Most don't realize that without all the Feds efforts mortgage interest rates would be much higher and economy worse off that were we are today.  Today processes are at work to bring the mortgage market back.  As much as most want to say how hard it is to get a loan there is a reason for this.  Investors who buy mortgages need to feel confident that the loans they are buying are good quality(solid appraisals, good credit, stable income).  We desperately need these investors to come back into the market and begin to buy these securities.  Simply put if they don't buy - mortgage rates will need to rise to a level that makes it attractive.  We need to do our part to make sure the mortgages they buy are the best quality.   

The Fed said they are going to ration out the remaining commitment of Mortgage Backed Security purchases through the first quarter of 2010. There will be no additional buying, but instead, a longer weaning off of the program. There was some speculation about the Fed increasing the amount of buying above the $1.25T committed to, and last week's statement is the Fed's nice way of saying "no." They will not be buying more in quantity, but what they will do is attempt to provide a smoother transition to normal market conditions.

It is a given that once the Fed ceases its purchases, that interest rates will most likely climb higher...most likely back above the 6% area. Next year this time we could be in the mid to low 6's.  So instead of a hard transition with a large bump in rates, the Fed is attempting to allow rates to gradually rise. This means that waiting to purchase or refinance will very likely mean a higher interest rate.

Now is the time to take action. 

MORTGAGE RATES  Loan Programs Interest Rates* 30 Year Conv. Mid - low 5's 30 Year FHA/VA  Mid - low 5's Rural Development Mid 5's 5/1 Arm Conv.  Low 4's 5/1 Arm Jumbo Mid 5's Please contact us for specific situations and specific rates. *Risk Based Pricing will affect rate offered.   MORTGAGE RATE TRENDS DAILY RATE LOCK ADVISORY   For an in depth explanation and daily update click on The Daily Rate Lock Advisory.    A copy of this newsletter can be found at Market Update. also check out Quick Tips and Home Loan Toolbox

With all the HVCC changes to conventional loans - FHA released some of their new appraisal guidelines.  Lets look at them


FHA Appraisal Changes

1- Changes effective January 1st, 2010.

2- Mortgage brokers and commission based lender staff are now PROHIBITED from selecting the FHA appraiser.

3- Lenders are not required to use Appraisal Management Companies.

4- When a borrower switches lenders FHA prohibits the 2nd lender for ordering additional appraisals to obtain a higher value unless:
     -The FHA DE underwriter determines the 1st appraisal is deficient
     -The appriaser of the 1st appraisal is the other lenders exclusionary list
     -The first lender delayed the trasfer of appraisal to cause harm

5- Appraisals are now valid for only 120 days for all existing and proposed or under construction properties.

Please remember that this has just been released and that most lenders have not created policy to handle this.  Just like most other regulatory changes this year I am sure most lenders will create their own policy on how to comply with these guidelines.  The good news is that everyone has some time to prepare.  I don't believe this will be difficult to work with and will update you as things continue to develop. 

Strategies and Tips for Realtors on working with Appraisers and the HVCC:

Remove the lockbox off of the home before the appraiser comes out to generate a phone call from the appraiser asking to gain entry (make sure you enter "call before showing" in listing info).  When the appraiser calls, politely ask them to get a sense of their competency. Here are some suggestions: Where are they based? Have they ever appraised in the area before? What data sources will they be utilizing? Do they have enough time to complete the appraisal? 

1. If you feel that the appraiser is not knowledgeable about the area, politely ask them to hold off. Next contact the lender and see about having someone else assigned. Rely heavily on the USPAP(page2)rules regarding appraising only in geographical areas in which an appraiser is competent (familiar).
2. Provide comps of your own before the appraiser comes out. This is important as appraisers have to take pictures and will want to avoid making a second trip. It is also important that the comps you offer have closed in the last 3 months. Comps closing longer than 3 to 6 months will likely be adjusted downwards for date of closing. (Comps closing longer than 6 months ago are unacceptable).  
3. Download this helpful document  from the NAR regarding the HVCC and educate yourselves.
   
