MORTGAGE NEWS!!!!

100% Financing With USDA Changed, But Still The Best Program Out There!

2011-10-11T10:52:00.002-04:00

USDA has come with some small changes to their program, but overall, it is still the best “bang for your buck!”

With the market changing so frequently, I thought it would be a good idea to educate you on the changes to this program so you can better educate your clients and have just more knowledge about the overall program. So here is what changed:

Monthly Mortgage Insurance– Before the end of September 2011, the USDA program did not include monthly mortgage insurance in their payments. Now, effective October 1, 2011, there is a small amount of monthly mortgage insurance that is required in the payment each month. The factor for determining how much is .3%. In comparison to all other programs, this is still very very cheap! For example, on a $150,000 loan, the monthly mortgage insurance would only be $37.50/month. Now compare that to FHA’s mortgage insurance factor of 1.15%, which would be $143.75/month, it is still saving you over $106/month. This is huge in qualifying!!! Your borrower essentially has about $30,000 to $45,000 more buying power when it comes to sales price! HUGE!!!!

Up Front Fee - A lot of the government programs charge what they call an upfront fee. The best way to view these fees are like upfront insurance. They are charging you this fee in case you default, like the millions of home owners who have before with this product. Essentially, you are paying for the transgressions of others! With these fees you have 2 options, you can either pay for it in cash (which no one ever does), or you can finance it into the loan amount. When you finance it in, this will increase your payment by a dollar or two but nothing crazy. USDA used to charge an upfront guaranteed fee of 3.5%, but they have reduced that to only 2%, but added the monthly mortgage insurance to make up for the difference, making the situation for the government even better.

Now this last change was not really posted, but with doing USDA everyday for almost every single client, I have found this change to be very common. USDA makes you run each loan through an automated underwriting system they call GUS. Now GUS focuses on a couple of main things: Property location eligibility, income eligibility, and the hidden front and back end debt ratios. Property location is to make sure the house being purchased is in an eligible area (All of Sussex County is), and there is a website where you can check every property. The income eligibility is to make sure the borrowers do not make more money than the limits allow. There is a website to double check this as well. The Front and back end debt ratios are the tricky part. I have found out that they recently updated the GUS system and made the ratios tighter, meaning they lowered how high you can take them. The front end is the difference maker! They have lowered it to 35%, no if ands or buts about it! This makes it very difficult if you exceed this because you either have to lower the interest rate to get the payment lower or find more income, both options suck!

With these 2 (plus 1 hidden) changes, it will have a significant impact on your borrowers ability to purchase and qualify! Make sure your lender is on top of these changes because it only takes one mess up to lose a client and/or referral for life!

The Time to Move Forward Is Now!

2011-10-10T09:48:00.000-04:00

Stop dwelling on the mortgage meltdown and what you think is standing in your way and go out and starting moving forward with your business today! Start trying to figure out how you plan on moving forward and the steps to get there. Here are a few steps you should consider taking:

1. Join an Association - Standing together is the best way to get things accomplished and a voice heard. You will be able to voice your opinions, hear what others in your profession are thinking, and brainstorm how to help your industry, as professionals, grow! By joining associations, you can also bounce ideas off others professionals and see what others are doing to help grow there business and move forward.
2. Educate Your Partners – Holding seminars is the single bet way to educate your partners. You have complete control on what to discuss and how to relay the message you are trying to deliver. For example, I would hold a seminar for agents and update them on products, programs, and upcoming or changing guidelines so they are aware of what’s going on and can prepare their clients accordingly. The more information an agent has the better they can deliver and prep their clients for future business (hopefully you receive). Also, if seminars are just not your thing yet, try sending out links to helpful programs or business ideas. In my business, I would send out to realtors about Down Payment Assistance programs and how they can recommend this to their clients to help with the cost of buying a home. This makes the agent seem very knowledgeable and who doesn’t like free money right? When they look good, so do you!
3. Mentor Others – Whatever your strengths are (writing, blogging, data management, talking), you need to share these skills with others. By doing this within your industry, you will help rebuild it. I know this seems like helping your competition become as strong as you (which is one reason I do not focus too much on this area), but it is nice to be known as someone who helps and can be relied upon within your own industry. I.E. I would help a first time home buyer seminar or go to a local high school and teach the local youth and financial responsibility and how to keep track of their finances.
4. Educate Yourself – Keeping up on changing products and programs is one way to become a leader in your industry. How nice would it be to be thought of as
”The To Go To Person” in your profession? This is a great way to create more business, but remember when you learn it, you must share it or they will never know you do! Also, try to ask for training materials and continual education courses to attend. This is a great way to refresh the information you already learned and focus in on other stuff you don’t.

The industry is changing everyday, so you need to ask yourself this, “Are you moving with it or being left behind?” The choice is yours!

Fighting Re-Aging… And I’m Talking About Your Credit Here!

2011-10-07T11:03:00.000-04:00

Your credit is the lifeline to homeownership! Making sure it is not improperly impacted by debt, especially old debt, is a very real concern and issue most people are pressed with everyday. Re-Aging debt occurs more often nowadays with all of the debt collectors going after every penny they can obtain. Being a loan officer, this is one issue I make my clients aware of and help prevent and detect the malpractice from occurring.

Re-aging of debt can best be described as when you have outstanding debt either from medical or other creditors and they post the delinquency to the credit reporting agencies and it appears on your credit. Then after it has already negatively affected your credit scores, they either sell it off to another collection agency and it comes up as a new negative trade-line or they do not sell the debt off but wait till you’re trying to purchase something and they quickly report it and create a negative trade-line.

When a consumer defaults on a debt and is report to a credit-reporting agency, the default generally remains on the consumers credit file for seven years and 180 days as permitted by FCRA. The Fair Credit Reporting Act is supposed to be the main line of protection, but with the debt collectors manipulating when the first late payment was actually reported, it is hard for the agency to take action on these debt collectors. What is supposed to trigger when they start and have to end the reporting of the debt is when the first late payment occurred. But determining when this happened is when the re-aging of the debt happens. The abuse can really take an effect to the clients score!

The most common criminals of this abuse are collection agencies (Debt-Buying Companies). When past due debt obligations are sold repeatedly this makes the re-aging effect occur over and over again every time is it sold. The sales of the debt do not give anyone the right to improperly place these new negative trade lines, but it does not stop them from doing so!

Another very common practice for debt collectors is when the debt holder holds back on placing the negative trade line until its research department determines/indicates that the client is trying to buy a house. They do this by purchasing lists of people who have applied for mortgages and comparing them to their own data sheets. If home buying activity is determined, they debt collectors then place the negative trade-lines against the person hoping they have to pay for them first in order to obtain financing for the mortgage. Due to tightening lending standards, most mortgage companies require these debts to be paid off in order to obtain the mortgage. Further, this will have a negative impact on the clients credit score. This creates a situation where the client has to pay the debt holder or negotiate the terms of it to secure the mortgage.

To help prevent these practices from happening to you and your clients, people must monitor their credit reports and what is reporting and what is outstanding. It is imperative that people check their credit reports once a year to make sure nothing is going to stand in the way of their financial goals. Keep copies of any outstanding debt and any proof of when it went delinquent and then use this documentation to request removal from your credit report.

By helping your clients fight the good old fight against creditors and their mischievous methods of re-aging credit, you can keep your clients safe and on the path to financial success!

When Your Past Clients Become Distressed

2011-10-06T11:24:00.000-04:00

For many Americans, the “American Dream” is not a “Dream” anymore, but has become a constant struggle and pain. With high unemployment and home values plummeting all over the United States, many Americans are having a difficult time just keeping up with the payments. When this happens, it is crucial that real estate agents and loan officers come to the aid for their past clients who see themselves in these situations.

When your past clients see themselves in these situations, agents and Loan Officer’s need to come to the forefront and should earnestly attempt to help. This will not only build your reputation as a caring professional, but also will increase your chances of repeat business and referrals.

The best way to tackle this is to establish a network of real estate professionals who specialize in the distressed property market/situation. Make sure you get to know the agents and how they like to handle things, especially in relation to short sales and foreclosures.

You will then need to identify the clients needs/wants in regards to their home. If they choose to stay, then the proper steps need to be taken i.e. Loan Modification. Now I am not a bigger believer in the Loan Modification process. I personally think its crap, never works, and only pushes the debt further into the future providing very little short term relieve (But that’s just my opinion). You must make sure the homeowner has proper expectations for what the modification process will entail. Make sure they do not pay any money upfront! Most real modification companies will work for free without any upfront costs. The process is going to be a bit lengthy and entail a lot of paperwork, so its not going to happen overnight, so SET REALISTIC EXPECATATIONS will your clients.

Now if the modification does not work or they are okay with relocating to another place, then a Short Sale is the next best thing! When the real estate agent works with the client, they should normally try to sell the house for less than the competing listings. This should draw more interest and attract more buyers. With the abundance of short sales in the market today, it is imperative that the LO and real estate agent work together with the client to keep fees at a minimum and making the process less complicated for the client.

If anything is crucial for the client in the short sale or even the modification process, it is COMMUNICATION! The fear of the unknown always seems to get bigger and bigger when communication breaks down, and this can lead to doubt and most commonly frustration. By keeping the lines of communication open, you really get to strengthen your relationships with the client and the real estate agent(s). Also, look for online tools and resources to help make the process run smoother ( like a document drafter), this will cut down the time required for the process and also help the real estate agent be able to spend more time attracting buyers and sell more houses.

By aligning yourself with the proper professionals, you can really help your business grow and establish those strong relationships. The best agents are honest, trustworthy and qualified, all qualities you need to succeed! So I ask you, who are you aligned with?

Separating Yourself To Thrive

2011-10-05T08:44:00.000-04:00

How do you separate yourself from your competition? Please don’t tell me it’s because you show up to work everyday and answer your phone….really??? This is not different, this is something expected! If you think it’s from entitlement…THINK AGAIN! Just because you have been in the business for over 10 years does not by any means make you deserve other peoples business or referrals. It is time to step out of that safe box and step into reality and the constantly changing times!

