National 20-Hour Mortgage Pre-licensing course is NMLS approved!!

After meeting the conditions of the CSBS, our national course is now NMLS approved!! We will have other state courses up shortly. The 40-hour mortgage course for Utah will also be up next week. It's been a great year for all of us at Praedo and we wish you and yours a very Merry Christmas and a Happy New year!!

The New GFE Cost Breakdown

It seems that everyone is still up in arms about the new Good Faith Estimate. If you are a little confused, don't be too hard on yourself. It is not because of you being a bad loan officer or a slow learner. The new GFE really pushes loan origination into a completely new arena. Many large lenders (who have very large and well paid compliance departments) are having a tough time understanding the new GFE and its effects. Here's a quick reminder, or tutorial, on costs:

- Costs which are GUARANTEED by the new GFE:
- Origination charges
- Interest rate related costs, AFTER the interest rate is locked
- Adjusted origination charges
- Transfer taxes

- Costs which may increase up to 10% at settlement:
- Required services selected by originator
- Title services and lenders title insurance, if provider was selected by originator or by consumer from originator's list
- Owner's title insurance if provider is on the originator's list
- Other required services chosen by the consumer from the originator's list
- Recording fees

- Costs which may change without limitation at settlement:
- Required services selected by consumer when they DO NOT choose a company identified by the originator on the originator's list
- Title services and lenders title insurance if provider was selected by consumer and was NOT included on the originator's list
- Owner's title insurance if the provider is NOT on the originator's list
- Escrow account deposit
- Daily interest charges
- Homeowner's insurance

Hopefully this helps. If you or your company would like some live training with us, please use the 'Contact Us' tab on our website (www.praedo.com).

A Good Time To Be Thankful

There has been a lot of complaining in the mortgage industry for over a year now. I will be the first one to say that there has been a lot to complain about over the past year but we should take a break this week. What could have been a complete meltdown of our financial system was slowed and we are now starting to see the light at the end of the tunnel. We still have a long road in front of us but we can see the light. Despite the many fingers of blame that have been pointed at this industry from the federal government, business is getting better and for the most part, there has been an industry cleansing that has got rid of many brokers who gave this industry a bad name. But of all weeks of the year, this is a time to be grateful. We have so many things to be grateful for, look around. No doubt it will be an eye opening experience to anyone who really stops to think about all he/she has been given. Happy Thanksgiving from all of us at Praedo.

Great Turnout

We had a great turnout at our Good Faith Estimate Course yesterday. We had over 100 students show up who were all eager to learn about the new good faith estimate and to be taught how to keep their jobs in January. We are eager to announce new classes coming in Salt Lake, St. George, Boise, and Denver. Don't wait until after the new GFE goes into effect to learn more about it. Step up to the plate and get some mortgage CE as well!! Real Estate continuing education also available.

FACT OR FICTION: BROKERS ARE DEAD

So is it true or not? The end of the mortgage broker is here? New GFE takes away YSP? We have been flooded with questions regarding the RESPA changes which take effect on January 1, 2010. Rumors are flying regarding the future of YSP and the future of mortgage brokers in general. Many of these statements are simply false. The new GFE and the accompanying RESPA changes DO NOT eliminate YSP. The new GFE simply requires it be disclosed differently. Mortgage brokers may still earn YSP as part of the total compensation on the transaction. The RESPA reforms do not kill the broker industry, but do require ALL loan officers to change the way they disclose costs to the borrower.

Due to the massive amounts of confusion and rumor about these issues, we will be holding several seminars in the next few weeks to explain the new GFE and the RESPA changes. Please see the schedule below and know that we will be adding additional dates in Utah, Idaho, and Colorado. We are only charging $30 for the course and it is approved for 2 hours of core Utah Mortgage CE. (MC091014) In the next few weeks we will be launching a new online course on the new GFE.

Salt Lake City, Utah

November 18, 2009

St. George, Utah

December 14, 2009

Utah New Agent Renewal Course

Praedo Institute offers the only online new agent renewal course in the state. This course allows new real estate agents the opportunity to sharpen their skills while their career is still in it's infancy. Students will not only participate in our engaging online education but will also complete several case studies that will help them be more successful in this competitive industry.