   

MORTGAGE RATES  Loan Programs Interest Rates* 30 Year Conv. Mid - low 5's 30 Year FHA/VA  Mid - low 5's Rural Development Mid 5's 5/1 Arm Conv.  Low 4's 5/1 Arm Jumbo Mid 5's Please contact us for specific situations and specific rates. *Risk Based Pricing will affect rate offered.   MORTGAGE RATE TRENDS DAILY RATE LOCK ADVISORY   For an in depth explanation and daily update click on The Daily Rate Lock Advisory.    A copy of this newsletter can be found at Market Update. also check out Quick Tips and Home Loan Toolbox

Delays in closings are the number one cause for a client to be disappointed with the process of purchasing a home.  This year with all the foreclosures, shorts sales and changes in the industry we now have another item to pay attention to that now can be added to your already long list of things to do.  Home owners associations are a part of many communities and are now may be creating delays as the owners of  foreclosed properties may not be current on association dues or having a property with a subdivision violation that need to be corrected before  a closing can occur. 

This is not surprising to me as many times, we(Lenders) receive realestate contracts are lucky to have any disclosure notifying anyone that there is a Home Owners Association(HOA).  It is great for a lender to know up front so we can quote accurate closing costs and payments.  Home owner associations have initiation fees that can affect the buyers funds for closing or monthly fees that affect payments.  Upfront disclosure is always the remedy for all parties to facilitate a smooth closing.

To miss closing dates or have delays caused by no one obtaining the HOA info or being able to clear any conditions in a 30 day period is unacceptable.  This is not meant to point fingers but there has to be a better way.  I believe the first line of defense against this is a listing agent providing information on the HOA and to properly disclose in the initial contracts.  This will greatly assist all so that by the time it reaches the closing attorney they are alerted to contact the HOA and can now get any information pertaining to the home.  Lets not wait for the title report to come back.  Buyers agents also need to ask when making offers - may be helpful to provide in the listing information.  Once this  is identified up front this should allow for more time for the title agent to obtain the info.  Again lets not wait for the closing agent to find out there is a HOA and then start the process.  I find it hard to belive that a listing agent would not have this info and or a buyers agent would not do any due diligence when receiving or making offers just seems like common sense.  Yes common sense however, this does not have much to do with what we are dealing with today.  Dont kill the messenger I was told to say this.  By the way dealing with  foreclosure attorneys is never a winning experience when issues arise that are time sensitive.  This is not the hard stuff and should be a simple fix.  Us survivors need to stick together. 

Any insight/feedback is greatly appreciated. 

MORTGAGE RATES  Loan Programs Interest Rates* 30 Year Conv. Mid - low 5's 30 Year FHA/VA  Mid - low 5's Rural Development Mid 5's 5/1 Arm Conv.  Low 4's 5/1 Arm Jumbo Mid 5's Please contact us for specific situations and specific rates. *Risk Based Pricing will affect rate offered.   MORTGAGE RATE TRENDS DAILY RATE LOCK ADVISORY   For an in depth explanation and daily update click on The Daily Rate Lock Advisory.    A copy of this newsletter can be found at Market Update. also check out Quick Tips and Home Loan Toolbox

I have already heard of a couple of a closings that have been affected by the new truth in lending requirements now required. When a lender discloses an initial truth in lending in todays market there now is a requirement that the final one(provided at closing) has to be within a .125% tolerance.  The truth in lending is a form that a buyer signs at loan application that discloses the APR.  The Annual percentage rate(APR) is the real cost of funds a buyer pays that takes into account certain closing expenses.  In a perfect world buyers are told to compare APR's in choosing lenders with low interest rates - surprise we don't live in a perfect world.  Unfortunately some lenders today still utilize misrepresentation and bait and switch tactics.  

