Archive for September, 2013

MMRecap for Sept. 30th

Posted by Joel pate in Uncategorized. Tagged: , , , , , , , , ,

Last Monday stocks fell, but so did Treasury yields. The catalysts for the movements were the possibility of a government shutdown and the possibility of a budget battle that, if unresolved, could lead to default.
These are serious issues, and because of the status of the U.S., countries around the world could be affected by the outcome. Each of the three main stock indices suffered considerable losses. The only winner — and it wasn’t big — was the 10-year yield, which fell to 2.71% from 2.73%. There were no economic reports on Monday.

Stocks, oil, gold and Treasuries opened down again Tuesday, but the decline in the 10-year yield was notable, considering how yields have fared recently. It fell to 2.65% from 2.71% and closed there. The government’s dual problems with the debt ceiling and budget cuts continued to rattle Wall Street.

The Case-Shiller housing price index in July rose 1.0% from the previous 0.7% increase in June, which was good news, but not a market-mover. The consumer confidence index for September dropped to a lower-than-expected 79.7 from a revised 81.8 in June. This wasn’t received well.
When the markets closed, stocks were off their morning lows, but only the Nasdaq ended in positive territory, gaining 0.8%.

Two economic reports, released Wednesday morning, had little impact on stocks. Durable goods orders in August were up 0.1%; that doesn’t appear to be a big deal until you realize they were down 8.1% in July. Durables, excluding transportation, fell 0.1%, but that was better than the 0.5% drop the previous month.

New home sales soared in August, reaching an annual rate of 421,000 units. That was better than expected, up from the previous 390,000 units and up 13% from one year ago. In addition, there has been a significant drop in foreclosures, and 2.5 million homes are no longer under water. The housing industry is definitely looking up, and the 10-year yield is moving down. Yields should stay on the low side as long as the nation’s financial future remains uncertain.

When the bond market closed, the 10-year had fallen again — this time dropping four basis points to 2.61% — the lowest it’s been since August 12. Stocks struggled again, with the major indices closing in the red. The Dow fell 61 points, or 0.40%. The Nasdaq was down 0.19%, while the S&P slid 0.27%.

On Thursday stocks edged their way into positive territory with a whimper, not a bang. After five days of losses it was time. Initial jobless claims for the week ended Sept. 21 dropped to 310,000 — 5,000 fewer than the previous week. The number was roughly in line with recent claims. It was followed by the final estimate for 2nd quarter GDP which came in unchanged at 2.5%, as forecast. The final report, pending home sales in August, actually declined a tad, but not as badly as expected. Pending sales fell 1.6% — slightly lower than the 1.4% drop in July. Analysts were way off, forecasting a 2.4% decline.

Stocks ended in positive territory, so the 10-year yield took a slight hit. It rose three basis points to close at 2.64%. Nasdaq was the big winner, gaining 0.70%. Both the Dow and the S&P 500 added about 0.36%.
Better-than-expected economic reports were unable to pull stocks out of the red zone on Friday. The first was personal spending/personal income for August. Both categories came in above expectations, with spending up 0.3% and income rising 0.4% — good news for the economy. The PCE, a major inflation guide, edged up to 0.2% from the previous 0.1%, but it’s a long way from worrisome.

This was followed by the Thomson-Reuters/University of Michigan final consumer sentiment survey for September. It rose to a better-than-expected 77.5 from the previous 76.8. Stocks again failed to be impressed; but the 10-year yield, which opened down three basis points, held at 2.61%.

Treasuries held their ground, and then some. The yield edged down two basis points to close at 2.62%. Stocks, however, were hit hard. The Dow lost 70.06 points, or 0.46%, followed by the S&P 500, which fell 0.41%. The Nasdaq sustained a loss of only 0.15%.

The Mortgage Bankers Association reported that applications rose 5.5% during the week ended Sept.20 from the previous week, while the purchase index jumped 7% — the highest it’s been since July. Refis rose 5.0%, but their share was unchanged at 61%. The 30-year average contract rate on a conventional conforming loan fell to 4.62% from 4.75%.
This week there is at least one report scheduled every day, but the focus will remain on the nation’s budget.