So what does it take then to thrive in the changing market? I will try and break it down into 5 groups (big help from Dale Vermillion on this) to help simplify things for you:

1. Diversify Your Marketing - Rates are great right now, but we all know they have to go up sometime, so you need to not focus entirely on just one thing when you are marketing because soon those leads will dry up. Work on getting purchasing leads from aggregator sources. This will allow for a steady flow of leads coming and you can buy them at your convenience. Also, make sure not to forget about your past clients and referral leads. You need to make sure you are in constant contact with them via phone, mail and email. Establishing and re-establishing the relationship with each client will make sure the leads are coming in and they do not forget about you! Lastly, reach out to other third party sources to retrieve leads. For example, as a loan officer, I will reach out to realtors, financial planners and CPA’s to establish relationships and hopefully build a strong referral network.
2. Quit Selling Rate/Price - This makes you ordinary! Nothing unique except you are quoting a rate/price. Not only by doing this do you make a horrible impression, but you allow the person to obtain a bargaining chip they can use elsewhere and then you essentially have pushed them to go shop you around. You must not make this mistake! As we all know in the mortgage business, just because the rate is better does not mean it is the perfect fit for the client!
3. Build Relationships – With the media making everyone in our business seem like crooks, you need to make sure you have built strong relationships based trust and honesty. These two characteristics are very strong because the referral person knows you will take good care of their client and you can get the job done! As we all know, if you refer someone to a person and they do a horrible job, it in turn, makes you look even worse!
4. Make A Difference - Make sure you meet not only the client’s short term needs but help them focus, establish, and head towards their long term goals as well. This will help you truly separate yourself from your competition because most people only focus on the short term and what is affecting them now, not what could or will happen in the future.
5. Focus on Today – Plan and simple, do not dwell on past success, this creates negative thought process and stops you from pressing forward!

Nowadays people choose the easiest and safest forms of marketing, but this is not helping them separate themselves from their competition and thrive in the changing market. Go over the 5 forms and see if you are making all the appropriate efforts and begin separating yourself from your competition today!

ARE YOU KEEPING YOUR CLIENTS SAFE?

2011-10-04T10:05:00.000-04:00

Protecting your clients against identity protection in an everyday job! Identity thieves have adapted many new techniques and methods and they are changing all the time, which makes your knowledge and awareness of these techniques very important!

Remaining up to date on the latest trends and methods is a very difficult job. You are not going to be able to help stop every instance of identity theft, but prevention and making the clients aware of it and how it can happen is the key! On the frontline of identity theft attacks should be your mortgage loan originator providing defense and becoming a main leader in helping your prevent the identity protection.

My main way to prevent identity theft is to understand how it can happen and being able to identity the different forms it comes in. Do not be blinded here! Identity theft is not solely on financial identity, it can come in other forms as well. Medical, drivers license, social security and Criminal identity fraud are four other types of identity theft that can take place.
Medical – Stealing identity to obtain medical insurance, treatment, or prescriptions in your name.
Drivers License – Stealing your identity and using it in traffic related incidents.
Social Security – Stealing your social security number in order to obtain employment. This can often lead to further damage to credit and taxes.
Criminal – Stealing your identity and providing it to law enforcement upon arrest.

These forms of identity theft are very common, so do not be focused on just the financial aspect of identity theft because these forms are most popular and becoming harder to detect. So you know are asking “How do I prevent this from happening to me?” BE AWARE AND PROTECT YOUR PERSONAL INFORMATION! Yes that might sound very simple and almost stupid, but it’s the truth! You will be amazed as to how people treat and handle their financial and personal information. They throw it away, they give it out over the phone, they send it via fax, and they trust when they should be skeptical! Remember, an identity thief does not have to have all the pieces of your financial information to commit and subdue you to identity theft. Sometimes they will mix pieces of your accurate personal information in with a fictitious identity, causing much confusion and still having success in their attempt to steal and falsely use your identity.

Being a mortgage loan officer, we are here to help you and protect you at the same time with the biggest financial investment of your life! Identity theft is something no one should have to go through, but that does not mean it does not exist and can’t happen to you. Prevention starts and ends with how you handle and distribute your financial information. Loan officers need to strive to make sure every single borrower’s financial and identity is well protected and they have either implemented and/or developed methods to make this possible! Protecting your clients is a very prominent key to building your business! I protect my client’s identity, do you?

AT ITS PEAK!!!

2010-10-14T10:15:00.000-04:00

When is the best time to seal the deal? The answer is not always as clear cut on each transaction, but this one common theme holds steady day in and day out…..”Seal the Deal when the clients interest is at it Peak!”

Ever wonder why it is important to settle loans or handle transactions as quickly as possible? You have to make sure you are maximizing your client’s wants and interest, but within a time line. You have to focus on making the sale when your client’s interest is at its peak! At this point of time, your potential clients are seeing what they want, that they can achieve it, and you are the one that can help them get it! The more time your potential clients have throughout the process, the more doubt and confusion can clout their focus and desires. Questions and concerns are part of the process, we all understand and anticipate that, but like I said before, its part of the “process”, which means within the transaction, not before it even begins.

Clients are protected nowadays with many laws, Reg Z & X, TIL disclosures, GFE disclosures and tolerances, so proceeding with caution is still always a good idea, but proceeding with fear is what we have to lead our potential clients and consumers away from feeling. Maximizing a client’s interest point is key to delivering a solid pipeline of clients, and then the rest is left up to you to deliver the exceptional customer service that will lead to more referrals down the line! Are you up for the challenge?

Interest at its Peak can only be achieved by constant contact! You have to be involved with your clients from day one, answering questions and being there for anything anticipated or surprising throughout the process. By establishing your comfort level and capitalizing on your clients interests and wants, you increase the ability to sell and satisfy your clients on many different levels!

Here is my advice to you: Stop sitting around and waiting for your clients to call you back… Pick up the phone, follow up, give updates, and give other options and suggestions! Make your clients aware of what is out there, what you can do for them, and how you can help them achieve it! Its all about making them aware of what is going on and how they can get there (with your help of course!) Go get it!

So Your Business is Good….For Now!

2010-10-04T17:05:00.000-04:00

Rates are great! Everyone is calling because they want or most importantly need to save a few bucks every month. BUT, what happens when the rates start to creep up???

Loan originators need to start looking at what will happen in the following months, and stop looking at their full pipelines lines and radiating in the glow of this years income. If I were to tell you that home values are down 26% Nationwide….what would you respond with? If its not “Sorry I cant talk because I have to call every client to let them know this!” then you are missing the boat my friend! For example, if you wanted to buy a car 3 months ago, and it was priced at $25,000, and then its price dropped 26% to $18,500 wouldn’t you like to know? Don’t you think that the car salesman will definitely be blowing up your cell phone to let you know this news??!!! So why aren’t you letting your clients know this??

Realtors…let every prospect in your book know that the deals are there and you have someone who can make their homeownership dreams come true!

Builders…start thinking of new incentives (People LOVE free stuff) and be targeting new groups of potential clients….maybe current single wide owners who own their land?? Just an idea!

Financial Planners…any client coming in looking long term or even short term, a chance to lower their monthly mortgage payment or better yet, consolidate high interest debts, don’t you agree that this is worth taking a look at? Your clients should never turn down a free financial check up, regardless what finance it is referring to!

Accountants…Your season are almost here, so you know you will be seeing tons of mortgage statements! Why not be sending your clients to someone you trust that will also make you look even better when they lower your clients interest rate into the 4%’s, free up monthly income, and maybe even help them pay you on time this year for preparing their taxes!!

No matter what profession you are in and no matter what type of cliental you service, a free analysis of your clients or potential clients financials can really go a long way! Stop fixating on what you are doing right or today, and start thinking about what you are not doing and maybe should try to get ahead of the competition!

ENOUGH IS ENOUGH!!

2010-09-20T13:40:00.000-04:00

STOP BELIEVING THE INTERNET OR RADIO ADS ON INTEREST RATES!! Call a local mortgage originator to see your real options!

When lenders online are telling you that they can get you these historically low interest rates at 3.99% or even the low 4%’s, be ready to pay for it! Lenders are giving you the old “Bait and Switch” tactic! They reel you in within enticing ideas and monthly savings figures, and then when it comes down to it, there is some circumstance that disqualifies you from obtaining that “GREAT” offer. This is more common now than ever before! YES, rates are at historic lows, but remember, no one does loans for free, so it there are selling the rat to you at the bottom, you can bet you will be paying for the income that is needed to be generated from doing your loan.

Let’s just throw a couple of names out there…..”Quicken Loans”, “Lending Tree”
Now let’s see what they offer….
• Customer service reps that read from scripts
• Reps that have been in the industry for no longer than a year, selling something
they barely understand
• Reps that are not familiar with your market or community
• People that have no interest in your loan
• Denial of your loan but give ZERO guidance on how to fix your situation
• Do not review your credit with you
• ZERO one on one time and analysis of your loan and financial situation

When you are assessing what to do with the single biggest financial investment in your life, wouldn’t you want to know who you are dealing with? Wouldn’t you want to know where you could go or call for advice or questions you might have during or even AFTER the loan process? How about being able to call someone and not have to go through an automated system, but get someone directly?

America got into this housing mess with mortgages being handled this exact way! Borrowers need to know what they are getting themselves into, how to plan for it, how to handle it, and what to expect month in and month out! When you have someone, an actual person in front of you, questions are the easiest to be asked and answers obtained, which SHOULD ALWAYS be part of the process!

Mortgages are a very tricky process and overwhelming at times for many clients, so it’s smart to make sure borrowers are going through the proper steps in preparing for this huge decision! I am always here for your questions or to review anything you are looking to do! A second set of eyes is never bad!

Cleaning Up the Mess!!

2010-09-08T14:25:00.000-04:00

Have you been turned down by your mortgage lender? Have you been denied a refinance of your current mortgage or can not seem to be able to obtain financing at all? YOU ARE NOT ALONE! But what you choose to do from there is what will separate you from being financially smart or lazy!

If one lender says “NO” to your mortgage financing needs, that does not mean all lenders will look or treat your loan the same way! I am finding out more and more, that even though 65% of the mortgage financing professionals out there disappeared, that the remaining 35% still are not as good at their job as they should be in assisting clients with their mortgage financing needs. You still have the online companies shooting out vague information to your potential clients, filling their heads with huge promises and coming up short at closing! “Bait and switch” has always been a definite when it comes to online lenders and especially when you can not deal with someone who is local. Best way to treat this is that, if you have a feeling in your stomach that something is just too good to be true, trust your gut, because it is!

