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Recommendations:

I. The City Administration Should Maintain Cl

ose Attention To The Authorization Of Overtime

Overtime is an area that requires constant attention

and management by the city administration, based on

the substantial cost associated with this

form of compensation funded by taxpayers.

This office has seen a continued pattern into 20

10 of individuals accumulating overtime when other

individuals with like titles or responsibilities receive

none. This raises immediate questions as to the

allocation of work to staff. It also raises questi

ons as to the fairness of handing out overtime to specific

individuals.

And lastly, it raises repeated questions as to why an

y administrative or clerical staff would, in any

situation, receive overtime on a re-occurring basis.

During any fiscal year, regardless of the actual amount

budgeted for overtime, department heads should

make a concerted effort to bring overtime costs

in under budget, as a normal course of doing business.

II. Non-Essential Overtime Should Be Kept To A Minimum

Innovative solutions should be explored to minimi

ze and eliminate overtime for non essential services.

The Office of City Auditor pulled titles in its review

of overtime. Administrative & Clerical titles such

as “administrative assistant”, “paralegals”, “stock

clerks”, “store keepers”, “information aides”, and

“typists” ………..

all incurred overtime

.

The office of the City Auditor could not come to

a conclusion that would justify such titles receiving

overtime or why some individuals received con

tinuous overtime every single pay period.

The administration and the Council need to ask depa

rtment heads why individuals in these titles are

receiving overtime.

Finally overtime in non-essential services should be

eliminated, while overtime in operational services

must continue to be managed on a daily basis.

Philip J. LaTessa

Syracuse City Auditor

City of Syracuse

September 28, 2010

fha flipping

FHA flipping policy

In an effort to stimulate repairs and sales in neighborhoods hard hit by the mortgage crisis and recession, the FHA waived its standard prohibition against financing short-term house flips. Before the policy change, if you were an investor or property rehab specialist, you had to own a house for at least 90 days before reselling — flipping it — to a new buyer at a higher price using FHA financing. Under the waiver of the rule, you could buy a house, fix it up and resell it as quickly as possible to a buyer using an FHA mortgage — provided that you followed guidelines designed to protect consumers from being ripped off with hyper-inflated prices and shoddy construction.

FHA Flipping

FHA flipping policy

In an effort to stimulate repairs and sales in neighborhoods hard hit by the mortgage crisis and recession, the FHA waived its standard prohibition against financing short-term house flips. Before the policy change, if you were an investor or property rehab specialist, you had to own a house for at least 90 days before reselling — flipping it — to a new buyer at a higher price using FHA financing. Under the waiver of the rule, you could buy a house, fix it up and resell it as quickly as possible to a buyer using an FHA mortgage — provided that you followed guidelines designed to protect consumers from being ripped off with hyper-inflated prices and shoddy construction.

fha flipping

FHA flipping policy

In an effort to stimulate repairs and sales in neighborhoods hard hit by the mortgage crisis and recession, the FHA waived its standard prohibition against financing short-term house flips. Before the policy change, if you were an investor or property rehab specialist, you had to own a house for at least 90 days before reselling — flipping it — to a new buyer at a higher price using FHA financing. Under the waiver of the rule, you could buy a house, fix it up and resell it as quickly as possible to a buyer using an FHA mortgage — provided that you followed guidelines designed to protect consumers from being ripped off with hyper-inflated prices and shoddy construction.

Removing barriers to getting a mortgage

Removing barriers to getting a mortgage

HUD has been talking to their counterparts in the government about the reduction in FHA loans.

Jamie Dimon from JP Morgan stated in a conference call that perhaps its’ time to re-think doing FHA loans.

Mortgage Bankers are looking at alternatives to Fannie Mae and Freddie Mac loans.

Why is all this going on?

Lenders are tired of being sued for lending. That one-sentence probably best sums it up. The days of subprime mortgages and bad lenders were cleansed when the market crashed and rinsed and washed a second time with some valuable Frank-Dodd reforms.

However, the US government continues to sue lenders and announce large settlements, regulators continue to overzealously enforce provisions that even they do not fully understand and banks and bankers seek to settle because the cost of litigating is high, but to litigate your regulator is toxic.

