August 23rd, 2009
If you are having trouble getting your current mortgage modified, it may have more to do with the lender’s desire to collect the very high fees they charge for delinquent loans than on the lender’s limited staff capabilities as the Federal government has alluded to. The Tresury department has expressed that mortgage companies are not hiring people quickly enough to meet the current volume of customers seeking modification. I have had numerous customers share with me their frustations and difficulties in trying to get someone at their lender and/or servicing company to assist them with answering questions, let alone getting their loan modified. In the meantime, delinquency fees continue to accrue on their loans putting them further behind.
Another issue is those who are pro-active and are trying to avoid becoming delinquent due to job loss, death of a spouse or divorce, are often told that they must become delinquent before any modification option is available to them. One late mortgage payment can drop an individual’s credit score up to 100 points. Since credit scoring drives many factors in an individual’s life beyond the issuing of credit, such as employment opportunities or rates offered on insurance, it is ridiculous that lenders want to ‘recommend’ to individuals to become 90-days delinquent on their mortgage before seeking modification assistance. Yet that is exactly what has been told to several people I know who later called me seeking some kind of solution to their situation. Unfortunately, loan modification can only be offered by an individual’s current mortgage company. In most cases, due to depressed values, refinancing with a new lender is not an option because the property will not appraise for what is currently owed on the mortgage, further strapping the homeowner.
If a person is in a financial crisis to begin with and is attempting to find a workable solution before the crisis becomes dire, they should be applauded and given every possible resource available. To tell someone that essentially, they will not be offered any help until they’ve allowed their credit rating to be destroyed does not make sense in any way. Oh, and by the way, even after giving a borrower this ‘advice’ to let their mortgage go 90 days delinquent doesn’t guarantee the lender will agree to a modification at that time.
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August 20th, 2009
For some very real, albeit scary, information regarding our current real estate market, check out Mike “Mish” Shedlock’s article on HoweStreet.com “Brace for a Wave of Foreclosures, the Dam is About to Break.”
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August 19th, 2009
According to multiple news sources, over 15 million homeowners in the US are upside-down in their current mortgage. This means that the homeowner owes more on their mortgage(s) than the home is actually worth at this time. With unemployment creeping upward and companies cutting back on salaries, performance increases, etc., there is most likely another wave of foreclosures coming.
The government’s attempt to entice lenders to modify these type mortgages so homeowners can avoid foreclosure isn’t really working. As of July, according to several reports, as little as 9% of the troubled homeowners in the US are receiving any assistance at all through mortgage modification with their lender. Lenders claim to be ‘overwhelmed’ by the number of people calling for assistance but the truth is more than likely closer to the fact that, in these tough ecconomic times, they don’t want the burden of more ‘tainted’ debt.
Delinquency rates on all forms of credit are rising at a rapid pace. The result, banks are continuing to clamp down on lending to businesses and consumers. According to Federal Reserve report, they plan to keep things tight for at least another year.
While persistence is key, according to those that have successfully negotiated a modification, it is time-consuming and fraught with frustration. Homeowners are only eligible if they are “at risk of imminent default.” If you think you need to pursue a mortgage modification, prepare before you call. You’ll need copies of tax returns, pay stubs, bank and savings accounts, a written explanation on why your mortgage is currently unaffordable and what event(s) caused your income to fall or your expenses to rise.
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August 13th, 2009
The USDA Rural Development Home Loan is one of the last remaining ways to help homebuyers buy a home without a large down payment. Believe it or not, USDA has been around for a long time. Since the demise of the “subprime” no money down, no mortgage insurance loan, Loan Officers are going back to the basics.
What is a USDA Rural Development Loan?
A USDA Rural Development Home Loan is a loan backed by the USDA that allows homebuyers to purchase a new home for 102% financing. There are not many other options left to buy a home with no money down, and it is unclear how long this program will be available as it relies on government funding every year. The best features of a USDA loan are the long list of benefits to borrowers.
Compare these features with your other loan programs:
* No money down—up to 102% financing and based on appraised value
* No mortgage insurance required (just 2% upfront guarantee fee)
* Thirty-year fixed rates with no loan limits (income limits apply)
* New or existing homes accepted
* New manufactured homes on land/foundations also eligible
* No first-time homebuyer requirements
* No cash reserves required
* Owner-occupied only
* Generous seller contribution limits
* Not a government or down-payment-assistance program
* It’s a lender’s program–using lenders’ money and lenders’ loan forms
Eligibility includes household income limitations and geographic location of the property being financed. To learn more about the USDA Rural Development Home Loan, visit www.usda.gov
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August 12th, 2009
According to the requirements of the SAFE Mortgage Licensing Act, individuals seeking Loan Officer or Mortgage Broker Licenses must pass a national test and any state-mandated test in order to qualify for a mortgage license. The national component of the required exam was released on July 30, 2009 along with the first group of state exams. All state components are slated to be available no later than December 31, 2010.
The National Component of the SAFE Mortgage Loan Originator Test consists of one hundred (100) test questions: ninety (90) operational (scored), and ten pre-test (not scored). The test time will be one hundred fifty (150) minutes, with an additional thirty (30) minutes for completing a tutorial and an optional candidate survey.
Each State-Specific Component of the SAFE Mortgage Loan Originator Test consists of forty-five (45) to fifty-five (55) operational test questions (scored) with an additional ten (10) pre-test (not scored) test questions. The test time will be ninety (90) minutes with an additional thirty (30) minutes for completing a tutorial and an optional candidate survey.
