Kabir Mahadeva NMLS #182829 Alpha Mortgage www.kabirm.com's Blog

The State Of Mortgage Lending Today

Kabir Mahadeva NMLS #182829 Alpha Mortgage www.kabirm.com — Tue, 25 Oct 2011 15:12:03 -0700

The state of today’s mortgage lending is characterized by three major factors: market volatility, accountability, and challenges in selecting the right mortgage lending source.

Market volatility refers to both mortgage rates and home prices. Mortgage rates, which depend on publicly traded bond markets for mortgage backed securities (MBS), fluctuate daily, if not several times a day, due to global and domestic economic events. Threats of inflation, government borrowing, economic trends, foreign debt and trade, political unrest affecting commodity prices, stock market activity—all of these cause reactions in the bond market that affect mortgage rates. Although rates are at all time lows, it is now virtually impossible to time the market, so a rate quoted at 9am could be drastically different only a few hours later. A trained professional should be able to show you how the bond market is performing, analyze trends, and be a “personal shopper” for their clients in the volatile rate environment.

Home prices are scrutinized like never before. The appraisal, and, indirectly, who performs the appraisal, becomes one of the most important factors in loan approval. Many large bank lenders use third party appraisal management companies to assign appraisers, and this creates a risk that the appraiser is not knowledgeable about the trends in the local market. Home prices in a given neighborhood could also vary widely depending on the existence of distress sales (foreclosures and short sales), and sifting through the relevant comparable sales can be a challenge. Some areas are actually appreciating in value, despite what you might have heard in the news, but you need a local, experienced appraiser who really understands the market to provide the most accurate evaluation.

Accountability applies both to borrowers and their loan originators. Borrowers must now provide more documentation than ever before—tax returns and bank statements are required for all loans—as well as be expected to sign more disclosures and forms than any other time in mortgage origination history. Cash flow is much more important than assets, and newly self-employed or retired people need to plan carefully if they intend to purchase a home with income sources that they have not drawn upon for appropriate lengths of time.

There are still many low down payment options for home buyers as well, including USDA, FHA, VA, and, yes, loans with private mortgage insurance. Such loans are appropriate not only for first time homebuyers but also people relocating to new areas who have had to sell their previous homes for lower prices, and hence, have limited funds for down payments.

Borrowers should no longer expect to get a rate quoted without providing important information and allowing their credit history to be checked. Borrowers with lower credit scores may either pay higher rates or find themselves ineligible for any loan until they take steps to raise their scores.

People who pay their bills on time, have steady incomes, and have good credit scores (720+) can get loans at unprecedented low interest rates. Self employed and commissioned people have to show track records of success in their work and not deduct so many expenses that their cash flow becomes too low to qualify. People who can’t prove their income can’t get loans.

A loan originator must now be an expert in coaching his or her clients in gathering and presenting a loan application package that is comprehensive and addresses any issues up front. That originator also needs to work for a lender who can offer quick turn times for loan decisions and make all decisions in-house. Many large bank lenders can no longer close loans quickly, and have very little accountability to the borrower in keeping track of their files. Loan originators should have in place a disciplined regular communication program for every loan that keeps every party (borrowers, realtors, attorneys) proactively informed.

Thus choosing the right lender becomes critical. While rates are important, most lenders tend to have rates in a similar range as their loans all ultimately end up in the same secondary bond market. Minor pricing variations could result from quotes at different times, different lock periods, or levels of service. Many low-priced lending sources such as internet lenders will not offer the personal attention, service, and accountability that a local loan originator will provide, not to mention the on-the-ground local problem solving necessary to get things done properly. Finding the right lender is as simple as asking 7 questions; for more information on this, watch the video at http://vimeo.com/25821745.

In summary, to properly navigate today’s lending environment requires working with trained, experienced local professionals to help prospective borrowers understand the market, use local appraisers, compile a solid loan application, and remain accountable to the borrower throughout the process.

7 Questions to Ask Your Asheville Lenders

Kabir Mahadeva NMLS #182829 Alpha Mortgage www.kabirm.com — Wed, 06 Jul 2011 14:43:58 -0700

DO YOU KNOW WHAT QUESTIONS TO ASK WHEN YOU’RE SHOPPING FOR A MORTGAGE? MOST ASHEVILLE LENDERS WILL BE PRETTY CLOSE TO EACH OTHER IN RATES AND FEES. RATES MEAN NOTHING IF YOUR LOAN IS NOT APPROVED OR CAN’T CLOSE ON TIME.

Today, with all the uncertainty and strict loan guidelines, you really need to work with an Asheville Lender who can get your loan approved and closed quickly and efficiently. But how do you find such a lender? Here are 7 Questions to ask a prospective lender.

1. Are you lending your own money? Alpha owns the process from application through closing and funding. We lend our own money, so we make the decision to lend.

2. How many people will be involved in the loan process? For Alpha, it’s the loan officer, processor, and underwriter. That’s it. You will always know what is happening. We are ACCOUNTABLE.

3. Who will do the appraisal and how will they be assigned? Alpha still uses experienced, local appraisers whom we assign on a rotational basis. Many other Asheville lenders use third-party appraisal management companies that put the appraisal out to bid; in many cases, the appraiser with the lowest bid, regardless of experience or local knowledge, get the assignment.

4. How fast can you close? Alpha owns the loan process, so we can adjust priorities if necessary. This is particularly important when purchasing short sales where the time frame to close is short after the servicer of the existing loan agrees to the short sale.

5. Can your loan officer work directly with underwriters? Alpha has in-house underwriters who answer questions and resolve issues instead of just declining loans. Every loan has individual characteristics that DESERVE PERSONAL ATTENTION and understanding from everyone involved. Underwriting should not be an impersonal machine.

6. Who prepares the closing package and arranges funding? Every Alpha loan processor closes her own files. Many other Asheville lenders have centralized closing departments who are unfamiliar with the file and who have multiple conflicting priorities with getting packages out. If your processor is your closer, then she has a commitment to get that file closed. It’s her job. SHE IS ACCOUNTABLE.

7. How many days in advance do you typically have the package to the settlement attorney? Alpha strives to get the package out at least 48 hours prior to closing. Many other Asheville lenders end up sending packages at the last minute which leads to a lot of stress. Settlement attorneys LOVE Alpha because we make their jobs easy. They have a single point of contact (the processor) to get the package, approve the HUD, and resolve any last minute issues.

Today, it's all about EXECUTION AND ACCOUNTABILITY. This may be one of the largest financial decisions you will ever make, so you need to find an Asheville Lender who will put your needs first and get things done fast.

Click here to request a checklist of the 7 Questions to Ask Your Asheville Lender. And if you'd like to share this information with a friend as a video, click on the picture below:

Work Only With the Best Clients

Kabir Mahadeva NMLS #182829 Alpha Mortgage www.kabirm.com — Fri, 29 Apr 2011 12:40:06 -0700

In today's market, we often show willingness to work with anyone who can fog a mirror, but at some point, we need to recognize that we must focus on the right clients and referral partners. If we don't, we lose the opportunity to work with people who help build our business rather than waste our time.

Your time is the one precious commodity that you can never recover if spent unproductively, so being selective about the people with whom you will invest your time and effort.

I recently read a great coaching article by Tim Davis in The Niche Report magazine in which he laid out the qualities he wanted in a referral partner. I was inspired to create my own list, below, for the types of clients I want to work with. I strongly recommend that anyone in sales do the same for himself or herself.

I will choose to only work with clients who will provide information cooperatively.
I will choose to only work with clients who have a strong desire to gain knowledge and education.
I will choose to only work with clients who have a sense of urgency.
I will choose to only work with clients who believe in building long term relationships based on mutual respect.
I will choose to only work with clients who are ethical, have integrity, and are open and honest.
I will choose to only work with clients who understand how value is more important than price.
I will choose to only work with clients who treat me with courtesy, appreciate my expertise, and honor my time.

Tim says, "I am not looking for anyone, instead I am looking for someone. You do not have to work with everyone. You can choose. When you understand that principle, you will feel empowered, confident, and your business will grow."

