Week 2, January 2010

This week we have been doing some training and have been experiencing some challenges with the new 2010 rules on the Federal Good Faith Estimate for purchase and refinance loans.  In general, the changes to the estimate make the disclosure clearer and they are good for consumers.  What isn’t fine is how the California Mortgage Loan Disclosure Statement (MLDS) does not correctly reconcile with the new Federal Good Faith Estimate.  The new rules for lending are that the fees covered under the term “origination” include the commission for the broker, the broker processing, the lender underwriting and processing, and any other fees a lender likes to throw in such as flood certification fee, wire fee, and tax service fee.  All of these are now singularly called the “origination fee.”  What was once called the “broker rebate” or “yield spread premium” and was once paid to the brokers by the lenders is now redirected as a credit paid to the borrower to offset the cost of origination.  The trouble is that the MLDS does not show it that way.  Maybe it’s California’s budget crisis that’s keeping this from being up to date, but on the California MLDS it’s still showing as a rebate paid to the broker.  And as of January 1, 2010 that is incorrect disclosure.  But we still have to use it.  How do you like that?  Bottom line is that there can be a “rebate” paid by the lender for choosing a slightly higher interest rate.  Whatever rebate that is will now be credited to the borrower to offset the costs of the loan.  Eventually the MLDS will be updated to be consistent with the new Federal Good Faith Estimate.  It just isn’t doing that quite yet.  So, keep in mind that instead of going to the broker the “rebate” now goes to the borrower to potentially offset the origination cost of the loan, and whatever fees go to both the lender and the broker are disclosed on the Federal Good Faith Estimate as the “origination fee” for doing the loan.  The Federal disclosure is actually pretty good, it’s just California that needs to get itself up to date (IMHO). 

See here for more on the battle to update consumer protections in the finance industry.

To contact me about financing your dream-home click here.

Weekend Wanderer’s Events

…finding the treasures in your town and beyond. 

Two for This Weekend:

When Lives Become Form: Contemporary Brazilian Art, 1960s to the Present:  Focused on a particular art movement in Brazil in the 1960s, here is how it’s described:  “Tropicália sought to escape the shadow of the West and create a uniquely Brazilian art culture. Its central figure, Hélio Oiticica, took inspiration from Brazilian favelas, “a product of fantastic improvisation in creating a ‘vital place’ for communicating not form so much as joy.”  Check it out! 

Continued into January “Affordable Art for the Holidays”: Just a few blocks from the BART stations in the Mission District is the CityArt Cooperative Gallery, which has extended their holiday show with all art in the back room priced at $200 or less.  Another group show is in the front as well.  It’s looking like a great chance to find some great art for a good price, and to have a fun visit to the Mission’s progressive and hip shops and restaurants.  Check it out and enjoy! 

Help Your Fellow Living Beings:

American Red Cross for Haiti: With the 7.0 earthquake hitting Haiti on Tuesday, at press time, it is very unclear how many are dead and injured from this disaster.  There are estimates of around 3 million people who must are being affected, and it’s up to the rest of the world to respond.  Needless to say, the Red Cross is always there.  If you are moved to respond at this time of crisis, click the link and send a donation. 

Two Weekends from Now:

Health, Wellness and Goals Workshop in San Francisco: Here’s how it’s promoted in The Chronicle:  “This New Year, discover principles from do-able yoga, daily meditation, going back to nature, affordable and nutritious cooking, simple detox steps from breath, colon and more, developing a calm/purposeful life & ways of giving! Explore “111 ways to lose weight, look younger and great and feel energetic”.”  Looks like a good one for us all. 

Pic of the Week… from my phone camera:

Green of winter in Loma Rica, CA