While the SAFE Act does not require candidates to complete their pre-licensure education prior to scheduling and taking a test, pre-licensure education classes can be extremely helpful if used as part of your preparation strategy. Mortgage Training Concepts, LLC offers pre-licensing education pending approval by the NMLS. Visit their website at www.mortgagetrainingconcepts.com for more information.
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August 11th, 2009
With mortgage applications taken after July 30, 2009, waiting periods will go into effect with regards to when and how disclosure forms are provided to the consumer. The Mortgage Disclosure Improvement Act (MDIA) seeks to ensure that consumers receive disclosures earlier in the mortgage process. Here are some of the details:
Good Faith Estimate and Truth in Lending Disclosures….required waiting periods. Under MDIA, early disclosures are required for “any extension of credit secured by the dwelling of the consumer.” Three business days from application, the consumer must receive an initial Good Faith Estimate and Truth in Lending (unless the borrower is denied at application).The earliest a transaction can possibly close is seven days after the initial disclosures have been issued by the lender (delivered in person, mailed, emailed, etc.). This is assuming no re-disclosure is required. Re-disclosure (waiting periods after the early disclosure and corrected disclosures) of the GFE/TIL are triggered if the fees and charges are more than 10%; if the APR is more than 0.125% or a change in loan terms. Three business days must pass in the event of re-disclosure.
Re-disclosing is nothing new, it typically happened at closing–this will no longer be acceptable. Mortgage originators “should compare the APR at consummation with the APR in the most recently provided corrected disclosures (not the first set of disclosures provided) to determine whether the creditor must provide another set of corrected disclosures”. Read the press release regarding the Mortgage Disclosure Improvement Act on the Federal Reserve’s website: http://www.federalreserve.gov/newsevents/press/bcreg/20090508a.htm
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August 10th, 2009
While this will eventually be known as one of the worse housing recessions in our history and there are indications that the housing market beginning to stabilize, it is hard to tell if we’ve hit rock bottom yet. Dean Baker of the Center for Economic and Policy Research says, “The freefall is over.” That said, the expectation is that the market will continue to hang out here ‘at the bottom’ for several more months, possibly into early next year.
Unemployment is steadily increasing and expected to go over 10% nationwide, it’s pushing 15% in some states already, and it will be difficult for the housing market to truly settle if people continue to struggle to make their mortgages or are unable to due to lack of income from job loss.
Currently short sales are on the rise and could increase as more homeowners find themselves with poor job prospects after layoffs. Massive layoffs at Bank of America and Wachovia in their home state of North Carolina has taken a serious toll on the housing market in and around the Charlotte area. Florida, already suffering from one of the highest foreclosure rates in the country, suffered yet another blow last week when mortgage giant Taylor Bean Whitaker closed its doors for good. Approximately 1000 employees were suddenly out of work.
The problem about knowing if you’ve reached the bottom is—you only know for certain you were there once you’ve started to climb up on the other side. It may be a while before we can confidently look over our shoulders and say, yep, that was the bottom!
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August 9th, 2009
FHA now has a section on their website for consumers and loan officers to go and get answers to questions regarding all areas of FHA lending. It’s called FHA WIKI. It’s listed under resources on this site on the right-hand side of the page or you can simply click on it in the body of this post. If you have questions about the loan process, underwriting guidelines, qualifying process or anything related to FHA lending, this is a great reasource.
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August 8th, 2009
On Tuesday, the Federal Housing Administration (FHA) suspended Taylor Bean Whitaker (TBW) from originating or underwriting mortgage loans for FHA.
“The FHA said in a written statement that TBW is the third largest direct endorsement lender of FHA-insured loans and the eighth largest issuer of Ginne Mae mortgage-backed securities.”
According to the Wall Street Journal’s report on Tuesday, Taylor Bean failed to submit a required annual financial report and to disclose to the FHA “certain irregular transactions that raised concerns of fraud.”
TBW was shut down on Wednesday and approximately 1000 employees found themselves out of work. This closure will have a significant impact on both mortgage brokers and borrowers seeking FHA financing.
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August 5th, 2009
Since the new regulations don’t ensure that you will get a fair and/or accurate appraisal, it’s important that you, the homeowner, know what you can do. If you are refinancing, it would be a good idea to talk to an experienced realtor about property values and comparables for your home.
After finding out as much as you can about recent sales, talk to your neighbors and find out if there were any unusual circumstances surrounding recent sales, such as a homeowner that was out of work trying to avoid foreclosure, short sales, a couple divorcing, etc.
If you find properties with good sales prices that are reasonable comparables for your home, be sure to note them down and share the list with the appraiser.
Curb appeal helps—appraisers are not evaluating your housekeeping skill but you want your home to appear in its best light just as you would if you were having an open house. Yard and flower beds should look tended and tidy.
Once the appraisal is complete, you are entitled to a copy, even if you paid for it through a lender. Review it carefully. Make sure the details regarding the square footage, rooms, and features are accurate.
If you find mistakes or other items to question, contact the appraiser directly and ask him/her to correct and/or explain their assessment. If the value is lower than you expected and you have your list of good comparables, review them again with the appraiser and ask for an explanation of why they weren’t included or ask for them to be included in the valuation. If the appraiser is not willing to make corrections or updates to the original report, you can file a complaint with your state’s real estate appraisal board.
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