My Blog

Settlement Reached...

Wed, 22 Oct 2008 06:55:52 -0500

The Office of Federal Housing Enterprise Oversight (OFHEO), the division of the Department of Housing and Urban Development that oversees and regulates Freddie Mac and Fannie Mae, has reached a notable settlement with three of Fannie Mae's former executives. The settlement, announced late Friday, will end enforcement actions against the three officers arising out of accounting and internal control problems at the two government sponsored enterprises (GSEs) in 2004. It took Freddie Mac and Fannie Mae three years to revise their financial reporting to clear the problems and cost them a substantial part of their autonomy. The Consent Orders were announced by OFHEO Director James B. Lockhart and dealt with former Fannie Mae Board Chairman and Chief Executive Officer Franklin D. Raines, former Chief Financial Officer J. Timothy Howard and former Controller Leanne Spencer.

Taylor Bean & Whitaker....Going out of business?

Tue, 26 Feb 2008 15:28:36 -0600

Anyone have potential loans with Taylor Bean & Whitaker? I have four (4) loans that have been in underwriting for the past fourteen (14) days! I know last week they were twelve (12) days behind in underwriting, but it is crazy. Rumor on the street is that they can not fund any loans....wow. Good thing we have several other lenders to work with. I have moved all my loans to another lender. I know from experience that this is a sign they are going out of business.....

Thank You Fellow Rainers...

Tue, 25 Dec 2007 13:47:23 -0600

Hello everyone may God bless each everyone of you fellow Rainers. Christmas should be a day for family, but any more it has became a day about how much money can be spent and how quick you can open one present to get to the next. I believe the meaning of Christmas has been lost through out the years instead of being about love and sharing and family. Its all about how many hours you can spend in a store and how much money can you spend. It is so sad that we have got away from the true meaning of Christmas. Wouldn't it be nice to be able to give one gift and have a wonderful dinner and enjoy just being with your family instead of over spending and going in debt. Have a great Holiday....

Why use a Mortgage Broker? Here is why...

Thu, 09 Aug 2007 21:19:10 -0500

With many lending sources going out of business everyday now, utilize a Mortgage Broker. Ifone goes out of business, we have many other lending institutions to quickly work with. As a mortgage broker, we work for our clients. I am not saying bank loan officers do not, nevertheless, bank loan officers are employed by the financial institution. The benefit of using a Mortgage Broker is the fact that we have the ability to offer more mortgage products from a number of financial institutions & investors. Bank loan officers work for one bank, that means they can only offer their clients what their financial institution has to offer. Mortgage Brokers do not work for one specific lender, and you are assured impartial advice. A Bank Specialist has limited number of their own financial products, and while there may be better mortgage products out in the market place they will do their best to sell you their own mortgage product.

We use our knowledge of the mortgage market to negotiate mortgage rates with lenders to get the best possible mortgage rates for the client. When you go see a Bank loan officer, commonly the mortgage negotiating is left up to the client. For conventional mortgage financing, the services of the Mortgage Broker are generally provided at no cost to the client. Banks pay us for providing business.

Mortgage Brokers will exhaust every possible solution to approve their clients mortgage application to pre qualify them. Because we deal with so many different lenders, we have solutions for new foreign nationals, clients who are self employed, and clients with poor credit history. We also provide personal service, usually at times convenient for their clients - late evening & weekends -Mortgage Brokers are not restricted in seeing clients within certain business hours.

Simply stated, we are customer focused, as I rely on referrals from previous clients and agents to provide future business.

AT&T has rebranded themselves...

Thu, 26 Jul 2007 23:20:21 -0500

AT&T did it smart. In the moments leading up to the launch of the iPhone, AT&T CEO Randall Stevenson told USA Today something that made me read twice: "[The iPhone launch] helps us complete our change from Cingular to AT&T and has created a halo effect for the re-branding." You'd think that more than a billion dollars spent on re-branding by AT&T alone should buy some halo, but Stevenson would apparently disagree. The PR that Apple has been able to generate around this launch is so formidable, even the bluest of blue-chip brands is happy to take a back seat and enjoy brand equity by association. But AT&T isn't the only company that can benefit from the massive iPhone awareness machine. The device itself opens many opportunities for any brand to design for the iPhone and tap into not only the brand halo, but also the hottest-selling, largest audience for a single mobile device since the ubiquitous RAZR. While incredible that the iPhone features a more typical web experience than the average Smartphone, it's still not the same as browsing a website on a monitor.

