Mortgage Chatter That Matters

What is "Fair" about "Fair Issac" AKA FICO

lorraine leff (first american lending) — Fri, 18 May 2007 00:05:57 -0500

I hate to admit it but I've been in the mortgage business for a LONG TIME! About 20 years long. (Yea I started when I was 5 , LOL)... Today I read that Fair Issac AKA FICO is changing the way it calculates credit scores. First of all this "Fair Issac" does not always appear to be fair, and secondarily he's got alot of power. The power to turn people into homeowners or NOT, the power to decide how high or low of an interest rate will be charged, the power to decide how much money someone has to put down on a purchase or how much money they get out of the home they already purchased. I for one, think that we need to have balance back, we need to be able to add human reason to our loan decisions, take back some of that power that Mr. Fair Issac ever so slowly gained.

I also really find it odd that the reason that the FICO score was first introduced and implemented was to be a tool for lenders to qualify buyers. This score was based on a mathematical model that predicts the liklihood of a mortgage default in the future. At the beginning everyone was a little slow in getting on board with the change. The credit score was used on a few loans, then a few more loans and now is used on just about every type of loan with the exception of government loans. But really, what good did this credit score model do? It really didn't reduce the amount of pending foreclosures, which last time I read was predicted to be 1.1 million over the next few years. It also took away the ability to look at a loan from a human, logical standpoint and make a decision based on the complete credit profile of the borrower. I really miss getting the letter of explanations from borrowers as to the reason for the credit woe's. First of all they could be entertaining! No seriously, people could get loans if they hit a rough patch due to circustances beyond their control while otherwise demonstrating an abiltiy to manage thier finances. They were not just assinged numbers and if their number was one point lower than it should be,opps so sorry.. can't do your loan.

I think now is the time for the pendulum to rest in the middle. Don't go back to the "day" when perhaps there was a bit to much personal bias in making loans, (I was an underwriter at that time, and know this to be true) however let's not give Fair Issac all the power either.

Just some thoughts!

Lorraine - The Loan Lady

DIVORCE AND YOUR CREDIT

lorraine leff (first american lending) — Mon, 07 May 2007 23:20:04 -0500

Divorce and Your Credit!

When a marriage ends in divorce, the lives of those involved are changed forever. During this time of upheaval, one thing that shouldn't have to change is the credit status you've worked so hard to achieve. Unfulfilled promises to pay bills, the maxing out of credit cards, and a total breakdown in communication frequently lead to the annihilation of at least one spouse's credit.

The good news is it doesn't have to be this way. By taking a proactive approach and creating a specific plan to maintain one's credit status, anyone can ensure that "starting over" doesn't have to mean rebuilding credit.

The first step for anyone going through a divorce is to obtain copies of your credit report from the 3 major agencies: Equifax, Experian®, and TransUnion®. It's impossible to formulate a plan without having a complete understanding of the situation. (Once a year, you may obtain a free credit report by visiting www.AnnualCreditReport.com.)

Once you've gathered the facts, you can begin to address what's most important. Create a spreadsheet, and list all of the accounts that are currently open. For each entry, fill in columns with the following information: creditor name, contact number, the account number, type of account (e.g. credit card, car loan, etc.), account status (e.g. current, past due), account balance, minimum monthly payment amount, and who is vested in the account (joint/individual/authorized signer).

Now that you have this information - NOW IT IS TIME TO PLAN!

There are two types of credit accounts, and each is handled differently during a divorce. The first type is a secured account, meaning it's attached to an asset. The most common secured
accounts are car loans and home mortgages. The second type is an unsecured account. These accounts are typically credit cards and charge cards, and they have no assets attached. When it comes to a secured account, your best option is to sell the asset. This way the loan is paid off and your name is no longer attached. The next best option is to refinance the loan. In other words, one spouse buys out the other. This only works, however, if the purchasing spouse can qualify for a loan by themselves and can assume payments on their own. Your last option is to keep your name on the loan. This is the most risky option because if you're not the one making the payment, your credit is truly vulnerable. If you decide to keep your name on the loan, make sure your name is also kept on the title. The worst case scenario is being stuck paying for something that you do not legally own.

