Rain Wallace Mortgage Blog

Should There Be A Surgeon Generals Warning on Credit Scores?

Rain Wallace (City1st Mortgage Services) — Mon, 09 Mar 2009 14:57:14 -0500

I think everyone would agree that hazardous materials should be marked with a skull and cross bones; the universal message "bad things will happen to your health if you're not careful" symbol.

Now I'm asking -shouldn't there be a warning for financial health? Today credit scores have serious power over almost every financial aspect in our lives. Shouldn't consumers be warned before we fill out forms or applications that will adversely effect credit scores?

First look at the traps. If you're in a checkout line at a grocery store, department store or even at a trade show. You can be asked to apply for a credit card in exchange for a substantial discount of 10% to 20% off a purchase at point of sale. What seems like a great way to save some extra cash can actually end up costing you thousands of dollars in the long run. When "whoever" pulls your credit at point of sale (and they most certainly will) it may drop your credit scores 0 - 50 points depending on the type of credit you have established in the past. Even if you don't use the credit you just applied for; there is potential for lower scores and other consequences. Perhaps the "type" of credit offered gets a low rating with the credit bureaus and you now have that hit to your credit scores. Which means if you're about to buy a home or make another major financial purchase you pay more due to an increase in rates or fees. In the case of a home loan over the life of that 30 year mortgage .25% rate increase on a $250,000 loans means adding over $10,000 to what you could have paid with a slightly better credit score. This is repeated over and over with auto loans, insurance premiums and even dream jobs that harvest scores to see how worthy you are for what they offer.

Inquires do not stay on your record forever. But do you know when an inquiry is being put on your credit rating that will effect your score? How about the last time you test drove an automobile? Did the salesman ask you to sign a form before climbing behind the wheel? Have you answered a credit card ad in the mail telling you they offer 0% interest and you're "pre-approved"?

Would you be enticed to enter a drawing if at the top of the form a bold box said: "Warning! filling out this form will check your credit; increase the chance of identify fraud and injure your short or long term financial health"

Would you think twice before using a 90-day-same-as-cash account if there was a warning in a box that stated "This type of credit typically lowers credit scores"?

I like the idea of "Credit Hazard Warnings" but since they don't exist today, try reading a FICO booklet about credit scores.

Fannie Mae and Freddie Mac Under Control of Uncle Sam

Rain Wallace (City1st Mortgage Services) — Mon, 08 Sep 2008 19:54:32 -0500

It's a good day when I see mortgage backed securities soaring high when I get my first report on the days trading. With the news of the government taking control of Fannie Mae and Freddie Mac we got a nice drop in mortgage rates today. (About three different reprice notices from our lenders improving rates all along the way). I got the drop I was hoping for from my FHA lenders and perhaps tomorrow will produce more of the same and bring a smile to all the buyers out there in this market. Happy buyers = happy agents = happy me.

I see refi's coming alive again, with rates in the 5's the action will be fast and furious. If you're thinking about a refinance; stop thinking and get a call in now. If you're application is in, we Mortgage Loan Officers can shop rates for you and take the stress out of looking everywhere for the best pricing. With rates changing in real time, just looking at them a couple days ago won't cut it. Rates are now changing several times a day. You need to be set-up and have your loan officer getting rates for you in real time. Just getting on my e-mail list can get daily hot sheets of rates and offers tailored to each individual homeowner. Even better; have an application waiting, so when these rates hit the sweet spot, you're ready to lock.

Home Buyer's Assistance

Rain Wallace (City1st Mortgage Services) — Tue, 19 Aug 2008 17:25:48 -0500

It seems like the only thing anyone will confirm about the Down Payment Assistance program (the ones most used with FHA purchase loans) is that they are not allowed after October 1.

Many lenders are requiring home buyers using DPA money to be locked by this week's end, a few will confirm that they will allow DPA till the cut-off as long as the loan is approved and in underwriting with an FHA case number assigned to a property. *If you are in this pool it's going to be very crowded.* Check if you have a DPA company bringing funds to close if they have a deadline that runs ahead of the ruling. It was rumored that Nehemiah wouldn't send funds to close past September 15th 2008, but I can't find anything to support that on their website. http://www.getdownpayment.com/

For the Salt Lake City area, the tax credit offered to 1st time home buyers is not allowed if your buyer is using a city grant for down payment.

In Forbes.com: "In Depth: America's Recession-Proof Cities" Salt Lake City is in the top 10. Something you might like to have to show potenial buyers.

http://www.forbes.com/2008/03/25/suburbs-quality-lifestyle-forbeslife-cx_mw_0326realestate_slide_17.html?thisSpeed=15000

Mortgage Haiku

Rain Wallace (City1st Mortgage Services) — Sun, 28 Oct 2007 02:24:14 -0500

MORTGAGE STRATEGIES

COMPLETELY TAKE CARE OF CLI

ENT COMES FIRST WITH ME

FHA down payment assistance program. Rule as of Oct 1.

