Lender Questions-My Interview with Dean Wong at First Capital Mortgage

It is with great pleasure to post my Interview with one of my favorite Lenders Dean Wong at First Capital Mortgage. (His contact is at the end of my post).
Tom:
Hello Dean. How are you doing?
Dean:Great Tom
Tom:
1).I have heard that there are some changes in the Appraisal Process for new sales.
What are they and how does that impact my Buyer and Seller Clients?
Dean:Correct Thomas, since May 1, 2009 appraisals must be performed by the bank’s appraisers so we as lenders can no longer order appraisal reports from independent appraisers.  The impact is that it’s difficult to have short contingency periods as we don’t even know who the appraiser is to rush until the report gets back to the bank’s underwriter.  With FHA loans, I can still order my own appraisals so I can close FAST w/ FHA.  This new rule is called HVCC (Home Valuation Code of Conduct).  
Tom:
2).Can you explain the new policy related to the Good Faith Estimate on front and back end?
Dean:As you all probably know, MDIA (Mortgage Disclosure Improvement Act) was put into place last Friday July 31, 2009.  Below are the main bullet points of this act that can impact your contingency periods and close of escrow dates.  
So CALL me if you or your clients can’t afford to lose 3 days on the front end or 7 days on the back end for your escrows.  
Early Disclosures: A lender must provide a borrower with an initial Good Faith Estimate within three business days of receiving the borrower's written loan application as specified.  For this provision, a "business day" is generally defined as a day on which the lender's offices are open for business. 
Upfront Fees Restriction: Neither a lender nor any other person may impose any upfront fee (Pre-approval, Application, Credit report, Appraisal, etc) on the borrower until the borrower has received the early disclosures in person or, if mailed three business days after the early disclosures are mailed.  For this rule, a "business day" is defined as all calendar days except Sundays and legal public holidays as specified. 
Re-disclosure Requirement: If the final Annual Percentage Rate (APR) at loan consummation varies more than 0.125% (or 1/8 of one percent) from the initial APR on the early disclosures of a regular transaction, the lender must provide the borrower with a corrected disclosure at least three business days before the loan is consummated.  For purposes of this waiting period, a "business day" is defined as all calendar days except Sundays and federal legal holidays as specified. 
Three-Day Waiting Period: For corrected disclosures, a lender cannot consummate a loan until three business days after the borrower receives the corrected disclosure in person.  If the corrected disclosure is mailed, the borrower is deemed to have received it three business days after it is placed in the mail.  A borrower may waive this waiting period in writing in case of a bona fide personal financial emergency, such as an imminent foreclosure sale. 
Seven-Day Waiting Period: A lender must wait seven business days after providing the early disclosures before consummating the loan.  For purposes of this waiting period, a "business day" is defined as all calendar days except Sundays and federal legal holidays as specified.  A borrower may waive the waiting period in writing in case of personal financial emergency, such as an imminent foreclosure sale.
Tom:
3).My clients have told me they want to work with a "Direct Lender"...what is the difference or risk and are you a direct lender?
Dean:I’m actually both a direct lender and a mortgage broker. I direct lend for our parent company PHH Mortgage as well as work w/ A rated banks like BOFA, CITI, WELLS FARGO, METLIFE, etc on a wholesale level so my terms are usually better by .125-.25% on rate than if one went into a storefront branch to secure a loan.  People feel that if they go to the branch that they bank at they will get better terms which is not the case as they’ll be paying “retail.”  They also feel that if they’ve been a customer of a particular branch for years that they won’t have to provide as much documentation which is also untrue.  Keep in mind that all loans get underwritten, NOT by the loan officer, but by an underwriter who does not know the history of a borrower and renders decisions based on what’s provided in one’s file.  In short, your clients have MORE options and will get better terms with a broker than w/ a storefront lender.
Tom:
4).Do you still pay for my clients Appraisal?
Dean:This is case by case still.
Tom:
5).Where are rates headed?..where will they be next year??(I saw an article that predicted they will be 10%).
Dean:Wow, probably the hardest question that I get daily. It’s very hard to say Tom. Much of it depends on the real estate #’s as well as our overall economy, inflation and unemployment.  If I had to bet, I’d say we’ll be higher next year than right now as our economy is still sluggish. Once the stock market rebounds, rates will increase.  I’d say mid – high 6’s by end of next year IF I had to guess….  But don’t hold me to this please.
Tom:
6).Are escrow periods still 30 days?
Dean:Yes, with me I can still do 30 days as long as all parties act FAST. This entails committing to a lender ASAP, providing updated financials ASAP, open escrow ASAP, order appraisal ASAP etc. IF so, YES I can still deliver in 30 days.  Most of your smaller brokerages or a big bank most likely will not be able to perform in 30 days anymore. 
Tom:
Thanks Dean. Any thing else you think my clients should know?
Dean:Make sure your clients are working with a true professional w/ experience.  In this lending climate, I’d be very wary of out of state lenders or lenders who are new in the business.  They may be looking at national guidelines not knowing the complexities of CA or the local Los Angeles market and it’s different requirements. I see this a lot Tom where I’m asked to come in at the 11th hour to save a deal.  
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Dean Wong can be reached at:
http://www.firstcapitalmtg.com/wong.shtml
Dean Wong:
Phone: (310) 656-8210
Fax: (310) 576-8073
Cell: (310) 344-3252
Email: dwong@firstcapitalmtg.com