law targeted at mortgage lending abusesOne legislative action now working its way through Congress could potentially change the way mortgage bankers and brokers do business is a bill that has been introduced in Congress called “Mortgage Reform and Anti-Predatory Lending Act of 2007.”  The objective of the bill (H.R. 3915) is to minimize problems stemming from the current mortgage crisis and protect borrowers from lending abuses that can lead to foreclosures. The bill would create a “duty of care standard” for residential mortgage loan originators.  It would include regulations to prevent steering a borrower to a loan that is not in their best interest so the broker can earn more commission.  And it would establish a nationwide registration regime.  It would also call for minimum loan repayment standards, including taxes and insurance payments, based on verified and documented borrower information.  It would eliminate loans with prepayment penalties, negative amortization and balloon payments for high risk mortgages, and it would require mandatory pre-loan counseling for some borrowers.Another interesting part of the bill would set forth certain foreclosure protections for renters.  “While the bill is filled with good intentions and does contain some reasonable and necessary changes to industry policies and procedures, there are some aspects of the bill that create an unfair advantage for institutional originators,” it was noted in a feature carried by Originator Times.  “It could possibly put some mortgage bankers and brokers out of business.” The bill was approved in the House of Representative on November 15, with a vote of 291 for it, 127 against.__________________________Refi mortgage applications upWith mortgage interest rates remaining at historically low levels, and even declining recently, more mortgage applications are coming in from home buyers and those who want to refinance their existing mortgage.  An increasing number of consumers are seeing today’s market conditions as a “window of opportunity” for applying for a mortgage that meets their current needs.             “Reports of weaker consumer spending and a decline in manufacturing activity is keeping mortgage interest rates at bay,” said Frank Nothaft, chief economist for Freddie Mac, a major buyer of mortgages.  “Rates for long-term mortgages are little changed while rates for ARMs lowered following the Federal Reserve’s latest interest-rate cut.  With mortgage rates remaining low, about 38 percent of applications are for refinance transactions.  During the third quarter of this year, about 87 percent of refinanced loans were for loan amounts that were 5 percent or more higher than the original balances.”            Also, Freddie Mac estimates that families withdrew about $60 billion in home equity over the third quarter, down from about $81 billion during the second quarter.________________________________Homebuilder price-cutting hurts other sellersHomebuilders are cutting prices and offering tempting incentives in efforts to reduce their inventory of completed homes.  This is good news for home buyers, but bad news for other home sellers in the same area.  Those lowered prices of new homes depreciate the value of all existing homes in that area, and make it even more difficult to attract buyers to resale homes. However, those lower prices offered by builders often fail to attract many buyers because potential home buyers still focus on the probably that those prices will fall further if they wait for a while, rather than perceiving the immediate price drop as bargains.  This was revealed in a recent survey of real estate agents by Bank of America._______________________ Jim Woodard writes a nationally syndicated newspaper column on real estate and mortgage news and trends, carried in about 230 U.S. newspapers – along with freelance features.  Reproduction of this report, in part or entirety, is prohibited without the express permission of the author.  E-mail: storyjim@aol.com.   # # #Mortgage rates down By Jim Woodard             As we move into the last month of 2007, mortgage interest rates are continuing to decrease.  They are now at the lowest point in more than two years, thus opening a bit wider the door of opportunity for home buyers.             The average rate for a 30-year fixed-rate mortgage is now down to 6.10 percent, with 0.5 points (fees), according to Freddie Mac, a major government sponsored buyer of existing mortgages.  It has not been this low since mid-October, 2005.  Last year at this time the rate was 6.14 percent.             The 15-year, fixed-rate mortgage has an average rate of 5.73 percent, with 0.5 points.  A year ago this rate was 5.87 percent.  It’s now at the lowest rate since January of last year.  This is a popular option for many homeowners who are now refinancing their mortgage.  The 5-year hybrid adjustable-rate mortgage (ARM) is still popular.  Its rate now averages 5.86 percent.  A year ago it was 5.95 percent.             “Interest rates for U.S. Treasury securities are drifting lower over market concerns that the housing slump and stress in credit markets could slow future economic growth.  As a result, interest rates are slipping lower,” said Frank Nothaft, Freddie Mac’s chief economist.  With Federal Reserve chairman Ben Bernanke hinting that yet another rate cut may be needed to bolster the economy, prospects look good for continuing declines in mortgage rates.__________________________Current opportunities for property buyers                   The next 18 months will be a particularly good time to buy real estate, according to Jim Wagner, an attorney specializing in real estate investments and retirement planning issues.  He notes the following reasons: Home construction starts are now at the lowest volume in the past 14 years.  Foreclosures are on the rise, providing many good buying opportunities.  