Rates hold steady...

Wed, 25 Jul 2007 20:12:13 -0500

Freddie Mac's Primary Mortgage Market Survey concluded that the 30-year fixed-rate mortgage (FRM) averaged 6.73 percent with 0.4 point for the week. Both rate and points were unchanged from the previous week and the interest rate was 7 basis points below the average for the same week in 2006. The 15-year FRM averaged 6.38 percent, one basis point lower than the week ended July 12. Fees and points were unchanged at 0.4. One year ago the 15-year FRM averaged 6.80 percent. The five-year Treasury-indexed hybrid adjustable rate mortgage (ARM) was unchanged at 6.35 percent and 0.5 point; one year ago the rate was one basis point higher. The one-year Treasury-indexed ARM averaged 5.72 percent compared with 5.71 percent the previous week. Fees and points were unchanged at 0.5. This was 9 basis points lower than the one-year ARM average a year ago.

Very similar news came from the Mortgage Bankers Association's Weekly Mortgage Applications Survey for the week ended July 20. The average contract interest rate for the 30-year FRM was reported to be down from 6.61 percent to 6.59 percent with points, including the application fee, decreasing from 1.6 to 1.55. The 15-year FRM also decreased, averaging 6.24 percent with 1.43 in points compared to 6.29 percent with 1.33 points the previous week. The average contract interest rate for one-year ARMs increased to 5.62 from 5.60 percent, with points increasing to 1.13 from 1.11.

Conventional vs. FHA Loans..

Sun, 22 Jul 2007 15:24:09 -0500

People commonly ask me about rates, I tell them, it all depends on the program you are talking about. Then they say well, a regular 30 year fixed. I then ask questions about the down payment, verified or stated, etc.. I get wow, you ask a lot of questions just for a rate quite. Yes, but I want to be accurate and give the right rate. The most two popular are the Conventional & FHA loans. A FHA mortgage has up-front mortgage insurance of 1.5% of the loan amount and is added right to the loan. For example a 100,000 FHA loan would actually be 101,500 after MI was added. The payments are calculated of the total loan amount. Also FHA has a monthly mortgage insurance premium as well. Using the 100,000 loan example the mi premium would be $41.66. A conventional mortgage has no up-front mortgage insurance, but does have a monthly premium. This premium is determined by the loan to value. The mortgage insurance rate varies at the following LTV's 100%, 97%, 95%, 90%, and 85%. No mortgage insurance is required for 80% or less. Assuming a 3% down payment, the mortgage insurance on a 100,000 loan would be $83-$86.

Money for the "No Money Down Purchase"..

Sun, 22 Jul 2007 15:18:40 -0500

Ever see those commercials or ads where you can buy a home with no money down? Although there are new programs that allow buyers to purchase a home with little or no cash, you will generally need some funds for down payment, closing costs or both. Since a mortgage payment will take a good percentage of your income, lenders will usually want you to have responsibility from the very beginning. There are options for low down payment (5% or less) mortgages such as FHA mortgages and there is always the possibility that the seller could absorb some of your closing costs (which are usually 3-5% of the selling price) but to buy a home with no cash down is a rare occurrence. If you have cash for closing costs, though, and excellent credit, there are new options for the conventional loan.

PreQualify..

Sun, 22 Jul 2007 15:14:27 -0500

With the earnest money now an option as nonrefundable, a Loan Officer must Prequalify a potential client. What is the basic difference between Prequalification & Preaproval? Prequalification is the process where the lender will look at a basic copy of your credit report and use the information you supply to determine how much mortgage you can afford based on your income. No accounts or employment information is verified. Preapproval occurs when all credit and employment is verified and the mortgage is approved, subject to the appraisal of the property you have chosen to buy. Final loan approval occurs when the property has been appraised, all documentation is in the hands of the lender and all contingencies have been met.