"I want to get a mortgage"

Kabir Mahadeva NMLS #182829 Alpha Mortgage www.kabirm.com — Mon, 22 Nov 2010 11:52:44 -0800

If ever you're at a loss on creating a video, you can always make one by simply writing a script and using a simple web-based editor. I was amazed at how quickly one can produce a short cartoon with just a little bit of effort.

I've watched a lot of movies in my time, and never fully appreciated the importance of the script and directing until I made my tiny screen debut.

If you're shy about being in a video, you can still produce video without showing your face. So here's to you, creative Rain members, another outlet for your inner Scorsese!

FHA's New Mortgage Insurance Premiums--Will This Affect Buying Power?

Kabir Mahadeva NMLS #182829 Alpha Mortgage www.kabirm.com — Thu, 02 Sep 2010 16:12:47 -0700

The answer is...yes it will, and it might be best for them to go under contract before October 4.

With the passing of H.R. 5981 and the resulting Public Law 111-229, FHA was given authority to change the amount charged to borrowers for both the Up Front and the Annual premiums. These changes as outlined in Mortgagee Letter 2010-28, are effective for all case numbers assigned on or after October 4th, 2010.

Here are the 6 things you need to know about these changes:

The Up Front premium is now 1.0 % for all standard FHA programs (purchase money mortgages, full credit-qualifying refinances, streamline refinances)
|
The Annual premium is now .90% for LTVs GREATER than 95% on 30 year loans
The Annual premium is now .85% for LTVs EQUAL to or LESS than 95% on 30 year loans
The Annual premium is now .25% for LTVs GREATER than 90% on 15 year loans
The Annual premium is now .00% for LTVs EQUAL to or LESS than 90% on 15 year loans
These premiums apply to purchases, regular refinances and streamlines

Please note that this new law also gives FHA the authority to raise the Annual premium at will up to 1.5% for LTVs at or below 95% and 1.55% for LTVs more than 95%.

Here's how it affects a hypothetical purchase of 200,000 with a 3.5% down payment, giving a loan amount of 193000 (96.5% LTV):

Current FHA Up Front Premium is 2.25% of 193,000 or 4342, so total loan amount is 197342. The monthly principal and interest is 999.90, MI is 87.81, so the total monthly payment (principal+interest+MI) is 1087.71 at 4.5% interest.

Revised FHA Up Front Premium is 1% of 193000 or 1930, so total loan amount is 194930. The monthly principal and interest is 987.68, MI is 143.69, so the total monthly payment is 1131.37.

So the monthly payment will go up by $43.66. Using standard qualifying ratios, this would mean the borrower's income to qualify would have to be about $110 more per month.

Another way to look at it is that $43.66 would have allowed them to borrow about $8600 more if they can go under contract prior to October 4.

If you have FHA buyers, and their income to qualify is tight, or they want to be able to spend a little more now, then they should go under contract and have their lender pull an FHA case number prior to October 4, 2010.

Contact your lender if your borrowers are looking in a particular price range, and have them run the numbers for you for that specific case so you'll know the monthly savings for your borrower if they act now.

Interview with an Internet Marketing Expert in Asheville, NC Part 2

Kabir Mahadeva NMLS #182829 Alpha Mortgage www.kabirm.com — Thu, 20 May 2010 17:50:11 -0700

This is a continuation of a conversation I had with Sarah Benoit, an internet and social marketing expert based in Asheville, NC. This set of questions is more advanced and complex.

We talked about the history of social media, how to make this type of marketing effective, and what to look for andhow best to prepare for working with a social media marketing consultant.

Sarah's web page is at www.creative-original.com. I've found her to be very responsive, accessible, and knowledgeable.

Q. How long has this social media marketing existed? What is its future, practically speaking?

A. Social media as it exists today is the evolution of what we call the social API (application programming interface). Without getting too technical, this means that a service provider (Google, Facebook, eBay, etc.) provides the tools to outside parties to build new applications on top of that service to add more value to the user experience.

A good analogy would be the apps you can download for your iPhone or aftermarket accessories you can buy for it. Apple makes the internal specifications (application interface) available for outside parties to create new products. Similarly, Facebook has apps, eBay and other sites have "plug-ins" and so forth, all of which extend the basic service in new directions.

It wasn't until the last 3 years that what we call social media marketing began to emerge. And it is a form of marketing that many people still do not understand simply because it forces us to think about business very differently than we have in the past. The line between what is personal and what is professional is blurred. Customer experiences are easily shared worldwide. Social media marketing is only successful when you have a plan and clear goals.

According to www.Socialnomics.net "over 50% of the world's population is under 30-years-old and 96% of them have joined a social network." This is why social media is going to be part of the future, because it has become an easy, fast, and affordable way to communicate and it has changed the media landscape in a way that it has never changed before in human history. Social media marketing will continue to develop and grow because it is a fast, easy, straightforward way for businesses to communicate and build relationships with their customers, as well as for customers to share info about products or services they like.

Q. What kind of resources do I need to really make this type of marketing work for me?

A. There are a few things someone who wants to do their own social media marketing needs to do in order to produce a result.

First, you must want to learn. Like any technology, social media changes every few months and it is important to keep up. If you don't like technology and you don't have the time to learn new skills this may not be the right avenue for you.
Second, you must know all marketing requires a plan, clear goals, execution of that plan and then tracking and evaluation of the results. Marketing on social media is like all other marketing, it is a process and all parts of the process must be given attention.
Third, you need to be excited and enjoy building personal relationships for professional purposes. You must also have the time required to build those relationships and reap the benefits of them. If you can not get excited about your social media you will not make the time and if you don't make the time you will not see the results.

Q. What questions should I ask a potential social media marketing consultant to help me decide whether or not to hire her?

A. The first key to hiring the right social media consultant is that you need to be clear about your needs. Some questions to ask yourself:

Do you want to learn how to execute a social media campaign or hire someone to manage it?
What role do you want to play and how do you see this person assisting you?
What are your expectations and goals and can you communicate them clearly? For example, do you want more online sales, more attendees at an event?

The second key is that you hire someone you feel can truly understand your business, your company image and your marketing message. This person will be speaking for your business on a regular basis, you must place your trust in them that will represent you in a way that is true and accurate. I also believe any social media consultant should be passionate about your business. If they are passionate about working with you this passion will carry over and others will see it shine through. This passion often attracts others via social media. Also remember even if you hire someone they should always be communicating with you in order to share ideas and to clarify what kind of content you want on your social media.

Q. How should I prepare for a meeting with a social media marketing consultant?

A. Do your homework and be prepared:

Write out your goals and expectations.
Be clear about your marketing message and brand image. If you are not sure what these things mean speak to the social media consultant about potentially exploring these topics in more detail before a social media campaign is launched.
Be open-minded and listen to their ideas, decide if what they are saying resonates with you. Don't ever be afraid to ask questions.

Q. Can social media be tied in with my other marketing efforts?

A. Social media must be tied in with your other marketing efforts. Your website, blog, social media profiles and more should have a cohesive look, consistent messaging and all be linked to one another. Traditional forms of media like print, radio and TV can be used to drive traffic to your social media as well as your website. Social media can also be used to promote events, coupons, contests and more. You must always think of your marketing as a whole, as a single plan and every form of media has its role based on your goals.

Q. What kind of results can one expect? Are they measurable?

A. Results differ for every industry. The best thing you can do is see who is out there in your industry and see how well they are doing. When you find someone that is getting a lot of attention on social media observe the way they interact and behave. If you have clearly outlined what our goals are you want to develop some systems for tracking the results. Google Analytics is best for tracking the effects of social media on our website. Google Webmaster Tools can also be helpful. Using coupons, discount codes, promotional giveaways, contests etc can also help create a trackable result.

This concludes the interview. If you've gotten this far, you realize how interesting and complex social media can be, and how we've only scratched the surface. I hope these will give you a roadmap for investigating this marketing approach.

A Parable About Being Thankful

Kabir Mahadeva NMLS #182829 Alpha Mortgage www.kabirm.com — Fri, 16 Apr 2010 15:08:03 -0700

The following story was sent to me by accident by someone who really meant to send it to someone else. Or was it something that was actually intended for me? I'm not religious by nature, but I do believe that things happen for a reason. Hope this was intended for you, too!

A blind boy sat on the steps of a building with a hat by his feet. He held up a sign which said: "I am blind, please help." There were only a few coins in the hat.

