REFinBlog

Editor: David Reiss
Brooklyn Law School

August 25, 2016

Thursday’s Advocacy and Think Tank Roundup

By Jamila Moore

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August 25, 2016 | Permalink | No Comments

August 24, 2016

Wednesday’s Academic Roundup

By Jamila Moore

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August 24, 2016 | Permalink | No Comments

August 23, 2016

Jumbo Mortgage Deals Ahead

By David Reiss

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The Wall Street Journal quoted me in Attention, Jumbo-Mortgage Shoppers: Deals Ahead (behind paywall). It opens,

With more lenders offering jumbo loans, borrowers have more bargaining power to negotiate the best terms.

During the first quarter of this year, 20.3% of all first mortgages originated were jumbo loans, according to Guy Cecala, CEO and publisher of trade publication Inside Mortgage Finance. That’s up from 18.9% last year and 5.5% in 2009, just after the financial crisis.

“At the end of the day, it’s all just supply and demand for capital,” says Doug Lebda, founder and CEO of LendingTree, an online financing marketplace. “Over 60% of people still don’t think they can shop for loans—even rich people. But everything is negotiable.”

Since only a small percentage of jumbo loans are sold to investors, the “vast majority are winding up on bank balance sheets,” according to Michael Fratantoni, chief economist of the Mortgage Bankers Association. But because these loans are held in a lender’s portfolio and aren’t subject to the guidelines of investors purchasing them—as opposed to conforming loans, which must comply with hard-and-fast parameters established by Fannie Mae and Freddie Mac—terms and underwriting standards vary widely.

“Borrowers may find more flexibility with lenders that keep mortgages on their own books,” says David Reiss, a Brooklyn Law School professor who specializes in real estate. “These lenders can usually take a more individualized approach to underwriting than a lender that sells its mortgages off to be securitized with a whole bunch of other mortgages.”

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Here are a few things to consider when negotiating a jumbo loan:

Prepare before applying. “Jumbo lenders are focusing on borrowers with good credit and resources,” said Brooklyn Law School’s Mr. Reiss. Before applying, borrowers should clean up their credit report and keep debt in check. Lenders look at total debt-to-income ratio and overall credit to determine how strong a buyer is; the stronger the buyer, the more the negotiating power.

Create a relationship. “If you’re a substantial borrower with a substantial relationship with a bank—one of our wealth clients—the guidelines might get a bit more flexible,” saysPeter Boomer, executive vice president of PNC Mortgage, a division of PNC Bank NA.

Don’t hesitate to negotiate. “They are the customer, and the lender is not doing them a favor,” says Mr. Lebda, of LendingTree. “People are ecstatic when they get approved for a mortgage, but they actually need to think about it the other way—that the lender should be ecstatic for giving them a loan.”

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August 23, 2016 | Permalink | No Comments

Tuesday’s Regulatory and Legislative Roundup

By Jamila Moore

  • New York approved a two billion dollar housing bill aimed at increasing the number of affordable units in New York, improving the existing public housing complexes, and addressing New York’s homelessness issues.
  • The state of New Jersey approved a 34.8 billion dollar budget and allocated 300 million for anti-poverty initiatives throughout the state.

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August 23, 2016 | Permalink | No Comments

August 22, 2016

Monday’s Adjudication Roundup

By Jamila Moore

  • Variant Holding Co. LLC asks a Delaware court to dismiss a case they filed against their past CEOs for interfering with the company’s real estate purchase and sales.
  • An Oklahoma court determined that Enable Midstream Partners LP can no longer run their gas pipeline through a local tribal landowners real property.
  • New Jersey reinstated a lawsuit against Wells Fargo and a third party for allegedly covering up an environmental contamination before selling a property in 1988.

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August 22, 2016 | Permalink | No Comments

August 19, 2016

Bringing Debt Collectors to Heel

By David Reiss

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TheStreet.com quoted me in Debt Collectors Hounding You With Robo Calls? Here’s What To Do. It reads, in part,

Mike Arman, a retired mortgage broker residing in City of Oak Hill, Fla., owns a nice home, with only $6,000 left on the mortgage. He’s never been late on a payment, and his FICO credit score is 837.

Yet even with that squeaky clean financial record, Arman still went through the ninth circle of Hell with devilish debt collectors.

