Brian P.'s Blog

Yogi Berra and FHA Loans

Brian P. Forrester (VanDyk Mortgage) — Tue, 14 Feb 2012 12:26:43 -0800

It’s déjà vu all over again at least twice a day when you live in the house that FHA built. In my opinion, that’s because there’s typically such a good deal of commotion about FHA rules that the commotion tends to distort the reality.

Case in point of course is the deal with seller-paid contributions. I am typically asked twice daily to confirm the change to the current six percent of the purchase price for the seller contribution towards prepaid expenses, closing costs, discount points etc., to the buyer’s bottom line. It’s still six percent. FHA’s projected change back in July 2010 never materialized and their new “soon to be released” change hasn’t happened yet either.

On top of that...the projected, new-all-over-again proposal will be subject to a 30-day comment period post-publication in the Federal Register.

And then after that, (once the flood of comments are evaluated), there may be the possibility that it could happen that there might be a potential change to the seller-paids as we know and love them today. I can’t imagine why it’s so confusing. (Insert sarcastic tone here.)

At the end of the day we’re still a month (or months) away even if anything will change. For now, believe it when you see it. I’ll keep you posted...

Things That Make You Say WTF

Brian P. Forrester (VanDyk Mortgage) — Tue, 07 Feb 2012 11:26:38 -0800

My most recent need to “WTF?” something was in response to an absurd left hook leveled at Americans by our governing body and its cracker jack cast of elected officials.

First of all, thanks for passing the Tax Cut Continuation Act of 2011; you guys rock the Congressional floor! But after the confetti for their self-indulgent ticker tape parade settled it seems that we’re simply talking about a re-distribution here. A component of this act includes a mandate by the Federal Housing Finance Agency to have Fannie and Freddie increase their guarantee fee on mortgage loans.

In the classic “give with one hand and take away with the other” we all only needed one guess to figure who was going to assume these new fees....yes, borrowers; aka the tax-paying public. And while some may argue that a 10 basis point is not a significant increase, that’s not the point.

First of all, this was the result of a classic shell game (moving a decrease over to increase something else) and second of all, once a fee gets its foot in the door there’s only one direction for it to go. On top of that, this is just one more “small” increase atop a host of other “small” increases that have been passed on to the consumer and can make the costs of borrowing ridiculously unaffordable. Every huge pile of crap starts with one fee increase.

Our housing market really doesn’t need another hurdle and the borrowers who are contributing to its recovery shouldn’t be penalized and the tax payers shouldn’t be subject to blown smoke.

At the end of the day I guess it will probably be OK. Sometime soon, the abolishment of the guarantee fee will make for some “atta boy” news. I wonder where this “tax cut” will show up next?

Down Payment Assistance is the Ultimate Coupon

Brian P. Forrester (VanDyk Mortgage) — Thu, 26 Jan 2012 09:34:34 -0800

If Extreme Couponing can be a reality show, just think what some down payment assistance can do for your real reality. Both Pasco and Pinellas counties in Florida have revamped their programs and have rolled out some really impressive down payment assistance from their respective counties.

Pasco County’s down payment opportunities can range from $20K to 30K while the program in Pinellas ranges from 5K to 20K.
What makes these programs even more attractive to home buyers interested in living in Pasco County is that the qualified properties have been rehabilitated and remodeled and probably require very little to do in the way of repairs and overall beautification. (What more could you ask for?)

I’ve always believed home ownership is the best gift anyone can give themselves. I don’t say that because it’s my business, I say that because that’s the reason why I’m in this business. But still, it’s a consumer purchase and should be considered as you would anything you buy; is it the right fit and are you getting the most for your money?

At the end of the day, I prefer to consult with clients as soon as they are considering a purchase so we can get them the best bang for their buck.

Don’t Play Chicken with Your Creditors

Brian P. Forrester (VanDyk Mortgage) — Thu, 19 Jan 2012 14:48:53 -0800

In a perfect world I would tower over most at an imposing height of 6’5”. In that same perfect world potential home buyers wouldn’t have to contend with credit disputes. Lately I’ve seen a lot of hiccups in mortgage processing with Fannie, Freddie and FHA due to judgments and liens and even minor credit disputes that hold up the works.

These are the types of “gotchas” we must get our arms around as soon as possible. It’s one of the many reasons I conduct such a thorough consultation/investigation when I first meet with a client.

