After almost one full year of searching for and communicating with one potential suitor after another, at long-last, a special Board of Directors Meeting was held last week; a company spokesmen later revealed the Board approved the long sought after pending cash sale and acquisition of the company by www.710holding.com.

Based upon suitable market timing to the 710 folks, the ‘close’ is anticipated for late Summer or early Fall. “During this period, we understand they will be looking for execs and operators for the various operating divisions shown on their website. We wish all our new sister companies the Best of Good Luck with this venture,” the spokesmen said in closing.




Strategic Defaults
We all know what those are, right? It's when borrowers (not all – but in MANY cases never deserved a loan in the first place) ended up in a house with very little or no down payment at all, during the period when property appraisals were going through the ceiling, and they were dreaming values would continue to soar!

Next came the big surprise (for those of you with little history in this industry) – it isn't a surprise really – has happened every 10 years almost like clockwork here in the California during much of the last half century – although not quite this bad – but historically BAD), the marketplace turned on them and all of us, and plunged.

So a LOT of them (many who CAN afford their payments) felt this mess wasn't their fault, so why should 'they' be punished. To protect themselves they mailed in the house keys to the lenders and walked away … nicely … as a 'Strategic' Default! What's the prob, right? Hell, all they did was sign a contract, right?

Other side of that coin, sits the lender about to suffer a major loss of money, again because the marketplace shifted … through no fault of their own either! BUT they honor the contract, instead of tossing the borrowers out into the streets (to protect themselves) when the plunge began (their own Strategic Default).

Thankfully here in California (and many other States) deficiency judgments are available in many cases … and SURPRISE … the borrower appropriately owes the lender any REO sale shortfall.

In the all too 'politically correct' world – that's the outcome our industry really deserves!





Credit Score Average Rises to 750 at Agencies
The average FICO score on single-family loans purchased by Fannie Mae and Freddie Mac now stands at 750--up from 715 on purchases during 2006 and 2007, the two years that account for most of the GSEs' credit losses. The government sponsored enterprises have tightened their underwriting standards since being placed in conservatorship in September 2008, according to the Federal Housing Finance Agency's newly released annual report to Congress. The GSE regulator notes that the shift to higher credit quality also has resulted in lower guaran tee fees and income. In addition, interest income in 2010 will be reduced due to an accounting change that will stop the GSEs from accruing interest income on delinquent loans. Meanwhile, Fannie and Freddie are still dependent on the U.S. Treasury for financial support. FHFA notes that credit losses on the GSEs' 2006-2008 book of business, in particular private label securities, will "remain substantial," adding that, "Consequently, financial results will be greatly affected by the success or failure of loss mitigation initiatives." Fannie and Freddie are major participants in the government's Home Affordable Modification Program.

Bet you're happy to have learned it's so very easy to attract a flood of 750+ customers and have them NOT shop you for the lowest rate in the world! Bet you wish 'non-vanilla' loans were common again, right? They will be soon - through our new sister company!

In case you're interested in the history of our company, and how we evolved into a nationally recognized industry learning center these past 10 years, and shortly to be a part of a holding company consortium, check out our Press Releases Right Here!

Get his long-experienced perspective and analysis of issues which face our industry during these interesting times; all from our Founder - My Perspective! Read Daily

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Have you seen the AMC Institute Job Board yet? By adding this industry specific resource to our learning center last year, we are able to provide a value added service for our students, alumni, and new members alike. Click Here to give it a try.

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Link to the permanent version of our newsletters by Clicking Here and save our online Newsletter Library in your computer's 'favorites' - check out past issues too!

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Happy Father's Day!

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News courtesy National Mortgage News

Fannie Mae is putting mortgage lenders in a Catch-22 situation with its "loan quality initiative" which takes effect June 1. One of the new requirements is that lenders have to check any undisclosed liabilities a borrower has taken on between the initial loan application and the closing. In order to check a borrower's debt-to-income ratios, a lender typically would have to pull a second credit report. Fannie has only recommended that lenders pull a second report. "It is not a requirement," said Fannie spokeswoman Janis Smith. Teresa Grove, a senior vice president at Kroll Factual Data in Loveland, Colo., said lenders "are between the proverbial rock and a hard spot," adding that the GSE "does not require a credit report, but the fact is that there is no better source for detecting undisclosed liabilities." When pressed, Brian Faith, a Fannie spokesman, said the GSE did not want to mandate any specific method and that there are other "processes" a lender may choose to fulfill the requirement. "In all likelihood, in the overwhelming majority of instances, pulling the credit report a second time in some manner will be the method used."

So there you (broker) sit, with 'visions of sugar plums dancing in your head' (about to receive a gagging YSP on a pending close) - the lender does the 2nd credit report (to cover his behind) and SURPRISE - new Lower credit score. His pricing to Fannie just got worse, now's time to say Buh-bye your YSP ... hey dude, can YOU dig it? Think that won't happen? Think again.