A man was walking by. He took a few coins from his pocket and dropped them into the hat. He then took the sign, turned it around, and wrote some words. He put the sign back so that everyone who walked by would see the new words. Soon the hat began to fill up.

A lot more people were giving money to the blind boy. That afternoon the man who had changed the sign came to see how things were. The boy recognized his footsteps and asked, "Were you the one who changed my sign this morning? What did you write?"

The man said, "I only wrote the truth. I said what you said but in a different way." I wrote: "Today is a beautiful day but I cannot see it." Both signs told people that the boy was blind. But the first sign simply said the boy was blind. The second sign told people that they were so lucky that they were not blind. Should we be surprised that the second sign was more effective?

Moral of the Story: Be thankful for what you have!

Be creative. Be innovative. Think differently and positively. When life gives you a 100 reasons to cry, show life that you have 1000 reasons to smile. Face your past without regret. Handle your present with confidence. Prepare for the future without fear. Keep the faith and drop the worry.

It is a beautiful thing to see a person smiling. And even more beautiful, knowing that you are the reason behind it!!! Catch yourself when you start complaining about what you don't have. Enjoy your day with a heart of gratitude.

Interview with an Internet Marketing Expert in Asheville, NC

Kabir Mahadeva NMLS #182829 Alpha Mortgage www.kabirm.com — Mon, 12 Apr 2010 10:17:21 -0700

A couple of weeks ago, I had the opportunity to interview Sarah Benoit, an Internet Marketing Specialist based in Asheville, North Carolina. We met for lunch at one of my hangouts in downtown Asheville.

Sarah's web page is at www.creative-original.com. Sitting down with her, one feels a level of energy and enthusiasm. She's spent a lot of time thinking about how best to use social media technology, and her commitment and breadth of knowledge are impressive.

Many of us have a presence on AR, LinkedIn, Facebook, and Twitter, but have not tied them together as well as we could. Others of us are bewildered as to where to start. The first part of this interview is designed as a primer, answering some of the questions we all have had before getting started. I've taken the liberty of emphasizing parts of the answers.

Q. There are so many different choices of social media Twitter, Facebook, MySpace, etc. Where do I start?

A. Social media is just like any other Internet technology. As time passes existing programs improve their functionality and user friendliness, while new programs are launched all the time with innovative new options. This makes choosing your social media tools at time very confusing. There are some key questions that need to be answered before you commit to using any social media tool.

Set up an account and surf around. See if you feel comfortable using the interface or if you feel lost and feel the system is difficult to follow. Also see if the applications and tools they offer are of interest to you.
Find out if your audience is there. Use the search feature to look for groups or discussions happening on topics related to your industry. Think carefully about how you can identify your target market and what information you can use to encourage them to interact with your company.
When you are first starting out limit yourself to 2 or 3 social media sites you think might work for you. Don't try to do everything at once. Also, mainstream social media sites like Facebook and Twitter are not the only places your audience can be found. Be open to more niche marketed social media sites or online communities that may have great value for your business.

Q. Social media seems extremely time consuming--can someone help me set this up and manage it for me? How much would that cost?

A. Social media can time consuming if you do not have a clear plan. You must have a strategy for what social media tools to use and how often, as well as to track and evaluate results. Set up can be extremely affordable, ranging between $100 to $500 or even more depending on:

the number of social media accounts you want set up,
the level of customization you want on each account, and
the time spent on additional tools you need to streamline your accounts into a single system.

It may be beneficial to ask for training along with set up if you are not familiar with social media sites and how they operate. There are a variety of companies that can assist with social media set up and management, as well as social media marketing.

Be sure you have thought clearly about what you hope to accomplish with this kind of online campaign. Set some goals before you speak with a professional so that when you meet with them to discuss social media marketing you can explain clearly how you expect to see your business benefit. It will also help the social media expert to implement an appropriate tracking system for your social media campaign. Cost for social media management varies depending on the goals you have and the role it plays in your business's overall marketing plan.

Q. How computer literate or savvy do I have to be in order to manage my social media? Is it important that I know how to write well and spell?

A. In any professional setting writing and communication skills are essential, social media is no different. Although social media appears at times to be less formal than other marketing you must express your business's credibility and relevancy to any potential client, customer or referral source.

If you are not a great writer, or find spelling and grammar difficult, find someone to edit or monitor your content. Many social media sites include automatic spell check that will usually alert you to any misspellings. Remember, most messages on social media tend to be short and to the point so they don't have to be traditionally grammatically correct. You can abbreviate, especially on sites like Twitter.

As to computer literacy, social media sites are some of the easiest site to navigate on the web. They are made for less technical people and ease of use. Therefore, I do not believe a high level of computer literacy is required. Social media requires a person who likes to learn new things, who likes to share information and ideas with others and who enjoys using technology like texting on their phone or exploring on the Internet.

If you don't find pleasure in these activities and in connecting with others on a daily basis then social media may not be the best choice. Other kinds of marketing may work better for you or hiring someone to manage your social media may make more sense. Just remember that, even if you hire someone, they will still come to you for help developing your social media content and company message or brand.

Part 2 of our discussion will focus on more advanced questions for the experienced social media navigator. Stay tuned!

What I like Best About Living in Downtown Asheville, North Carolina

Kabir Mahadeva NMLS #182829 Alpha Mortgage www.kabirm.com — Sun, 28 Mar 2010 19:26:52 -0700

Here's what I like best about living in downtown Asheville, North Carolina:

Shopping in quirky, locally owned stores. All along Lexington Avenue and Broadway street are great local shops offering, among other things: wigs, gifts, household decorating and furniture items, used books, high-end and inexpensive clothing, a real general store, groceries, natural foods, handmade art, and so much more. It's not a mall with mega-chainstores, but a real unique downtown shopping experience. Asheville store owners encourage people to buy local, and with so much to choose from, you won't be disappointed.

Dining on the foods of many nations, just steps from my home. Living downtown means you never have to cook, ever again. Within a 5 block radius of Pack Square, the heart of the downtown, you can dine on Japanese, Indian, Chinese, French, Caribbean/South American, Cuban, Thai, Italian, Cajun, Mexican, Southern, Continental, New American. I'm sure I've left off a few cuisines here but you get the idea.

Drinking locally brewed beer. Asheville is second only to Portland, Oregon, in the number of microbreweries per capita. Several local bars and restaurants serve dozens of beers on tap, and three new brewpubs have opened within the last year, all in downtown Asheville. There's also a great specialty beer store on Broadway Street that specializes in high-gravity brews and has a tasting every Thursday evening.

Sharing coffee and dessert. It's not quite the large rainy city in the Northwest, but Asheville has numerous independent coffee shops and delectable locally baked desserts. For chocolate lovers, we have at least two specialty chocolatiers; pastry and cookie mavens can choose from several bakeries (one specializing in dog cookies!), and some outdoor cafes for people watching with your coffee. Ice cream fans have a couple of tasty options too. Sitting outside on a sunny day in Pack Square sipping something nice and sharing a dessert with someone special is pretty unbeatable.

Those of us who living downtown can find both new and historic condos, from the spartan to the luxurious, city and mountain views, small and large spaces, traditional and modern floor plans, high and low rise buildings. In short, if you can't find a condo that fits your needs, you're not looking in downtown Asheville!

10 Questions You and Your Buyers Must Ask Before Purchasing A Condominium Unit

Kabir Mahadeva NMLS #182829 Alpha Mortgage www.kabirm.com — Sun, 28 Mar 2010 19:00:04 -0700

This is the best summary I've seen on this topic. Only one thing to add: if your buyer is contemplating a purchase, get a condo questionnaire completed by the management company or a condo board member before writing any offers. This questionnaire will help identify some of the killer issues.

Via Richard Vetstein (Vetstein Law Group, P.C., TitleHub Closing Services LLC):

Buying a condominium unit can be more involved than buying a single family home. This is because you have to worry about both the unit itself and the condominium project as a whole.

10 Questions You Must Ask Before Purchasing A Condominium Unit

To borrow from a famous phrase, not all condominiums are created equally. Some condominiums are very well run; some are quite poorly run and underfunded. Buyers interested in purchasing a condominium unit must do their homework: not only about the condition of the individual unit they are interested in purchasing, but on the financial health and governance of the condominium as a whole. Remember, you are buying into the entire project as much as you are the unit, and your decision will impact your daily living and your ability to re-sell.