The Mortgage Process is Like a Project

With the ultimate goal in mind, you must assemble the steps that constitute the plan while giving priority to long-lead items. By allowing sufficient time to complete those tasks they cannot pose conflict with subsequent ones.

What I’m saying is, even if it means paying off a minor balance you are disputing or submitting a letter to rescind a dispute so your mortgage process can proceed, you can move on with your life (and home purchase!).

How do our friends at Wikipedia define playing chicken? “The principle of the game is that while each player prefers not to yield to the other, the worst possible outcome occurs when both players do not yield.”

At the end of the day, sometimes you need to back down in order to win.

Florida Mortgages and The Loch Ness Monster

Brian P. Forrester (VanDyk Mortgage) — Wed, 11 Jan 2012 21:01:38 -0800

Despite the veritable murkiness of the rules regulating the mortgage industry, every week I get asked the same questions from Realtors about down payments. So every week these questions just reinforce the fact that there’s still confusion and that the mindset that “FHA is the only way” still exists.

In the wonderful world of mortgages everyone’s story is different and things are not always what they appear to be. Ironies exist. The assumption that you’ll come out ahead by financing with an FHA mortgage is not necessarily true.

Conventional loans with 5% down do exist and are still the gold standard as far as I’m concerned. With no upfront costs and a much lower monthly mortgage insurance payment to contend with, you still come out better off even with the extra 1.5% down.

At the end of the day, if your client is planning on occupying the property themselves, the conventional is truly their best bet across the board. Nessie does exist and so do great home financing solutions.

Thank You Santa!

Brian P. Forrester (VanDyk Mortgage) — Thu, 05 Jan 2012 20:40:11 -0800

Well I got my Christmas gift early and it came from Mozy.com. Everyone knows how I love me some technology, especially when one acts as a defense against the frailties of another! There’s no functioning without technology, but there are ways to arm yourself against these necessary evils.

What happened this time was the nose dive of my hard drive – although it was the one where I keep all my non-confidential data…gone were my go-to docs, my cheat sheets, form letters and computation spreadsheets. Or at least they could have been had they not be safe and secure beyond the world of cantankerous hardware and destructive software viruses.

While this is not a paid endorsement for Mozy.com, I have been using this remote back-up system for the past few years now and the first time it saved my home computer and all the photos of my kids. While those could never be replaced and my work templates could of course be re-created, who has the time or even should have to devote any energy to something when Mozy’s got your back?

I take my business seriously and to tell the truth I sleep better at night knowing all my family’s pictures and all my data is protected. So while I am able to go out and save the world one mortgage at a time; Mozy is also on the job saving one database at a time.

At the end of the day, there’s nothing like a contingency plan.

Shark Bait

Brian P. Forrester (VanDyk Mortgage) — Wed, 02 Nov 2011 15:14:51 -0700

Despite my sometimes caustic commentaries on regulations that don’t always provide what I would consider the most ideal solutions to fix real world problems in the mortgage industry, I will say that we have weeded out a bunch of the “in it for a buck” crowd. The alleged mortgage brokers and various bottom feeders who participated in the subprime feeding frenzy have done their damage and sank back into the sea and now (for the most part), the professionals left are honest people.

And isn’t this what me and my Realtor partners continue to strive for? We’re not out to chum the waters and just be “sellers of dreams” -- our role should best be defined as “trusted advisors.”

We’re not just a website where you enter a few variables to get current mortgage rates or home prices – we are instead resources. According to our friend Jeffrey Gitomer (who makes his money teaching sales people the art of earning and developing strong and long term client relationships) there are:

“6 Levels of Competence you can rise to as a salesperson:

Salesperson
Consultant
Advisor
Strategic advisor
Trusted advisor
Trusted advisor and resource

PLEASE NOTE WELL: These are NOT titles. They’re roles you play, and positions you are regarded as, by the customer. If your card says “consultant,” that doesn’t mean you are one. The proof of title is that the customer PERCEIVES you as one.

The customer’s perception of you is your reality.”

At the end of the day I think it is really important to keep our functions and responsibilities in focus. It’s the only way any of us are going to get anywhere and conquer our clients’ fears of going into the water. Cue Jaws soundtrack…

Mortgage Loans and Rabbit Holes

Brian P. Forrester (VanDyk Mortgage) — Wed, 26 Oct 2011 09:58:12 -0700

Thanks to Jane Kolocotrones, our Underwriting Manager extraordinaire for some much needed sanity about allowable fees and payments on the Purchase of Pre-foreclosure or Short Sale Properties!