Today’s lone report, the Chicago PMI index on September manufacturing conditions, is expected to climb to 54.0 from 53.0. Although good news for the beaten-up manufacturing sector, it’s unlikely to affect trading.
The ISM index on nationwide manufacturing conditions in September, due Tuesday, should dip to 55.0 from the previous 55.7. That would not likely affect the markets. Nor would the 0.6% increase in construction spending in August, although it would be the second consecutive 0.6% rise, which can’t be ignored.

On Wednesday, ADP, the payroll processing giant, will release its data on the number of new jobs filled in September. Analysts are expecting 175,000, which would be somewhat higher than the 169,000 jobs added in August. This could push the 10-year yield up a notch or so.
Thursday features first-time jobless claims for the week ended Sept. 28, and they are expected to rise. Analysts believe 327,000 will be added, versus 309,000 the previous week. That could make Treasuries attractive to some buyers. Other reports include factory orders for August, which are expected to rise 0.3%. While that doesn’t seem like a big deal, they were down 2.4% in July.

The final release, the ISM index on the service sector, could fall to 56.9 from 58.6. While the service sector employs huge numbers of workers, many of them have low-paying jobs in the hospitality and retail sectors, so their income doesn’t grow the economy.

The monthly employment report for September is due Friday. Analysts are saying 180,000 new jobs will have been added to payrolls. That would be a whole lot better than the 152,000 added in August. The unemployment rate is also expected to fall to 7.3% from 7.5%. While, if correct, those are decent numbers, they still lag the data the Fed wants to see before tapering begins.

Realtors, Homebuilders, and Manufactured Home Dealers Are Losing Money Because Some Loan Originators Have Not Embraced Pre-Underwriting Homebuyer Development

Posted by Joel pate in Mortgage Loans. Tagged: , , , , , , , , , , ,

“Realtors across America tell me that their loan originator is doing everything possible to get every prospect qualified, when in fact, that is not the case. Yes, they use the “what if simulator” provided by their credit report provider, proven in too many cases to be inadequate. In fact, loan originators normally turn down 10-15% of consumers during the pre-qualification process whom end up purchasing a home from another realtor within 12 months”, according to 27 year industry veteran Joel S. Pate of Mobile AL.

“Realtors, Homebuilders and Manufactured Home Dealers, work too hard, spend too much on advertising, not to require their loan originators, embrace the process of Pre-Underwriting Homebuyer Development” said Pate at the Annual Convention of the Alabama Mortgage Brokers Association meeting in September, 2013.

As a recent study by the Federal Trade Commission proves “the number of errors on credit reports (SIC) is eye opening,” according to Howard Shelanski, Director of the FTC’s Bureau of Economics. He went on to say, “The results of this first of its kind study make it clear that consumers should check their credit reports regularly. If they don’t, they are potentially putting their pocketbooks at risk.”

“Loan Originators have been taught by credit report providers that there is nothing you can do to improve a consumer’s credit; that credit reports are materially accurate and that nothing but time can improve a consumer’s credit report,” according to Pate.

Joshua Carmona, Vice President and founder of, the credit repair industry leading provider of software and outsource services, “With an estimated of 2,000 negative, inaccurate and unverifiable trade lines entries repaired from consumer credit reports per week, it is hard to believe that an consensus can be true. We see errors on credit reports every day that are fixed or removed by the data furnishers and the credit reporting agency’s so that the consumer can go on to purchase a home sooner rather than later. Without this work, not only the consumer won’t be able to purchase a home, but the builder, seller, realtor will miss out on a transaction.”

Carmona further stated, “The Consumer Data Industry Association industry report released in May 2011 estimates that 90-98% of credit reports contain no errors, and for that, the industry should be applauded. They have a very complicated task and they are doing it better every day. But, that is little conciliation for the individual consumer that cannot purchase a home, get a car loan, or even a job, because of an error on their credit report. We work diligently every day for that mother or father.”

Pate calls on all Realtors, Builders and Manufactured Home Dealers to immediately have a conversation with their loan originators about these findings and to determine if in fact the originator is actually using all of the tools, resources and services available to help the consumer to not be one of the unfortunate statistics. maintains a list of credit repair advisors that you can refer your home-buying customers to in every market throughout the United States. To have refer a Score Way Credit Repair Business associate just call (877) 876-5921 or visit for more information.