$8,000 Tax Credit Hasn't Been Extended YET

Many loan officers, real estate agents, and even some title companies have been spreading the good word of the extended $8,000 tax credit for first-time home buyers. Well, hold the phone. You don't have to hang up the phone, but hold the phone. While there is a lot of momentum in the Senate to get this stimulus tax credit extended, it still has not happened.

Here is what is going on. If the tax credit is extended, it's December 1, 2009 deadline will be extended to some time during the middle of next year. There is also talk of a $6,500 tax credit for homebuyers who have lived in their previous home for at least 5 years. A final bill will be voted on next week in the Senate, but until then . . . Dec.1 is the deadline. Just hold the phone.

Idaho Mortgage Continuing Education

I saw Christmas lights last night. I couldn't believe it. I just stared in awe, not really knowing what to do. We barely are scraping November and christmas lights already? Someone told me that they hauled up their Christmas tree this weekend. It made me think of two things. One, where has 2009 gone? Two, many Idaho mortgage licensees are coming up on their year-end renewals. With that being said, many will be procrastinating and their getting continuing education while the kids are banging pots and pans together and counting down to the New Year.

With that being said, maybe we can help you keep some of those long, forgotten new year's resolutions that you made back in January. The first of course being not procrastinating. The second being spending more time with your kids during important times in their lives, like New Year's Eve. Here's how we can help, we at the Praedo Institute are not only a leader in the Idaho mortgage continuing education but we have the best prices in the industry. Our courses allow you to take at your own leisure from the comfort of your own home or office. Contact us for information on corporate discounts and help others keep at least one new year's resolution.

Just how SAFE is it?

Any firefighter or EMT will tell you that the worst thing to do in an emergency situation is panic. Whether it is the parent or a friend or even the victim himself, the guaranteed way to ensure a worse outcome is panic. I wish we could apply this to other facets of our lives. Sometimes we try to fix things that don't need being fixed and end up causing bigger problems then the ones we sought out to combat. This issue is really obsessed over in our society. We love it. We can't live without it. We thrive off of it. If you don't believe me, turn on prime time any night of the week. And before you run behind the barricade of blame that it is the networks' fault, they only give us what we want. But you turn it on and what do you see? Drama. Drama. Drama. People living ordinary lives with more drama then any self-respecting person could ever stand. And now that is 'reality' in our society. Normal problems that are blown way out of proportion and so the outcome is blown way out of proportion. I can't help but believe that this is seeping into the rest of our lives. I would be willing to submit that I know that it is.

Was there panic involved in trying to get our economy back on its feet? Was there some drama in how government (we as they are our representatives) fixed some of our economic problems?There was. One such outcome was the SAFE Act which instituted a federal licensing system and guidelines by which all mortgage licensees, schools, states, and other regulating bodies must abide. Yes, some states did need to regulate their licensees but many had to downgrade in order to be compliant with these new regulations. Others could were not prepared for such a change because of the substantial fees and costs. This goes without mentioning the fact that after this bill was compiled, passed, and assigned it was handed off to a non-governed third party that could address the issue as they wished. Not only were states obligated to pay an exorbitant amount of money to make changes and adjust to the SAFE Act, they had to give up their right and obligation to follow the demands of their citizens but had to submit to the demands of strangers who now wielded the shield and sword of federalism.

Time would tell that such a radical change was probably unnecessary, that it simply caused more panic and drama than it attempted to abolish. Many would even agree that the finger of blame was pointed in the wrong direction in this case. What can we learn from all of this? Any good EMT or fireman would tell you to relax. Breathe. Analyze the situation and look at the FACTS. Then make a decision. With that hopefully we can better combat the problems that will inevitably come.

Idaho SAFE Preparation Course TOMORROW

With Praedo's live SAFE exam courses in full swing, we are happy to announce another Boise Idaho class tomorrow. If you are in the Boise area and you have a couple hours to come join us, please do. This class will not only prepare you for the exam but combined with your other Idaho continuing education will allow you to opt of the required 20 hours of education (offer extends at the end of the year). Tomorrow's event will be held at the Hilton Garden Inn located on 7699 West Spectrum Street in Boise beginning at 9am. This course will be the beginning of a host of others that will help licensees prepare for the federal changes that have swept our industry.