Here are the 10 questions buyers should ask when deciding to purchase a condominium unit:

What is the monthly condominium fee and what does it pay for? The monthly condominium fee can range quite dramatically from condominium to condominium. The fee is a by-product of the number of units, the annual expenses to maintain the common area, whether the condo is professionally managed or self-managed, the age and condition of the project, and other variables such as litigation. For budgeting and financing you need to know the monthly fee and exactly what you are getting for it.

What are the condominium rules & regulations? Condominium rules can prohibit pets, your ability to rent out the unit, and perform renovations. Make sure you carefully review the rules and regulations before buying. Needless to say, the buyer's attorney should review and approval all condominium documents, including the master deed, declaration of trust/by-laws, covenants, unit deed and floor plans to ensure compliance with state condominium laws as well as Fannie Mae and FHA guidelines, as necessary.

How much money is in the capital reserve account and how much is funded annually? The capital reserve fund is like an insurance policy for the inevitable capital repairs every building requires. As a general rule, the fund should contain at least 10% of the annual revenue budget, and in the case of older projects, even more. If the capital reserve account is poorly funded, there is a higher risk of a special assessment. Get a copy of the last 2 years budget, the current reserve account funding level and any capital reserve study.

Are there any contemplated or pending special assessments? Special assessments are one time fees for capital improvements payable by every unit owner. Some special assessments can run in the thousands, others like the Boston Harbor Towers $75 Million renovation project, in the millions. You need to be aware if you are buying a special assessment along with your unit. It's a good idea to ask for the last 2 years of condominium meeting minutes to check what's been going on with the condomininium.

Is there a professional management company or is the association self-managed? A professional management company, while an added cost, can add great value to a condominium with well run governance and management of common areas.

Is the condominium involved in any pending legal actions? Legal disputes between owners, with developers or with the association can signal trouble and a poorly run organization. Legal action equals attorneys’ fees which are payable out of the condominium budget and could result in a special assessment. In most states, you can run a search of the condominium association in the court database to check if they've been involved in recent lawsuits.

How many units are owner occupied? A large percentage of renters can create unwanted noise and neighbor issues. It can also raise re-sale and financing issues with the new Fannie Mae and FHA condominium regulations which limit owner-occupancy rates. If your buyer is using conventional financing, check if it is a Fannie Mae approved condo. If FHA financing, check if it's an FHA approved condo. (Thanks Lou Corcoran for the links)

What is the condominium fee delinquency rate? Again, a signal of financial trouble, and Fannie Mae and FHA want to see the rate at 15% or less.

Do unit owners have exclusive easements or right to use certain common areas such as porches, decks, storage spaces and parking spaces? Condominiums differ as to how they structure the “ownership” of certain amenities such as roof decks, porches, storage spaces and parking spaces. Sometimes, they are truly “deeded” with the unit, so the unit owner has sole responsibility for maintenance and repairs. Sometimes, they are common areas in which the unit owner has the exclusive right to use, but the maintenance and repair is left with the association. Review the Master Deed and Unit Deed on this one.

What Does The Master Insurance Policy Cover? The condominium should have up to $1M or more in coverage under their master condominium policy. For buyer's own protection, they should always buy an individual HO-6 policy covering the interior and contents of the unit, because the master policy and condo by-laws may not cover all damage to their personal possessions and interior damage in case of a roof leak, water pipe burst or other problem arising from a common area element. Ask for a copy of the master insurance policy and don't forget to check the fine print of the by-laws. Sometimes, there's language that would hurt a unit owner in case of a common area casualty. Condominiums over 20 units should also have fidelity insurance to protect against embezzlement.

Often a standard condominium questionnaire will answer all or most of these questions. In Mass., where I practice, this isn't required by law, nor is a seller disclosure. If not, be prepared to generate this list and incorporate it into your Offer to Purchase or Purchase and Sale Agreement, as the case may be in your home state.

Either way, do not have your buyer put earnest money down until satisfactory answers are received. Good luck and happy condo hunting to you and your buyers!

Make Upgrades Count: Ask Your Lender to Use A Local Appraiser

Kabir Mahadeva NMLS #182829 Alpha Mortgage www.kabirm.com — Sat, 27 Feb 2010 16:58:38 -0800

Tony has written a nice summary and provided useful links to appraisal requirements. Anyone interviewing potential lenders should ask the question "Who orders your appraisal and where do the appraisers come from?"

If the lender cannot guarantee experienced local appraisers who are familiar with the area, you should find a lender that does or risk a lot of unhappiness.

If the lender orders appraisals via a third party appraisal company who puts appraisals out to bid and takes the low bidder, you could get an appraiser who does not know the area, and now you have set the stage for a disappointing appraisal.

Mortgage brokers cannot order appraisals and must rely on the lender to whom they will broker the loan to manage the appraisal process.

In Asheville and surrounding counties (Buncombe, Madison, Henderson, and Haywood), Alpha Mortgage only sends out experienced, local appraisers, assigned on a rotating basis. We have a 100% chance of getting a knowledgeable appraiser who knows the loal housing market and who earns a full fee to do a thorough and professional appraisal. If the home has real upgrades and the appraiser knows the market, then you can count on the fact that the appraiser will take them into account.

Via Tony Grego with American Bank Mortgage Group - 317-714-8080:

Do you feel that pricing a home is a little like throwing darts these days? Sometimes you hit, most times you miss?

At the end of the day Realtors have a next to impossible job trying to help clients price their home. I don't think I ever met anyone that wants to lose money but most homes we price today should reflect a lower price than a few years ago. Now I'm on the mortgage side of things but I hear the same things. My house is worth XXX,XXX due to:

"I have nicer landscaping."

"I just replaced the carpets."

"I just repainted the walls."

"I just had the bathroom toilet fixed."

"I had my furnace replaced last year."

Realtors work very hard with comparables, pictures and stats to help support the price. I'm not saying that these upgrades are not important. They just don't really add value. They add eye and curb appeal to help a potential client say yes to the listing.

What goes into a Lender's Appraisal?

For Fannie Mae, Click here

For Freddie Mac, Click here

For FHA, Click here

Most homes are financed. So these appraisal standards are important when you price. Remember we are in a Lender's Market. Nothing will turn a buyer off more than working hard on a price agreement only to find out the appraisal comes in short. So to best serve our clients remember that most of the weight for your pricing strategy must be Lender comps.

At your service,
Tony Grego
Senior Mortgage Banker American Bank - Indianapolis, IN Branch
www.getmyratequote.com
www.tonygrego.com to learn more about me

317-348-0280 direct line
317-536-3754 fax
"Bankers with vision, helping people with dreams!"

Listing Language

Kabir Mahadeva NMLS #182829 Alpha Mortgage www.kabirm.com — Tue, 02 Feb 2010 14:33:02 -0800

How do we get our message through clearly? The right words matter.

Via Marianne Grant, CRS 907-529-6602 (Prudential Jack White Vista Real Estate):

Words matter. Wars have started over them; people are propelled to act because of them. And it appears that the marketing-time of houses might be determined by them, too. At least in part...

As listings grow old, and frustrated sellers are jostling for an edge, perhaps it is time to review the language we use to describe our "products". I regularly read other agents' descriptions of homes closely for that flair with words that would make me want to see the house. If what I read pleases me, it will also please the potential buyer. I want to learn to write like that agent.

A Canadian study found that homes where the seller was "motivated" actually took 15 percent longer to sell, while houses listed as "handyman specials" flew off the market in half the average time. (Paul Angelin teaches real estate and housing trends at the University of Guelph in Ontario. The study dissected the wording of more than 20,000 Canadian home listings from 97 to 2000)

The study found that words that denoted general attractiveness helped sell a property faster than those that spoke of "value" and "price." "Beautiful" beats "good-value", "must see" is a total dead-beat and does nothing to impact days on the market, "Landscaping" and "move-in ready" brought buyers faster, but "move-in ready" had no impact on the sales price, and neither did "clean" or "quiet". "New paint" is an often listen comment which leaves buyers cold.