Cleaning up the mess that other lenders have left behind seems to be the common theme this year! Many borrowers have been led down paths for 2 to 3 months from mortgage originators, only to be let down at the end and confused as to why. Make sure you are asking the correct questions:

• What are the issues on my loan?
• Do all lenders have the same guidelines?
• Is there just one problem or more than one?
• What can I do to fix the issue(s)?

Understanding why your lender is not approving or accepting your loan can do wonders when you try another lender. If you can address the concerns upfront and give the next lender a chance to work around it or figure out how to solve the issue(s) you stand a much greater chance of obtaining your mortgage finance goals! If you feel that you were denied mortgage financing or just want a 2nd opinion, give me a call or shoot me an email and I will be glad to give some insight into your loan!

Self-Employed Borrower’s Income…Tough Stuff But Here is Some Help!

2010-08-30T16:48:00.000-04:00

Definition: Being Self-Employed in the mortgage world means you are a borrower(s) with a 25% or greater ownership interest in a business. Also, anyone who works for a family owned business are treated in the same light, but without having the ownership interest.

It is extremely tough nowadays to obtain a mortgage if you are self-employed. Not only do you have to prove almost everything coming in for income, but you almost have to prove everything being spent outwards as well! If you are self-employed and looking to purchase or finance, keep these things in mind so your loan goes more smooth and quick!

Need 2 Years of Self-Employment – The borrower must be able to show they have being in the same line of work and/or at least a 2 year history of doing that type of work. This also means you have to be able to show that you business is stable and efficient, and with 2 years of existence, it shows less of a probability for the business to fail. Here is what to remember: YOU MUST BE ABLE TO SHOW YOU HAVE BEEN IN BUSINESS FOR 2 YEARS AND/OR WORKING IN THAT TYPE OF WORK! Of course there are exceptions, but this is the main rule of thumb!

Income Documentation – You must have 2 years worth of tax returns to support your income. An average over the previous 2 years is used to qualify, but that’s only if your income is stable to increasing from year to year. If you have high earnings in one year, and then lower or slightly lower income the next, they usually will take your income “worst-case-scenario” and take the lower of the 2 years and average it over 12 months. If you would like to use a higher income stream, a year to date Profit and Loss statement can be obtained, but you will have to use the average of lowest year and the P & L income. Sometimes you can get around the average if you show receipts and consistent earnings, but 2 years of tax returns seems to be standard across the board! W-2 income is also used to qualify, but you have to show a history of receiving this income AND your business needs to be profitable and posting a positive income on the tax returns in order for this income to be used.

Debts – If the business pays for debts, make sure you write checks out or pay automatically from the business account. Most businesses not only generate business income, but W-2 (salary) themselves with income also. This is critical you separate the business debts from the personal debts. You can qualify for a loan with only using the personal income and exclude ALL business debts, but ONLY if you can show 12 months of cancelled checks from a business account that the other debts are being paid from the business account. This is why accountants always tell you to separate your business from your personal!

If you are like most self-employed borrowers, you do not show much income on your tax returns so you can avoid paying taxes. But in the mortgage world, if you avoid paying taxes, your income becomes untraceable and unusable as well! A lender will need to see your income on your tax returns in order to use it to qualify, so be ready to prove it! Not only will you have to provide tax returns, the lender will also request tax transcripts from the IRS to make sure your copies of the returns are matching to the files IRS ones!

It is tough out there already to obtain a loan, but if you feel like you want to purchase in the near future or are looking to refinance, make sure you have your financials in line before starting the process because it will save you a lot of time in the long run! If you need a review or have questions, email me at mortgagesbyhunt@gmail.com

Strive to Be Different

2010-08-24T14:58:00.000-04:00

What makes you any different than every other loan originator in your market? This is what sets you apart from your competition and should be the very question that you ask yourself everyday so you are striving to separate yourself from the competition.

If you want to be the best, you must be willing to compete aggressively! Wining on the separation and success fronts will help you achieve this, and they run hand in hand. To separate yourself from your competition, give yourself an advantage by trying a few of these simple ideas:

Attend your Settlements – This is HUGE! If it’s a purchase deal, you get to meet all agents involved in the transaction and get to not only introduce yourself, but establish some sort of contact and reference hopefully with the agent and yourself. Also, it prevents clients from having a bad taste in their mouth if something is a surprise or they have questions that can not be answered. This is your chance to leave a POSITIVE lasting impression…make it count!

Attend Real Estate and Local Builder Functions – “Shaking hands and kissing babies” is a phrase that comes to mind. You need to put yourself out there and gain that recognition along with name correlation when someone thinks about purchasing or refinancing. People are not going to look you up in the phone book and call you on a whim! They need confidence you can get the job done and do it the best! Functions are a great way to establish a relationship network with others who can help you with different parts of your business like attorneys, insurance, contractors, surveyors, etc.

Weekends & Nights – Work when work is needed! Most clients are looking for homes on the weekend or nights because that’s when they are off of work. You have to accommodate to your clients schedules, it just part of the job when you work for the public! If you choose not to return or answer calls promptly, clients do not wait around and either do agents. Every deal is important nowadays, so if you do not pick up the phone they are going to keep calling people till someone does, so why not take the 10 minutes and at least establish contact.

Send Thank You Cards – Every time you are referred a client by someone, send a thank you card! It is so simple, and so overlooked! This gives you a reason to contact them, and hopefully allows you to solidify your relationship with your referral partner so you keep on receiving referrals. You do not want the referral source to feel unappreciated or you come across ungrateful; don’t make it all one sided either!

Simple ideas can turn every missed lead into huge profits and clients for life! If you treat your business with the utmost attention to detail, you really minimize the leads that could fall through the cracks!

Initial Credit View, Not Enough!

2010-08-23T11:26:00.000-04:00

Lenders are now more cautious than ever when it comes to credit review! Do not be surprised if you have to provide statements, cancelled checks, and/or proof of payment when it comes to some of your debts on your credit report. With this said, you should also be aware that Fannie Mae has started to instruct lenders to put a new policy in place that includes a second review of your (borrower’s) credit report before closing. Now this does make sense, but also just demonstrates how the variance in the time frame between loan application and closing is so critical!

We all know that a borrower’s ability to purchase a home is strongly affected by the debts they currently pay monthly. In a common time frame of application to closing, lets say 60 days (Definitely not my Company), the borrower can use their credit report in many different, mostly adverse ways! With the borrower having the ability to utilize their credit, it is crucial you make you clients aware that they need to “freeze” all credit use from application to closing. Here are the reasons for this:

Your Closing Will Be Delayed!- if your credit application was pulled for a second time and you have purchased a car, increased your balances significantly, increased or taken upon any new debt, the lender is now required to disclose all new debt and payments and must re-run the loan under the new circumstances. With many companies, this could take as long as 2 weeks! Time is money and honestly, it is going to be extremely hard to “Save face” with your realtors if this happens, especially more than once.

You are Pre Approved for Less! – if you have opened new accounts or tapped your current ones, you are going to be liable for more debt on a monthly basis. Thus, this must be calculated into your debt to income ratios, which if pushed to higher levels, you will have to lower the amount being borrowed to qualify! In turn, you will have to find another house in a different price range (starting the house searching process all over again)!

Interest Rate Could Increase – By having your credit re-pulled and things are not consistent with the initial application, you run the risk of your score being lower. This in turn, correlated directly with your interest rate. Just say, you have a 720 FICO score, but your credit report is re-pulled and you bought a washer and dryer with a Sears credit card, and now you have a liability with a $2,000 balance and a $100/month payment. You are liable for more debt and increased your risk level, your score will most likely drop below the 720 level, and result in a slightly higher interest rate since you dropped out of the top tier.

Loan is Denied – This is by far the worst possible scenario….but it has happened many times! It is extremely important you notify your borrowers whom are on the “thin line” when it comes to credit score and approval (620 to 640 FICO’s). One simple collection, medical collection, late payment or utility bill being misplaced could kill your deal entirely! Loan Denial is beyond embarrassing, so make sure you set the expectations upfront with your clients!
Make sure you are telling your clients not to borrow or even apply for anything during the loan process (till they have closed)! When we say everything must remain constant, we mean everything! Set your expectations upfront, to prevent problems further down the line! Let me know what experiences you are running into or if you have had problems will credit re-pulls recently!

Things to Consider when Purchasing Your First Home

2010-08-19T10:45:00.000-04:00

Congratulations, you are on your way to homeownership, the single biggest and best financial investment you can make in your life! With this though, comes some hurdles and sometimes a little bit of a lengthy process to obtain your very first home. It is understandable to feel scared, nervous, tentative, and at times overwhelmed with the home buying process. I am going to lay out some things every first time home buyer should keep in mind, so they do not become overwhelmed.

Know Your Monthly Expenses – First thing you and your spouse need to do is write down all of your monthly bills, along with the income coming in. This will allow you to see how much money you allocate for certain expenses and then from that point, you can set a budget for yourselves to prepare to purchase a home.

Rent – You know how much you currently spend in rent and with that comes the ability to either spend the same amount or increase that amount to purchase a home. Rent is an easy way to gauge whether you are ready and able to buy your first home. If you struggle to make your rent payments each month, then maybe you should go back to step #1 which will help make you align your finances and set up a budget to get you where you need to be. Also, it tests your seriousness about buying a home because if your finances are not where they need to be, then the work you need to do will be the equalizer on how to accomplish your goals.

Save a Down Payment – I do not know how many times people have asked me for 100% financing. I understand this program sounds like a great deal! No money down and all you need is a pen, a drivers license, and a pulse to purchase a home. Well, this is where the perception is skewed! Your are getting yourself into a loan where your are buying and financing 100% of the value of the home, so you will have almost 0% equity in the home, along with a higher payment since you are financing more per your loan amount. Interest rates are around the same for 100% financing, but also remember, you are going to have a much harder time obtaining financing in this type of program since it is a higher risk level. Also, finances are heavily tied in with your financial investment into those items. So if you do not have anything into the deal, you are less likely to keep or maintain the investment to get the best return.