The following is directly from Fannie Mae’s Selling Guide to distressed properties. While it is permissible for the borrower to pay a short sale processing fee for example, they do not allow the borrower to be reimbursed by an interested party (such as the seller or the real estate agent).

If the buyer is reimbursed, the fee is then characterized as a concession. And as we continue down the rabbit hole, a concession spurs the need for a dollar for dollar reduction in the sales price of the property.

Purchase of Pre-foreclosure or Short Sale Properties — Allowable Fees and Payments

Borrowers may pay additional fees or payments in connection with acquiring a property that is a pre-foreclosure or short sale that are typically the responsibility of the seller or another party. Examples of additional fees or payments include, but are not limited to, the following:

short sale processing fees (also referred to as short sale negotiation fees, buyer discount fees, short sale buyer fees);

Note: This fee does not represent a common and customary charge and therefore must be treated as a sales concession if any portion is reimbursed by an interested party to the transaction.

In a recent transaction, the buyer was going to pay the $6000 short sale review fee because the seller wasn’t paying it. (In conventional loans, these aren’t typical fees that a buyer pays.) In this scenario, the fix was to move the seller paid contributions to the seller paid closing costs.

As with these types of deals we have additions to our typical line to include short sale departments and lawyers and probably too many moving parts. These machinations tend to get a little gunked up unless every single move is checked and lubricated.

As a mortgage professional I completely understand why the short sale lender needs to confirm that the buyer is willing to pay more money for the house. The short sale lender needs to know and have the ability to re-negotiate the short sale once they know the buyer is willing to pony up more money. The lender needs to get as much as they can to mitigate the short sale. However…I don’t believe these transactions should ever be about lining a lawyer’s pockets with outrageous fees.

At the end of the day, if a buyer is willing to pay, then let’s add the expense to their side of the HUD and move on with our lives. The caveat here is the requirement by FNMA that the short sale lender get the opportunity to renegotiate and avoid slipping and sliding down the dark and winding distressed property rabbit hole.

Not So Fast My Friends

Brian P. Forrester (VanDyk Mortgage) — Mon, 10 Oct 2011 13:58:21 -0700

You would think that because our country’s veterans made personal sacrifices to defend and protect the United States that we wouldn’t pull a fast one on them wouldn’t you? Well, apparently the VA is all about bad magic tricks and pulling nothing but empty promises out of their shiny black hats.

It all started out on such a positive note: an existing funding fee was supposed to be adjusted giving veterans of our armed forces as much as a half a point off. But before the hats we tossed into mid-air had a chance to hit the ground it all got taken away. (AND HEAR THIS….we get to do this all over again on November 17th 2011!)

You see, the VA made this extraordinary announcement, but they did it with no approval; our elected officials never okayed the funding fee adjustment.

That’s bad enough, but if we know anything about this industry of mortgages we know that one thing affects another. Because of our Mortgage Disclosure Improvement Act we’ve got the happy three day disclosure time. SO…..if a vet had a pending closing at the new and improved rate, the paperwork now has to be adjusted to reflect the old rate which messes with due process of the loan transaction and can certainly affect a closing date and all the associated time sensitive elements.

I’m not necessarily “anti-Mortgage Disclosure Improvement Act”, but when dates are changed because you’ve got loose cannons at VA Headquarters, who wouldn’t take exception to that?

At the end of the day don’t raise any cheers in the VA’s direction. They didn’t really do anything at all except eat before they said grace.

What Does Your CPA Say?

Brian P. Forrester (VanDyk Mortgage) — Fri, 30 Sep 2011 09:08:06 -0700

We’re not actually in the mortgage industry; we’re actually in the business of navigating underwriting and guideline minefields. If you’re a recent home buyer, a Realtor, a title company professional or a fellow lender you’ll understand that I am not being overly dramatic! We tread cautiously with an eye for what’s ahead…that’s just the name of today’s game.

Today’s borrowers are different too. A larger percentage carries heavier baggage and less than stellar credit scores. Some borrowers, (more than you would think) are not even packing a W-2 – the standard statement for yearly income reporting. Certainly the economy and subsequent job losses have compelled many “ex-employees” to become business owners. And while being self-employed has tremendous benefits; you need to follow different qualification rules when buying a home. One of them involves getting “permission” from your CPA.