Rain Wallace (City1st Mortgage Services) — Tue, 09 Oct 2007 14:36:35 -0500

Here's an update about the home buyer assitance programs.

"Important HUD ruling on FHA Down Payment Assistance:

On October 1, 2007 HUD published a final regulation that establishes that a prohibited source of downpayment assistance is a payment that consists, in whole or in part, of funds provided by any of the following parties before, during, or after closing of the property sale: the seller, or any other person or entity that financially benefits from the transaction; or any third party or entity that is reimbursed directly or indirectly by the seller, or any other person or entity that financially benefits from the transaction.

This regulation is effective October 31, 2007. Therefore, in order for a homebuyer to use downpayment assistance derived from a seller the homebuyer must have entered into a contract of sale (including any amendments to the purchase price) that was signed by the homebuyer on or before October 30, 2007. However, in accordance with a settlement agreement resolving previous litigation between the Nehemiah Progressive Housing Development Corporation (Nehemiah) and HUD, this regulation will not apply to the Nehemiah downpayment assistance program until April 1, 2008. Therefore, in order for a homebuyer to use downpayment assistance derived from a seller under the Nehemiah program, the homebuyer must have entered into a contract of sale (including any amendments to the purchase price) that was signed by the homebuyer on or before March 31, 2008."

Rain

FHA Secure

Rain Wallace (City1st Mortgage Services) — Mon, 08 Oct 2007 16:54:34 -0500

FHA Secure Plan this is NOT FHA 100% purchase money.

I have had some clients I've pre-approved to buy homes tell me during my usual follow-up call they were waiting for the FHA Secure plan to roll out in January before they begin shopping for a home.

I'm not sure where they got this misinformation but if you run across buyers with similar beliefs and you'd like to understand the FHASecure Plan; read on.

First of all you might ask; what is it?

It is the FHA Secure plan, it is for refinance; it lets borrowers with strong credit histories qualify for a refinance when they would otherwise be declined. Suppose a homeowner's been making his mortgage payment on time prior to having an adjustable rate change. Then after the change they are having a difficult time staying current with their new higher payment.

How the FHA plans on doing this is with risk-based premiums for mortgage insurance that will match the borrowers credit profile. The less risk the lower the premium the higher risk borrowers pay more for their FHA mortgage insurance. This mortgage insurance pricing will begin on January 1, 2008.

How you can answer questions about FHA Secure if a past client calls you about an adjustable rate they may have in their current mortgage. THING THEY MUST HAVE:

1. A history of on-time mortgage payments before the borrower's teaser rates expired and loans reset.

2. Loan applications must be signed no later than December 31, 2008.

3. Three percent cash or equity in the home.

4. A sustained history of employment, and enough qualifying income.

5. Sufficient income to make the mortgage payment.

Message me if you have any questions.

Rain

FHA down payment assistance program.

Rain Wallace (City1st Mortgage Services) — Thu, 04 Oct 2007 18:11:13 -0500

As some of you know the down payment assistance program used for FHA purchase money "Nehemiah" could be canceled if you don't have an application in by Oct 30Th.

But there is hope for Down payment Assistance from "The Genesis Foundation" http://www.preferredprogram.org/realtors.aspx

This company uses HUD approved native American tribal grant program. Contact me if you would like to see a copy of the actual HUD letter concerning these grants. I'll email it to you.

Rain Wallace

New Salt Lake County Group

Rain Wallace (City1st Mortgage Services) — Thu, 04 Oct 2007 17:23:49 -0500

This group is a great idea; I would like to meet more people in real estate; exchange ideas and knowledge and build new business relationships.

Rain Wallace

Citywide Home Loans

Spend a weekend driving through Utah you won't regret it. Go with friends; split the gas and enjoy the diamond lanes.

Rain Wallace (City1st Mortgage Services) — Thu, 04 Oct 2007 02:30:07 -0500

"Reserves" the magic word.

Rain Wallace (City1st Mortgage Services) — Sun, 16 Sep 2007 11:54:50 -0500

You can still buy a home today with little or money down in Utah with a couple of good tips. Agency loans like MyCommunity and Home Possible are still making loans to home buyers with no down payment. The rules for qualifying for these loans have tightened up in effort to reduce the chances of exposure to foreclosures for the lender.

Fannie Mae, Freddie Mac and FHA all love to see reserves for borrowers; which helps enormously in getting approved for a no money down loan. What lenders like to see is a minimum of two months the buyers proposed mortgage payments with taxes and insurance in reserves with the borrower. This can in the form of bank accounts, 401K and other retirement accounts, stocks, bonds or any liquid asset that has been in borrowers account for two months.

What many home buyers don't know is that the money they have been saving to put down on a home might better be kept as a reserve account for establishing stability to the lender, then applying for a 100% home loan.