         Words that Help                        Words that Can Hurt

handyman special,          motivated seller

curb appeal                    good value

move-in condition           as-is

landscaping                    clean

granite                          quiet

gourmet                        new paint

golf, park, trails              playgound

Where would you place "needs repairs?" Other suggestions from your experience?



Marianne 907-529-6602

Do You Suffer From Information Overload?

Kabir Mahadeva NMLS #182829 Alpha Mortgage www.kabirm.com — Wed, 27 Jan 2010 09:35:29 -0800

I was talking to my nearly 80-year old mom yesterday about how I just got set up on Facebook. People from my elementary school from 40 years ago are finding me and reconnecting. My mom said she just wasn't ready for another stream of information, and I started to list the different streams of information that hammer at me:

3 e-mail accounts (1 work, and 2 personal, one used for mostly receiving advertising mail and the other for friends)
Instant messaging
Text messaging
Land line phone
Mobile phone
Voice mail
Twitter
Facebook
Linked In
ActiveRain
Mortgage bond market information
Lender guideline changes (almost hourly these days!)
Real estate finance, law and compliance requirements
Training, continuing education, and marketing ideas
Blogs I follow
Newsletters (online and paper)
8 magazine subscriptions
Books (paper and e-books)
Webinars
Satellite TV
Netflix DVDs
Streaming video (from blogs, newsletters, and training)
Satellite Radio
Face to face conversations with other humans
My dog barking or asking to go out
My cat asking for food

When it's all listed like this, it can feel overwhelming. How does one person keep up with all of this, especially since 21st century marketing seems to depend on processing and generating information?

How many of us are stuck to our electronic tethers (CrackBerry, iPhone, etc.) just to try to keep up? Is that you, walking down the street on a beautiful day, just looking at your phone and not noticing the flowers or the cloud formations? I confess that it has been me.

No wonder I feel pushed and pulled in many directions, reactive instead of pro-active, seemingly paralyzed and unable to prioritize and focus.

Here's what I've done;

Tried not to check e-mail more than once per hour (wow, that is hard, especially with those popup notifiers!!!)
Login to Facebook, Linked In, ActiveRain just once a day
Only read the magazine articles I really care about and then recycle or give away the magazines so they don't make me feel guilty for not reading them and paying for the subscription
Use a DVR to only watch the shows I care about, and skip commercials
Watch less TV
Avoid YouTube; I just don't go there
Only send text when voicemail isn't getting through
Use Google Voice to turn voicemail into e-mails and text messages (so I can read them first and prioritize)
Shut off my phone when I meet with anyone in person
Avoid meaningless chatter on IM (unless I've accomplished something first)
Time blocking, returning calls between certain times
Writing down a list of things I need to do every day, and fitting in the information streams around those tasks
Adding a filing/sorting scheme to my e-mail accounts so I can move things out of my inbox and keep or delete them
Pay attention to my wife and my companion animals

How do you cope?

What Everyone Needs to Know About the New Good Faith Estimate

Kabir Mahadeva NMLS #182829 Alpha Mortgage www.kabirm.com — Tue, 12 Jan 2010 13:37:49 -0800

Recent guidelines from Washington have forced a change to the way that loan originators will disclose closing costs for all borrowers. The purpose of the new Good Faith Estimate is to level the playing field for borrowers comparing loans to be able to make apples to apples comparisons for loan scenarios.

In essence, HUD is working to bring all lenders up to the same standard of excellence in reporting closing costs that good lenders have always adhered to, estimating realistic fees that a borrower should expect to pay at closing with no last minute surprises.

Below are some important points to know:

All fees paid to the lender/broker are to be consolidated in one line, including processing fees, origination fees, etc. These charges cannot change from the original estimate without a material change to the loan requested. A breakdown of this consolidation must be requested.
In the event fees are being charged to obtain a lower rate, these are to be broken out and itemized for the borrower's ease of comparison to other loan programs.
Estimates for fees from government recording charges and third party settlement providers we suggest are to be itemized and the lender is held to a tolerance of 10% for their accuracy. In the event the estimated charges exceed the amount listed by the allowable tolerance, the lender will be responsible for making up the difference.
Estimates for services that the buyer can shop for and do choose can change at settlement without the lender being held accountable. This can include title charges, homeowner's insurance, and initial deposits for an escrow account.
Seller’s contributions toward closing costs and escrows are not provided nor accounted for. These are considered charges to the buyers even if it is normal and customary for sellers to pay them, such as title insurance. A good lender will provide other documentation showing the effect of seller contributions.
Total cash to close is not shown. Again, a good lender will provide other documentation with this vital information.
A complete payment breakdown is not shown; only the principal+interest+mortgage insurance. Other components such as escrows for homeowner’s and flood insurance and property taxes are not added to show a total monthly payment. Good lender's clients will get this too.

If anyone you know is about to get a mortgage, please share this with them.

How to Prevent or Mitigate HVCC and AMC appraisal issues

Kabir Mahadeva NMLS #182829 Alpha Mortgage www.kabirm.com — Wed, 06 Jan 2010 11:53:57 -0800

This blog entry is more for sellers and realtors, but the issues are important for everyone. Buyers, too, should seek to work with lending sources who use local, experienced appraisers.

Although on its face, having a low appraisal may seem to benefit buyers, this is a short term benefit. Someday, perhaps sooner than expected, buyers will become sellers, and then the appraisal issue suddenly affects them in the other direction. So it behooves buyers also to have accurate appraisals.

The key is to have an accurate appraisal done by someone who knows the locale and the market. An appraisal fundamentally is still an informed opinion of value, but its quality depends greatly on the market knowledge and expertise of the appraiser.

Here are some things you may be able to do mitigate HVCC issues:

1. Get to know some good lenders that don't use AMCs. Smaller lenders can comply with HVCC by having a separate appraisal department that has no financial connection to the loan process. This rules out working with most big banks and mortgage brokers, but if you want local, experienced appraisers who get paid full fees, then this could make a difference.

2. If you're the listing agent, take the lockbox off the house and force the appraiser to contact you to arrange access. Prepare a comprehensive packet of information about the house (upgrades, amenities, and architect's floor plans are very useful, for example), information about any FSBO's in the neighborhood, recent comps, any good pending contracts that you know about. Don't discuss valuation, but there's nothing wrong with giving the appraiser information. which they can use or discard at their discretion. At least you tried.

3. If you're the buyer's agent, persuade the listing agent to do #2 but prepare the information packet for him or her. Better still, see if you can be the contact person for the appraiser and deliver the packet in person.

4. Find out if your lending source will allow you to reject the assigned appraiser. If you can ensure the appraiser contacts the realtor, and the realtor finds out the appraiser is not an expert in the local market, tell them you don't want them to come and get your borrower to tell the lender to pick another. You referred them to this lender, didn't you? It might slow down the process a bit, but better that than have the deal die.

5. Prepare your seller for the appraisal as if it were a showing, only more so. If anything, the house needs to show even better than it did for a potential buyer. Even good appraisers are affected by subjective criteria. A nice, neat, clean, quiet house, with no distractions, pets, kids, or owners around will allow the appraiser to get the inspection done more efficiently. Leave a small edible treat for the appraiser. Your packet will tell the rest of the story on the house. Keep the owners away and get them to make any obvious minor repairs if possible. You know how to stage houses, right?

Good luck!

New Standardized Good Faith Estimate Effective January 1 2010

Kabir Mahadeva NMLS #182829 Alpha Mortgage www.kabirm.com — Thu, 10 Dec 2009 14:53:36 -0800

This is the best, most concise summary of this topic I have seen.

Many thanks, Loreena!

Via Loreena Yeo - Broker|Realtor(R) of www.Frisco-TX-Homes.com (214) 783-2210 (3:16 team REALTY):

For the longest time, there was no standardization in good faith estimates presented by Lenders when a loan application is made by a borrower. No standarization here means some lenders disclose a variety of information on the previous GFE while others do not disclose at all. In efforts to facilitate a better shopping experience for the consumers, HUD requires all lenders use the new standardized format for Good Faith Estimates effective January 1 2010.

At first glance, the standardized format of the Good Faith Estimate is easy to read, understand and digest by the average borrower.