Inventories of available homes are at a very high volume.  And housing prices are declining in most markets.  Also, he noted that mortgage interest rates remain at historically low levels, and could go a bit lower.  Many banks now offer non-recourse loans. He recommends the use of a self-directed retirement plan to generate capital for investing in real estate.  “The ability to access IRA monies to purchase foreclosed homes or other properties, or to offer private loans when credit is tight, puts the self-directed IRA holder ahead of the game,” Wagner said.  Whether using IRA funds or financing properties with conventional mortgages, there are strong market factors that point to exceptional opportunities for today’s real estate buyers.______________________Preference for fixed-rate mortgages           Fixed-rate mortgages are definitely the “loan of choice” by today’s homeowners seeking a refinance mortgage.  About 85 percent of refinance mortgages in recent months have been fixed-rate loans, according to Freddie Mac, a major government-sponsored buyer of existing mortgages.  Those applications include many homeowners who initially had a hybrid ARM (adjustable-rate mortgage). “Mortgage rates on 30-year fixed-rate conventional conforming loans have become more favorable to applicants of refinance loans,” Freddie Mac reported.  “The difference in rate between fixed and adjustable rate loans has narrowed.  Also, although the spread between the 30-year fixed-rate and 15-year fixed-rate mortgages has not moved significantly in recent months, more borrowers replaced their 15-year fixed-rate mortgages with 30-year fixed-rates when they refinanced.”The report also shows that refinancing into the 30-year fixed-rate mortgage among borrowers who originally had an ARM loan has been increasing.  However, fewer borrowers who originally had a balloon mortgage are switching into a 30-year fixed loan, many opting instead for an ARM or hybrid mortgage.  The proportion of borrowers who originally held 30-year fixed-rate mortgages and are now applying for a refinance mortgage of the same type has remained about the same in recent months._________________________Home prices stabilizing                         Many metro areas are now showing rising or stable home prices, according to a recent survey by the National Association of Realtors.  In NAR’s latest study, 93 out of 150 metropolitan statistical areas showed increases in median existing single-family home prices from last year.  That includes six areas with double-digit annual gains and another 21 metro areas showing increases of six percent or more.  About 54 had price declines, and three were unchanged.            Regionally, prices rose in both the Northeast and Midwest, as did the national condo price.  Even with most areas showing improvement, a disruption in higher priced sales impacted the national median existing single-family home price – down 2 percent during the third quarter of 2007 from the previous third quarter.  Median home prices in the Northeast rose about 3.2 percent during the past year.  In the Midwest, the median home price increased 0.5 percent.            The median existing home price in the South is about 3.6 percent below a year ago.  In the West, the median price is down by 3.8 percent.  Home prices generally seem to be stabilizing in most areas of the country, but nationally they have dropped about 4.5 percent over the past year.            In another survey (by S&P/Case-Shiller for the National Association of Home Builders), the nation’s 20 largest metro areas were targeted and studied.  It was determined that five of those areas are showing home price appreciation rates over the past year – seven posted  declines of less than 5 percent and eight metro areas registered losses of between 5 and 10 percent._________________________New home sales up            New single-family homes sales are finally heading in an upward direction, at least for the last reported month.  Home sales increased by 1.7 percent in October compared with the previous month, according to a report from the U.S. Commerce Department.  October’s seasonally adjusted annual sales rate was 728,000 units.            “The progressive tightening of mortgage lending during this year has been the major factor behind the setback in home sales,” said David Seiders, chief economist for the National Association of Home Builders.  “We expect home sales to begin a gradual recovery in the early part of 2008.”__________________________Growing popularity of reverse mortgages                Major changes are taking place in the reverse mortgage industry.  And with its rapid growth during the past year or so it certainly has become an industry.  First, a basic definition:  A reverse mortgage is a loan against the equity in the home owned by a senior individual or couple.  In most cases the owner(s) must be at least 62 years of age.  The loan provides monthly income for the owners, usually for the rest of their lives, or until they sell or move from the property.  It can also be taken as a lump sum, line of credit, or combination of those options. For years there have been three primary reverse mortgage plans available, the most popular being FHA’s Home Equity Conversion Mortgage (HECM).  The reverse mortgage concept has become more popular in recent months and years with senior homeowners.  This has motivated many of the nation’s large banks and mortgage lenders to start offering reverse mortgage products.  Some of those lenders are trying to edge out competitors by lowering their fees and increasing their payouts.  One lender has reduced the minimum age requirement to 60.  Others are making loans on second homes, and are offering “jumbo” reverse mortgages for high-end homes valued up to $10 million. The key reasons for the growing activity in this area are two-fold.  First, cost of living that continues to grow while seniors are often living on fixed incomes.  