In the case of a mortgage, enlisting the aid of a qualified mortgage professional is extremely important. This individual will review your existing home loan along with the equity you've built up and help you to determine the best course of action.

When it comes to unsecured accounts, you will need to act quickly. It's important to know which spouse (if not both) is vested. If you are merely a signer on the account, have your name removed immediately. If you are the vested party and your spouse is a signer, have their name removed. Any joint accounts (both parties vested) that do not carry a balance should be closed immediately. If there are jointly vested accounts which carry a balance, your best option is to have them frozen. This will ensure that no future charges can be made to the accounts. When an account is frozen, however, it is frozen for both parties. If you do not have any credit cards in your name, it is recommended you obtain one before freezing all of your jointly vested accounts. By having a card in your own name, you now have the option of transferring any joint balances into your account, guaranteeing they'll get paid.

Ensuring payment on a debt which carries your name is paramount when it comes to preserving credit. Keep in mind that one 30-day late payment can drop your credit score as much as 75 points. It is also important to know that a divorce decree does not override any agreement you have with a creditor. So, regardless of which spouse is ordered to pay by the judge, not doing so will affect the credit score of both parties. The message here is to not only eliminate all joint accounts, but to do it quickly.

Hope this article was helpful to you. Take Care, Lorraine Leff - Loan Lady

TIME BLOCKING - WHERE DID THE TIME GO?

lorraine leff (first american lending) — Fri, 04 May 2007 20:06:39 -0500

Time Blocking

Where Did the Time Go?

Have you ever had your day end and wonder where it went? Have you ever been frustrated by how reactive you have been to "emergency" situations that significantly reduced your productivity? Or maybe just allowed yourself to get involved in more personal business rather than professional. It is very easy to do.

Many of us have experienced this to an excessive degree in our business practices. One of the greatest ways to eliminate the reactive state we find ourselves in is to practice the art of Time Blocking. Time Blocking is about scheduling your day with purpose, making sure the things you need to get done DO get done.

I find that if I ALWAYS block the first three hours of my work day for High Payoff Activiities and stick with it, my productivity increased greatly, while the time I spend in the business actually decreases. This applies to work and personal activities. Remember, the more proactive you are with your day, the less reactive you will be.

The key to this type of planning is to check your voice mail and email each hour and return messages promptly. The reason is simple: If you let too much time lapse before you respond to your client, it will tear you away from your time blocking schedule. The temptation to check the red light blinking on your phone, or respond to that electronic voice saying, "You've got mail," will be too great to resist. Remember, time blocking is about commitment. The more you live your days proactively, the more work you will get done.

Give it a try for a week, and let me know how it goes for you.

Lorraine Leff - Loan lady

Managing Time - chose to proactive or reactive

lorraine leff (first american lending) — Thu, 03 May 2007 20:24:07 -0500

Proactive or Reactive?
It's up to You

Everyone makes choices. Their outlook on life, whether at home, at work, behind the wheel or at the theater, directly correlates to the decision to be either positive or negative. In essence, it's as simple as whether you see the glass half full or half empty. As author Stephen R. Covey puts it in his much publicized book, The 7 Habits of Highly Effective People,* you can choose to be proactive or you can choose to be reactive. He takes his theory a step further, saying that a proactive stance leads to greater success and contentment. From that perspective, a reactive person is sabotaging himself or herself.

Covey contends that every single day, people have 100 opportunities to be proactive or reactive. Let's say you're in your car on the freeway and an overly zealous driver is practically sitting on your tail in the fast lane. You're driving at the speed limit, actually a couple of miles faster than the law permits. But the motorist behind you thinks he's at the Indy 500. You can stay where you are, infuriate him and possibly get rear-ended. Or, you can move out of harm's way, to that opening in the right-hand lane and let him pass. He's in the wrong, and there's no question about it. Will you follow his lead? Will you be proactive or reactive? It's up to you.

