Colorado Mortgage Broker Licensing - 12/26/08 11:31 AM
Only one more week before the licensing requirements change for all mortgage brokers in Colorado.  Every mortgage broker needs to be licensed now, but the education and testing requirement doesn't go into effect until January 1, 2009.  For any loans that are originated after January 1, the broker must have taken a 40-hour class and passed a test.  If they have not passed the test, then their current license will no longer be valid, and that puts any deals you have going with that mortgage broker in jeopardy.   
Of the 9,402 active mortgage brokers in Colorado, only 2,111 have passed the test as of December 18.  That's … (1 comments)

Does a Buyer Have To Initial the Pages On a Sales Contract If There Is a Counter-Proposal? - 12/24/08 10:34 AM
Q: Why do some underwriters ask for the seller's initials on a sales contract when there is a counter-proposal?A: Although a seller does not sign the original offer if there is a counter-proposal, the offer is still the bulk of the contract. By initialing the pages, the seller is indicating that they have agreed to everything in the contract except the terms that are changed by the counter-proposal. Underwriters ask for the initials for the protection of the seller.Not all underwriters will ask that the pages be initialed, but if they do ask, then the pages need to be initialed.
… (2 comments)

What Happens if the Underwriting Guidelines Change After a Loan is Started? - 12/22/08 08:20 PM
Underwriting guidelines change constantly these days and we are often asked what happens if the guidelines change between the time a loan application is taken and the loan closing. Q: Does the lender have to honor the old guidelines?A: No, a lender is under no obligation to honor underwriting guidelines just because a loan application has been taken. Some lenders will honor the existing guidelines once the interest rate has been locked and some will honor them once a clear-to-close (the final underwriting approval) has been issued. Find out up-front from your mortgage broker what the rules are for the lenders … (6 comments)

What is the Difference Between a Collection and a Charge Off? - 12/16/08 09:41 AM
Q: What is the difference between a collection account and a charge off, and why does a company choose one over the other? A: A collection account is an account that is delinquent and has been sold (usually at a discount) to a collection agency. The consumer now owes the collection agency, and not the original creditor, for the debt. A charge off is a delinquent account that has been "written off" the creditor's books. The creditor takes a tax deduction for the loss, and no longer attempts to collect the debt from the consumer.
The obvious question is why would a … (1 comments)

The Two Biggest Credit Mistakes - 12/14/08 10:51 PM
We've mentioned this tip before, but it is so important, we've got to post it again.  Too many people are not qualifying for mortgages because they don't know this.  
These are the two biggest mistakes people make regarding their credit:  
-- They pay off an account and then close it.  DO NOT tell anyone to do this.  It will make their score go down for two reasons. 1) They have stopped the amount of time the account has been opened -- the longer an account is open, the higher the score.  2) They have lowered the amount of available credit that they … (2 comments)

Should You Use a Credit Repair Company? - 12/14/08 10:46 PM
Here's one of the most common questions we are asked:
Q: Should someone use a credit repair company to improve their credit score?  
A: No one should ever use a credit repair company.  The vast majority of them are complete rip-offs.  There are no "secrets that the experts don't want you to know." 
If there is an error on your report, you can correct it yourself, for free, by writing a letter to the three credit reporting agencies (TransUnion, Experian, and Equifax) and sending them the documentation showing that there is an error.  It costs nothing.  If someone tells you that they can … (5 comments)

What Does POC Mean? - 12/12/08 12:24 PM
Here's another common question:Q: What does POC mean on a Good Faith Estimate and a Final Settlement Statement?A: POC stands for Paid Outside of Closing, and refers to any fee that is not being disbursed at the closing. The two most common POC charges are the appraisal fee (if it has been paid by the borrower before the closing) and the yield spread premium (the rebate that the lender pays the mortgage broker).If a fee is marked as POC, it is not included in the bottom line on the settlement statement because the borrower has either already paid it (in the … (0 comments)

Is the $7500 Tax Credit for First-Time Home Buyers a Good Deal? - 12/11/08 10:11 AM
By now, everyone has probably heard about the $7500 tax credit that first-time home buyers can get this coming tax year. We're hearing many people question whether they should claim the credit because they have to pay it back over the next 15 years (at no interest). Because $7500 is not a huge amount of money - certainly not enough to make anyone rich - it's a difficult decision, especially because the IRS is involved (we're always pretty suspicious of the tax man).Here's a great way to tell whether something makes sense. Multiply the numbers by 1000. It will become very … (2 comments)

When Does the FHA Down Payment Change to 3.5%? - 12/11/08 10:07 AM
Q: I know the FHA down payment goes from 3% to 3.5% on January 1, but what is the down payment if the sales contract is signed in December and the closing is in January?A: The down payment is determined by the date that the lender gets the FHA case number. As soon as a sales contract is signed, your mortgage broker can get a case number. It takes about 5 minutes. As long as the case number is obtained in December, the 3% down payment applies -- it doesn't matter when the loan closes.
… (2 comments)

