2010 - The year of change in the mortgage industry.

"What doesn't kill you will only make you stronger". That sums up 2010, as it relates to the mortgage industry.

Regulatory changes have:

severely affected the appaisers livelihood. Those who chosen to stay in the industry, have taken a 25% pay cut thanks to appraisal management companies. I am all on board with appraisal assignments being selected at random, but you have to feel badly for anyone who takes that kind of pay cut.

taken a one page good faith estimate that was easily understood and turned it into a 3 page GFE that is so confusing it takes another form to explain to the customer how much money they will need to close and how much the monthly payment will be.

Truth-in-lending reform act: requires lenders to re-disclose after any change a customer makes on their loan that affects the APR by more than .125% and requires them to wait 3 business days before they can close. How does this affect you? Suppose you decide you need to raise your loan amount, and you do not discover the need until the day before you are scheduled to close. Guess what? It probably means you will need to re-schedule your closing because the change will likely change your APR, requiring a 3 business day delay. Can't come in to sign the new TIL and need it mailed to you? Sorry, 6 business day delay.

I know the intent "to protect consumers" is there, but mortgage lenders are not the bad guys the regulators make us out to be. After all, we are not the ones who created the mortgage products that caused the mortgage meltdown, nor did we rate the securities, or sell them on Wall Street.

Unfortunately, the fallout of this is a higher charge to the consumer, the same consumer our government is trying to protect.

Let's hope 2011 brings a little more common sense as it relates to regulatory issues.

Mortgage Helpful Hints

Helpful Hints

MORTGAGE MISTAKES AND SOLUTIONS

You can borrow too much or prepare too little. You can misjudge terms or overestimate your credit. With so much at stake, it's no wonder so much can go wrong.

Applying for a mortgage can be a daunting experience. It's not enough that you're agreeing to take on the biggest debt of your life, one that represents two to three times your annual income. You're also confronted with piles of paperwork, flurries of fees and a tidal wave of terms, from amortization to title insurance, whose meaning is fuzzy at best.

Most people don't understand the loan process. In this confusing and pressure-filled atmosphere, it's easy to make some mistakes. Here are some common ones that lenders and mortgage brokers see, and what you can do to prevent them.

Not fixing your credit

Mortgage brokers say they're confounded at the number of buyers who apply for a mortgage with their fingers crossed, hoping their credit will allow them to qualify for a loan.

Before you even think about applying for a mortgage, obtain copies of your credit report and your credit score. Your credit score is the three-digit number that's used in 75% of mortgage-lending decisions. You can order your credit score from your local mortgage provider or directly from Trans Union www.transunion.com, Equifax www.equifax.com, or Experian www.experian.com.

Doing this at least six months in advance should give you plenty of time to challenge any errors on your report and ensure that they're removed by the time you're ready to apply for a loan. You can also see the legitimate factors that are hurting your score and do something about them, such as paying off an overdue bill or paying down credit card debt.

Not getting pre-approved for a loan

Many first-time borrowers confuse being "pre-qualified" with being "pre-approved." Pre-qualification is a pretty casual process, where a lender tells you how much money you probably can borrow based on how much money you make, how much debt you already have and how much cash you have for the down payment.

Getting pre-approval, by contrast, is a much more rigorous process and involves actually applying for a loan. You typically submit tax returns, pay stubs and other information. The lender verifies the information and checks your credit. If all goes well, the lender agrees in writing to make the loan.In a hot or even warm real estate market, the house hunter who is only pre-qualified is not as appealing as one who is pre-approved. Home sellers and their agents give much more weight to offers being made by buyers who already have a loan lined up.

Borrowing too much money

Many people take out the biggest loan they possibly can, figuring that their incomes will eventually increase enough to make the payments comfortable. But few first-time buyers have any clear idea of how expensive homeownership can be. Not only will you shell out more for mortgage payments than you probably did for rent, but you'll also need to cover property taxes and homeowners insurance, as well as higher bills for utilities, maintenance and repairs than you faced as a renter.

Lenders are perfectly willing to let you overextend, knowing that you'll probably forgo vacations, retirement savings and new clothes for the kids rather than default on your mortgage.

People tend to overbuy and that can really stress family life. It's also a formula for foreclosure.Instead of going to the edge of affordability, consider limiting your housing costs -- mortgage payments, property taxes and homeowners insurance -- to 25% or so of your gross income. That's a much more sustainable level for most people, financial planners say, than the 33% lenders are typically willing to give you.

Not shopping around for rates and terms

If the borrower doesn't know what the prevailing interest rates are for someone with their credit standing they can easily pay thousands of dollars more than they need to. You can see a listing of loan rates by credit score at www.myfico.com.

Even people with a few dings on their credit can often qualify for better loans than they're typically offered. Most of the people being shunted into government loan programs, such as Federal Housing Administration (FHA) loans, would pay less if they used mortgages now being offered by private-sector lenders.