Guide clients to correct reporting errors to qualify for home loans

Posted by Joel pate in Mortgage Loans. Tagged: , , , , , , , , ,

The American dream of homeownership is bubbling up again for many consumers. By aligning yourself properly, your mortgage brokerage or bank will be able to help these families make sound homeownership decisions while also building a profitable line of business for your organization. These future homebuyers are saving money, being careful about expenditures and working to rebuild their credit through wise decision making.

One of the last steps that’s keeping these consumers out of your office and away from the closing table, however, is the inaccurate and unverifiable negative information that’s on some consumers’ credit reports, information that’s a violation of the Fair Credit Reporting Act. The Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau have released recent reports that provide substantial evidence about American consumers’ rights being violated in this regard. Equally as troubling is the fact that many consumers apparently are having difficulty correcting such errors.

According to a federally mandated study by the FTC this past February, “Five percent of consumers had errors on their credit reports that could result in less favorable terms for loans.” The FTC study, in which participants were encouraged to use the Fair Credit Reporting Act process to resolve any potential credit-report errors, also found several other intriguing statistics. For instance, as quoted in the report:

• One in four consumers identified errors on their credit reports that might affect their credit scores.

• One in five consumers had an error that was corrected by a credit- reporting agency after it was disputed on at least one of their three credit reports.

• Four out of five consumers who filed disputes experienced some modification to their credit report.

• Slightly more than one in 10 consumers saw a change in their credit score after the credit-reporting agencies modified errors on their credit report.

• Approximately one in 20 consumers had a maximum score change of more than 25 points and only one in 250 consumers had a maximum score change of more than 100 points.

Although all of these findings are interesting in and of themselves, you may find yourself wondering about an even more thought-provoking matter: What happened to the consumers whose errors were not corrected or corrected with only one of the bureaus?

Further, what are some of the specific reasons why inaccuracies exist in these consumers’ credit reports?

Common issues

Although some consumers have bad credit because they simply do not pay their bills on time, many others are in their predicament because of job loss, medical problems or the death of a partner — the same historical reasons why many consumers default on home loans. These extenuating circumstances sometimes can be explained and understood by your underwriter, however.

Regardless, these initial defaults are bad enough and should be reported by the credit-reporting agencies. To a large extent, this simply is a major part of the process that keeps the credit and banking markets intact. If, however, the original creditor is showing a balance but has sold that balance to a collection company — and if the corresponding collection company also is showing the same balance — then there is an error in the reporting on the consumer’s file.

In other words, the consumer does not owe the same amount to both companies; the consumer owes the given amount to the collection company, and the original creditor must report the balance as $0 after the account has been resold to the collection agency. This violation of the consumer’s rights may occur more frequently than many mortgage professionals realize, and consequently, the given consumer will have a difficult time qualifying for a home loan until all of the items on the report are accurate.

Similarly problematic are the credit issues caused by identity-theft or identity-confusion, problems that also may be more common than some mortgage brokers and originators realize. For instance, when Hispanic consumers use both their father’s last name and their mother’s maiden name, those consumers may encounter trouble because some credit applications in the United States simply don’t accept two last names. In turn, this can cause confusion among the credit-reporting agencies, resulting in a blended file with other family and non-family members who use similar names.

Embracing Pre-Underwriting Home Buyer Development

Although the credit-reporting agencies tell consumers that they can repair their own credit and don’t need to hire a professional, it may strike some as interesting that even the FTC used a trained “study associate” to assist its sample of 1001 consumers to dispute the errors on their credit report, according to the executive summary of the FTC’s February study. Regardless, it can be difficult for average consumers to navigate their credit reports and the solution processes by themselves. In addition, many mortgage brokers and originators may be uncomfortable in assisting consumers with their credit reports, as they do not have sufficient training to do a good job for their clients. Mortgage professionals should know, however, that several training resources are available to them, including continuing-education courses, certifications from industry websites, trade associations and industry training companies.

In today’s market, potential homeowners are increasingly interested in purchasing a home that they’ll be able to afford down the road. They need the assistance of credit and mortgage professionals to guide them to the closing table. Mortgage company owners and lenders should realize that the goal of credit repair is not to help consumers purchase homes they cannot afford, but to assist them in accessing the credit markets with the credit that’s legally due to them under federal law.