The summary of the loan is displayed on the 1st page with answers about the loan such as:

(1) Can your interest rate rise? (Indicates if it is an adjustable rate mortgage)
(2) Even if you make payments on time, can the loan balance rise? (Indicates if it is a negative amortization loan)
(3) Even if you make payments on time, can your monthly amount rise? (Indicates if the account is escrowed or not)
(4) Does the loan have a pre-payment penalty?
(5) Does the loan have a balloon payment?

Lenders are held to a higher standard of accountability with the use of the standardized Good Faith Estimate. "Good faith" in the past will now be more of certainty, especially when it comes to the Lender charges. HUD requires that Lenders be sure to know how much they intend to charge their borrowers based on the information the borrowers provided.

The new Good Faith Estimate also utilize the Lump & Dump concept whereby HUD feels that the borrowers have been provided too much information in the previous good faith estimates. Items "A" on Page 2 of the GFE includes all origination charges. They are no longer broken down into Loan Origination Fee, Processing Fees, Tax Service Fee, Funding, Lender Feeds, Doc Prep Fees, Broker Yield Spread Premium, etc. Only information that could affect the loan is broken down into 2nd part of "A". According to HUD, the "bottom line" numbers is what the consumers care about.

This section of the Good Faith Estimate must be the same (ie. Zero Tolerance for differences) and borrowers can expect them to be the same on the HUD-1 settlement statement - if the terms and conditions of the loan are the same. Should there be a difference, HUD considers this Breached Tolerance and this breach will be cured with a credit at the closing table or writing a check to the borrower within 30 days of closing.

This brings Lenders to more accountability towards the accuracy of their good faith estimates to their clients. It is a good thing.

Other considerations could be expected should there be changed circumstances on these No Tolerance items above (ie. Lender charges). A changed circumstance may include acts of God, war, disaster, new information not known by the Lender, other information found not to be inaccurate.

There are other charges associated in purchasing the property. These items are found as part of "B" on page 2 of the GFE.

The similar lump & dump concept for Title charges in Section 3, 4, 5 and 6. These charges can deviate up to 10% on the HUD-1 statement - assuming that the borrowers services identified by the Lender. The total of these charges of page 2 on the GFE constitutes the "B" total.

Along with the "A" total and "B" total, these costs add up to make the Total Estimated Settlement/ Closing Costs. However, this is NOT to be confused with Cash Needed for Settlement. Items A and B DOES NOT account for Seller's concessions, property tax and HOA prorations, etc.

Page 3 of the Good Faith Estimate is also known as the "finishing touches" for the loan. It gives borrowers instructions on what cannot be increased at settlement, what may increase up to 10% and what could potentially subject to change.

There is also a tradeoff table for borrowers to see the various choices as provided by the same lender. Same loan with lower settlement charges or same loan with lower interest rates.

Last but not least, the GFE also provides a section to allow borrowers to compare various loan offers in the Shopping Chart section.

The use of the form is MANDATORY. In the past, lenders have created their own formats and some not providing one at all. The new rules as directed by RESPA must be furnished to borrowers:

Within 3 days of loan application.
A loan application is deemed taken by a lender with the borrowers' names, social security numbers, incomes, estimate purchase value, loan amount, other information deemed necessary by lender and property address.
This form must only be utilized if there is a specific property address.
While home buyers have used the GFE to shop for lenders, they could no longer do that. Without a property address, the industry believes that lenders will come up with "preliminary" GFEs without the actual property address.

Without 10 days of GFE issuance.
The GFE will be good for 10 days after the borrower receives it. The borrower MUST express an intent to proceed with the terms and conditions of the loan based on the GFE provided within 10 days business. After 10 business days, the lender is no longer bound by the issued GFE.

This is HUD's effort in facilitating consumer comparison shopping of Lenders. It is not the most perfect version out there but it is a much simpler method for an average consumer to understand. What this new GFE does not address is it does not specify the loan product (FHA, Conventional, VA, etc.) and it also does not inform the borrower the actual monthly payments in Principal, Interest, Property Taxes and Home Insurance (PITI). It only addresses the Principal, Interest and Mortgage Insurance (if applicable). The lender may furnish these information on other documents.

Download the new GFE here.

Related Articles:

How to Compare Lenders and Good Faith Estimates

Mortgage Interest Rates Spiked Higher Than Normal

100% Home Loans

Time Value of Money in Closing Costs

Myths about Tax Assessments vs. Property Values

*********************************************************************************************

All contents are original. Consider subscribing to my blog for more real estate commentaries.

Subscribe via Email if you are not an Active Rain member here.

Contact:

Loreena Yeo
Realtor®/ Broker of 3:16 team REALTY
(214) 783-2210
loreena@loreenayeo.com

Check out my Frisco TX Homes website.
The premier greater Frisco TX Homes local informational center for your one-stop real estate needs.

Search MLS Listings with no registration required.
Home Value Request

Super-serving Frisco, Plano, Dallas, McKinney, Allen, Little Elm, Prosper, Celina, Richardson, Dallas M-Streets, Dallas White Rock Lake area communities and other surrounding areas.

Copyright © 2009 by Loreena Yeo (3:16 team REALTY)
Originally posted on New Standardized Good Faith Estimate Effective January 1 2010.

How’s the Market? How's Business?

Kabir Mahadeva NMLS #182829 Alpha Mortgage www.kabirm.com — Thu, 03 Dec 2009 09:11:49 -0800

I get asked the essentially same question about interest rates. Here again, the person really wants to know if their rate is as good as or better than what is available today. With all the variables in today's lending scenario, you cannot really quote rates to anyone without knowing a lot more about their specific situation. So the conversation goes like this:

Q: How are rates these days?

A: I am glad you asked. They are still at historic lows. Are you asking because you are thinking about buying or refinancing property or just curious.

Now this can go two ways.

Q: I'm thinking about buying/refinancing.

A: There are a lot of variables that go into rate calculations. Would you like to set up a time to review your specific situation?

OR,

Q: I'm just curious.

A. Today's mortgage market is constantly changing and rate calculations depend on the borrower's specific situation. For borrowers with excellent credit and low debt ratios, a 30 year fixed rate loan may be available in the range of X to Y percent, but this could change in a heartbeat.

If you or someone you know is looking to buy or refinance property, I'll be happy to get you something more specific. What's the best way for me to follow up with you?

The only other question that seems to get asked a lot these days, to all of us dependent on the real estate market, is How are you doing/ how is business?

There is only one positive answer: Business is steady, thank you. I've been fortunate to survive and thrive in this market thanks to the referrals of friends and past clients. So I'm staying busy but I will always make time for anyone you refer.

Do you know anyone who could use my help right now?

Via Mark Fidgett - www.NotaPennyDown.com:

What a Great Question!!

As we approach the Holiday Season, you'll be presented with many networking opportunities.

BE PREPARED...

The other day a friend of mine was in Starbucks and he started talking to a woman in line.

She told him she was in real estate.

He chuckled inside and thought this is your lucky day.

He asked her, “How’s the Market?”

Her response was, “It’s picking up”.

He thought the words; “It’s picking up” may not be the best words to choose to answer that question?

Then he thought about his question?

What really was he asking her when he asked, “How’s the market?”

What he was really asking was, "How's his market not how's your market?"

What he really wanted to know is, in his neighborhood on his block are the values of homes going up or down and how long is it taking to sell a home.

So here is a suggested dialogue the next time a person asks you how’s the market?

"How’s the market?"

Overall the market is improoving.

I’m curious when you ask how’s the market, would you be interested in specifically how much homes are selling for in your neighborhood and how long they are taking to sell?

Yes.

What I do for my friends, family and other people in the neighborhood is send a quick email that gives you an up to the moment analysis of how well the market is doing in your neighborhood. Would you like me to send that to you?

Yes

Cool, what’s your email

Mark Fidgett | 604-273-2002

"Your Personal Mortgage Consultant....For Life!"

PS - Please Don't Keep Me a Secret
A REFERRAL is when you INTRODUCE someone you care about to someone you TRUST!

T 604.273.2002 | F 604.522.2072
W http://www.notapennydown.com

An independent Mortgage Specialist associated with the Verico Mortgage Network.