Discount Points...

Sun, 22 Jul 2007 07:51:07 -0500

Have you heard of the term Discount Points? Discount points are called so because they discount the interest rate. A typical trade-off is 1 discount point for each .25 percent reduction in interest rate. You could get a 7.00 percent rate with zero points or 6.75 percent if you paid one discount point. If you're getting charged 2 discount points, then you should conversely get a rate .5 percent higher for zero points. If you're getting charged 3 points, I'll bet it's nothing more than more income for the loan officer, without a subsequent rate drop. A discount point is tax deductible because it's a form of interest. If you're paying 5 points on a loan, not only is it not interest, you're getting taken advantage of. If you're using a mortgage broker and there are points on the loan, those points are supposed to go to the lender, not the broker. It's not the broker that discounts the mortgage, the lender does.

5 Common Consumer Mistakes..

Sun, 22 Jul 2007 07:41:36 -0500

What are the most common mistakes consumers make when getting a loan?

Not knowing which mortgage fees the borrower can and cannot negotiate.
Using an interest-only or payment option adjustable rate loan to qualify for a more expensive house.
Not comparing the final fees listed on the closing documents to the upfront estimates and good faith estimate. Don't allow the lender to pack the loan with add-on fees without the borrower's knowledge.
Not knowing if the mortgage has a pre-payment penalty until it's too late, such as when the borrower decides to refinance or pay the mortgage off early.
Paying hundreds of dollars to have a company set-up a bi-weekly mortgage payment plan, which is something the borrower can generally do at no cost.

Mortgage Terms you must know...

Sun, 22 Jul 2007 07:36:43 -0500

These are the terms you must know when applying for a mortgage:

Adjustable Rate Mortgage (ARM)
Also referred to as a Variable Rate Mortgage. A mortgage in which the interest rate is adjusted periodically based on a pre-selected index.

Annual Percentage Rate (APR)
An interest rate that reflects the cost of a mortgage as a yearly rate. This rate takes into account any points and fees and is based on the loan going to it's full-term.

Assumption
An agreement between buyer and seller in which the buyer assumes responsibility for the seller's existing mortgage. This agreement usually saves the buyer money because closing costs and the current interest rate, possibly higher, do not apply.

Buy-down
A method of lowering the buyer's monthly payment for a short period of time. The lender or homebuilder subsidizes the mortgage by lowering the interest rate for the first few years of a loan.

Caps
A limit in the amount the interest rate or monthly payments for an adjustable rate mortgage that may change.

Closing
Also referred to as settlement. The meeting at the conclusion of a real estate sale in which the property and funds are exchanged between the two parties involved.

Debt-to-Income Ratio
The ratio, expressed as a percentage, which results from dividing a borrower's monthly payment obligation on long-term debts by the borrower's gross monthly income.

Discount Points
Prepaid interest assessed at closing by the lender. A point is equal to 1 percent of the loan amount.

Down Payment
Cash paid by the buyer at closing that makes up the difference between purchase price and the mortgage amount.

Earnest Money
Money given by a buyer to a seller as a deposit to commit the buyer to the future transaction. Earnest money is subtracted from closing costs.

Equity
The value an owner has in real estate over and above the obligation against the property. Equity is fair market value minus the current indebtedness.

Escrow
Funds given to a third party which will be held to cover payments such as tax or insurance payments and earnest money deposits.

Fixed Rate Mortgage
A mortgage in which the interest rate remains constant throughout the life of the loan.

Loan-to-Value Ratio
The ratio between the amount of the mortgage loan and the appraised value of the property.

Market Value
The price that a property could possibly bring in the marketplace.

Mortgage Insurance
Insurance that protects lenders against loss if a borrower defaults. This is required when the loan-to-value ratio is greater than 80 percent.

Origination Fee
A fee charged by a lender for processing a loan application; usually computed as a percentage of the loan.

PITI
Refers to Principal, Interest, Taxes, and Insurance.