Mortgage Brokers: Extinction or Purification?

It is simply human nature to assign blame when something goes wrong. I am not one who usually complains about human nature, I normally leave that to the philosophers and the anthropologists, but I feel as if this case is different. This case should make us all raise our eyebrows as to what is going on. When the tides of recession began to hit every shore in 2008, the blame assignments were being passed out. What surprised me and what should have surprised many more was who got the brunt of the blame.

What emerged was a lot of blame on the mortgage broker. Many more should pause and realize that banks created these loan programs. Banks did the underwriting, the due diligence, and the approving. Banks handled the investing and the hedging. Mortgage Brokers simply submitted the files and they take home the blame while banks get a bailout and a mere slap on the wrist.

What isn't surprising is the fact that this has led to a severe drop in the number of mortgage brokers in the industry. Market analysts are predicting that by the end of the 2009, the number of mortgage brokers will have dropped 72% since 2006. Many are calling it a purification, that only the 'creme of the crop' will be around by the beginning of the next year but others are worried that banks and a gullible federal government will not rest until there is an extinction of the mortgage broker as we know it. Only time will tell.

Utah Continuing Education Changes

We have seen some sweeping changes that the SAFE (Secure And Fair Enforcement) Mortgage Licensing Act has brought. It has, as we have said before, remodeled the mortgage industry as we know it. One of the areas being remodeled in the mortgage industry is continuing education for license renewal. Mortgage licensees must have 14 hours of continuing education during the fiscal year of 2010, meaning mortgage licensees will have until December 31, 2010 to complete the required hours.

However, the mortgage industry isn't the only one who is undergoing some 'house cleaning' issues. The Utah Department of Real Estate is now requiring 18 hours of continuing education for real estate agents and brokers for every two-year period. Everyone who has a renewal date after January 1, 2010 will have to complete the 18 hours of ce.

If you didn't see this month's Praedo newsletter, please email us so we can put you on the list! Contact us at support@praedo.com today!!! Don't let ignorance get you in trouble!

SAFE Act Testing in Utah Postponed

The Utah Division of Real Estate has collectively decided to postpone the new SAFE testing until September 1, 2009. This extra month gives 'on-the-fence' Utahans the opportunity to decide whether or not they should get their mortgage license. If you've been trying to decide whether or not you or someone else in your office should get licensed, now is the time to act.

While many states have postponed testing requirements until next year, The Utah Division of Real Estate has been ahead of the pack when complying with this new federal legislation. Many states have postponed SAFE testing until the middle of next year as they scramble to draft and pass laws that will allow for the type of changes that the SAFE act is bringing to the table.

Nonetheless the SAFE act has caused a lot of headache for the Utah Division of Real Estate. Not to mention all of the changes that the act is calling for, it also affects legislation that the Division has painstakingly fought for years and now much of it will fall by the wayside. On an administrative level, the Governor has been assigned as the Ambassador to China and the Director of the Division of Real Estate (an assignment appointed by the Governor) has also been assigned to a new position. These two changes bring a lot of headache to the Division, but in addition to all the changes that SAFE is bringing to the mortgage industry, it is no wonder why the testing has been postponed.

The End of Brokers?

I had the opportunity to meet with a senior manager for one of the largest wholesalers a few days ago. He met with a group of brokers and updated us on the industry and his company. He also solicited feedback from the attending brokers. One of the consistent themes throughout the conversation was treatment of us mortgage brokers over the last several months. It seems many are ready to blame the financial crisis on us. Obviously, this approach frustrates me as most of us simply sold the programs which were offered to us. We didn’t commit fraud. We didn’t misrepresent. We conformed with the program guidelines and very effectively sold the aggressive programs developed by the lenders. Over the last several months, I’ve been worried about the future of the broker industry. Every time we turn around, someone is making it more difficult to do business as a mortgage broker.

We posed the question as to the future of the mortgage broker. Finally, we received some positive feedback. The large wholesalers are experiencing outstanding returns on the third party origination business. The performance of the loans is excellent. The two largest originators nationally are most likely the largest due to their broker business. The lenders are again realizing that, if done properly, broker business makes sense. As the executive put it, the brokers are no longer the poster child for the mortgage crisis. As warehouse capacity increases and the industry stabilizes, mortgage brokers should be able to continue effectively serving the borrowers who have come to rely on our expertise, experience, and relationships.