It's very empowering to look at life from Covey's point-of-view. If you moved to the right lane, the reckless driver didn't force you. He didn't win. A vehicle can be a deadly weapon and you made the sensible, mature decision that shows why you deserve a driver's license and the other driver belongs on roller skates.

At work, you can be proactive if you take the time to learn about the principles of nature - in this case human nature and people interaction.

"If you ignore the principles of human effectiveness, you (can) work very hard, but still not get what you want," Covey says. Say that you've been working with a prospective client for the past three weeks, really putting a lot of effort into the new relationship. Then you learn, through some mutual acquaintance, that this would-be client ended up going to a competitor for the same service. It happens, and you don't have to necessarily blame yourself. But, you should take time to reflect on the past three weeks. Were you really proactive or were you reactive? How did you interact with the client?

Covey says principles are "natural laws that govern the world." To attain a proactive mind-set, he emphasizes one must create beneficial relationships, build trust and commit to self-renewal."To be trusted, you must be trustworthy over time," Covey asserts. As for self-renewal, he says renewal means "preserving and enhancing your greatest asset - yourself."

The Sunshine State (Ca) Mortgage Planner bio

lorraine leff (first american lending) — Sun, 22 Apr 2007 18:49:38 -0500

Hello - My name is Lorraine Leff. This is a little about me.

20 Years of Mortgage Experience

For 17 years, I was able to work in many different facets of the lending behind the scenes. Giving me a complete understanding of business. This has proven to give me an edge when it comes to putting together files for borrowers that get APPROVED.

Type of Loans :

Any Residential loan for 1-4 units. Including Sub prime and A paper, Construction and existing homes. Purchases or Refinances. Firt Time Homebuyers and Move Up buyers.

Specialty

Educating consumers in all of their options and completing total cost analysis and loan comparisions.
Helping my referral partners in growing their business, whether it is database management, co-op marketing or anything that is needed to help grow their business.
Past Client Marketing

Credentials

Certified Mortgage Planner
VA Authorized Underwriter
FHA Direct Endorsement Underwriter
FNMA/FHLMC Underwriter
Multiple certificates and credentials for leadership and mortgage courses
California Real Estate License issued in 1986-( Do not sell Real Estate)

Personal

Married for 26 years to the same wonderful man ( Dave), 2 great grown boys ( or I guess I need to say young men) and one of the cutest grandson ever born!

Contact

909-732-3546 ( cell)

Lleff@the Leffteam.com (E-Mail)
WWW.TheLeffTeam.net

Taxes Taxes Go Away - Come Back Another Day!

lorraine leff (first american lending) — Fri, 20 Apr 2007 13:12:28 -0500

IMPORTANT INFORMATION UPDATE THAT COULD SAVE YOU MONEY ON PROPERTY TAXES

As a mortgage advisor, I am always looking for ways to save clients money, and this may be one for you. This is something you can do for yourself, so please do not fall for a company saying they will do it for you for a fee or sometimes for a percentage of your tax savings!

As I am sure you are aware overall property values are either stabilizing or in many cases going down. This trend will continue for a couple years. The primary reason for this is the forecasted amount of foreclosures due to the sub prime lending crisis. I know that is not great news, but the Good news is you can possibly save some money on your property taxes!

Proposition 8 Tax Relief for California property owners.

Prop 8 provides that your current years taxes is limited to the lesser of the current proposition 13 base value OR the current fair market value as of January 1^st. In times of declining real estate values, you may be able to reduce your tax bill. I will show you an example of what I am talking about;

Your current Prop13 value/ Assessed value......................... $550,000

Your value on January 1^st 2007......................................$500,000

Difference in Value...................................................$50,000

Approximate Annual Tax savings.................................. $500.00

(1% of the difference in value)

This is only a temporary tax reduction, based on current value. When values go back up, you will more than likely be reassessed at the higher value again.

The deadline of March 15^th has already passed for this year, but rest assured I will be sending out a reminder letter later this year so that you are able to take advantage of any savings you might be entitled to.