How Did the Lender Know My Buyer Quit His Job? - 12/09/08 06:22 PM
Here's another question from a recent presentation we gave:Q: "I had a buyer quit his job right before a closing and the deal fell apart. How did the lender know he quit his job?"A: Every lender calls the borrowers' employer right before the closing (generally within 5 days of the closing) to see if the borrower is still employed. This is one of the conditions on all loan approvals that must be satisfied before the loan can fund. The verification is known as a verbal verification of employment and is done over the phone. It does not include income information, just … (7 comments)

Licensing for Mortgage Brokers in Colorado - 12/08/08 10:11 AM
All mortgage brokers in Colorado need to take 40 hours of training and pass a test by January 1, 2009 in order to maintain their licenses and be able to legally originate mortgages. 
The training and testing has been available since April 1, 2008.  However, so few mortgage brokers have bothered to take the training and sign up for the test, the state is being forced to extend the deadline until March 31, 2009.   
Every mortgage broker must be individually licensed.  As of the end of November, only 1166 out of 9402 licensed mortgage brokers in Colorado have taken the … (0 comments)

What Does Underwriting Mean? - 12/08/08 10:06 AM
Q: What does underwriting mean?  
A: Underwriting is the process used to determine whether a borrower falls within the risk guidelines for a particular loan product.  On it's simplest level, underwriting is a "check off the boxes" process.  Do the borrowers have high enough credit scores?  Do they have enough money for a down payment and closing costs?  Do they make enough money to be able to pay the loan back?  The underwriting guidelines are different for every type of loan.  When a mortgage broker "qualifies" a borrower, he makes sure the borrower fits within the underwriting guidelines for the loan they … (2 comments)

Are Co-Signers Allowed If They Don't Live in the House? - 12/06/08 11:19 AM
Q: Can a buyer have a co-signer on a loan if the co-signer doesn't live with them?  
A: Yes, this is allowed for all loans, but the occupying borrower must be able to qualify for the loan by themselves if the loan is not an FHA loan.  If the loan is an FHA loan, then the occupying borrower doesn't need a credit score, income, assets, or anything else, as long as the co-signer (who must be a relative) can qualify for the loan.
… (2 comments)

Is an Ex-Spouse Considered a Relative for Loan Purposes? - 12/05/08 07:35 PM
Here's another question we were asked at a seminar for real estate agents:Q: I have a buyer who needs gift money to pay for closing costs and I know the money needs to come from a relative. Does an ex-spouse count as a relative?A: No. Exes, boyfriends, and girlfriends are not considered relatives. Fiancés and fiancées are considered relatives, however, provided some proof is available showing that the couple is actually engaged. A marriage license, a receipt from a jewelry store for an engagement ring, and a newspaper announcement are all examples of proof that has been accepted by underwriters. Same sex … (4 comments)

HUD Home Info - 12/05/08 07:31 PM
A HUD home is a house that the Department of Housing and Urban Development (HUD) owns and wants to sell.  HUD is the owner because the house used to have FHA financing and the previous owner went into foreclosure.  HUD is the government agency that oversees the Federal Housing Administration (FHA).
Ever wonder where to get all the information you could want about HUD homes?  Here's the link:
http://www.mcbreo.com/st_comain.htm  
Make sure you click on the "Broker Handbook" link on the right of the page.
… (0 comments)

What Is the Origination Fee? - 12/03/08 01:51 PM
Q: What is an origination fee?A: The origination fee is pure profit for the mortgage broker. Part of it may go to the mortgage broker's employer, but it is still 100% profit for the mortgage company. Sometimes a mortgage lender will tell you that the origination fee is being used to buy down the rate, meaning it's being used to secure a lower interest rate by making a one-time up-front payment. That is not correct. Loan discount fees (sometimes referred to as "paying points"), and not the origination fee, are used to buy down the interest rate. It's important to have … (113 comments)

Do All Lenders Allow a Power of Attorney? - 12/02/08 10:51 AM
Here's another question we're frequently asked:Q: Do all lenders allow a Power of Attorney (POA) if one of the buyers cannot be present at the closing?A: If the buyers are related, then it's generally not a problem. If they are not related, then the lender must approve the person who will be acting as the attorney-in-fact. In all instances, the lender has to approve the format and wording of the POA. The title company will be able to prepare the POA.
… (2 comments)

FHA and VA Classes - 12/01/08 09:16 AM
Government loans (FHA and VA) now account for more than 40% of all loans nationwide, up from less than 10% a year ago.  The number is growing every month and is expected to be greater than 50% in the next month or two.  
That means about half the deals that are closing right now are unavailable to buyers, real estate agents, and mortgage brokers who don't use government financing.  The primary reason for not using government financing is a lack of understanding about how the programs work.   
We are approved by the state to offer continuing education units (CEUs) to Colorado real … (0 comments)

Quit Claim Deeds - 12/01/08 09:10 AM
Q: Does transferring the title to a property using a quit claim deed release someone from the responsibility of paying the loan?   
A: No, it does not.  The only way to release someone from the responsibility of paying a mortgage is to refinance or sell the property.  A quit claim deed only transfers ownership, not liability for the loan.
… (4 comments)

 
Chris Thomas (The Mortgage Experts at America's Mortgage) Rainmaker_large

Chris Thomas

Denver, CO

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The Mortgage Experts at America's Mortgage

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