If a new home buyer looking to use one of these loans and meets the guidelines for credit and income but fails to have the required reserves there is another way to build those reserves fast. Have a yard sale or sell anything you can document with a receipt or transfer of ownership for the money, then put it into an account to show that you have had the asset there. Keep in mind you cannot sell something like a used baby buggy to your Aunt for $2900.00. The value of what you sell has to be in line with todays value of the thing you are selling. If you are selling a scooter or a piano to raise money for your reserves you must check the "book" values for these sales and they must be in line with todays current market.

Cash reserves are good for lenders and home owners alike. Please feel free to contact me about ways to establish reserves that adhere to lending guidelines.

Rain Wallace

rain.wallace@chl.cc

How does your homeowners insurance company measure up?

Rain Wallace (City1st Mortgage Services) — Wed, 18 Jul 2007 17:55:53 -0500

I was reading an article about insurance companies that didn't pay claims after the 2005 Katrina disaster in New Orleans. Which made me wonder about my own insurance company I use for homeowners insurance and who I recommend to others. Since my rates are what I consider low; I wanted to make sure I wasn't compromising service for low premiums. So I went to this site http://www.naic.org/cis/ One of the best ways to get an insurer's reputation is to check its complaint ratio - its percentage of total customer complaints divided by its market share, as measured by total premiums. The lower the ratio, the better a company's performance. Check it out.

How does your homeowners insurance company measure up?

Rain Wallace (City1st Mortgage Services) — Wed, 18 Jul 2007 17:55:52 -0500

New rules for FannieMae and MyCommunityMortgage loans

Rain Wallace (City1st Mortgage Services) — Tue, 17 Jul 2007 17:12:57 -0500

According to a FannieMae representative visiting my office, FannieMae had four times the MyCommuityMortgage loans by April this year than they did the entire year of '06. They are now trying to slow down the sale of this product.

As of May 19th 2007 clients applying for 100% MyCommunityMortgage for purchasing a home will no longer be required to pay-off collections of any amount to close their loan for one-unit, owner-occupied properties. (Judgements or things that show up at title that could end up being a lien against the property still have to be paid).

Effective July 22, 2007 - Community Seconds may be used in conjunction with the interest only feature.

Effective August 1, 2007 - Loan-Level Price Adjustment or (llpa) of 1.00 percent applies to all MyCommunityMortgage loans. Most of our investors are collecting for this right now. Still when you figure there is no upfront MI and the low .59 factor for the starting monthly MI rate with zero down; it's still a pretty good deal. Just remember the extra cost if you have seller's paying the buyers closing costs. LLPA's also apply to MyCommunityMortgage loans with:

5/1 ARMs / 2 unit ARMs / non-Community Seconds subordinate financing / Interest -only feature / Terms in excess of 30 years

Effective July 22, 2007 MyCommunityMortgage permitted for Approve/Eligible and AE Level 1 only! I did get an AE 2 approved through Countrywide broker side; it funded just before the change date, it priced the same as MyCommunityMortgage, but was funded by CWBC's sub-prime division. Underwriting was about 72 hours, conditions 48 hours and so forth.

Appraisal Waivers

Rain Wallace (City1st Mortgage Services) — Mon, 02 Jul 2007 13:46:30 -0500

Try this. If you're a selling agent or a mortgage officer, you can help your Lender by providing the address of a listing; sale or refi, by looking up your property address on post office records at http://zip4.usps.com/zip4/welcome.jsp. When you use the property address as it appears from the post office, it helps getting an appraisal waiver in the loan officer's DU findings. (Most appraisal waiver systems are set up to recognize the address as the post office has it on record). This will make the process of closing faster and save a buyer/borrower money. There are other factors that apply for an appraisal waiver; down payments, low loan-to-value ratios, credit scores etc. But making sure the address is typed in like a postal address still makes a difference.

Alert your name is being sold! Take action today!

Rain Wallace (City1st Mortgage Services) — Sun, 20 May 2007 11:31:53 -0500

The latest news about getting your credit checked for a home loan is "inquiry data" that the credit bureaus have on file. This information is being sold by the credit bureaus (after you pay them) to other lending companies, and it allows them to resell your information. Adding to the risk of identity theft and also causing a maelstrom of junk mail for the borrower looking for a home loan.

I am posting the link for you to take action and opt-out take advantage of this today and give this link to all your family and friends. I found it to be more effective than even the "do-not-call" list.

To opt out: You can contact them by phone at 1-888-567-8688 or online at www.optoutprescreen.com You must opt out at least 48 hours prior to having your credit checked to make sure it is processed in time. You can choose a five year or lifetime option, and the lifetime option does require a signed form. If a credit report needs to be run prior to the 48 hour waiting period - at least you are aware and informed and can be on the lookout for strange mail and offers.

-Rain Wallace

Mortgage Officer

Citywide Home Loans

(801)747-2474