Basically, if you plan on taking money from your business and putting it toward buying your home, your CPA needs to provide a statement attesting to the fact that the amount you are “withdrawing” will not materially affect your business going forward. (Personally, if your CPA has that brand of crystal ball I have a lottery card I’d like her to fill out…)

At the end of the day, I just enforce the rules; I don’t make ‘em. If you own your own business just be prepared for some less-than traditional means of showing your mortgage-ability!

Let’s Hear it for the Team

Brian P. Forrester (VanDyk Mortgage) — Wed, 21 Sep 2011 12:52:30 -0700

If a mortgage banker can have a fan club, I guess I sort of do. I have worked really hard for many years and I am as trusted for my in-depth investigations to assemble fair and honest mortgage files as I am for my knowledge of all the changes that swirl about the lending industry on a daily basis.

The thing is though; I sort of get all the credit because I am the face of the business to my clients. Although I never portray myself as a one-man show, because I work directly with my clients from Day One to Closing – it may appear that I am.

I am not just some figurehead who delegates tasks to a team of subordinates; a huge part of my success and the fact that there are so many new homeowners on our watch is because of the support I receive from the back office and the underwriters and our management. It’s not just because they’re professionals, it’s because we share the same business ethics and that all-important sense of urgency. If I had to make a list of tips for people in the mortgage (or any industry!) on how to provide the best possible service:

Know what you’re talking about; if you don’t, say you don’t and get the right answer
Don’t micro-manage, but provide mega-support
Be days and steps ahead of the process so we are ready for any curve balls
Never throw the other guy under the speeding train; always use the pronoun “we” and work the problem internally until it’s fixed
Be honest

At the end of the day, myself and my company are a means to an end. We do our best to facilitate a challenging process and provide mortgages to home buyers who are a good risk. We’re a team.

Two FHA Loans Can be Better Than One

Brian P. Forrester (VanDyk Mortgage) — Thu, 15 Sep 2011 15:15:24 -0700

Hey all you Realtors out there…I think you know I’ve always had a great deal of respect for how difficult your job is. You really bear the lion’s share of responsibility for getting a real estate transaction underway:

You unravel client wish lists to ascertain what they’re really saying
You conduct comprehensive searches to come up with a selection of properties that meet all the criteria
You negotiate prices and repairs
You draw up contracts that protect your client and uphold the laws of the state AND you keep a vigilant eye on the drop dead dates so the time sensitive terms get accomplished
You even act as a part-time counselor/psychologist as you become immersed in the buyer’s family dynamics and drama

You guys contend with this impressive To Do List all the while keeping your client informed and making sure that everyone from the lender to the insurance company to the home inspector has everything they need to get their jobs done.

And besides all that…you are expected to keep up with my crazy industry and all the changes that keep it spinning.

With that being said, here’s some information about FHA loans – I get this question frequently so I thought it would offer some helpful insight. Basically, there’s a misconception that buyers can hold more than one FHA loan at a time. The answer is: They can. If one of your buyers has:

Limited down payment funds
Gift funds from family for their down payment
Credit scores that don’t qualify them for conventional financing

…then you know they are in FHA territory. If their current home is FHA-financed and they require the same mortgage type for their new home, there are circumstances under which they will qualify for a second FHA mortgage.

And here they are…

Relocation – they must document an unreasonable commute from current home
Increase in Family Size – must have current mortgage balance at or below 75% LTV
Vacating a Jointly Owned Property – a divorce situation for example
Non-Occupying Co-Borrower – Co-signed with family on their home

At the end of the day, your client still of course needs to financially qualify for two mortgages. And as with everything else in our world, they need to provide all the pertinent documentation per the individual lender’s specifications. Bottom line, this multi-FHA mortgage can really work to your client’s advantage.

As always, never hesitate to call if you have any questions about this opportunity in particular or anything about mortgage products and qualifications.

Fannie Mae and The Tax Man

Brian P. Forrester (VanDyk Mortgage) — Fri, 09 Sep 2011 14:19:54 -0700

Well, as of two weeks ago Fannie Mae is over it. If you’ve got an account with the IRS, she doesn’t want to know you; she’s paranoid.