“In and Outs’ – Your mortgage payment will be an accumulation of things, but it does not include everything! Utilities, water, sewer, well and septic, electric, cable, phone, internet, car insurance all are NOT included in your mortgage payment. Many people concentrate so hard on the mortgage payment and if they can make that payment alone, but they need to focus also on the other expenses of the house once you occupy it. You will NOT be qualified based off of those additional items, so that’s why Step #1 is so very important! It lays out all of these items, so you know how much you have to budget for each month, plus a little extra since your house is going to be slightly bigger than an apartment.

If you do your planning, it really will make the home purchasing experience that much easier. It will allow you to know your limits and how much every dollar goes. By preparing ahead of time for what expenses and money you have coming in and out, you can become the smartest first time home buyers and save yourself tons of money and heart aches!

Hooray For Lower Interest Rates!! But Wait There’s a Catch….

2010-08-18T09:26:00.000-04:00

Everywhere you look or on every search engine you go to, it is extremely likely you will see something talking about these historically low interest rates on mortgages. Most likely these ads will even show rates in the 3%’s!! Well I am going to be the first to tell you, there is always a catch! DO NOT TRUST A FLYER OR AN AD ABOUT A MORTGAGE IF YOU DO NOT KNOW THE PERSON YOU ARE DEALING WITH!!!!

I do not know how many times I have friends that tell me about these “Great Deals” that they are getting from this company over the internet. Then about 2 months later, when they still have not gone to settlement and everything that was so “Great” has changed a million times, I get a phone call asking for help! People, I know pride plays a big part when it comes to finances, but TRUST and HONESTY are the 2 hardest things to come by, so if you have it with someone, use them! Let me know what you think and what your leads are doing.

Besides the changes of the “Great” aspects of these loans, the biggest catch is the closings cost increase from a year ago. Closing Costs banks are charging have increased 36.6% over the past year! So let’s take this into real numbers. On a $200,000 mortgage, closing costs used to average around $2,739, but now they are averaging $3,741! Of course this is going to vary state by state, but still the increase is staggering!! With all of the financial reform, companies are low-balling their closing cost estimates, which could account for a part of the increase because the costs to close now have to be more accurate. We all know that most originators would low-ball their closing costs to win the deal, and then the borrower was stuck when they got too deep into the transaction. In addition, costs probably have increased due to more thorough checks on applicants financial and ability to repay the loan. there are more fraud checks, employment verifications, and tax transcript certifications that are required on each deal to make sure borrowers and the originator are telling the truth on the application.

Now if you think that costs are also going up because of origination fees or points to buy down the rate, then we need to clarify what origination fees entail. Plain and simple, any charge the lender incurs to process, underwrite, and/or originate your loan (appraisal, credit report, processor, underwriter, tax cert, flood cert, etc). These fees have increased due to each lender requiring them to buy the loan, but the points to buy down the rate should be looked more closely! Seriously, with closing costs being as high as they are, you better be staying in your current house for a long time (more than 10 years) if you are buying down your interest rate. By the time the monthly savings wash out the closing costs you paid, you are going to be at least 4 to 5 years into your loan! With rates as low as they are, essentially 1% or 1 point origination on a $200,000 mortgage, will add another 2 years to the time frame you will break even! I know, most people only look at the monthly payment, but you need to look both short term and long term when it comes to your mortgage and any other financial obligation you may have. Since rates are so low, the need to buy down the rate further should really not be a factor, especially if you are purchasing a home. If you can not afford the house you want at 5%, then you need to lower your price range!

VALUE PROBLEMS??

2010-08-16T11:01:00.000-04:00

The collapse might be considered as being over, but new problems have arisen! The time for finger pointing has passed and we need to have everyone focusing on the relevant issues to the mortgage world, and not concentrate on the problems of the past!

I am talking about appraisal issues, single handily the biggest problem any mortgage originator is facing right now. I know credit is very high on people’s problem list, but I feel that credit is something we can detect from the beginning and work around, but appraised value issues is an instant killer and nothing but an uphill battle! Do you agree??? I would love to know what problems originators are facing that is stopping deals dead in there tracks!

Everyone goes on and on about appraisal fraud. They keep on wanting to point the finger at inflated values and appraisers omitting certain data about comparables to obtain higher values. Well stop the finger pointing and think about this….we concentrated so much on how accurate appraisal need to be, but never considered the idea that deflating a value of a home is just as fraudulent as inflating! How many times have you asked your client what their house is worth, you took that value, subtracted $40,000 for the market and then subtracted another $10,000 to be safe? Then you ran the whole entire loan based on that value, to only have the appraiser come back with a value $20,000 lower than the one you anticipated! This is a very common situation, so please do not feel like you are alone! Here is what you need to be doing:

1. You need to be aware of how appraisals work and the adjustments and such! Knowing how appraisers can adjust for comparables and the “ins and outs” of the appraisals guidelines, you can be much more aware of when an appraiser is sticking it to you and when you should get on the defense and fight the good old fight, or take what is given to you. This not only can help you serve your clients better, but can save you and your clients a lot of money and time in the long run!

2. You need to make sure you have good appraisers you can trust on your panel to be selected from! Despite HVCC, you still have the opportunity to advocate on behalf of your client by encouraging lenders and AMC’s to use top-notch appraisers with proven track records and valuation reports. Most importantly, make sure the lists of appraisers to be selected from are LOCAL APPRAISERS! I have been burned so many times in the recent 6 months because I have appraisers from another state come and do an appraisal for a small local town and they have absolutely no clue what they are looking at or not to focus on. Instead, they just shoot some statistics into a software program and use whatever pops up and makes some adjustments to each comparable so it does not get questioned!

3. Do you homework! Make sure you ask specifics about the house, know the area and square footage, and make sure you know the age! This is just the beginning because you also need to call a local real estate agent you trust and have them pull up comparables in the area, and you can even go as far as asking an appraiser (who is not on your list) to see an acceptable value range. This will make you look even smarter to your client when you have this work done and the value is not what they expected, PLUS, if the appraised value comes in much less, you have comparables to prove a higher value and wont have to scramble for something to prove your point!

I want to know what problems you are having with your loans! Let me know your biggest problems and your thoughts on how to get around them!

UNWELCOME SURPRISES

2010-08-13T10:08:00.000-04:00

ASSUMPTION can be a killer in the mortgage world! When you are preparing a client for the biggest financial transaction in their life, assuming anything can kill the deal in a heart beat! How many times have you said, “Why in the world did my client do that?” The truth to the matter is that it’s because they did not know any better. If they knew all of the information we did, then we would be out of a job or they would just do the loan themselves. We have to make sure each client understands the process completely! The mortgage world requirements change daily, and how we guide them in the process really plays a big part in making it all works smoothly!

Make a Checklist or Information Document- This makes sure that the client(s) knows what needs to be presented to you in order for your loan to get approved. It also can make sure that potential road blocks are caught up front due to the client knowing it the documents required is obtainable.

Make a “DO NOT DO LIST” – This is huge, especially in FHA loans. How many times have you had a client throw large sums of money or even just transfer money back and forth between accounts? This makes it very tough to trace the paper trail of the money, where it came from and how in the world they got it! Explain the credit situation and not to purchase anything in the time frame, along with making sure they are not planning on changing jobs or quitting!

Meet the Client(s) in Person – By meeting in person, nothing should get lost in translation! The client can ask any questions they have in regards to the paperwork being requested from them and about the documents they are signing in front of them. Eliminating phone calls ahead of time by meeting the clients, can definitely move the process along quicker and should result in a faster loan approval!

From beginning to end, you need to lay out the expectations for the client(s) throughout the process and what they can expect from you and what you are doing for them as well. By narrowing the amount of “Surprises” that happen throughout the process will make timely settlements and allow you to focus more on generating new leads!

OH IT’S A RUMOR….BUT LET’S HOPE IT STAYS THAT WAY!!

2010-08-11T10:14:00.000-04:00

HUD and FHA have always required a 2 year work history requirement for all of the borrowers trying to obtain a mortgage through the FHA program. An easy way to accomplish this and trace it was through school or college, or some sort of advanced education, if you did not currently have a job. FHA would consider this education as holding a job in the same line of work, which also allows the underwriter to consider the income as stable.

Here is the nasty RUMOR….FHA is going to do away with allowing the education period or schooling period to be considered as “time on the job.” So if you choose to get further education, concentrate on bettering yourself and your family with an advanced degree and you are absent from the workforce, FHA is going to stick it to you! You will have to prove a 2 year work history somehow, or my solution to this, is to have your new employer write a letter explaining the parameters of your job and income stability!

You know what really gets me is that it seems that FHA wants to punish those are actually trying to better themselves and their families! I mean getting a nursing degree, LPN, RN, automotive tech degree, computer systems, finance or economics degree not only makes the borrower stronger in the job market, but also makes a good resume filler/builder in case (worst case scenario) the borrower loses their job or is laid off for an extended period of time. Without the education, the borrower would never have been offered that job, so if job stability is an issue here because the borrower has not been on the job for 2 years, why not include the education or at least picture it as training without pay????

If you keep on punishing those you try to better themselves, you only hurt the future outlook of the potential buyers, and give the impression that it is better to stay put in the same job than push yourself to become all you can be! Lets all pray this stays a RUMOR!!!

ATTENTION UNDERWATER BORROWERS…FHA IS HERE TO HELP!

2010-08-10T11:12:00.000-04:00

On March 26, 2010 HUD and the Treasury announced an enhancement to the FHA refinance program that will give a greater number of responsible borrowers an opportunity to remain in their homes. The enhancement is designed to maintain homeownership by providing borrowers, who owe more on their mortgage than the value of their home, opportunities to refinance in an affordable FHA loan. This will allow borrowers who are current on their mortgage to qualify for an FHA refinance loan provided that the lender or investor writes off the unpaid principal balance of the original first lien mortgage by at least 10%. Here is what needs to be met:

1. Homeowner must be in a negative equity position
2. Must be current on the existing mortgage to be refinanced
3. Must be a primary residence
4. Must qualify under current FHA underwriting requirements and possess a
FICO based decision credit score great then or equal to 500
5. Must not current be a FHA mortgage
6. Existing first lien holder must write off at least 10 percent of the unpaid principal balance
7. LTV max is 97.75%
8. Subordinate mortgage must be subordinated and CLTV not higher than 115%
9. On Refer or Manual underwrites, can not have greater than 31% of gross monthly income and total debt not higher than 50%
10. Loan be refinanced can not be brought current by anyone else, not allowed to catch the borrower up or make current and no allowed premium pricing to payoff other debts to qualify.