So what does this have to do with the closing date?  Based on the previous topic of HERA HOEPA, most don't realize that lenders are checking the initial truth in lending figure against the final one.  Most do know that when it is off by more than .125% the lender must redisclose and now wait 3 days for the client to understand the process. 

You know as well as I do that some times figures are changed last minute.  In todays environment this could impose delays and you need to make sure that you are in touch with your lender when making these changes due to the potential of causing a delay.

I have done some of the math on the impact to APR based on a change in closing costs

    $100,000 loan - $1000 - $1250 change may trigger a change in APR and delay  closing

    $200,000 loan -  $3000 change may trigger a change in APR and delay a closing

Please remember the lower the loan amount the bigger the impact on APR when changes are made. 

Now that you can see the math the next item is what closing costs trigger the change in APR.  I have gone ahead and prepared a list of fees that are both included and not included>

I understand that sometimes changes need to be made last minute.  Working with someone who knows the ins and outs of the new legislation and understanding it impacts your clients loan has never been as important.  Clients can be forgiving but the one item they never seem to forget is if they miss the closing date.  Set the best expectation and do it right.  

Please visit Realtor Toolbox and go to Easy Notes for our APR handout
    

MORTGAGE RATES  Loan Programs Interest Rates* 30 Year Conv. Mid - low 5's 30 Year FHA/VA  Mid - low 5's 30 Year Jumbo Mid 6's 5/1 Arm Conv.  Low 4's 5/1 Arm Jumbo Mid 5's Please contact us for specific situations and specific rates. *Risk Based Pricing will affect rate offered.   MORTGAGE RATE TRENDS DAILY RATE LOCK ADVISORY   For an in depth explanation and daily update click on The Daily Rate Lock Advisory.    A copy of this newsletter can be found at Market Update. also check out Quick Tips and Home Loan Toolbox

This is a simple one that many still struggle with.  Just he other day had a Realtor want me to specifically give an exact dollar amount for a prequal.  For the record, this is impossible in that every property is different based on the property taxes and home insurance.  The best that any  lender can do today is provide a range that makes sense based the buyers qualifications and needs. 

As home values have fallen some property assessments have remained the same or gone up.  Typically many have used a calculation of 1.25% of the sales price to calculate taxes.  Today the best practice is to pull the exact tax amount from the county web site.  We have provided a link for every county in the US on our site in the Home Loan Toolbox page.  Just scroll down and click on the Property Tax Resource page, click on state, choose county and select Tax Commissioner for that county.

In addition,  to the property tax differences most still don't realize the payment differences based on every $1,000 financed.  look at the differences below.  

                                                        30 year Fixed                       30 year Fixed
                    Interest Rate            Cost Per $1,000                Cost Per $10,000

                        5.5%                               $5.68                                    $56.80

                        6.0%                                $6.00                                   $60.00   

So as you can see the differences per $1,000 is very small in the payment for a 30 year fixed.  So when someone is looking put down another $2,000 or raise the sales price $2,000 so that the seller can pay for some of the closing costs, you can no see how small an impact it is.

So to sum this up as best practice for any agent when working with buyers - you need to not only know the price range but also have an understanding of the payment.  Partner with your loan officer when looking at making offers and writing contracts so your buyer has the right expectations.   
    

MORTGAGE RATES  Loan Programs Interest Rates* 30 Year Conv. Mid - low 5's 30 Year FHA/VA  Mid - low 5's 30 Year Jumbo Mid 6's 5/1 Arm Conv.  Low 4's 5/1 Arm Jumbo Mid 5's Please contact us for specific situations and specific rates. *Risk Based Pricing will affect rate offered.   MORTGAGE RATE TRENDS DAILY RATE LOCK ADVISORY     For an in depth explanation and daily update click on The Daily Rate Lock Advisory.    A copy of this newsletter can be found at Market Update. also check out Quick Tips and Home Loan Toolbox

After completing a job everyone likes to get paid as it is part of the reward.  It can be a very frustrating thing not to get paid when your suppose to.  Over the last few years this has increasing been a more important subject as lenders have gone out of business and left many parties to a real estate closing with no funds. 