Utah County Parade of Homes

Despite the popping of one of the largest housing bubbles the country has ever seen, there is one venue that is not being cancelled: The Utah County Parade of Homes. From the edge of Santaquin to the rolling hills of Alpine, 28 homes are 'decked to the halls' for all to come and see. You can download a map of the parade here. Open Daily 12:00pm - 9:00pm, closed Sundays and Mondays. Tickets are $10 each, kids 5 years and younger are admitted free. Praedo sponsoring a booth in Home #2, The Chatham located at 5937 W. Chatham Circle in gorgeous Highland. Come see us!

New Home Grant Total: Now at $14,000

New home buyers in Utah may qualify for $6,000 in mortgage assistance with the Home Run Grant. If the home buyer is a first-time home buyer, the grant may also be combined with the new $8,000 federal tax credit for additional savings.

Approximately of 1,600 grants are available for home buyers who purchase a newly-constructed, never-occupied, primary, single-family residence in Utah. The grants will be given on a first-come, first-serve basis.

Individuals do not have to be a first time home buyer to receive the grant, but must meet the requirements to be eligible. Home buyers have income restrictions of $75,000 for a single person and $150,000 for a married couple.

In addition to the income restrictions, the property has to be occupied within 30 days of closing by the home buyer as their primary residence. If a mortgage loan is needed to purchase the property, the loan must have a fixed interest rate and amortize with a term of 30 years or less. Home buyers also need to have a Home Run Grant Commitment before the transaction closing.

Applications for a Home Run Grant need to be submitted through the home buyer’s mortgage lender. More information about the program and how many grants are still available can be found on the Web site for the Utah Housing Corporation.

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Praedo Institute has been offering mortgage and real estate education to industry professionals since 2003. Online courses are available to fulfill pre-licensing and continuing education requirements. Education courses were first offered in Utah, but Praedo Institute has now expanded to assist industry participants with education requirements for multiple states. Praedo Institute works closely with industry and state regulators to educate individuals of any changes or updates.

Home Valuation Code of Conduct Brings Changes to the Appraisal Process

The Home Valuation Code of Conduct (HVCC) will change the way appraisals are ordered and how residential transactions that utilize financing are processed.

The HVCC was created as part of a settlement that requires Freddie Mac and Fannie Mae to change their policies and procedures for all loans purchased. These companies will not be able to purchase mortgages from sellers who are not in compliance with the Code after the pending implementation date of May 1, 2009.

The lawsuit was filed when home prices were being inflated and foreclosure rates were starting to rise. Freddie Mac states on their Web site that the HVCC will, “enhance the independence and accuracy of the appraisal process, and provide added protections for homebuyers, mortgage investors and the housing market.”

Mortgage brokers traditionally order the appraisal required on a mortgage transaction. The HVCC now requires the appraisal to be ordered by the lender or a third party authorized by the lender.

This will impact mortgage brokers, since according to the National Association of Mortgage Brokers, brokers currently account for over half of the mortgages originated in the United States. The HVCC will not allow brokers to select, recommend, or influence the selection of any appraiser. Brokers are also not allowed to have substantive communication with the appraiser or have any influence on valuation.

Another provision required under the HVCC requires the lender to provide a copy of the appraisal to the borrower. Currently, a lender is required to provide the borrower with a copy of the appraisal upon request. After the implementation date of the HVCC, borrowers need to be provided with a copy of the appraisal at no additional cost at least three days prior to the loan closing.

Lenders must also randomly select 10 percent of appraisal reports for a required quality control test. The appraisal reports include automated valuation models, broker’s price opinions, or any other valuation. Any unusual findings or negative information by the lender needs to be provided to Freddie Mac or Fannie Mae.

Praedo Institute has been offering mortgage and real estate education to industry professionals since 2003. Online courses are available to fulfill pre-licensing and continuing education requirements. Education courses were first offered in Utah, but Praedo Institute has now expanded to assist industry participants to comply with education requirements for multiple states. Praedo Institute works closely with industry and state regulators to educate individuals of any changes or updates.