Help is here, but remember he is the “catch”….your current first lien holder must ensure and agree to write off at least 10% of the unpaid principle balance on the first lien. The short payoff serves as payment in full for any debt extinguished. This is going to be tough because man lenders are holding onto any penny they can. 2nd lien holders are totally left out in the cold and should just come to terms that they will probably never see their money, but the first lien holders also need to realize, “something is better than nothing!” Borrowers are becoming more and more aware of their current options and many of them are looking at walking away because they know they can not come out of being underwater. This is an option that is becoming more and more popular because with their backs against the wall, borrowers do not feel like they have anywhere else to turn to. This program will be a huge relief to many borrowers nationwide, so hopefully lenders and lien holders take this program in full stride so this housing market can recover! Let me know what you think!

FHA CHANGES EFFECTIVE 9-7-2010

2010-08-09T12:00:00.000-04:00

$200,000 @ 5% 30 YR Fixed

STATS Today Sept 7, 2010 Future

Loan Amount $204,500 $202,000 $202,000
P & I Pymt $1,098 $1,083 $1083.00
MI Monthly $94 $152 $261
Total Payment $1,192 $1,235 $1,344

Let’s look at the proposal:

Monthly Insurance Premium will be reduced from 2.25% to 1%. So instead of financing the MIP of 2.25%, which in this case would be $4,500, your client will only be financing 1%, which is $2,000. Seems nice, but the payment is only effected by $4 or so in this case!

Here is the killer! The new rule will increase the monthly MI from .55% to .85%-.9% and possibly to as high as 1.5% in the future! What does this mean? Let’s refer to the chart above.

Right now, on a $200,000 mortgage loan, the borrower is only paying $94/month in mortgage insurance. After September 7, 2010 the monthly mortgage insurance will increase to at least $152/month on the same loan amount. That’s a $58/month increase! This really can hurt your borrower’s ability to purchase a home in a higher price range. The best comparison is to look at the mortgage having a higher interest rate, about .33% higher in this case! Also, if further government regulation takes place, the monthly mortgage insurance could be raised up to 1.50%! That would result in a $167/month increase in the monthly mortgage insurance, which is equivalent to a 1.125% increase in interest rate!

By SETTING REALISTIC EXPECTATIONS with your clients now, not only does it make your clients feel comfortable with your knowledge of the industry but it also might get some of those people who are “Sitting on the Fence” to finally jump to the buying side! Please let me know if you have any questions!

TO ESCROW OR NOT TO ESCROW…THAT IS THE QUESTION??

2010-08-05T10:35:00.000-04:00

Consumers seem to be very leery of escrowing nowadays! It seems like they are putting money into an account, where they are not gaining interest on that money, but there is much more to it than it seems.

Escrowing for taxes and insurance in your mortgage lowers the risk the lender is assuming with your mortgage loan. They know that no matter when the tax bill is due and when your homeowner’s insurance bill is due, they have full control over the bills being paid in full and on time. All originators should guide their clients to set up an escrow account because not only does it take on less things off the consumers plate to worry about (monthly/yearly), they also receive a better interest rate! Lenders are going to charge a slightly higher interest rate for the extra risk they are taking on by letting you handle the taxes and insurance bills. Rates and Risk run hand in hand in the mortgage world, so its always wise to approach your mortgage with the less amount of risk as possible so you can obtain a better interest rate!

In addition, how many people can actually save the full amount of their home owners insurance and tax bill each year? Especially for first time home buyers, it is extremely difficult to manage and budget your money for these upcoming bills. If you fail to make the payments, you can face some pretty tough penalties, along with much higher fees. If the lender detects a lapse in your homeowner’s insurance policy, they can even call your full NOTE due at that time…trust me I have seen it happen!

So if you are thinking you are just throwing money away by escrowing, ask yourselves these simple questions to determine the amount of risk you want to partake in:

Are we capable of setting the amount of money needed for our insurance and taxes aside on a monthly or per paycheck basis?

How much extra is it costing me to do so?

Do you auto debt your mortgage? If so, do we want to be in charge of another bill?

By asking yourselves these questions you can better gauge how much risk you are able to take on in regards to your mortgage loan!

FHA MORTGAGE INSURANCE PREMIUMS…GOING UP!

2010-08-03T11:04:00.000-04:00

Every FHA mortgage loan has a Mortgage Insurance Premium (MIP) attached to it. This MIP is like a “safety net” for HUD. The MIP used to be 1.75% of the total loan amount, but after this Friday, all FHA loans will have a MIP of 2.25%! What does this mean to your borrowers? This means that for every $100,000 they borrow, it will cost them $500! You have 2 choices in what to do about the MIP, roll into the loan amount (99.99% of people do) or pay for it in cash at settlement.

Why….is the next logical questions of course? Remember the HUD and FHA loans are not very “Pretty” on paper. They have much more risk associated with them, that standard conventional loans on a per loan analysis, due to the more flexible guidelines FHA allows. Since conventional financing has become one of the toughest routes, FHA market share has more than doubled in the past year, making for more risk and liability for HUD. The step to increase the MIP will allow FHA to boost it reserves which is essential since it has been taking on big losses from loans it has backed over the past 3 years! This idea though is tweaked so that it will be less costly to the housing market. This idea was accepted over the proposal to increase the required down payment from the current level of 3.5%. I am very excited that they chose this route, but I see other proposals that are still on the table like reducing seller paid closing costs to only 3% and increasing the monthly mortgage insurance rate from .55% currently to .85% or .90%. ON a average loan amount of $300,000, this would increase the monthly payment by at least $85/month!

I hope that since the House passed this bill and it goes fully into effect this coming Monday, that they will start to take a deeper look into ways to help the financial markets and loosen up credit. I feel that the proposals seem to only be ways to boost their reserves for fear that more people will default. But if the average American can not obtain financing due to increased payments and standards, the short term and long term financial goal is destroyed!

FHA NEEDS TO DRAW A CLEAR LINE

2010-08-02T10:19:00.000-04:00

Welcome Brokers….to how FHA loans should really be done! The days of trying to complete the impossible loan and giving false expectations are over with; you have to come down to reality! BUT, THIS IS A REALLY GOOD THING!

Restoring consumer confidence in the mortgage originator is not an easy task, but FHA and HUD have taken the appropriate steps in the right direction! HUD’s decision to eliminate FHA approval of mortgage brokers definitely draws a clear line on where HUD is heading and where they currently stand.

Lender to lender, even though it was the same program the consumer was going through, it seemed that each lender had different criteria for FHA loans. Now this is erased almost completely! The vast difference in FHA standards was creating quite a problem for HUD when it came to purchasing and performance of FHA loans (the 2 main areas of concern).

Now we have to look at the remaining question….how does a lender determine the criteria to judge brokers on when assessing whether to sponsor them or not? Since there has not been a uniform standard established on how they should approve brokers, this leaves a very risky and potentially costly position for lenders and HUD. I believe that a consistent uniform approach needs to be established ASAP! This will not only allow lenders to have a “Matrix” to go off of when considering approving a broker, but it will allow lenders to understand the cost benefits of adding the broker and help develop standards across the board with FHA guidelines which can help ensure that FHA loans are originated properly. One thing we do know is that all brokers will have to obtain all current and necessary state licenses and approvals, along with having a strong portfolio of loans with good performances. This is huge step in the right direction when it comes to developing a standard for HUD and FHA loans because this makes sure the playing field is level and makes sure that the loans being brought to the market are good performing loans, not risky!

Performance of loans is a huge deal right now! No one wants to establish a relationship with someone who does poor loans and has a high default ratio. This not only makes the lender look bad, but provides a poor investment with a negative return, which is not the reason why financial institutions lend money! Getting a sponsorship will require that the relationship established is going to be a profitable one, or at least had the potential to be. Lenders can see how the broker has originated loans that place consumers into good financial positions, not ones where they are struggling to keep their heads above water! Do not expect lenders to pick brokers up right away! This process has not been established yet as to how they are going about it, but I would assume a good in-depth look into the financials of the broker, his portfolio, and possibly his personal financial situation will be the norm. With any business relationship, one side usually is taking on more risk than the other, but how much risk that other side is willing to take is going to be the question in the air! Brokers get ready!

Where would we be without FHA and HUD?

2010-07-28T10:02:00.000-04:00

You remember the old days of panning and digging for gold? The days of the long assembly lines and intensive labor….well that’s where mortgage originators would be if we did not have FHA! HUD and FHA really stepped up to the plate! Instead of running scared from the market and the economy, they took on the challenge and in my opinion, really exceeded expectations! While all other programs and government programs turned their heads or kept running in place, FHA saw the markets changing and adapted before the changes. They easily captured a huge part of the market share and this is exactly why!

Easy Underwriting- oh I know this will start a discussion and probably get someone’s engines burning, but really if you look at the overview, it really makes sense. On conventional loans, you have to provide the same amount of documentation for income. There are some small situations where this is not true, but almost all lenders are requiring 2 years of tax transcripts in the file and W-2’s, along with a month of pay stubs. Face it, if you are qualifying with it, you better be able to prove it! FHA allows you to qualify with anticipated income! You can get a letter of income being guaranteed for a job you have not even started yet, and as long as you are going to be working at that employer in at least the next 60 days after settlement, you can use the full amount of income to qualify for your home loan. EASY….how could you beat that? Conventional wants at least a pay stub showing 30 days worth of earnings!!

Low Down Payment – ONLY 3.5% of the Purchase Price needed to Close! You are not beat that with a stick! 100% programs have the tightest matrices, so you borrower better be very very strong to qualify. FHA allows a borrower to only put 3.5% of their own money into the deal to purchase a home, and in some areas that can be up to a $700,000 house! Conventional requires every bit of 5% down and you end up paying more on the loan and go through great lengths just to obtain Mortgage Insurance!

Mortgage Insurance (MI) - MI FOR EVERYONE! It does not matter if you have 650, 640 or even a 620 credit score, FHA will give you mortgage insurance. Conventional loans you must have at least a 680 credit score, so once again, that’s at a minimum for conventional, not to mention you have to have 3 months of your payment in the bank as reserves, 5% down, and your mortgage insurance will be 2 times the amount monthly when compared to FHA MI! Wow, FHA just gets better and better!