If you owe back taxes and worked out a payment plan with the IRS, that’s all well and good as far as the IRS is concerned. You have an agreement and a payment schedule and you’re making good on your obligation…all is right in tax land. But the looming cloud that Fannie is trying to avoid is the potential future tax lien.

Her concern is the repercussion of you defaulting on your payments. If you do…you’re looking at a tax lien. If you’ve got a tax lien, that means you still owe money to the IRS and you have a Fannie Mae backed mortgage. Fannie would therefore slip into second place in the payback-pecking-order.

Consequently, in this theoretical scenario, you’re a bad risk. SO…Fannie is gonna save herself the heartbreak and not even entertain a business relationship with you. Hell hath no fury like a woman scorned.

The good news is…FHA and VA loans are not jumping ship and will not hold an IRS payment schedule against you. At the end of the day, the more things change, the more things change. I’ll keep you posted.

Never Assume When it Comes to Mortgages

Brian P. Forrester (VanDyk Mortgage) — Wed, 31 Aug 2011 16:58:08 -0700

What I tell everyone is that their perception of their credit situation is not clear until it’s verified by a professional. This cuts both ways….

I’ve had clients in my office who believed they had no stumbling blocks that stood in their way of obtaining a million dollar mortgage at an interest rate of under 4% with no money down. (Yes, I’ve heard it all!) What happens in some of those situations is that a person may have the financial “aptitude” but if they don’t have all the appropriate documentation to verify the source of their income and their holdings to prove their “mortgage-ability” -- then they’re going nowhere.

On the flipside, there are buyers who believe they have horrible credit, they know they have credit lines and high balances on several cards and don’t believe they would be a good mortgage risk. They therefore assume they will be denied a home loan.

This is not to say that either one of these clients is ready to make a move, but neither should presume their reality. It takes a comprehensive investigation into everything from the verification of income, to the mitigating circumstances, to the solid assessment of the buyers’ ability, to finding a mortgage product that suits; in order to determine the ability and ease with which they can pay back their loan.

At the end of the day, we all know what happens when we assume.

Putting Out FHA Fires

Brian P. Forrester (VanDyk Mortgage) — Sat, 27 Aug 2011 18:34:14 -0700

Our friends at FHA are back to adjusting the loan max limits. And again…change often equals panic. This is not only evident in our emotionally-driven stock market. We also see it just about every time there’s an adjustment to a mortgage policy; whether the perception is that it is a good or a bad adjustment.

In the case of FHA’s maximum loan limits, (the minimum loan is being reduced from 292K to 271K); it turns out the actual number of transactions it will affect in the Tampa Bay real estate market is not huge.

And besides, in a recent post, I detailed the comparison between going FHA and going conventional; and just to quote myself:

“FHA Loans were once the best game in town. If you had less than 20% to put down, FHA was your man. But now… 5% down with a conventional loan may ultimately be the cheaper/faster/better alternative than going the FHA Way.”

There are two sides to every story and the same holds true for mortgage loans. Reality is the side that will dictate what works best for your situation.

At the end of the day, don’t panic until you know how something is going to affect you. Secondly, if something costs you about the same amount, but potentially saves you from jumping through hoops of fire – consider it a viable alternative. Call me if you have any questions.

FSBR - For Sale By Realtor

Brian P. Forrester (VanDyk Mortgage) — Tue, 16 Aug 2011 14:52:04 -0700

Call it karma, or ironic or just really funny; but I love when real life reinforces a truth that I hold self-evident: you need a professional to represent you when there’s a lot on the line.

What’s the recent real life reinforcement that prompted this post?? The story in the Wall Street Journal about Colby Sambrotto: the founder of forsalebyowner.com. You know… the guy who predicated his business on Do It Yourself Home Sales but had to hire a Realtor who knew what the heck he was doing so Sambrotto could get his Manhattan apartment sold?

There’s a ton of expertise that goes into marketing and listing a home – it’s not just location, location, location that will make the sale.

I could go on at length about this guy and his inability to practice what he so easily preached (sometimes I wish I had my own talk show so I could devote an entire opening monologue to these types of stories!).

At the end of the day, whether you’re in the market for a $2.5 million co-op on Manhattan’s Westside or a doublewide in Anytown, USA…you can’t go wrong with an experienced agent and a mortgage banker who knows their market and how to facilitate the home buying or selling process.