Today all lenders are required to wire funds to closing.  Wires are the cleanest way to close as the funds are liquid once they reach the destination.  The question many times is when did the wire go out and when is the closing agent notified that the funds are available.  Most of the time everyone is never provided the best information - so why point fingers.  Lets just try to come up with some solutions that may provide greater consistency with getting paid at the closing table.

1.  Always try and work with closing agents that have good offices who know what is going on.  Always surprises me when we get the call from closing that the attorney indicates they don't have the wire.  We produce the Fed number and they still don't fund because they cant get confirmation.  Also please understand that the attorney has no profit motive in holding on to the funds as any interest the account earns just goes to the Georgia Bar Association.  Close with Attorneys who have greater consistency and know what is going on.  Remember you are writing the attorneys name in the contract.  

2.  Always try to make sure your working with reputable mortgage providers who provide wires prior to closing.  Need to also understand the process the lender has for when and what conditions have to be met to have the wire go out.

3.  Schedule closings for later in the day  so you have a higher likely hood for the wire to make it.  Most mortgage companies have similar wire cut off times such at 10 a.m, 12 p.m. and 2 p.m. for the same day wires. It usually take a couple of hours for a wire to transmit.  Typically lender do not like to send funds until the day of closing.

4. Schedule closings so that you do not close at the end of the month.  This is something we have always been a big advocate of.  Closing at the end of a month is a recipe for spending more time waiting on the system to fail you as everyone else is trying to do the same and thus creating capacity issues for closing agents and lenders.

I am firm believer in getting paid what you do and we do everything possible for this to happen.  Are we perfect - unfortunately not but I can guarantee on thing is that we can tell you exactly what is happening and where we are in the process.  We are very fortunate to have one of the best closer/funders.  She is know as Sarge.many know her by Regina.  If you have had the opportunity to work with her you know why. 

MORTGAGE RATES  Loan Programs Interest Rates* 30 Year Conv. low 5's 30 Year FHA/VA  Mid - low 5's 30 Year Jumbo upper 6's  5/1 Arm Conv.  low 4's 5/1 Arm Jumbo upper 5's Please contact us for specific situations and specific rates. *Risk Based Pricing will affect rate offered.   MORTGAGE RATE TRENDS DAILY RATE LOCK ADVISORY   For an in depth explanation and daily update click on The Daily Rate Lock Advisory.    A copy of this newsletter can be found at Market Update. also check out Quick Tips and Home Loan Toolbox

 

Home financing is still considered to be 50% of the home buying process.  Once a home has been selected the next step or the buyer is to obtain financing.  If you are not able to come to terms on a home loan your contract can die.   Over the years it has always shocked me as to the criteria some agents use to make decisions on who they refer clients to for home loans.  Most of the time it largely based on what others in the office have to say.  I don't believe this is the only  best practice that is going to guarantee success.  When so much a transaction is based on financing you need to take time have solid resources available. 

With some of the recent changes in the lending industry this is a good time to take inventory and make sure you have the right lender relationships in place.   Last week I receive an inquiry from a top producer who took some of our previous updates and decided to take action.  I want to thank Jessica Horton  who took the time to develop some questions that you may want use today with your lenders.  Cudos to you if you already have taken the time to do something like this but if you haven't this is definitely an action item to complete.  Believe it or not there are differences between loan consultants - just like every Realtor has a unique set of skills no matter the company. 