RATES- If you think FHA is going to have higher interests, well simply, that’s wrong! FHA offers just as competitive interest rates, if not better on lower credit scores, than conventional products! Try pricing out a 640 credit score on a refinance for your borrower with FHA and Conventional and see what you find out!

House standards – I know FHA has little tighter standards on certain criteria when it comes to appraisals and the overall condition of the property. But you can not blame HUD for not wanting to insure a house with a bad roof, chipping paint, missing siding, ripped carpet, leaky pipes, dismantled bathrooms, and no running water. Frankly, the borrower should be happy that FHA and HUD does not allow this, it protects their interest in the end!

Overall, it is a no brainier! FHA kicks all other programs butts! If you have not learned the program, only done a few loans through it, or just have stayed away, I will give you this warning: Jump on the boat before you get left at the dock!

BACK TO THE BASICS

2010-07-27T10:58:00.000-04:00

New home sales are up!! But……consumer confidence is way down, down to a 5 month low, thanks labor market! Jobs are tough to come by right now, and with unemployment at the highest in forever, and companies holding onto cash instead of hiring new people, we all are just sitting tight! So what now?????

Get back to the basics originators!!! Did you know that 9.39% of all mortgages are delinquent? This means that those people could have been helped prior to going into default. We need to get back to the simple basics:

Communicate: Call All of your leads, at least once a week. On average, it takes 5 to 7 times of contact to secure a lead. I know you think you are better than that, but face it, over communication is much better than under! You need to keep plugging the good info into their ears so the bad information from TV and newspapers will bounce off.

Visit: Visit your realtors! Let them know you are still out there doing loans! With everything going on, most realtors think that mortgage originators are out of business or left the industry. Shoot, 65% of the people who were originating loans have left our profession. It never hurts to reach out and let them know you are still alive and pumping out loans! Ask them what problems they are facing and how you can solve them! Sometimes you just need to give an alternative or a suggestion!

Market: If you capture the market now, imagine the business you will get when it turns back around (2-3yrs)! Get your name out there, make sure they know what you are doing and how well you are doing it! Tell them what you do that makes the difference and ask them if they want to make more money, because that’s what you will help them achieve!

Basics are sometimes forgotten when things start turn bad! They forget how they got to the great place they were in and try to make excuses so they hide themselves from reality. Make sure you are still making the basics work for you or have you forgotten the basics???

That is the Norm…..RIGHT???

2010-07-26T14:19:00.000-04:00

Contrary to many people’s believes, mortgage originations are busy….but seldom are they that busy they can not return your phone call within a week? I know many borrowers think that they should not hear from their mortgage originator except for when they need something or there is something wrong….INCORRECT! I am going to address some common, but very wrong practices about your mortgage transaction.

Getting Pre- Qualified: Most people believe this is a very lengthy and tedious task, but this is simply not true! Getting pre qualified is one of the easiest parts of the approval process, sometimes it is even too easy! Most real estate agents will suggest someone whom they have worked with in the past to help you with getting pre- qualified. I suggest using the recommended person because they would not suggest someone who does not know what they are doing since their income is based off of the loan getting done. STAY AWAY from online mortgages! These are sometimes the most risky and scary dealings you can encounter in the mortgage process. They have no ties with you or your realtor, and simply are just a info “plug and play” person.

Communication- You should know where you loan is every step of the way! By phone, email, or text message, your mortgage originator should be letting you know what stage your loan is in and what to be expecting or waiting for. I always hear that borrowers have not heard from their mortgage person in days or weeks, that is really sad! Your mortgage person works for you, not the other way around! You need to tell them upfront you want to know what’s going on throughout the whole process, clear and cut communication, so the expectations are clear!

Fees- With new regulation, you are much more protected than before. The mortgage originator will have to provide you with the fees being charged upfront, and if something extra is added or comes in higher, they are responsible for the charge not you in most cases. This way, you know what to expect and how much it will cost, so you can prepare you finances accordingly! (Check out my blog from July 14, 2010 Resurgence of Trust)

Settlement- Closing is the best and sometimes the most stressful part of the real estate transaction! Purchases are a little tougher because of the deadline/settlement date needing to be hit. Your mortgage person will do everything they can to get you there, and it is customary to hear from them almost everyday during the week of settlement. If they are not calling you and you do not know if your mortgage is approved or not, you better bet you should be on the phone calling your agent, closing attorney and of course, your mortgage person to see where your loan stands. Everyone needs to be on the same page during a purchase deal, so all things flow smoothly and no one says “I did not know that.”

All in all, the mortgage originator dictates the pace and controls the process of the loan. Sometimes things happen that one can not foresee, but even then, your mortgage person should be notifying you of these things so you can keep yourself involved in the process throughout. Ask questions, because if you don’t, you cant use the excuse “you didn’t tell me that” which puts you in a very poor position!

RATES ARE GREAT…BUT SO ARE THE COSTS!!

2010-07-23T09:31:00.000-04:00

Let’s scream it from the roof tops!!!! RATES ARE THE BEST THEY HAVE EVER BEEN! Then why do you ask are more and more people not running full speed to the mortgage originator to refinance or purchase a home??? One word, COST!

Banking profits are down and you know that does not sit too well with the big guys on sitting on capital hill. So instead of passing along all of the nice savings they are receiving from the government, they decide to pay the cost (and then some) onto the consumer. On average, it is costing American’s a minimum of $157 extra per loan in operating expenses. I know you think this is not very much, but lets not overlook the behind the scene issues that the costs are associated to in the loan process. It is more paperwork, U/W issues and the most popular topic in the last year or so APPRAISED values. The paperwork is in the form of more disclosures and legality issues. Lending institutions have to be more conservative and on top of all regulation issues in terms of fully disclosing the proper paperwork. This has become very tedious and in-depth over the last past year, requiring companies to hire additional people to handle this issue and monitor it as well. Now probably the most costly of the processes is the Underwriting issue. Underwriters used to be a dime a dozen, but now lenders are so tight with guidelines, they need more experienced underwriters to protect their financial institution from HUD violations and the worst case, LOAN BUYBACKS! Lenders never want to have to buy back a loan they thought they had sold off to an investor. This is the single most costly process when it comes to operating expenses because not only does the lender have to try and service the loan or find somewhere to place it, it must be reviewed and analyzed again to see if there is anyway to be able to sell the loan off (Repeat cost). Loan buyback fear has made it even tougher in the underwriting department because this drives underwriters to be the most cautious on every single file. For example, yesterday I mentioned that lenders are discriminating against women you are on maternity leave or going to be, saying their income can not be used in qualifying purposes. This is a prime example how lenders are tightening down on underwriters to make sure they are reviewing each loan file as “worse case scenario,” meaning what could go wrong, will go wrong! Hard as that is to swallow, it is just the way the market is, but it still comes as a cost, and it is being passed along to the borrowers.

Lastly, Appraisal issued and appraised values have really hurt the industry as a whole. If you think we have seen the worst in value issues, think again! Banks are holding a lot of loans on homes that are either behind or upside down. If they let these homes go off of their books, then we will have another way of short sales and foreclosures hitting the market, effecting values once again. Appraisals get scrutinized from the beginning to the end. Field reviews or 2nd appraisals are being required more heavily now to secure the value being used and qualifying the borrower on. These each have their own cost associated with them. Appraisers get paid before the loan closes nowadays, not when the transaction is delivered. This took out the appraiser incentive to appraise higher to make sure the deal would go through and they would get paid. But what it has created is an industry scared to appraise houses for a “TRUE” value in regards to the market because they are afraid there work will be reviewed 3 times and scrutinized till they are booted off of the approved list.

Each way you look at it, costs are running up! Loans are more expensive to create, to originate, to close, and to sell! These costs do not disappear and companies are not willing to absorb them just to retain and/or bring in more borrowers. With that said, do not wait to get your historically low interest rate because the cost now will definitely be worth the savings over the term of the loan!

A BABY ON THE WAY AND LOOKING FOR A HOUSE?? BE CAREFUL!!

2010-07-22T10:59:00.000-04:00

I never thought I would see the day where brining a child into the world would actually create a problem to the lender. Lenders are now scrutinizing potential borrowers if they are planning on going on maternity leave. I do not know how the lender believes this will deplete the borrowers ability to make timely payments, and they are really reaching on the fact that they believe the borrower will not have a job to come back to when then come off of maternity leave. LETS GET REAL HERE! If we are going to start assuming that a “norm” that rarely, and rarely is being worse case, has ever created an issue with someone returning to the workforce or their current position, then everyone is at risk! Anyone could lose their job at anytime! Many people learned the hard way in this economy about job stability and security! People have it rough right now in the job market and everyone is holding onto what they have and waiting to see which way the economy is going to turn. If lenders are now going to steer away from the matrices they hold as the Holly Grail, then as originators, what should we be basing our pre qualifications and loan approvals off of???? Maybe I should just start assuming I should only use the male income to qualify….wow this is really going to help the housing market! People can now only afford half of a house they would normally be able to afford if we start making broad general assumptions about a potential woman’s clients ability to take maternity leave and keep her job. Really the lender might want to step back and rethink the whole idea because this sounds like to has a big LAWSUIT issue written all over it! If this is what lending has come to, maybe its time to start really holding those groups and people who really hurt the market accountable, and stop making the honest American pay for their mistakes! LENDERS WAKE UP!!!

THINKING OF BUILDING…..THINK ABOUT THIS

2010-07-21T10:20:00.000-04:00

In a time where the mortgage originator already has his hands tied with getting a easy purchase loan through in 30 days, the days of the construction loan are gone! At one point of time, construction loans were sky rocketing and it seemed that almost anyone who wanted to build could find some local or big bank to fund there project, as high as 100% of the appraised value. They would cover your cost overruns, your extra fees, permits, and even sometimes advance draws before the builder ever did anything! Now, you are lucky if you can even find a lender who will offer the product. Construction loans became very risky business and soon banks and financial institutions shied away from this type of lending due to the increasing amount of debt that was accumulating on their books and destroying their balance sheets. I know that some construction loans single handily destroyed a couple of bigger banks that failed in the past year or so.