How to save thousands of Dollars on anything you want to Finance

lorraine leff (first american lending) — Fri, 20 Apr 2007 12:21:31 -0500

Wow, Take A Chill Pill!! It is not that bad!

Credit scores have been around for a long time, but it seems that this three digit number that is assigned to each of us, continues it's climb in importance! Employers are using the score to make a hire or not hire decision, insurance companies are basing their insurance prices to you off of it, same with car dealers, credit cards and mortgages.

It can cost you literally thousands upon thousands of dollars extra if you don't have a "Good Score".

You may think credit scores are based on how you pay your bills. IF you pay them on time each month, then you have a good score - RIGHT? - WRONG! I had a very sad story to tell about that one. One of my customers that due to credit had to take a subprime loan. When I gave them the loan, I also educated them on the credit score model and exactly what needed to be done so that when we refinance in two years, their credit score would be good. They chose to disregard my information, and thought well if I have a mortgage and pay it on time for 24 months my score will be fine. Well, the sad part of that was that when the time to refinance arrived, their scores were actually worse and there was no loan for them........ So, please read, listen and implement.

Let me try to share some insight on how to manage your score, without boring you.

35% of your score is comprised of - do you pay your bills on time - So pay your bills on time if at all possible. Don't let that little 35.00 a month payment go 30 days late!

30% of your score is related to - what is the amount of credit used compared to the amount of credit that you have available. Example the closer to zero the higher your score! You are probably scratching your head on that one. Let's say you have a credit card with a 20,000 high limit, and you are carrying a 19,000 balance on that card - Not good- that will pull your score down dramatically. Simple thing to do is keep your current balance less than 50% of your available credit. But, as I said the closer to zero the better. There are many ways you can change this around - getting credit line increases , having a family member add you on as an authorized user, and just changing around the balances between cards. This could get lengthy, if you want more info on this. Just let me know.

15% is the Age of credit. The longer your accounts are open the better your score will be. So, the lesson to be learned here - Do not close your accounts!

10% - Credit Mix. Best mix is a couple credit cards, a car loan and a mortgage.

10% - Number of inquiries. I am told and read that you can shop for a car or a mortgage for up to 45 days and it will not impact your score. Now what I am told and what I actually see are two entirely different things. I have seen credit scores go down 20 - 50 points because of multiple inquires ( shopping for a car or mortgage) - so it is important that you have as little inquires as possible.

Take care, Hope this article was helpful, and let me know if you would like any more info on this important aspect of our life - Whether we like it or not!

What is working NOW for your business?

lorraine leff (first american lending) — Wed, 18 Apr 2007 22:26:52 -0500

With so many changes in our industry, I am just curious how have you changed up your business. Where is the majority of your efforts focused? on what is working for you and not working for you? I have always had a great past client system that gives me about 95% of my business, but am looking to increase the number of past clients that I have in my database and really unsure which business pillar I should persue at this time! It seems with all of the marketing saturation in California from Mortgage companies the majority of time that borrowers see a realtor, they already have a lender... so my feeling is that the referrall power from Realtors is just not what it use to be a few years back. Please let me know your thoughts. Thanks in advance.

Lorraine

Credit Bureaus Exploiting consumers for a few bucks - That is Just Wrong

lorraine leff (first american lending) — Sat, 17 Mar 2007 16:42:42 -0500

Trigger Leads: Don't Be Exploited by the Credit Bureaus

While it's an illegal breach of privacy for real estate agents or mortgage originators to sell your credit information, it is perfectly legal for credit companies to do so. For a price ranging anywhere from $25 to $100, your name and certain specifics about your credit report - including your address, phone number, mortgage history, and even your FICO score range - are sold by the credit bureaus to mortgage companies. The result is an onslaught of unsolicited phone calls and junk mail as soon as you apply for a home loan.

Unfortunately, no legislation exists to prevent credit bureaus from profiting at your expense. As a "trigger lead", you are simply at the mercy of any number of marketing campaigns designed specifically to discredit the mortgage professional you've come to know and trust.