1. How does your PQ process work. 

MORTGAGE RATES  Loan Programs Interest Rates* 30 Year Conv. low 5's 30 Year FHA/VA  Mid - low 5's 30 Year Jumbo upper 6's  5/1 Arm Conv.  low 4's 5/1 Arm Jumbo upper 5's Please contact us for specific situations and specific rates. *Risk Based Pricing will affect rate offered.   MORTGAGE RATE TRENDS DAILY RATE LOCK ADVISORY   For an in depth explanation and daily update click on The Daily Rate Lock Advisory.    A copy of this newsletter can be found at Market Update. also check out Quick Tips and Home Loan Toolbox

                    -Likeability - do you and will your clients like the person your refer?
                    -Professional - Knowledge, work ethic, organized, trained, systems, close on time
                    -Value added - what extra things can they do to assist you ($$ does not count)
2.  Control the referral.  Obtain buyer contact info.  Dont hope your clients call.**
3.  Understand the lenders PQ process in the following ways(this is value added for your client)
            -How and when do they perform a pre-qualification(PQ)**
                        -Face to face, phone, web or remote
            -What is the lenders process of a PQ
                        -Do they charge a fee to the client?
                        -Is a credit report reviewed?
            -Pre-Purchase counseling for clients**
                        -meeting before contract to review financial aspects of  purchase and answer ?'s
            -Pre-Approval Process obtain documentation in advance  for preliminary approval.
4.  Loan Application Process
            -How is this completed and by who.  face to face preferred in regard to new legislation**
            -When is the Good Faith and Truth in Lending provided (client always get a copy)
            -Do they charge a fee to lock loans? Do they quote accurate GFE's(.125% redisclosure)**
            -How and when do they perform updates and to whom do they provide them to?**
            -Do they have any service guarantees in place? 

If I were in business as a Realtor and 50% of any transaction closing is based on financing, I would make sure that I had the absolute best resources(loan officers) you cant afford not to.  

**above indicates crucial items for smooth closings. 

MORTGAGE RATES  Loan Programs Interest Rates* 30 Year Conv. low 5's 30 Year FHA/VA  Mid - low 5's 30 Year Jumbo mid 6's  5/1 Arm Conv.  low 4's 5/1 Arm Jumbo mid 5's Please contact us for specific situations and specific rates. *Risk Based Pricing will affect rate offered.   MORTGAGE RATE TRENDS DAILY RATE LOCK ADVISORY   For an in depth explanation and daily update click on The Daily Rate Lock Advisory.    A copy of this newsletter can be found at Market Update. also check out Quick Tips and Home Loan Toolbox

The changes in the industry have been fast and furious and do not look like they are going to slow down any time too soon. From some of the responses we have received over the last 2 weeks I can tell that some are not fully aware of what this means to the business of a Realtor.  

Our goal in the last Message  ,HERA HOEPA and Your Lender!, we attempted to explain some of the new timeframe's that lenders will have to adhere to with loan applications starting this July 30,2009.  We understand that you receive many messages and may from time have trouble pulling the relevant message from news, advertising and marketing data. 

The last Mortgage Market Update was to provide clarity with the news rules and not intimidate you.  Fear is always a great motivator and in this market of change it can be used as a technique to keep and win referral business as most lenders promise to be the solution to all the issues.  The company can only go so far in my opinion and it is the loan process of the loan officer that will make the difference.  Doing business with a nice or honest person is important but is not the only criteria.  Remember if you are referring buyers to lenders - these are some of the basics you may need to know. 

Can you answer the following?

                                  What is the prequalification pre approval process the lender uses?
                                  Does the loan officer meet face to face with your client?
                                  Who completes the good faith Estimate? - Processor or Loan Officer?
                                  Is it completed at loan application or mailed out?
                                  When will they order the appraisal? Before or after application fee received?
                                  What is the HVCC process the lender has in place? - All loans or Conv only?
                                    
As mentioned many times this year - we are back to the basics and it is refreshing but challenging at the same time.  if I were a Realtor in business today and have referral relationships with lenders, I would absolutely need to understand the loan process so I could better negotiate realistic contract time lines for all parties involved.  Remember you don't make more commission every time you have to get updated addendum's negotiated and signed. 

Each lender may have a different process to the new guidelines as is the case with many of the changes this year.  Please don't misunderstand my previous message as this is not a big deal.  The purpose of our message is that these changes are going to be good for the consumer  and that the requirements for proper disclosure is something we have been doing for over the last decade before it became mandatory.  This will not change the way we have been executing loan applications as we continue to deliver the Home Express Guarantee - our attempt at advertising, just solid promises backed by financial commitments. 