Wonder what Sambrotto’s up to now? Perhaps he’s building his own home! Who needs a contractor or an architect or an engineer or a carpenter or an electrician or a plumber or a roofer anyway?

A Little Perspective Please?

Brian P. Forrester (VanDyk Mortgage) — Thu, 11 Aug 2011 10:42:55 -0700

While politics are more of a hot button than ever before and Americans are currently caught in the cross fire of Congressional finger-pointing; we still need to get perspective about how the country’s recent downgrading by Standard and Poor’s is really affecting you and getting a mortgage.

Whoever you want to “blame” for the downgrade, S&P is only one of three companies that provides credit ratings. Much like Experian, TransUnion, and Equifax are our mortgage industry go-to sources for a client’s credit score as they help to determine interest rates...S&P isn’t the only game in town and their peers are still standing firm on the premium credit status for the United States.

And another thing! In comparison to other nations issuing credit, we are still the gold standard upon which others are based. Therefore, the market for our debt still strongly mitigates most of the fears S&P may have instigated.

At the end of the day, amidst all the panic, interest rates actually went down over this past week; so what’s that saying? That’s reiterating that the market will be a main driver in helping to set the interest rates.

Let’s just de-twist the proverbial panties and take a deep breath. Your 401k may have been all over the map this week, but we’ve got money to lend at reasonable rates in a buyers’ market. How’s that for perspective?

Townhome and Condo Insurance - Be Prepared!

Brian P. Forrester (VanDyk Mortgage) — Mon, 18 Jul 2011 10:23:16 -0700

In the Alphabet Soup of Lending: Fannie, Freddie, FHA…just a quick reminder for the buyers of attached properties – townhomes and condos.

First of all…along with the cavalcade of foreclosures, lenders would find the inside of units had been destroyed and would not have any recourse to assist with repair costs.

Now lenders have wised up and have made it a condition of purchase that the buyer insures the interior of the property. Since buyers of attached properties have “walls in” responsibility, they need to be accountable for any potential damage to the interior of the unit caused by leaks or appliances.

Also….both buyers and their Realtors should triple check what the Homeowners Association master insurance covers; a portion of which your condo/association fees contribute toward that premium.

While these policies typically protect the exterior from outside walls to roof to common areas…just make sure you’re not going to get stuck with a repair bill for an exception for which you assume you are covered, just because you think you have insurance coverage by the homeowners association.

At the end of the day, you just never want to get caught swinging in the wind.

The Fall of the FHA Empire?

Brian P. Forrester (VanDyk Mortgage) — Mon, 11 Jul 2011 09:03:18 -0700

Before “Too Big to Fail” became a cringe-inducing colloquialism, we had “armor that cracked” and the “mighty that fell”. Do we now have a front row seat for The Fall of the Roman (FHA) Empire?

FHA Loans were once the best game in town. If you had less than 20% to put down, FHA was your man. But now… 5% down with a conventional loan may ultimately be the cheaper/faster/better alternative than going the FHA Way.

If you’re deciding your mortgage loan based on sheer costs (and most of us are!):

FHA Loan

$100,000 property
3.5% down

- Need 1% of the loan amount upfront

- Need 1.15% of the loan balance for the monthly Mortgage Insurance - this is included in the monthly payment

Conventional Loan

$100,000 property
5% down

- Need .94% of the loan balance for monthly Mortgage Insurance - this is included in the monthly mortgage payment (FHA used to be .55%)

So as to the proverbial bottom line for FHA, if you’re already putting 3.5% down plus the 1% of the loan amount upfront, you’re already at 4.5% in loan costs; and if you go conventional, you don’t need to contend with the laundry list of mandates associated with FHA loans.

However, the circumstance in which FHA still shines is if the borrower does not have the best looking credit. To qualify for conventional mortgage insurance, the borrower will still have to fit inside a rather small underwriting box. Therefore, a less than stellar credit profile could disqualify the borrower from the conventional mortgage insurance program; while FHA still provides opportunities for those with busted up credit.

At the end of the day, I’m thinking an FHA Loan is just not the workhorse it once was. From my Florida mortgage lender seat, your best bet always involves the exploration of alternatives.

Lease to Own - Don't Get Got!