Federal Mortgage Disclosure Improvement Act (MDIA) goes into effect on 8/1/09

Kabir Mahadeva NMLS #182829 Alpha Mortgage www.kabirm.com — Fri, 31 Jul 2009 16:37:16 -0700

Thanks to Adrian Cox for so cleanly summarizing the impact of the new rules. My company will always redisclose changes as soon as they occur, and we generally do so long before settlement, so this should not affect our ability to close on time.

Via Adrian Cox (M Point Mortgage Services):

The Federal Mortgage Disclosure Improvement Act (MDIA) goes into effect on 8/1/09. This new Act applies to all applications dated 8/1/09 forward. The easiest way to understand the concept of MDIA is to think of it this way. Purchase loan borrowers now have the same protection as a refinance borrower, meaning the Act basically creates a rescission period of 3 days for purchase loans.

What is happening here is the Federal Government is making sure purchase borrowers cannot get "jammed at the table" with new fees and feel forced to close. The borrower now has 3 days to understand any fee changes before they close, just like the 3 day rescission period for refinances. This new Act is designed to ensure that the consumer is aware of the fees and will eliminate the practices of unethical Lenders that under disclose the closing fees in hopes of getting the deal.

You may consider standardizing your Admin fees on your real estate transactions. Often, the admin. fees change from deal to deal and are not charged on all cases. I don't always know what your fees are, or if they are being charged, until we receive a preliminary HUD-1 from the Title Company. This could be a potential problem that would cause a settlement to be delayed. It is imperative that we disclose these fees up-front so there will be no settlement delays. There is no way around this. This is a Federal Law. I will be asking about the Realtor Admin. fees on all deals referred by my Realtors going forward. This way we will not have to delay settlements. Please call me with any questions, and I look forward to working with you to ensure a smooth, stress-free transaction.

Here are some of the particulars that pertain to your real estate transactions.

If there are ANY changes (changes that trigger re-disclosure are below) made to the initial GFE and TIL that cost the borrower more money than what was originally disclosed, then I must re-disclose a new GFE and TIL, have these signed by the borrower, and then the loan MUST wait 3 DAYS to close.

Here are the changes that trigger the new Act:

-Origination Fees

-Loan Discount Fees

-Appraisal Fees

-Appraisal Re-Inspection Fees

-Credit Report Fees

-Flood Cert. Fees

-Tax Service Fees

-Commitment Fees

-Processing Fees

-Underwriting Fees

-Transfer and Recordation Fees (Stamps as well)

-Realtor Admin. Fees (charged to the borrower) **********(See comments above)

Thanks for your time.

"The Big Score: Getting and Keeping It" Credit Scoring Book Review

Kabir Mahadeva NMLS #182829 Alpha Mortgage www.kabirm.com — Wed, 15 Jul 2009 10:04:40 -0700

Note: I purchased this book for use in advising my mortgage loan clients. I did not receive a free review copy nor am I being compensated in any way for this review.

Linda Ferrari's new book, "The Big Score: Getting and Keeping It" (Consumer Power Press, 2008, $29.95, ISBN 978-0-615-22860-0) is "The Real Deal". It is both a blueprint for self-help in credit score education and improvement and an indispensable reference work on the credit scoring industry in general. It is fast paced, full of useful information and advice, and organized to help anyone navigate through the credit maze. It is available at a discount directly from lindaferrari.com or through all major booksellers.

The book has 22 chapters, beginning with an overview of why credit scores are important to all of us, then goes deep into how credit scores are calculated and what one can do to optimize each facet. There are also special chapters on divorce, bankruptcy, and advice for homeowners in distress. Each chapter ends with a section called "The Real Deal" which summarizes the chapter's main content.

The book also does a considerable amount of myth-busting and correction/clarification of commonly held misconceptions about managing one's credit information and reputation. Even if you have excellent credit, this book can help you maintain it by avoiding mistakes and actions that could compromise your situation. The chapter on identity theft was a wake-up call for me as I realized some of the things I have done created unnecessary exposure to this very real problem.

As with any self-help manual, to really get the most of her advice will require some work on the reader's part, especially if trying to fix their credit. It will involve gathering documents, writing letters, making phone calls, and following up. Although this all may seem overwhelming at first, the book's step-by-step orientation breaks it down into manageable tasks.

Ferrari also owns and runs Credit Resource Corp. a credit improvement and education service. If a reader doesn't want to "go it alone" then they can sign up to work with her company and get guided through the process. I have personally referred clients to CRC and been impressed with the company's follow up and thoroughness. But you must realize that you will still have to do some work to achieve success.

For professionals whose clients need direction and counseling about credit, this book can be an excellent reference to help you give better advice. For example, many homeowners in distress don't know the different impacts on them between the options of deed-in-lieu, foreclosure, bankruptcy, and short sales. Each of these approaches differently impacts credit and ability to purchase a home in the future. For people in financial distress, there are chapters on debt relief, handling collections, and bankruptcy.

The book also contains good external references to dig deeper, including case law and websites. Ferrari has worked hard to establish herself as a leading expert on the credit industry, and has shared her hard-won expertise and knowledge in a thought-provoking and useful book.

--Kabir Mahadeva, CMPS(r)

203k Made SIMPLE? Yes, for your clients..........

Kabir Mahadeva NMLS #182829 Alpha Mortgage www.kabirm.com — Wed, 15 Jul 2009 09:19:32 -0700

This is a great summary of a tool that can help sell distressed property. In addition to the information below, there is a streamlined version of the 203k for repairs not to exceed 35000.

Via Colleen Craig (Southern California Mortgage Professional):

203k MADE SIMPLE?

Ok, maybe not, but I will attempt to make it as simple as possible for the client to understand and want to read on.  For many of us in the business who are " in the know" we forget that we need to go back to the basics and spell it out in simple terms for others to understand. So I've compiled some information based on my most recent commonly asked questions just this week.

In Southern California, FHA loans were just not utilized over the past 10 or so years because of the FHA Maximum Mortgage limits But now that the limits have been increased and the prices have decreased, FHA loans have become the most utilized loan in recent months. HOWEVER, because it was not a popluar loan, you would be amazed at how many lenders/brokers do not know what they are doing. Especially when it comes to the 203k loan. I spoke to a client today that was given such mis information it made me cringe.



Apparently they told the client that 203k loans were no longer being done (Gee, you think it was after realizing that they had no idea what they were doing?) and they tried to flip them into another loan. This was after telling my client that their loan amount would be for the contract price and the extra money would just be separate and sit in an impound account to be disbursed over the next 6 months. Ok partially true, the extra amount would be in escrow to be disbursed as the remodel progressed, but for free? Who pays for the extra 50,000 dollars you just borrowed for repairs? Your loan amount is for the entire amount you are borrowing. Makes sense right?

So what is a 203k loan and why use one?

When a buyer wants to buy a home that needs repairs utilizing FHA financing, normally the repairs would have to be completed prior to the close of escrow.   The repairs would normally fall on the responsiblity of the seller. With so many foreclosures in today's market, the bank is the seller. And many times the home in need of repair is listed "as is". Which in the past would require a cash buyer or conventional financing. This is another reason that people in the business decided to shy away from FHA loans. I believe it was pure ignorance of the programs that were available by the brokers and the realtors couldn't properly prepare their seller for what to expect that gave FHA loans a bitter taste.

My associate Jeff Belonger said it best in his post about ignoring what your listing agent tells you about FHA loans

Here we go....203k loans for dummies



* 203k loans allow you to FINANCE the cost of the repairs in the new loan amount. (Not to exceed 110% of the after improved value determined by the appraiser and 203k consultant) What does this mean? I buy a house for 200,000 that needs 50,000 in repairs and I can borrow the extra 50,000? Too good to be true? NOPE. That's it in a nutshell....

ok details please.........

* Down payment is basesd on the sale price PLUS the final cost of the repairs x 3.5% so for example:

Sale price is 200,000 (DO not calculate 3.5% on this) PLUS 50,000 in repairs/costs (which includes certain costs and reserves the lender will require) 250,000 x 3.5%. Down payment is $8750.00 (closing costs are separate as usual)

* Buyer will hire (lender can recommend) a HUD approved FHA 203k Consultant  to go to the property with the buyer to determine the required repairs and wish list repairs.

The fee charged by the consultant can be included in the mortgage. The fee can range anywhere between $ 400 to $1200 depending on the repairs required. Please check with the consultant prior to scheduling your appointment.