As a Realtor I would be critical of any buyer/lender relationship that you are unfamiliar with as this could create delays, cost money and foster negative experiences for all parties involved.  It may be the best investment in your business to work with lenders that work for the clients best interest and have a proven track record of delivering. 

Look for more this week as we layout the flawless buyers agent process with the lender.   

It sort of feels like cramming for a test back in college -  you knew it was coming but had to deal with other important matters and now its the night before and your now just getting prepared to study.  Many real estate professionals are now just beginning to hear about some of the changes that will become reality on July 30th.    

The Home Ownership and Equity Protection Act (HOEPA) and the Housing and Economic Recovery Act (HERA) that were passed by Congress in 2008.  The Federal Reserve Board published the regulations under the Truth in Lending Act. These regulations were written to provide more transparent, level and fair regulation of the real estate industry; to add additional steps to help prevent deceptive lending practices; and to protect consumers by making them more informed - and therefore more confident- in their home financing choices.

Housing and Economic Recovery Act - (HERA) amends and impacts several aspects of obtaining a mortgage, the disclosures required for borrowers, and the timing of their delivery.  Below are some of the new time tables that may affect your closings.  The following rules only apply to primary residences and second homes. 

1.  The earliest a closing may occur is no sooner than 7 days after the borrower has been issued all the initial mortgage disclosures (Saturdays may count - depends on lender but Sundays and federal holidays do not).

2.  Upfront fees may not be collected until after the early Truth in Lending disclosures (good faith estimate and the Federal T&L disclosure)have been provided.  Truth in lending disclosures must be provided at least 3 days after application.
 
        Face to face application    -Credit report fee(reasonable) may be collected at application.
                                          -Appraisal fees may be collected the day after. 

        Mail out application          -Credit report fee(reasonable) may be collected up front (includes overnight and email)        
                                           -Appraisal fees may be collected 3 business days after mailing.

3.  The homebuyer must receive a copy of the appraisal 3 days before closing.  This right may be waived by borrower. 

4.  Redisclosure    -if the Truth in Lending changes by more than .125% a revised one must be issued at least 3 days prior to closing.  If mailed it is considered to be received by borrower 3 days after mailing.  You can see from the time line that this could be a long delay with any changes if your working with a lender that is not local. 

So what does this all mean?  Simply - at Premier Capital Mortgage, nothing to sweat - for other lenders this is going to create delays and potentially cost your buyers more money.  We have always believed in doing it right with full disclosure to set the right expectation up front.   Years ago we started our client value proposition called the Home Express Mortgage Guarantee that promises your clients this high level of service.  For years I have been surprised that most lenders no longer meet face to face with clients and have always felt this puts both the loan officer and client at a disadvantage.  Taking the extra time up front to set the right expectation can save many hours over the loan approval process in answering questions up front.  We have stayed committed to this practice what has continued to build our business and still meet over 95% of our clients face to face.

The new rules that will be in place next week are good for the consumer and may be an inconvenience for some in real estate.  If I were a real estate professional I would make sure that I understand my lenders loan process so that I could better navigate the contract negotiation process and set the right expectation up front for my buyers.      

MORTGAGE RATES  Loan Programs Interest Rates* 30 Year Conv. low 5's 30 Year FHA/VA  Mid - low 5's 30 Year Jumbo mid 6's  5/1 Arm Conv.  low 4's 5/1 Arm Jumbo mid 5's Please contact us for specific situations and specific rates. *Risk Based Pricing will affect rate offered.   MORTGAGE RATE TRENDS DAILY RATE LOCK ADVISORY   For an in depth explanation and daily update click on The Daily Rate Lock Advisory.    A copy of this newsletter can be found at Market Update. also check out Quick Tips and Home Loan Toolbox