Underwriting
The decision-making process of granting a loan to a potential homebuyer.

Variable Rate Mortgage
Also referred to as Adjustable Rate Mortgage. A mortgage in which the interest rate is adjusted periodically based on a pre-selected index.

Misc. Fees...

Sun, 22 Jul 2007 07:27:04 -0500

What are some of the fees associated with a mortgage? The mortgage fees can be confusing, and downright frustrating with some lenders. The more you know, the more you can potentially save yourself in unnecessary wasted money. What fees you should be wary of? "What are all the misc fees? These fees are are third-party vendor fees, the mortgage company does not make any money from these. These usually are:

Appraisal
Credit report
Lender's title policy
Escrow (where applicable)
Recording fees
Taxes

Where does it come from...

Sun, 22 Jul 2007 07:17:52 -0500

Most of the money for home loans comes from three major institutions:

Fannie Mae (FNMA - Federal National Mortgage Association)
Freddie Mac (FHLMC - Federal Home Loan Mortgage Corporation)
Ginnie Mae (GNMA - Government National Mortgage Association).

You talk to practically any lender and apply for a loan. They do all the processing and verifications and finally, you own the house and now you have a home loan and you make mortgage payments. You might be making payments to the company who originated your loan, or your loan might have been transferred to another institution. The company you make your payments to very rarely owns your loan. They are the "servicer" of your mortgage. They are called the servicer because they are simply "servicing" your loan for the institution that does own it.

What is a Credit Score...

Sun, 22 Jul 2007 07:13:52 -0500

When applying for a mortgage, your credit scores are based on a number of factors that analyze the electronic credit files maintained on virtually all adults in the U.S. The scores range from the 300s to around 850, with higher scores indicating lower risk. Many lenders reserve their most favorable quotes of rates and fees for applicants in the upper FICO score ranges, 700 and above. Mortgage applicants in the low 600s and below get progressively higher rate quotes and are charged higher loan fees.

Your FICO score only looks at information in your credit report. However, lenders look at many things when making a credit decision including your income, how long you have worked at your present job and the kind of credit you are requesting. Your score considers both positive and negative information in your credit report. Late payments will lower your score, but establishing or re-establishing a good track record of making payments on time will raise your score.

Main Factors for Credit Scoring....

Sun, 22 Jul 2007 07:11:12 -0500

In getting a mortgage a variety of factors are considered during the calculation of your credit score such as:

how much money you earn.
how long you have been using credit.
whether you have made payments on time.
your level of education.
the number of years you have lived in a single location.
the number of years you have worked for the same employer.
whether or not you are a homeowner.

What the credit companies are looking for with many of these factors is your stability and your likelihood to repay the loan.

Congrats to Wachovia...

Fri, 20 Jul 2007 14:23:56 -0500

I am huge into customer satisfaction, nevertheless, I am always curious who is doing the best job in our industry. It seems the results are in, for the second year in a row, Wachovia ranked highest in overall customer satisfaction among home equity lenders in the J.D. Power and Associates 2007 Home Equity Line/Loan Origination Study, according to the marketing information firm. The company said the study measures customer satisfaction with home equity line/loan lenders among 3,871 consumers who had obtained a home equity loan or line of credit from July 2006 to April 2007. J.D. Power reported that Wachovia scored 831 on a 1,000-point scale, performing well in all three factors contributing to customer satisfaction: the closing process, loan officer/representative or banker, and application/approval process. SunTrust ranked second, with a score of 794, and U.S. Bank finished third, at 787. Congrats to Wachovia!!

Lender Paid Mortgage Insurance...