*Buyer will obtain estimates from several licensed contractors for the work to be completed depending on how extensive the repairs.

Three estimates are recommended for each contractor but not necessary. The buyer can act as their own general contractor only if experienced and licensed. (FHA says experienced, but most investors require the buyer to be licensed) The contractors must provide documentation to be approved by the lender prior to approval.

The consultant will determine the "required" repairs versus the "wish list repairs". You must start with the required repairs and then move on from there for you wish list. This is an important step for the consultant and appraiser so that you don't over improve the home and exceed the comparable properties in the area.

* Once the consultant completes his report of required and wish list repairs, the lender will forward it to the appraiser for an "After Improved Value". This is where you may run into problems with OVER improving the property based on current values. Between the consultant, appraiser and buyer - the FINAL FINAL report will be tweeked to come up with a final report that the contractors will be hired to do.

* So now the file is submitted to underwriting and approved ( you need to qualify at the full amount you are borrowing of course, which may include your current mortgage payment for the home you will live in during the rehab period) and the normal steps for closing will occur.

(BIG PLUS - you can include 6 months of mortgage payments in the new loan amount since it's assumed that you will have TWO housing payments during the rehabiliation of the new home. This money will be deducted each month during the reahab process) This is optional.

* Closing occurs, and the work begins within 30 days of closing/funding. (This is when your mortgage payments start since this is when you started borrowing the money - however, if you included the 6 mths mtg payments, they will be deducted from escrow starting when your first payment is due)

* Disbursments are made throughout the following 6 months from the escrow account (normally 4 draws with one final inspection, but this can be increased for higher repair amounts) as the work is completed.

Remember you paid the seller for the price of the home, and then you borrowed an additional amount of X which is sitting in an escrow account to pay the contractors (your total loan is the total amount you borrowed)

Once the last disbursement is made and the final inspection showing COMPLETED AS PER THE CONTRACT........you are done! Simple ast 1 2 3 - okay maybe not, but that's why having an experienced lender on your side is crucial!

There are specific properties and repair requirements for this type of loan, so please call me for specific details if this sounds like the right loan for your new home.

Please send me your before and after pics! I would love to see them and maybe even post them for people to see what can be done with this awesome program! Or contact Colleen Craig FHA 203k Specialist for more details

Happy Rehabbing!

Who's Ordering Your Appraisal? How HVCC Affects Your Next Mortgage.

Kabir Mahadeva NMLS #182829 Alpha Mortgage www.kabirm.com — Thu, 02 Jul 2009 10:15:47 -0700

Once upon a time, we lived in a perfect world where everyone knew everyone and things went smoothly with the appraisal process. Your loan officer (mortgage broker or mortgage banker) had a list of appraisers that she knew understood the market, and ordered appraisals directly. In a perfect world, loan officers and appraisers never argued about property values, and never collaborated to inflate values to commit loan fraud. Loan officers never put pressure on appraisers to increase values so they could fit a loan into the right ratios, and appraisers never deliberately ignored good comps that didn't support the property value. Since the borrower relied on the integrity of the process, they never got taken advantage of and didn't end up with property that was not worth what they paid and lenders didn't get loans on property that was worthless.

YEAH, RIGHT!

We really never lived in that world, and the Attorney General of the State of New York went after Fannie and Freddie and obtained a consent decree that later became the Home Valuation Code of Conduct (HVCC).

In sum, HVCC prevents anyone with a direct financial stake in the loan origination process from having any communication with the appraiser until the appraisal has been submitted for review. Other than sending the appraiser a sales contract, no contact is permitted until underwriting, at which point the underwriter may request further information, clarification, or corrections.

Only lenders may order appraisals now (cutting mortgage brokers off completely from the appraisal process). Mortgage bankers who work directly for lenders must rely on their lender's compliance with HVCC. Mortgage brokers are completely at the mercy of the lenders they use.

To comply, lenders have essentially two approaches depending on their size and business operations. Either they contract the appraisal ordering process out to a third party, known as an appraisal management company (AMC) or they set up a separate department within their operation that orders appraisals but that has no direct financial stake in the loan approval process.

AMCs contract with appraisers to do the work, and have been getting a reputation for not paying appraisers as much as they would otherwise earn. For example, an AMC might charge the lender $500 for an appraisal, then offer to pay the appraiser $250 in a market where most appraisers normally charge $350.

The net result is what you'd expect: many local appraisers won't take the assignments, so the AMC ends up scrounging up an appraiser from someplace else who is hungry enough to work for less. Now you have an appraiser coming in from outside the area, or who is inexperienced. You won't have to look hard for appraisal horror stories these days, and this is one of the root causes.

I'm not saying that all appraisers sent by an AMC are bad, but the likelihood of getting someone who doesn't have the best possible market knowledge for your area increases substantially with AMCs.

The only time an AMC can be useful is if one is doing a deal outside one's own local area, but this, too, is a two-edged sword. When a non-local lender is involved, such as a hometown bank with a relocating or second home buyer, then an AMC likely will be used order the appraisal, with some risk that the assigned appraiser will not know the market.

That is why realtors try to get buyers to use local lenders. However, if the local lender's company now uses an AMC, you could still have a problem.

If your local mortgage banker works for a lender that has its own appraisal ordering department, then they will have a roster of local appraisers among whom assignments get rotated. In most cases, to keep things simple, there will be two or three firms that will be used consistently. These appraisers will be carefully chosen for their expertise, and you can count on the fact that they know the local market.

So, when you next shop for a mortgage, you must ask the question, "Who is ordering the appraisal?" It could make a big difference in your outcome.

Locking a loan in a time of extreme volatility (Asheville, NC)

Kabir Mahadeva NMLS #182829 Alpha Mortgage www.kabirm.com — Fri, 19 Jun 2009 18:10:15 -0700

In the last several weeks, loan rates have changed between .125 and .5% in a matter of hours. The mortgage bond market has never been so volatile before, and rarely has anyone been able to predict the moves with any certainty. Now, more than ever, I advise my clients to lock.

When advising a borrower about locking or not locking, I have stopped trying to time the market, because it ends up causing heartache nearly every time. Just ask the people who floated their loans on May 28 only to see rates skyrocket the very next day because the experts called it wrong on the jobs report.

I now tell my clients, "You always save time and money if you lock. If rates go up, you're protected. If rates go down far enough prior to closing, most lenders will allow you some leeway to renegotiate the rate. If rates stay the same, you saved time and stress dealing with the market volatility."

A note about renegotiation here: most lenders will not renegotiate unless rates move about .25-.375% lower. And a successful renegotiation will probably yield a rate somewhere between the current rate and the locked rate. For example, if you lock in today at 5.5%, and rates go down to 5.125%, you may be able to renegotiate a new rate of 5.25% or 5.375%.

Also, people holding out for a .125% difference in rate often fail to realize that it makes a very small difference in a monthly payment, about $8 per month on a $100,000.00 loan.

But if people don't want to lock, I tell them, "You lose time or money 2/3 of the time when you float. If rates go up, you pay more. If rates stay the same, you've had more than a few nerve-wracking moments with today's market volatilty. You only win if rates go down, and lately that's not been happening."

Mortgage bond prices move in the opposite direction from rates, and are affected by many macroeconomic and political factors. Lately, to use a mountaineering analogy, prices drop off a cliff, but climb back up a mountain of sand. Translating this to rates, they go up fast but go down slowly.

Most people do not have the fiscal literacy to follow the mortgage bond market and the many factors that affect it. While technical trend analysis can help in short term decision making, unexpected economic or political news can tip the scales suddenly and without warning, as we have seen in the past few weeks. Even routine news, such as the size of government borrowing (i.e. upcoming Treasury auctions) can affect rates.

Government intervention in the mortgage market is still keeping rates substantially lower than they would be without the intervention. This purchasing by the Fed will eventually stop when the money runs out, and then we will see substantially higher rates down the road. The refi boom is mostly over, though some of the fence sitters hoping for the 4.5% rates are now embracing reality and may settle for a higher rate while still saving money.

In the meantime, those of us who want to proactively control our destiny need to focus on the purchase market. And in that market, if we want our borrowers to win 100% of the time, we will advise them to lock when they can.