They need the extra monthly income to meet their rising financial needs.  Also there is a growing number of senior homeowners, with “baby boomers” now reaching retirement age.  These factors raise the antennas of banks and lender firms.  Before you start calling in representatives of firms selling reverse mortgages, discuss it with a friend, attorney or a trusted financial advisor.  Be sure it’s the right step for you.________________________Bright niche for mortgage lenders            One particularly bright facet of mortgage lending in today’s market relates to multifamily property lending.  This segment of mortgage lending grew by four percent last year and is continuing to grow, according to a report from Mortgage Bankers Association.            “The growth in multifamily lending comes amid different results for different market segments,” the report stated.  “The large and mid-size loan market saw solid growth last year, while smaller loan markets saw a decline.”________________________More buyers-sellers using professionalsA recently completed survey by the National Association of Realtors reveals that 79 percent of home buyers and sellers are using a real estate professional in their buying and selling transaction.  That’s up from 77 percent over the past three years, and nearly nine out of 10 buyers were satisfied with their agent’s knowledge of the process.   About 41 percent of home sellers found their agent as a result of a referral, while 23 percent used the agent in a previous home purchase.  The survey also noted that 43 percent of buyers relied on referrals to find an agent, while 17 percent of repeat buyers used an agent from a previous transaction.  Another interesting finding from the study:  About 81 percent of sellers use full-service brokerage, while nine percent chose limited services and another nine percent used minimal service (such as simply listing the property on a multiple listing service).  These figures are about the same as reported last year. About 34 percent of buyers said they first learned about the home they purchased from real estate agent, 29 percent said it was from searching the Internet, 14 percent from yard signs, eight percent from a friend or neighbor, eight percent from home builders, three percent from a newspaper ad, three percent from the seller, and one percent from a magazine.The typical home buyer today is 39 years old, two years younger than last year, according to the new survey.  That typical buyer earns about $74,000 annually and purchased a home costing $215,000.  Buyers searched for about eight weeks and visited 10 homes before making a decision.  These national figures vary widely from region to region._________________________Neglected real estate market niches               Many Realtors and their associates are neglecting important and growing niches in today’s real estate market, according to Frances Martinez Myers, one of the speakers at the recent Realtors Conference & Expo.  For example, immigrants represented 40 percent of new household formations between 2000 and 2005, and their numbers are still growing dramatically, it was noted.   In the 25-to-34 age group, about 20 percent of the population is now foreign-born.  And about 14 percent of recent homebuyers are immigrants.  Those immigrants value homeownership as much as native born citizens. It’s interesting that immigrants usually put more money down than native-borns.  On average, they put down seven percent of the total price, compared with four percent by native-borns.  And immigrants allocate more of their income for housing – 39 percent on average compared with 28 percent for natives.  Hispanics are the largest and fastest-growing minority group.  Their purchasing power is projected to equal the third largest economy in the hemisphere by 2010. Single women is another major overlooked market niche.  They now represent 20 percent of recent homebuyers – a 50 percent jump over the past eight years.  Surprisingly, about 83 percent of single women homebuyers choose single-family homes rather than condos.  About 28 percent of all households will be headed by women by 2010, it was projected.  Women now own 23 percent of homes._________________________Mortgage closings confusingMortgage closings can be confusing and inconsistent from company to company.   The nation’s leading mortgage bankers group, title insurance and escrow associations have teamed up to structure a uniform set of mortgage closing instructions.  Participating in the project are the Mortgage Bankers Association, American Land Title Association and American Escrow Association. Their objective is to improve efficiencies and lower costs to the industry and consumers by replacing countless sets of instructions with two standard sets, a spokesperson for the group announced.  The instructions will also help stem mortgage fraud and facilitate automated mortgage origination.  The new general instructions will detail the requirements for all transactions and the specific instructions will provide a standard format for the details of each individual transaction, such as names, property address, loan type, etc.  When these instructions are finalized they will not be required to be used by lenders, but they are likely to be widely accepted, it was reported. The new instructions will be discussed during an online workshop in early December.  This session will provide input for finalizing the set of instructions.  “It’s critical that companies across the industry understand the instructions and provide useful comments so we can move forward to finalize the project for industry use,” said Ken Markison, MBA’s senior director and regulatory counsel.For more information about the project, visit: www.campusmba.org or phone 800-348-8653.________________________New guidelines for mortgage brokersResidential mortgage brokers may soon have a new set of guidelines to follow when dealing with their borrower clients.  