Brian P. Forrester (VanDyk Mortgage) — Sat, 02 Jul 2011 09:42:09 -0700

The caveat “Buyer Beware” just doesn’t get old. While this message is not a paid endorsement by the National Association of Realtors; proper representation in lease to own and any other home buying/selling transactions will serve you best and keep you from the clutches of the “gotchas”!

Case in point: lease to own opportunities. They’ve been a viable alternative for future buyers who technically rent for a period of time with intent to buy the “rental” property. This arrangement typically suits potential sellers as well, as they are provided some peace of mind that these future owners of the property will have its best interests at heart and will not subject the property to the indignities often perpetrated by tenants.

However…..there is an apparently little known snag that can sneak up and distill this ideal arrangement.

When the renter-future buyer enters into the initial arrangement, the agreement that goes into effect cites the portion of the lease payment that will be allocated toward the purchase. The big but here is that when it’s time to transition to ownership and the appraiser pulls out the comparable rent schedule, if the payments that have been made are “over market”, it will instead be that rate of rent applied toward the future purchase.

At the end of the day, the economy and your credit are the players in your transaction, but treading cautiously with how today will impact tomorrow is your best bet.

Florida Mortgage Lenders and Bad Apples

Brian P. Forrester (VanDyk Mortgage) — Wed, 01 Jun 2011 14:11:47 -0700

And now for a journey down what I am just calling Ridiculous Road this week. Although mortgage lenders and just about everyone else relies on technology of some sort to do their job; we are not ourselves machines and we can make mistakes. OK -- but what happened to just doing your job as a plain old human being?

First of all, if you’re lucky enough to have a job in this economy, don’t you think that that alone would give you the impetus to do the best you can? But this week in particular we just had a rash of “professionals” who weren’t looking beyond their piece of the mortgage process.

None of us can work in a vacuum when it comes to getting buyers assessed and approved; everything is contingent upon everything else and when people just start drawing juvenile lines in the sand saying things like “I’ve done the three comps that were required for the VA approval and I am not going to do anything else.” – (a direct quote from a VA appraiser) – how can we get anything done if no one is seeing the big picture?

There are factors and standards in every phase of the mortgage loan process. But by not taking shades of grey and collateral dependencies into account and instead opting to infuse a situation with an attitude and huffing and puffing about doing perhaps a little extra from time to time is just ludicrous. (You may as well be a kid taking a tantrum in Aisle 5 in Wal-Mart…give me a break!)

At the end of the day, I realize we are not ending world hunger here; but can’t we just pull together and do everything possible to get qualifying people into their new homes? It’s a contribution to making people happy and salvaging the housing market while having a positive impact on real estate values and the economy. I think that’s a pretty lofty goal. I appreciate your indulgence as I just blow off a little steam; it happens when the relatively easy stuff is made so much more challenging than it needs to be. Now back to our regularly scheduled programming.

Fannie Mae Loans: Just Say "No" to LLPA

Brian P. Forrester (VanDyk Mortgage) — Thu, 21 Apr 2011 14:38:35 -0700

The Beatles would say "Money Can't Buy Me Love" and Fannie Mae would say "A Great Credit Score Can't Buy You a Home Unless You Grease Our Palm". I mean where does it stop? Now a home buyer with a credit score of 740 or better needs to pony up a 25% down payment to be off the hook? (I guess a 20% down payment is the old standard!)

So...if you've worked hard enough to achieve a pretty coveted credit score of 700 and you had the fortitude to save enough money to be able to put (only!) 20% down on a new home, our friends at Fannie will still charge you a full point (which is 1% of the loan amount) just for the privilege of doing a loan. I hate to say I've seen it all because who knows what tomorrow might bring; but come on people.

I mean I get it that they've lost money and need to replenish the coffers, but need it be on the backs of the people who should not be penalized? The ones who have shown that they are historically a good risk and will not likely walk away from the loan for which they've been approved?

According to the latest LLPA (Loan Level Price Adjustment) -- the matrix document that details the amounts applicable to loans delivered to Fannie Mae -- whole loans purchased on or after April 1, 2011 are subject to Fannie's trademark insanity.

And doesn't Fearless Fannie just publish this chart and then hand mortgage bankers the black hat to pass this additional loan fee stipulation on to Joe Home Buyer?

At the end of the day, I raved about it before in other Fannie Mae loan news; but I think it's time they pick up their charts and their graphs and take a long walk off a short pier.

