G-Fees
What the heck is a G-Fee, well that is a Government Fee that is attached to mortgage rates. And why am I bring this up…Well G-Fees are a tax on home owners, in the way of higher interest rates. Current there is about 2 point of G-Fees that are causing mortgage rate to be high. As an example, today, a typically FHA rate is around 3.75%, but a typical Conventional rate today is around 4.125%. So what is the difference, well it is mainly in the G-Fee, i.e. tax on mortgage holders.
A few years ago, Congress tried to tack on a G-Fee to pay for a massive Transportation Bill. Luckly it was defeated. Now a couple of Congressman are introducing the Risk Management and Homeowner Stability Act of 2017 or AKA H.R. 916. This would prevent G-Fees on mortgage rates could only be used for the mortgage market, not a Bridge to nowhere in Alaska.
But what I am really curious about is if they are going to remove the existing G-Fees and drop rates…stay tuned.
And in other Congressional News…
Another bill was introduced into Congress, forcing Fannie and Freddie to get away from using just FICO scores and opening it up to other Credit Score models, such as the “Vantage” Score. Never heard of it? Think back to those commercial on TV, you know the “free credit report dot com” people. Bill is House Bill 898, Credit Score Competition Act.
And in the New Loan Program category:
- Lenders are rolling out 80/10/10 loans, I have them available as of yesterday,. This is where a borrower can get a 1st Mortgage for 80%, a 2nd mortgage for 10% and just have to put 10% down. Thus saving them from that dreaded Mortgage Insurance.
This also works for JUMBO loans, where as JUMBO loans require 20% down, but not you can do 10% down and get a 10% 2nd mortgage. Pretty sweet option for those wanting higher priced homes.
OR, you can also use it to prevent you from getting a JUMBO and take the loan amount down to the Conforming Conventional loan amounts!
- National Realtor Association this week also asked Trump to re-instate the reduction of the FHA mortgage insurance rate, which for a whole 5 days, took it down from .85% to .60%. I suspect something is going to happen in the next few weeks.
- Bank Statement programs, for those self employed borrowers who show little to no money on their tax returns. Lenders have rolled out 24 month bank statement programs, where as we can use 50% of deposits on business statements, and 100% of deposits on personal statements, average, and utilize that number for income.
CFPB News
And more fallout from the CFPB clamp down on Realtors. Some RESPA attorneys are now saying that those loan officers who are just paying to Co Brand with Realtor on Zillow, may be violating RESPA but not equally following up on the leads. They went on to say that the Loan officer and the Realtor should be equally following up on the leads and be able to document that. If the Realtor is just following up on the leads and then giving the leads to the Loan Officer, that is a no-no. Well we think it is…have to wait for the CFPB investigation.
And why do we ask for all of the documentation, over, and over, and over again. Because there is still fraud being done in our industry. Just take the case out of Tampa, loan officer forging documents, putting false information, link to that one is here: https://www.justice.gov/usao-mdfl/pr/former-bank-officer-indicted-mortgage-fraud-charges