What choices do lenders have? Lend without using Fannie, Freddie or FHA. Tighten lending standards above and beyond what CFPB requires and deny credit to anyone who would have gotten a loan as recently as 2011. And, lenders now over underwrite and over request documentation while over disclosing and demanding proof from the borrower that they received the disclosures to ensure they are in compliance.

So, HUD and Fannie have taken a step back. HUD is in the process of re-writing their FHA lending requirements and Fannie and Freddie are looking at providing a more concise lending matrix that is very clear about how lenders can protect themselves from claims over bad loans.

The claims over bad loans are a big issue to lenders. Fannie, Freddie and HUD all look to kick a loan back to the lender for the smallest of things when that loan is, typically, found to be 30 or 60 days late.   The late payment status of a particular loan triggers a complete review of the loan. Any “t” not crossed or “I” not dotted triggers buy back demands. This then triggers lenders to demand buy backs from other lenders and the game of “Hot Potato” with Mr. and Mrs. Smith’s mortgage begins. As the game heightens and the loan gets sent from lender to lender back down the chain, the borrowers find themselves getting notices that their loan payment is not due to lender X, it’s due to lender Y now and maybe in 3-months it may be due to lender Z.   This hurts everyone and typically is caused by Mr. Smith forgetting to make the mortgage payment and everyone from Fannie to the small mortgage banker that originally originated the loan getting involved in who has what exposure.

Now, Fannie, Freddie and HUD realize that the mortgage market has gone too far in tightening credit. They don’t cite the reasons, but the reasons are clearly outlined above – they and the government went too far and became too punitive following the market crash of 2008 and 2009.

To ease the situation Fannie, Freddie and HUD know they have two issues to attack. One is the reduction in credit to individuals that is pushing potential homeowners into the rental market and slowing the home buying market. The second is being clear to lenders that if they lend in good faith and follow the rules, they will not be held accountable if a loan becomes non-performing.

Recently, Fannie and Freddie announced that they were working to clarify what constitutes a buy back. In 2013 they stated that no buy back would be demanded if the borrower did not miss any payments for three years. In May they announced that the borrowers could miss two nonconsecutive payments within three-years without triggering a buy back demand.

The agencies are now working on other issues including small mistakes (minor clerical errors or missing paperwork that does not alter the soundness of the underwriting decision made while processing and approving the loan).   That’s a big concern for lenders because many banks and agencies will look for a missing pay stub or a missing disclosure to trigger a buy back on a loan that they just want to find a reason to demand it be purchased because they simply do not want that loan.

Also, fraud is coming into view in the horizon. They are finally looking at what constitutes fraud and the definition of that.   This is an important point because lenders have met and exceeded due diligence in making a mortgage to a borrower only later to find out that the borrower was slick in providing false and misleading information to the lender to induce the lender to provide a mortgage. This has led many lenders to close, others to be wrongfully accused of fraud and yet still others to lose a lot of money on fraudulent loans. And, this problem, comes from consumers and individuals outside the mortgage industry. The general public has been sold the story by the US Government that the bad guys are the mortgage professionals and they do not know the story of the bad person who may be living next door to them that pulled off a sophisticated mortgage fraud scheme to acquire their home (which, is the equivalent of stealing hundreds of thousands of dollars from a bank but since it was not done with a stick up they are not, in many cases, being prosecuted. Instead, the lenders is being scrutinized by investigators from three, four and five federal agencies looking for anything to indict a company or staff of a felony; when in fact they were a victim. Most people don’t view lenders as victims following the outrage of the crisis and the shrill voice of uniformed politicians throwing red meat to the angry voter)

So, how does the government provide lenders with the protections that they need so that they can make solid, good loan decisions based on information provided to them and received by them using third party tools to verify said information without fear of being second-guessed later on?

How does the government reduce angst by lenders so that they loosen up credit?

And, how does the government address the fraud question and determine who is culpable (and this is a sticky one because, in the defense of the government, anyone could have committed the crime since there’s gain to be had for everyone in the process from the lender to the loan officer to the borrower to the attorney to the realtor and so on).

Well, that process has begun.

Fannie & Freddie are coming out with new “road rules” that address buy backs and addresses expanding credit to borrowers with lower down payments. And, they’ve begun to attack the buy back issue along with the fraud issue.

