The Last Housing Finance Roundup Of 2019



Lew Sichelman is a seasoned writer with 50 years of covering the housing and mortgage markets under his belt.

In clearing off my desk with the New Year fast approaching, I found these items of interest:

Massachusetts duo implicated in fraudulently making money off of short sales

Retail homebuyers and sellers aren’t always the sole target of criminal schemes. Here’s a reminder that real estate professionals can be too. Even an occasional lender can be the target.

Most recently, the principal and co-founder of a Massachusetts short sale assistance company pleaded guilty in connection with defrauding mortgage lenders and investors out of nearly $500,000 in proceeds from about 90 short sale transactions. Jaime L. Mulvihill, a co-founder of a company called Loss Mitigation Services in North Andover, Mass., pleaded guilty to conspiracy to commit wire fraud before U.S. Senior District Court Judge Rya W. Zobel. Sentencing is scheduled for February 25, 2020. Mulvihill was charged on Nov. 8, 2019, with alleged co-conspirator and Realtor Gabriel T. Tavarez.

The federal Department of Justice charged the duo with defrauding Fannie Mae, Freddie Mac and the Department of Housing and Urban development out of nearly half-a-million dollars from such transactions.

Their scheme, which ran between 2014 and 2017, allegedly stole undisclosed and improper fees from mortgage lenders in connection with sales of houses facing foreclosure. Their firm Loss Mitigation Services, purportedly acting on behalf of underwater homeowners, negotiated with mortgage brokers and investors to gain their approval of short sales in lieu of foreclosure.

The duo pocketed money from an unapproved three percent “seller paid closing cost,” or “seller concession,” on each short sale transaction above the fees paid to real estate agents, and others involved in the transactions by falsifying contracts and documents in the transactions, according to court filings from the Justice Department. Tavarez has not plead guilty as of press time and declined to comment when reached by Inman on the phone last week. They would tell mortgage services and investors that buyers of homes were financing their purchases and provided fraudulent mortgage approval letters and contracts when in fact the buyers had agreed to pay with cash.

House resurrects mortgage-related tax deductions and keeps national flood insurance program on life support

The week before Christmas, the House cleared an appropriations measure that resurrected two mortgage-related tax deductions and keeps the National Flood Insurance Program alive for nine more months.

On a 297-120 vote, the lower chamber renewed the write-off for mortgage insurance premiums as well as the tax break on forgiven mortgage debt. Both provisions ran out at the end of 2017, but the appropriations bill reinstates them for 2018 and 2019 and extends them through 2020.

The measure also keeps the NFIP afloat through next September. Without the extension, the program would have ended on Dec. 20, two days after the bill’s passage.

Prognosticators believe Senate will approve a companion bill.

Federal regulators give a cautionary thumbs up to using ‘alternative’ credit data to judge creditworthiness

Five federal financial regulators have given a green light – well, more like a cautionary yellow – to the use of alternative credit data that lenders can use to make their decisions.

The Federal Reserve Board, Consumer Financial Protection Bureau, Federal Deposit Insurance Corp., Office of the Comptroller of the Currency and the National Credit Union Administration said that using tell-tale signs of good credit will help expand access to credit and enable consumers to buy more at more favorable pricing and terms. It should also allow lenders to make more accurate and speedier credit decisions. These signs include  things such as rent, cell phone and utility payment patterns.

Alternative data is considered information not normally covered in traditional credit reports or typically provided by customers. Lenders can use automation to perform a cash flow analysis to evaluate a borrower’s capacity to meet payment obligations. The evaluation is also derived from a consumer’s bank account records.

Mortgage information provider reveals income requirements for homeownership around the nation

Homebuyers will need an annual income of $104,000 to purchase a median price house in Boston. But they’ll need less than half that – $45,100 – to purchase a median price place in Buffalo, just 450 miles away.

You’ll need annual earnings of $40,500 to do the same in Cleveland, and $40,900 in Memphis. And how about $38,000 or so in Oklahoma City and Pittsburgh? But in San Jose, it takes $229,000 to afford the median price house.

That’s almost twice as much as what’s necessary in Los Angeles ($124k) and San Diego ($122,600.)

These numbers come from an expanded analysis from HSH Associates, a New Jersey mortgage information company, of what it takes to buy houses in the top 50 markets nationally.

And unlike most other similar calculators, it takes into account not only the principal and interest on your mortgage but also property taxes and homeowners insurance. That’s the so-called PITI. People who take into account just the Principal and Interest portion of the calculation usually end up buying themselves short, because most lenders also require that borrowers also pay their Taxes and Insurance every month as well.

New form becomes mandatory for lenders in November

The latest version of the Uniform Residential Loan Application, or URLA, is now scheduled to become mandatory on Nov. 1, 2020. But lenders can start using the application for submissions to Fannie Mae and Freddie Mac in September.

The new URLA had been set to become compulsory earlier this year, but the agencies’ regulator the Federal Housing Finance Agency had misgivings about adding a question regarding would-be borrowers’ language preferences and proficiencies. That question has now been removed.

*Finally, this is my last column for Inman. You can continue to follow my work here. Or just Google my name.

Lew Sichelman is a seasoned writer with 50 years of covering the housing and mortgage markets under his belt. His biweekly Inman column publishes on Tuesdays.

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