Bottom line, construction loans are hard to come by and you better be a solid borrower(s). Here are some guidelines if you are thinking about building your first home or a home at all:

1. Obtain the land at least 6 months in advance. Usually the lender will want to see that you have owned the land for a little while or own it free and clear (No Lien) in order to be more flexible on the financial construction terms and end loan financing.

2. Have money for anything extra and don’t overdue the plans. If you don’t need it or you don’t know if you can afford it, the construction loan will definitely not be worth the hassle of trying to squeeze extra money out of it. When it comes time to finish up the home and roll into a permanent mortgage loan, you will have 2 options, if you are lucky, you can increase the end loan amount if there is enough equity and you qualify OR you have to come with the additional cash. Usually the construction loan bank will not choose to secure the end financing so you must go through a trusted mortgage institution who offers 30 year fixed products, so make sure you have your ducks in a row when it comes down to the bottom line.

3. Know how much your land is worth, not what you paid for it! This is one of the biggest traps people put themselves into. If you bought your land 2 years ago for $100,000, you will not be receiving $100,000 in value when it comes to the appraisal, land is just not worth that same anymore (nothing really is). By having a better idea of how much you land is worth, you know how much equity/down payment you have to use for qualifying purposes for the construction loan and how much of a loan you need to shoot and budget for in your scheduled time frame!

4. Lastly, choose a lender whom your builder has used before and has closed deals with recently. Things are different in each market, different per builder and especially in certain Neighborhoods. A builder will not recommended someone who can’t get your deal done, but make sure you have someone who knows what they are doing, look over your papers also. A lot of times the builder will recommend someone they have a financial tie in with, so make sure you know the deal in and out you are receiving what think you are getting.

Building is a great option when you have done your homework and put all the right pieces in place. If you are thinking about doing a construction loan, instead of calling a builder first, try calling a mortgage originator and see your options and make sure you have not jumped ahead of yourself!

VALUE vs. DEBT

2010-07-20T10:11:00.000-04:00

VALUE vs. DEBT

If you are a typical American, you most likely have or were living beyond your means. You spent more than you needed to and most of the time, spent more than you brought in. Well now the housing bubble popped, the financial markets are taking a huge hit, foreclosures are up, and the job market stinks….hold your breath for this…..THE US IS $4 TRILLION UPSDIE DOWN!!!!! What this means in simple terms is that the amount of home loans, outstanding mortgages, exceeds the actual value of the homes/assets by $4 TRILLION!! That is an outstanding figure to think about! You have more people with holding assets, making timely payments (hopefully) on something that is not even close to being worth what they owe or paid for from the beginning. This figure does not even include whatever debt local banks and smaller institutes are holding on their books!

Now the government needs to focus on this staggering figure because they are definitely not going the correct route to fix the problem. In a economy and market where values are the biggest issue besides credit score, they go ahead and implement a regulation group, HVCC, that we must regulate to for ALL APPRAISAL OREDERING! This means absolutely NO CONTACT WITH THE APPRAISER! I understand the theory behind the regulation….the less contact with the appraiser, the less fraud! BUT in turn they have single handily given all the power to the appraisers. You can not talk to them, you can not inquire about values ahead of time to even check to see if the deal is worth the borrower’s time or money, and the appraisers have absolutely no one to be held accountable to! Appraisers, scrutinized by underwriters and lenders for over appraising houses, now are running scared. They under appraise homes due to the fact of being removed off of lists and so no “red flags” are thrown towards their work. But here is a question I raise to all of you government and appraisers out there…Isn’t under appraising a houses value just as much fraudulent work as over appraising it???? Think about it, instead of giving too much credit to a home owner and supposedly hurting their financial asset, you under value their biggest asset and hurt any chance of financial security because their house can not be financed. It is interesting to see how appraisers and the government approach this Value vs. Debt situation because you would think they would try and open up the market and credit flows so we could bring ourselves out of the recession, not push us further into one. So I will leave you with this question to think about, if the government is not held responsible, the appraisers are not accountable, and the originators can not get deals done, then what good is HVCC when the whole entire nation is $4 TRILLION dollars in debt????

FHA….THE GOVERNMENT IS AT IT AGAIN!!

2010-07-19T10:19:00.000-04:00

WOW, lets take the only program that still allows borrowers to get into a home loan with low payments and a reasonable down payment, and take away some of it benefits and then add more stipulations. The Government is looking into changing a few items about the FHA Program, which we have heard about for the past 3 months. The first change is reducing the seller concessions from 6% to 3%!!! This could single handily reduce about 10% of all borrowers ability to purchase their first home. Nowadays, besides credit score, down payment and closing costs are the single biggest hurdle to have to get over. It makes sense when the sales price just gets increased enough to cover the closing costs needed for the borrower, which is typically 3-4% of the original sales price. BUT, if we are capped at 3% instead of 6%, how are borrowers going to come up with the extra 1%-2%??? Borrowing from other sources, silent 2nd liens, and other forms of secondary financing will start to become the way to obtain the extra money needed for closing. This in turn, will speed up the down ward spiral effect in the economy and market! If the “average” American must borrow more money than the original mortgage loan, then it is going to put them in a must more dangerous financial situation. Instead of the borrowers increasing their sales price and borrowing the money for 6.5% (if rates go up), they will be borrowing against credit cards 9% or higher, silent liens 10% or higher, and unsecured loans, 8% or higher. So not only do Americans have to borrow extra money from secondary sources, they also get to pay a much higher interest rate and thus prolong their debt situation even further! To get out of a financial crisis, we need to be implementing laws and adding to programs to help the average American obtain affordable housing, not making it tougher and tougher and pushing the borrower into further financial debt. STOP THE BLEEDING!

The second and third proposals about the FHA program make a lot more sense than the previous change! They would like to make it tougher on Manual Underwriting standards and increase the down payment required on a 580 or below credit score. I must agree with these proposals, but then again, isn’t this already the case???? I know every Manual Underwritten loan I submit, must have a whole heck on compensating factors to overturn the negative aspects of the loan. if you throw crap against the wall, it is not sticking nowadays! So by making higher expectations for Manual Underwritten loans, YES makes sense, but if you are in the mortgage industry, this is already the norm! Going back to the 580 credit score regulation….who can even do these loans? I know there are some broker companies out there promoting this product, but I find it to be slim to none to get these loans through and then, you better have a strong loan to even get this considered. In my opinion, if you have a 580 credit score or below, you must have done something pretty bad to have had your score get down that low. If it was your fault or not is left to discussion, but you have to take control of your credit especially when it comes to the single biggest financial investment of your life…your mortgage! You can not expect or even think you deserve to have someone lend you $150,000 and make a timely payment of $1000/month when you could not even pay a minimum credit card payment of $50/month on time! Finances still have to make sense, and even though the method of determining credit scores still has a lot of fuzzy area, you have to take a good look at your money coming in and going out, and think is it honestly feasible you can make the monthly payment!

I agree regulation was needed in the way programs were structured and even created. The programs, STATED, NO DOC, and 100% financing, all created more bad than good! But restructuring existing programs, the ones that help more than hurt, just does not sit well with me! Tightening up the standards where the default risk is the greatest makes sense, but when the program has a safety net and is the most strict per guidelines and documentation requirement, then why rock the boat??

THAT FEELING IN THE PIT OF YOUR STOMACH….

2010-07-16T10:07:00.000-04:00

Fraud is one of the most common measures borrowers and financial institutions are having to deal with in today’s economy. Mortgage originators need to be very aware of this problem and how it has been seeping into their industry. The best method to attack this issue is to prevent/detect it from the start. Gauging your clients by their interests, their dislikes, and their financial situation all can help you become more aware of your borrowers actual integrity and truthfulness when it comes to the mortgage process. This is just one of many things, but the main focus should be on ASKING THE RIGHT QUESTIONS! To determine a client’s exact degree of honestly if not easy, but it is not impossible either. By asking Safe and Informative questions, a mortgage originator can establish a rapport with a client and at the same time dig deeper into each response to determine if our client is being dishonest. Now, I used to tell my clients upfront, “Now I know there are a few things you probably do not want to tell me about your financial situation, but by the end of the process, it most likely will come out, so it is best to be as honest as possible with me.” Well, quickly I learned that clients still were holding information back (child support, silent liens, hours cut back). So where do you go from there?

You do not need to overdue the questions! You still need to be casual and friendly, but pay close attention to their mannerisms and subtleties to the questions you are asking. How many times have you kicked yourself by saying, “I knew something was weird when I asked that question?” Mastering this awareness will take time, but it is not always going to work, sometimes you just miss out on things! But to cut down on the percentage chance of that happening, you must follow this one idea…TRUST YOUR INSTINCT! If your gut is telling you that something is just not setting right, then you are probably heading down the right path!

So when you are originating out there, trust yourself and most importantly your instincts! They will never stir you in the wrong direction!

THE GAME HAS CHANGED…BUT IT’S STILL EASY TO QUALIFY FOR A MORTGAGE!

2010-07-15T10:04:00.000-04:00

In a time where people are scared to even walk out to the mail box, it is not surprising that the average American, and I am talking about almost 60% of Americans, think it is harder for them to obtain mortgage financing now then compared to when their parents bought their house many years ago. Well let me put this simply…NO WAY is that true!

Newspapers, magazines, TV and radio ads are definitely not helping the American perception of how the mortgage financing world is shaped! From horror stories in the job market to the millions of people foreclosing, Americans definitely have every right to think that it is tough to obtain a mortgage, especially in comparison to their parents. But here is the catch, when your parents tried to apply for a mortgage 30 years ago the interest rate was 12%!!!! Also, the average down payment was 20% of the purchase price. EASY????

Nowadays, the financial pendulum is on the complete opposite side. So what now? As an originator, we need to attack this problem head on and the best way is to educate the borrowers! Rates are at historic lows, and borrowers can qualify easier because their dollar can go a whole lot further than their parents. Even though the credit situation is tight, a borrower can obtain financing with as little a 3.5% down and a credit score of 620! Also, in some cases, the borrower(s) can obtain 100% financing pending their credentials. The underwriting system has become more automated and that also allows for easier approval process, along with high debt-to-income ratios for borrowers, so they can qualify for more of a house.