HUD also has begun that process

So, it may be a new day in the mortgage industry where saner heads prevail and the adults take control of the room from the crazy kids who ran rampant.

Perhaps returning to vanilla products that were available before Clinton pushed for expanded home ownership is a sound decision. Perhaps throwing in a few more products like one or two expanded ratio products geared specifically to LMI borrowers as defined by HUD medium incomes, issued by Fannie/Freddie is wise. Sticking to basic DTI’s and sticking to basic credit requirements is key.

In 1995 the mortgage market began to see the lugs that held the wheels to their cars loosen when first the government announced that certain minorities lacked access to traditional credit and an underwriter could use alterative credit sources – and such began the process of tiered credit (Tier I, Tier II and Tier III credit) that could be used instead of traditional credit reports.

That lead to tossing the basics out of underwriting and off loaded tax returns, eliminated proving income, went off only credit if the borrower put “enough down” and lent to borrowers at higher and higher DTI’s to get the coveted CRA’s from the government.

That was insanity. And, that led to the subprime market. And, that is a story the government does not want told – its’ to arcane a story to tell and the public would prefer to dumb down what happened and blame the lenders. This works for the likes of Barney Frank who pushed for the very rules he railed against in hearings in 2008 and 2009.

Maybe now we realize that too far left and too far right is simply too far. Perhaps we now get that lending soundly means lending rules should be clear, concise and across the board. The basic underwriting tools used from the 1990s were sound,: they should be used universally.

Borrowers who don’t meet the criteria of vanilla conforming or vanilla govy loans or even vanilla expanded credit loans (lower LTV) should be viewed as tomorrow’s borrower. Not today’s reject or the need for some politician to interject about unfair and discriminatory lending demanding new lending laws.

Lenders and agencies need clear rules of the road that dictate when a loan does not conform to agencies guidelines or regulations that then does trigger a buy back.

And, regulators and the government need to let people know that they will prosecute Joe Blow for lying on his mortgage application and getting a mortgage in addition to prosecuting rings of thieves who do so and rings of those in the industry who do so.   Breaking lending laws is not just the provence of those inside the lending industry.

Fear of Deflation

The US stock market tumbled, long term bond yields (US Treasuries) dropped to levels not seen since 2013 – causing mortgage rates to go downward.

What is causing the turmoil?  What are the implications?

A big immediate concern is both Europe and Asia – where the economies seem to be stammering. Italy and France both released budgets that do not address spending cuts nor income tax increases – believing they need to stimulate their economies in contrast to what northern European countries in the Euro.  Those countries believe in a more conservative approach, cutting spending and forcing reforms to fix their economies long term.

Meanwhile, oil prices continue to drop and ebola has spread to the US while the there seems to be no real coalition in the Middle East where wars rages onward.

As stocks go down, oil prices decrease, bond yields drop – a new fear has emerged according to experts.  It’s deflation.

But, not all is doom and gloom.  Dropping oil prices mean lower fuel costs for consumers in the US, which in large part is driven by the increased production of oil and gas in the United States.  Additionally, drops in bond yields bring forth lower long term interest rates.  Those individuals who missed out on re-financing their mortgages in prior year may want to think about it again – saving money on large debts can be significant.

Regulations push costs up 30% according to Fannie Survey

Most lenders believe new regulations have had “significant” impact on their business, according to the Third Quarter Mortgage Lender Sentiment Survey of senior mortgage executives conducted by Fannie Mae.http://www.fanniemae.com/portal/about-us/media/commentary/101514-huang.html

In particular, lenders reported a nearly 30% median increase in compliance costs compared with 2013. Lenders also reported increased reliance on outsourcing due to increased regulations and associated costs, particularly in relation to post-closing Quality Control review and servicing.

The mortgage industry has faced several significant regulatory changes in recent years.

The Office of the Comptroller of the Currency, the Consumer Finance Protection Bureau, the Federal Reserve, and the Federal Deposit Insurance Corporation all  issued new rules and regulations that affect the mortgage industry.