At least that’s the objective of a new resolution approved by the Residential Board of Governors of Mortgage Bankers Association.  The board wants more transparency and accountability in transactions handled by mortgage brokers.  They also want more net worth and bonding requirements for brokers.  It’s an attempt to minimize broker-related problems and enhance the quality of service to consumers, thus boosting their public image as credible professionals.             “This resolution is a step in MBA’s call for better disclosures and more transparency in mortgage transactions,” said MBA’s chairman, Kieran Quinn.  “The borrower is best served when he or she has a clear understanding of who their mortgage broker is working for and how their broker is compensated.”             The new resolution calls for legislative or regulatory action requiring brokers to maintain a minimum financial net worth consistent with FHA requirements – currently $63,000 plus $25,000 for each branch office.  MBA also wants brokers to carry bonding worth $75,000 or an amount equal to ten percent of the broker’s annual loan volume (whichever is higher).             There should be timely and improved disclosures about the services to be performed by the mortgage broker, the resolution stressed.  Brokers should disclose the total compensation they receive from the transaction before the borrower commits to the mortgage broker.  Disclosures should include how much of the compensation will be derived from the lender based on the loan terms and how much will be paid by the borrower in direct fees.  Finally, it should be disclosed to borrowers whether or not the broker is acting as the borrower’s agent, and if the broker is acting as such he should be treated as an agent under the law, the MBA resolution stated._________________________New law targeted at mortgage lending abusesOne legislative action now working its way through Congress could potentially change the way mortgage bankers and brokers do business is a bill that has been introduced in Congress called “Mortgage Reform and Anti-Predatory Lending Act of 2007.”  The objective of the bill (H.R. 3915) is to minimize problems stemming from the current mortgage crisis and protect borrowers from lending abuses that can lead to foreclosures. The bill would create a “duty of care standard” for residential mortgage loan originators.  It would include regulations to prevent steering a borrower to a loan that is not in their best interest so the broker can earn more commission.  And it would establish a nationwide registration regime.  It would also call for minimum loan repayment standards, including taxes and insurance payments, based on verified and documented borrower information.  It would eliminate loans with prepayment penalties, negative amortization and balloon payments for high risk mortgages, and it would require mandatory pre-loan counseling for some borrowers.Another interesting part of the bill would set forth certain foreclosure protections for renters.  “While the bill is filled with good intentions and does contain some reasonable and necessary changes to industry policies and procedures, there are some aspects of the bill that create an unfair advantage for institutional originators,” it was noted in a feature carried by Originator Times.  “It could possibly put some mortgage bankers and brokers out of business.” The bill was approved in the House of Representative on November 15, with a vote of 291 for it, 127 against.__________________________Refi mortgage applications upWith mortgage interest rates remaining at historically low levels, and even declining recently, more mortgage applications are coming in from home buyers and those who want to refinance their existing mortgage.  An increasing number of consumers are seeing today’s market conditions as a “window of opportunity” for applying for a mortgage that meets their current needs.             “Reports of weaker consumer spending and a decline in manufacturing activity is keeping mortgage interest rates at bay,” said Frank Nothaft, chief economist for Freddie Mac, a major buyer of mortgages.  “Rates for long-term mortgages are little changed while rates for ARMs lowered following the Federal Reserve’s latest interest-rate cut.  With mortgage rates remaining low, about 38 percent of applications are for refinance transactions.  During the third quarter of this year, about 87 percent of refinanced loans were for loan amounts that were 5 percent or more higher than the original balances.”            Also, Freddie Mac estimates that families withdrew about $60 billion in home equity over the third quarter, down from about $81 billion during the second quarter.________________________________Homebuilder price-cutting hurts other sellersHomebuilders are cutting prices and offering tempting incentives in efforts to reduce their inventory of completed homes.  This is good news for home buyers, but bad news for other home sellers in the same area.  Those lowered prices of new homes depreciate the value of all existing homes in that area, and make it even more difficult to attract buyers to resale homes. However, those lower prices offered by builders often fail to attract many buyers because potential home buyers still focus on the probably that those prices will fall further if they wait for a while, rather than perceiving the immediate price drop as bargains.  This was revealed in a recent survey of real estate agents by Bank of America._______________________ Jim Woodard writes a nationally syndicated newspaper column on real estate and mortgage news and trends, carried in about 230 U.S. newspapers – along with freelance features.  Reproduction of this report, in part or entirety, is prohibited without the express permission of the author.  E-mail: storyjim@aol.com.   # # #