Busting Florida Mortgage Myths

Brian P. Forrester (VanDyk Mortgage) — Mon, 04 Apr 2011 11:21:35 -0700

As a Florida mortgage banker, one of the debates that rage between two first time home buyers is whether or not it is cheaper to rent than to own a home. We hear it -- all the time.

While we know that it is typically cheaper to own, (after all, we're in the numbers game!) we still like to periodically test various markets and put theories to timely tests. I guess it's our version of "Mythbusters: Mortgage-Style!"

So we pulled a random sample from the Pinellas-West Pasco MLS in Florida and did a side by side analysis.

We took a three bedroom/2 bath home in Clearwater Florida with a listing price of $100,000 and a heated square footage of 1,576 square feet; Subject A in our investigation.

The three rental properties were in the same vicinity:

Subject B: 3 bedrooms, 1 bath, 1056 square feet

Subject C: 3 bedrooms, 2 baths, 1248 square feet

Subject D: 3 bedrooms, 1.5 baths, 1189 square feet

For Subject A we calculated a minimum down payment with an FHA loan and computed the principle, interest, taxes, and insurance that would be a part of the monthly payment to the bank.

So it is cheaper to own than to rent? Hell yeah!

•§ Subject A: Monthly Mortgage Payment - $842

•§ Subject B: Monthly Rental Payment - $1000

•§ Subject C: Monthly Rental Payment - $975

•§ Subject D: Monthly Rental Payment - $975

Not only is it less expensive, but you can have a home to call your own with no landlord telling you what to do, the benefit from the interest write-off on your taxes, and have the opportunity to build equity.

At the end of the day, what can I say? Oh, that's right! Myth Busted!

*Payment is for monthly Principal, Interest, Taxes and Insurance. Quoted payment is based on a loan amount of $97,465 at an interest rate of 5% for a 30 year term and has a corresponding APR of 5.977%.

Florida Mortgages and Making it Happen

Brian P. Forrester (VanDyk Mortgage) — Tue, 22 Mar 2011 15:53:54 -0700

Say what you want about the Florida real estate market, but from where I sit, these are some really good days. They are typically enjoyed when everyone does his or her job and delivers whatever paperwork or proof that's their responsibility to deliver so the gears remain greased and the show goes on.

This is not to say that Florida mortgage processes themselves are not without their challenges...one of them is getting FHA condo deals done. But you know what? They can get done if a mortgage lender steps up...and frankly, that's something me and my team pride ourselves on.

Case in point, in Florida, HUD has to approve a condo complex as a whole prior to the lender/FHA being able to approve an FHA mortgage loan for a unit in that condo complex. We had a client who wanted to purchase a unit for $40,000 in a subdivision for which the FHA approval was expiring.

And now here's the part where I shout about how we cracked the code!

We collected all the pertinent information HUD requires from the investor concentration to the pending owner assessments to the insurance data - we gathered every single document required (not something most lenders will deal with to be honest), and assembled the documents into a comprehensive package in the format that HUD requires to perform their review.

After a laborious 8 week process, we got the complex approved by FHA, we got the loan approved, and my client is in that condo right now painting her living room.

At the end of the day, I sometimes really love my job.

FHA: Just Ain't Going Your Way?

Brian P. Forrester (VanDyk Mortgage) — Tue, 15 Mar 2011 15:00:45 -0700

Well, they're at it again...cue the clowns. The FHA has once again increased their premium - yes, for the second time in 6 months, the FHA's mortgage insurance costs are changing.

While the effective date is April 18^th - I just need to clear up some confusion: this actually means that you have to have a fully executed contract, the application done, everything dotted and crossed and turned into the lender so he or she can submit it so you can receive the FHA case number. This all has to be accomplished prior to April 18^th.

If you receive your FHA case number on or after April 18, 2011, then your monthly mortgage insurance premium is subject to the increase.

Unfortunately, people still think that just because the paperwork is all done means that they just magically receive a case number OR even worse, believe they get a case number and then have to scramble to pull all the obligatory paperwork together. Well, that's just not how this circus rolls.

The interesting thing here is that this increase could actually pave the way for conventional loans to be a more affordable option.

So if you fit in that box, you could possibly be in a moving truck and driving up to your new home faster and less expensively than going the FHA way. (Area property taxes and credit-worthiness apply; see your local lender (ME!) for details.)