Philip LaTessa of The Funding Source: Tips to Consider When Purchasing a Boat

Philip LaTessa of The Funding Source, an individual who has successfully started and ran a number of businesses, finds that boating is one of his favorite activities. He finds peace and calm in the solitude of being on the water. Due the considerable experience he has with boats, Philip LaTessa of The Funding Source is a prime candidate to lay out a few tips that should be in one’s mind when purchasing a boat.

Philip LaTessa The Funding Source

First, says Philip LaTessa of The Funding Source, you must decide whether you want a boat you can take out on the sea or one that you can use mostly on lakes and rivers. Due to the rougher elements of the ocean as compared to a lake, a seafaring boat will bend accordingly more expensive. If you plan on only boating on lakes and rivers, it will serve you well to save your money for accessory expenditures.

The second thing you need to consider when purchasing a boat, says Philip LaTessa of The Funding Source, is whether you want to buy a new or used one. A used boat will obviously be more inexpensive and even might come with certain accessories or amenities included. However, it is important that you have a level of trust with the seller so you can be certain that the money saved will not be outweighed by maintenance costs. In this sense, it would be a good idea to call on the expertise of a friend or family member who is familiar with boats.

Philip LaTessa of The Funding Source is confident that you will not regret your decision to purchase a boat. He believes it will be an acquisition that pays for itself over the course of its lifetime.

 

Philip LaTessa of The Funding Source: The Attractions of Costa Rica

In 2009 Philip LaTessa of The Funding Source, a successful mortgage banker and entrepreneur, was able to accomplish his lifelong goal of visiting every country in Latin America. He is a well-traveled man who has spent considerable time in Europe and the Caribbean as well. One of his favorite destinations in Latin America is Costa Rica.

 

Philip LaTessa The Funding Source

One reason Costa Rica is so attractive, says Philip LaTessa of The Funding Source, is that it offers a wide array of natural beauties. It is surrounded by two oceans; the expansive, mysterious Pacific Ocean and the vibrantly colorful Caribbean Ocean. Sunbathers, boaters, surfers, and snorkelers alike will discover a permanent home on the beaches of Costa Rica. The nation also contains a number of active volcanoes, sure to be at the top of the Most Exotic list of most visitors. Perhaps the country’s greatest attraction, says Philip LaTessa of The Funding Source, is the dense Amazonian jungle that blankets the landscape in life and wonder. The jungle is home to a vast spectrum of animal and plant life, most of which are exotic to the average visitor.

 

Another reason Costa Rica is a favorite destination spot, says Philip LaTessa of The Funding Source, is that its people possess a culture that is rich in history and hospitality. He has found citizens of Costa Rica to be some of the most genuine and welcoming people he has ever interacted with. They are a people who respect the value of integrity and it reflects throughout their culture, says Philip LaTessa of The Funding Source.

Philip LaTessa of The Funding Source: Qualities of a Good Auditor

Philip LaTessa of The Funding Source is a successful entrepreneur who served two terms as the Syracuse City Auditor. He welcomed this role with open arms as it put him in a position to make sure all bodies of government within the city of Syracuse were operating with integrity. Integrity is central to Philip LaTessa of The Funding Source’s goal as a business owner, family man, and community member. As an auditor, he acknowledged that the community was relying on his sense of judgment in their own business operations. Being the Syracuse City Auditor was a demanding job but there were a couple of characteristics he possessed that suited him well for the responsibility.

 

First, Philip LaTessa of The Funding Source possesses a fine attention to detail. A fine attention to detail requires the ability to maintain concentration while pouring over a large amount of information. It is easy to let your concentration wane, but this may result in an easing of your judgment and important information might pass you by, unnoticed. As the Syracuse City Auditor, Philip LaTessa of The Funding Source maintained an excelled standard of concentration because he knew that the livelihoods of his community depended on it.

Second, Philip LaTessa of The Funding Source possesses a strong ambition. Ambition is required to tackle a goal as large as overseeing the auditing of an entire city. A man or woman without a strong ambition will see the task as too overwhelming to complete and lose faith in the operation before it even begins. It takes a man or woman with a voracious appetite and unwavering work ethic to even begin such a task as auditing a whole city. Luckily for the city of Syracuse, Philip LaTessa of The Funding Source possessed both of these qualities and more.