Fri, 20 Jul 2007 08:09:22 -0500

Lender-Paid Mortgage Insurance is beneficial to Lenders as well as a tax savings for borrowers. To sum it up, it is simple. The lender pays the MI premium and charges a slightly higher interest rate. For many homebuyers, Lender-Paid Mortgage Insurance (LPMI) offers significant advantages over the more traditional borrower-paid MI or even other loan options. Here are the benefits:

No monthly MI premium
No MI closing costs
Lower monthly mortgage payment
Potential for qualifying for a larger loan
Potential for greater tax benefits
Significant savings over the life of the loan

Lender paid mortgage insurance should be carefully looked at before obtaining. If the client plans on keeping the property for the life of the loan, is locked into a great fixed interest rate and never have any plan of refinancing that mortgage then it may be better to pay the PMI instead of the Lender paid mortgage insurance. With the lender paid mortgage insurance you are stuck with the increase to your interest rate for the life of the loan and with the PMI you are able to drop it at either 78% or 80% (depending on the lender and their guidelines) loan to value of the property. Therefore, it could end up costing more with the LPMI than it would with the regular PMI. However, most people sell or refinance within five years so the LPMI is a nice option for many people.

If simplicity is the clients goals, a LPMI loan might benefit you with eliminating the hassle of paying two loans. Consult with your mortgage consultant as to when the Mortgage Insurance can be waived.

NAACP file lawsuit with Sub prime Lenders...

Tue, 17 Jul 2007 09:48:51 -0500

An article was published yesterday from Mortgage Daily News in regards to NAACP Sub prime Discrimination Suit. The NAACP is calling the lenders predatory targetingof African Americans Two reports support this claim, one is released by CLC (Center for Responsible Lending) stated that "African-Americans were more likely - 31 to 34 percent - to be issued more expensive sub prime loans than were Caucasians with equal creditworthiness and credit risk". The other was released by NCRC (National Community Reinvestment Coalition) published a study that stated "Lenders made high-cost sub prime loans to higher-qualified African-Americans 54 percent of the time compared to 23 percent of the time to Caucasians, even when the latter group was less qualified".

Here are the lenders named:

Ameriquest Mortgage Company
Fremont Investment & Loan
Option One Mortgage Corporation
WMC Mortgage Corporation
Long Beach Mortgage Company
Citigroup, Inc.
BNC Mortgage, Inc.
Accredited Home Lenders, Inc.
Bear Sterns Residential Mortgage Corporation
First Franklin Financial Corporation
HSBC Finance Corporation
Washington Mutual, Inc.

Here is a copy of the lawsuit from the NAACP.

With my career mainly with business in Atlanta, GA, the racial makeup is 59.39% Black, 33.22% White and 6.49% Hispanic (facts from From Wikipedia). I work with clients from all types of backgrounds and ethnicity. I hope this lawsuit does not give the mortgage industry another bad stereotype. While this topic maybe sensitive to many, it seems we have not seen the end of the sub prime market fallout. I will follow this with extreme interest...

Credit Counseling is a Negative...

Mon, 16 Jul 2007 22:42:44 -0500

As a Loan Officer, we view the use of credit counseling services as similar to a Chapter 13 bankruptcy, because both can entail a payment plan and re-negotiation of debt payments. Some people who are using a credit counseling service do end up filing bankruptcy because they still don't have the income or money management skills to handle the payments. So, in some cases use of such a service can be a negative.

15 or 30 Year Mortgage?

Sat, 14 Jul 2007 14:43:12 -0500

Commonly I get questions regarding 25 vs 30 year mortgages. Because a 15 year mortgage gets a better rate, is it best to get get a 15 year mortgage? Here are some of the facts to consider. A 15 a year mortgage locks you into a set payment. With a 30 year mortgage you can make extra payments which will decrease the number of years of mortgage payments, but you need self discipline to actually make the payments. You really have to look yourself in the mirror to answer this question. By obliging in a 15 year mortgage you are investing in real estate, perhaps leaving less for other investments. It all depends on your financial outlook.

Never Shop For Your Loan Online...

Fri, 13 Jul 2007 19:17:20 -0500

With information only a keystroke away, it is easy to submit your basic information to get a "Rate Quote Request". The trouble is you do not get a quote. What you should expect is 5 to 10 phone calls and/or emails in the next few days. Your information will probably be sold, nevertheless, you do not get a rate like you expect. They may promise you the best rates in the world, but keep in mind you or your Realtor will not know anything about them or their company usually. Simple fact: Use the mortgage source your Realtor recommends. This will save you time and efforts in the long run. I worked with a client this morning that had done this in an attempt to see who would give him the best rate. He now has 5 inquiries in the last four days. The worst part is all of them were in different states and two of them have names of companies he can not find any information on. He regrets doing this and told me he should have just called me initially when his Realtor recommended him to - 5 days ago. A lesson well learned....