“The mortgage servicer would call ten days before the payment was even due, then five days, then two days, then every day until the payment arrived and was posted,” he says. “I told them to stop harassing me, and that my statement was sufficient legal notice under the Fair and Accurate Credit and Transaction Act (FACTA). But they said they don’t honor verbal statements, which is a violation of the law. So, I sent them a registered letter, with return receipt, which I got and filed away for safekeeping.”

The next day, though, the mortgage servicer called again. Instead of taking the call, Arman called a local collections attorney, who not only ended the servicer’s robo calls, but also forced the company to fork over $1,000 to Arman for violating his privacy.

“That was the sweetest $1,000 I have ever gotten in my entire life,” says Arman.

 Not every financial consumer’s debt collector story ends on such an upbeat note, although Uncle Sam is working behind the scenes to get robo-calling debt collectors off of Americans’ backs.

The latest example of that is a new Federal Communications Commission rule that closed a loophole that allowed debt collectors to robo call people with impunity.

Here’s how the FCC explains its new ruling against robo calls.

“The Telephone Consumer Protection Act prohibits most non-emergency robo calls to cell phones, but a provision in last year’s budget bill weakened the law by allowing debt collectors to make such calls when the debt is owed to, or even just guaranteed by, the federal government,” the FCC states in a release issued last week. “Under the provision passed by Congress, debt collectors can make harassing robo calls to millions of Americans with education, mortgage, tax and other federally-backed debt.”

“To make matters worse, the provision raised concerns that it could lead to robo calls not only to those who owe debt, but also their family, references, and even to someone who happens to get assigned a phone number that once belonged to another person who owed debt,” the FCC report adds.

Under the new rules, debt collectors can only make three robo calls or texts each month per loan to borrowers – and they can’t contact the borrower’s family or friends. “Plus, debt collectors are required to inform consumers that they have the right to ask that the calls cease and must honor those requests,” the FCC states.

That’s a big step forward for U.S. adults plagued by debt collection agency robo calls. But the FCC ruling is only one tool in a borrower’s arsenal – there are other steps they can take to keep debt collectors at bay.

If you’re looking to take action, legal or otherwise, against debt collectors, build a good, thorough paper trail, says Patrick Hanan, marketing director at ClassAction.org.

“Keep any messages, write down the phone number that’s calling and basically keep track of whatever information you can about who is calling and when,” Hanan advises. “Just because you owe money, that doesn’t mean that debt collectors get to ignore do-not-call requests. They need express written consent to contact you in the first place, and they need to stop if you tell them to.”

Also, if you want to speak to an attorney about it, most offer a free consultation, so there isn’t any risk to find out more about your rights, Hanan says “They’ll tell you right off the bat if they think you have a case or not,” he notes.

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Going forward, expect the federal government to clamp down even harder on excessive debt collectors. “The Consumer Financial Protection Board takes complaints about debt collector behavior seriously, and has recently issued a proposal to further limit debt collectors’ ability to contact consumers,” says David Reiss, professor of law at Brooklyn Law School. “In the mean time, one concrete step that consumers can do is send a letter telling the debt collector to cease from contacting them. If a debt collector continues to contact a consumer — other than by suing — it may be violating the Fair Debt Collection Practices Act.”

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August 19, 2016 | Permalink | No Comments

Friday’s Government Report Roundup

By Robert Engelke

  • In a report titled, Tenure Choice and the Future of Homeownership, the US Department of Housing and Urban Development in part with other contributors discuss how the future of American homeownership is being pushed in contradictory directions by demographic changes. The aging of the Baby Boomers would support higher levels of homeownership, but the increasing minority share of the population and the persistent racial gap in homeownership acts to reduce homeownership.
  • In a paper titled Credit and Collateral: Rising Denial Rates on Home Purchase Mortgage Applications, 2001-2011, the US Department of Housing and Urban Development estimates how the likelihood that an application is denied by the lender has changed over time after accounting for characteristics of loan applicants.
  • Using the Metropolitan Surveys of the American Housing Survey, from 1995-2004, this paper, titled Good Home Improvers Make Good Neighbors, analyzes the differences in real appreciation rates between neighborhoods with different levels of median home improvement spending, even for households with comparable levels of individual expenditures.

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August 19, 2016 | Permalink | No Comments