We are in the midst of heading into another recession, a “double dip” effect, but putting a negative image out on the one single thing that can bring us out of it, The Housing Market, does not seem to be the best strategy for marketers and the American people. Originators need to keep plugging the positives to their clients, realtors, business partners, AND ANYONE WHO WILL LISTEN TO THEM!!!! If we educate, it makes for a smarter borrower(s), who in turn, will tell someone else and word of mouth is always the best way to obtain a positive image! So get out there and educate someone! If you don’t, someone else just might…..

THE RESURGENCE OF TRUST

2010-07-14T10:15:00.001-04:00

TRUST…The one thing that can not be bought or faked! These are words to live by in the mortgage and lending world. Either you have earned it or you have not done enough to deserve it, so if you are on the wrong side of the pendulum, I suggest you find someone who has earned it and do exactly what they are doing each day!

Whether we want to admit it or not in the mortgage world, the government did implement 2 laws, one in 2008 (S.A.F.E. Act) and one in 2010 (Regulation Z) that are actually steps in the right direction. The Secure and Fair Enforcement for Mortgage Licensing Act sets standards for mortgage loan originators state licensing, education, and testing. Of course, the SAFE Act was not perceived too well in the mortgage world since it meant that an individual who wanted to originate loans must get licensed according to each states individual requirements. This also included the originators to take educational courses on laws, terms, and regulations in the mortgage world and one a state level, PLUS take a state specific and/or National Test (they must pass) to be able to obtain an originating license and originate mortgage loans in any state. So this is perceived as BAD????? This is such a blessing in disguise!! I do not know about all of you, but I was tired of losing leads and loans to “Fly by Night Operations.” I mean I think I even had my Fed Ex delivery man tell me he was originating loans. Now when I tried to talk to him about what loan products he offered, all he could really tell me was that he did not sell product and did not know the specifics, but he sold rate and something he currently had one his house…..he mentioned a “Ummmmmmm, Option ARM” We all know where that product got borrowers! This regulation I will say probably single handily eliminated 25% of the mortgage lending profession, which is great for those of us still in the business (STANDING)! If people are relying on us to educate them on the best mortgage product for their situation and TRUST that we will stir them down the right path, then we must be able to do that not only correctly but HONESTLY as well! TRUST and HONESTY run hand in hand with each other, and they are the surest way to firm us relations within any industry! I strongly believe the S.A.F.E. Act has definitely raised the bar in the expectation and education level of the mortgage originator!

Now, the S.A.F.E. Act played a huge part in the standard every client should expect from their Loan Officer, but to further even the paying field and protect borrowers further, the Government instituted REGULATION Z. The purpose of this regulation is to promote the correct and accurate disclosing of the terms and costs for borrowers about the mortgage transaction there are getting into, along with other rights like regulations of credit card practices, billing dispute time lines, and the right to cancel credit. Regulation Z is a blessing in disguise also for the borrower. The days are over for clients showing up to close on their mortgage transaction to find terms, rates, fees, and payments totally different than what they originally agreed to. As dishonest and crazy as this sounds, an outstanding number of people faced one if not multiple issues that I listed on their mortgage transactions everyday! This definitely gave the wrong correlation to the average American about the typical “Mortgage Originator.” In addition, it made a fair playing ground for the mortgage lending world. No longer will a lender, not disclose fees, point, discount points, prepaid items, ARM terms, pre-payment penalties, I/O, and the correct interest! If they do not disclose properly, it will not only delay the settlement by at least 3 business days, they will be liable for the difference in fees and must re-disclose properly to the borrower. I’m not going to say that Regulation Z is a walk in the park, in fact, I will go as far as saying it is a complete and absolute pain in the butt! Now though, people can start to feel easier when it comes to thinking about borrowing money because they know the originator needs to disclose everything o them upfront and they have the right to step away at any time.

RAISING THE BAR….are you keeping up?

THE WORLD OF THE CREDIT SCORE!

2010-07-13T10:14:00.003-04:00

Whether you like it or not, your credit score is the single most driving factor when it comes down to financing anything! In the financial world, credit equals risk, so the better the score , the less risk the financial institution is taking on and the better the financial terms you will receive and vice versa. FAIR you may ask? Well, financial institutions almost base 90% of all the money they lend primarily on your credit score (FICO)! This really hurts for those whose credit scores have taken a hit or are lower than the highest tiers because of financial reasons out of their own control (i.e. Loss of job, false reporting, mixed up reporting on accounts, disputed information, health problems).

25% of all Americans have a credit score that is below a 599!!!!! That’s around 43.3 Million People in the United States! This is a huge problem since lending and most financial institutions will not lend to anyone below a 600 Credit Score, unless you want to pay a ridiculous amount in extra fees ($3,000 average)! This means, No financial recovery and a greater risk for a double dipped recession! If these numbers do not concern you, just consider this as well, only 15% of all Americans before the meltdown had credit scores below a 599 and you could get a loan anywhere with nothing into the deal! We have over 26 million people out of work right now, almost all of them have had their credit scores take a tumble because of their financial losses….with all of this talk about financial reform, something needs to be done! Right now, these 26 million Americans do not have access to credit cards, auto loans, personal loans, and especially not home loans, and not only for the time period now, but for years to come!

Lending is tight! Most lenders are requiring a 620 mid Credit Score to be able to finance a house. If you are having trouble with your mortgage or just have questions, reach out to me hunts@fairwaymc.com or call 302-877-0400.

FHA DOING MOBILE HOMES???

2010-07-12T12:52:00.004-04:00

TAKE OFF THE WHEELS AND PUT IT ON A PERMANENT FOUNDATION!!

FHA is inquiring about taking on the huge task for financing mobile homes or at least increasing the amount of FHA lenders allowed to deliver this type of financing to their clients!

Did you know that nearly 1/4 of ALL the Homes sold in the US under $200,000 last year were MOILE HOMES???? Thats a staggering number!

Now if you are feeling up to the challenge, make sure you know the specifics about these homes! Here are a few items to look out for:

1. Built After 1976
2. On a Permanent Foundation, NO WHEELS
3. Must have Hurricane Straps, Tie Downs Underneath
HUD Labels, one on front and one on rear of home (each piece), the lables have numbers which are sequential i.e. 123 and 124 (Must have pictures of both)
4. ALL other FHA Appraisal conditions apply

Now is the time to snatch up the market share! If you can do what noone else can, every realtor will know about you and if you get just one deal done for a realtor that lists a mobile home, then there is your way in!

MORTGAGE MODIFICATION SCAMS

2010-07-08T08:38:00.003-04:00

YOU MIGHT BE IN A TOUGH FINANCIAL SPOT BUT DO NOT JUMP HEADFIRST INTO THE MODIFICATION PROCESS!

Mortgage modification scams can occur when unscrupulous people prey on borrowers who are struggling to keep their homes. While these modification programs promise to help, the people who perpetuate mortgage scams do little to no work, charge excessive fees, and se tactics that often put the homeowner at greater risk of losing their home.

MAKE SURE YOU DO YOUR HOMEWORK!!!!! KNOW YOUR OPTIONS! ASK QUESTIONS AND GET EXPLANATIONS!! These ideas will allow you to have a complete understanding of the modification process and procedures. In addition, do not submit your mortage payments to anyone other than your mortgage company. Also, beware of people who ask you to send your payment to them because they will just keep it for themselves.

The more you know the better you will be and hopefully steer yourself away from any scams out there! If you think you are being scammed, call a local mortgage broker and see if he can help you first, then have him look over the modification papers! i know financial trouble makes you feel desparate and looking for any help you can obtain, but make sure its the right help!

FHA- THE NEW WAY TO FINANCE!

2010-07-07T08:49:00.004-04:00

FHA (Federal Housing Administration) Loans are the hottest thing since SISA (No Doc) loans in the mortgage world (slap braclets kids may say)!

I have been orginating FHA loans since i came into the business about 10 years ago. I remember people telling me how stupid I was "wasting" my time lending with FHA loans. WELL LOOK WHO IS STUPID NOW!

FHA home mortgages are now the most popular way to finance the purchase of a home! Estimated 87% of prospective homebuyers plan to use this form of financing when purchasing their first or next home. FHA's market share has already grown considerably in recent years, and the first quarter of this year, alomst half of all homebuyers used an FHA oan to purchase a home.

YOU BETTER MOVE QUICKLY THOUGH!

With the new regualtions coming out each week it seems almost, FHA loans are easier to qualify for and have many neast features (gift funds for down payment, 6% seller help allowded for closing costs, only 3.5% Down Payment Needed, and Non- Occupying Co Borrowers allowed to co sign and monthly mortgage insurance only .55%). Now all of these neat items are all up for change per the house and senate and they are revamping the program weekly, so the time is now to jump in! For example, the House of Representatives recently passed a bill to increase insurance premiums charged to borrowers of FHA Mortgages, If they continue to make changes, the advantages of the program will disappear and your window to purchase will close! Call me today to discuss this wonderful program and let FHA WORK FOR YOU!

WALKING AWAY FROM YOUR HOME???

2010-07-02T10:45:00.005-04:00

Can't make your payment or can but think its beneficial to walk away from your mortgage???? STOP IN YOUR TRACKS!

On June 23rd, Fannie MAe announced policy changes designed to encourage borrowers to work with their servicers and pursue alternatives to foreclosure. Defaulting borrowers who "walk-away" and had the capacity to pay or did not complete a workout alternative in good faith will be ineligible for a new Fannie-Mae-backed mortgage loan for a period of 7 years from the date of foreclosure! Fannie Mae will also take legal action to recoup the outstanding mortgage debt from borrowers who strategically default on their loans.

If you think you are outsmarting the government, i would think again, because with the way things are heading, they will control not only Fannie Mae and Freddie Mac, but all aspects of FHA and VA loans, which then we all are in deep crap!!!

Tax Credit Extension

2010-07-01T15:38:00.004-04:00

So you think the deadline has passed and you lost your $8,0000! NOT SO FAST!

On Tueday June 29th, the House passed HR 5623 by an overwhelming margin of 409 to 5.
This bill would extend the "close-by" deadline for the home buyer tax credit to September 30. The Senate still must approve the measure before President Obama can sign it into law. Senate leaders announced that they are working on a similar bill on which to vote. As a stand-alone bill, the extension appears to have the broad support needed to pass!

What does this mean? This means that if the Senate passes the bill, anyone who is purchasing a home for the first time and got into contract on or before the end of April, is still able to get the $8,000 Tax Credit!