Market Update...

Thu, 12 Jul 2007 23:26:08 -0500

According to Freddie Mac, the 30-year fixed-rate mortgage (FRM) had an average interest rate of 6.63 percent with an average 0.4 point compared to 6.67 percent and 0.4 point the previous week. The 15-year FRM was down 4 basis points to 6.30 percent with points unchanged at 0.4. The five-year Treasury-indexed hybrid adjustable rate mortgage (ARM) decreased slightly to 6.29 percent from 6.30. Fees and points were down to 0.4 from 0.5. The one-year Treasury-indexed hybrid ARM increased, moving from 5.65 percent to 5.71 percent with fees and points unchanged at 0.4.

Closing Fees...

Wed, 11 Jul 2007 14:17:49 -0500

The normal closing costs here in Georgia are 2%. 1% origination and 1 % misc. fees. Often times the closing fees quoted a borrower change before and during the actual closing - hopefuly they are lower. This is a source of major frustration for borrowers looking for greater transparency. To this end, a recent partnership has sought to end this problem and integrate exact closing fees directly into the broker's core system early in the mortgage process.

Specifically, origination vendor Ellie Mae and First Title and Escrow Inc., a nationwide provider of title and closing services to mortgage lenders and brokers, have collaborated so that users of Ellie Mae's Encompass Mortgage Automation System will receive instant and exact closing fees, directly from First Title, prior to printing the good faith estimate. Because these figures are imported at an early stage in the loan, originators can price their loans more accurately earlier, streamline the origination process, and avert the possibilities of fee inaccuracies that can result in lost loans or costly compliance violations.

The closing fee data provided to Ellie Mae by First Title include abstract fees, title premiums, recording and release fees, closing fees, and city, county and state transfer taxes. The figures are not only exact and instantly available, but are also able to be imported directly into users' Encompass files from First Title's Web interface, www.FirstTitleServices.com. The Encompass system automatically populates the fees into the GFE, saving the customary excessive time and effort involved in acquiring the figures manually.

Determine your Income

Mon, 09 Jul 2007 23:11:41 -0500

I commonly get the question "How do you determine my income?" When we pre-qualify you with an application, we work backwards to figure your maximum mortgage amount. You can do the same thing. The first step is to determine your monthly income. It isn't quite as easy as it sounds. Lenders only count income they can document through paperwork.

If you are a salaried employee, and don't earn bonuses, it's easy. Get out your paycheck. If you get paid twice a month, multiply by two. If you are paid every two weeks, then you multiply by 26 (the number of pay periods in a year) and divide by twelve. Unless you're a teacher. Teachers don't always work year round and they have special rules.

If you are an hourly employee who works a straight forty hours a week and don't earn overtime income, then it's easy, too. Look at your paycheck, multiply your hourly rate by 40, multiply that total by 52, then divide by twelve.

If you earn overtime, bonuses, or commissions -- it isn't as easy. Lenders don't give you credit for what you are currently earning. They average your income from those sources over the last two years, then add that to your regular salary or hourly monthly income. If you want a shortcut that is usually close, get out your W2 forms for the last two years. Add them together and divide by twenty-four. That is your monthly income.

If you are a teacher, a nurse, a seasonal employee, in construction, or earn only part-time income -- you can use that shortcut, too. Add the figures from your last two years W2's, then divide by 24. It generally gets you close.

If you are self-employed or receive 1099 income, then you need a two-year track record. Lenders go by what you declare to the IRS as income, since that is documental. Since some self-employed people overstate their expenses, this may understate your income. Look at the Schedule C of your tax returns for the last two years and the number at the bottom that says "profit" is your annual income. You can add any depreciation to that figure. Add them together and divide by twenty-four.

There are variations and exceptions but the above should cover most people.