That's why, prior to applying for any loan program, I suggest that you visit http://activerain.com/action/blogs_admin/www.optoutprescreen.com to opt-out of future credit bureau solicitations and avoid this problem altogether. Not only will you avoid the hassle of telemarketers, but by opting out you could potentially add 10 to 15 points to your credit score!

In addition, if you do happen to receive phone calls from solicitors, ask them to place your name and number on their Do Not Call list. All telemarketing companies have their own internal Do Not Call list that they must abide by. Be sure to take down the name of both the company and the individual who made the call, and to let the solicitor know that you're doing so. This way, you will have grounds to seek action against them, should they call again.

As you embark on what is likely the largest financial transaction of your life, you should place yourself in the hands of a professional - not some transactional loan officer who purchased your information from the credit bureaus. Remember, only a limited number of sources exist for lenders to obtain mortgage money, so it's extremely unlikely that a borrower will find an unbelievably low rate without an unbelievably high cost.

If, however, you are curious about the programs these mortgage companies have to offer, then listen to what they have to say. Once they've offered you a rate that seems too good to be true, ask them a question or two from the following list.

1. Where did you get my information? Who gave you permission to call me, and how much did you pay for my information? By asking this series of straightforward questions, you demonstrate that you're not an uninformed or unsuspecting mortgage applicant who can be easily victimized.

2. What are the specific closing costs associated with the rate and program you're offering me today?

Many times, interest rates will be quoted with origination fees or discount points included in order to deliver the attractive interest rate being offered. While in some cases your situation may warrant paying these fees to get a better rate, you should always be made aware of these fees and options up front. Also, be aware of any fees disguised as a "Funding Fee." In some cases, these fees have been hidden in order to deliver what seems like an exceptionally low rate with "no points or fees."

Hope this was helpful.

Subprime issues just keep on keeping on

lorraine leff (first american lending) — Thu, 15 Mar 2007 22:57:19 -0500

I gotta share what happened to me today. Let me start by saying that for the past 8-10 years for conforming loans, pretty much "A" paper loans we have been relying up automated underwriting systems. These systems are proprietary and over the years, the only way we could close these A paper loans is if we received an approval from the computer. Fannie Mae (FNMA) had DU and Freddie Mac (FHLMC) had LP both introduced these automated systems as an answer to stop prejudice in having a human underwrite the file, and apply historic data to determine the chances of default in the future. Of course like anything new, we fought the change, I fought the change......One day I realized this was not going away , so time to make the best of it. Call me a nut, but I would run one loan through it up to 30 times just tweaking numbers to see what got me an approval and what did not. that way I knew when I was speaking with a client whether or not I could with confidence tell them they will be approved soon this automated underwriting became my friend ( of course unless I was wrong and it declined a loan) which thank god did not happen alot. Anyways after working with this system for at least 8 years, and knowing we I had an approval through DU, it was a done deal. No exceptions, no problems for 8 years until today.....I start working on my sister in law loan. I run it through the automated underwriting system (DU) and beautiful thing that it is - it says "Approved" - I of course called sis in law to tell her the good news, and submitted to a large mortgage banker (aegis) to get it to docs.... To my chagrin they did not honor the DU approval, instead they manually underwrote it, disregarded the fact that they had a DU approval and declined the loan!!!!! Yipes, we stepped back 10 years in time in a matter of a week. the explanation given was with all of the subprime shake up they are looking at things differently. What a Mess we are in. Thank God my sis in law loves me, knows me and trust me and I was able to submit to another company that did honor the DU approval and now getting loan docs, but what a crazy time we are in.

What do customers with existing subprime loans do when it comes to refianancing?

lorraine leff (first american lending) — Wed, 14 Mar 2007 21:50:00 -0500

With 1 out ever 5 homes in our area having a subprime loan, and knowing that all of these subprime loans were meant to be "Band Aid" loans. Band aid meaning a temporary solution allowing the consumers some time to correct their past credit woes. Knowing that in 2 or 3 years they will have to refinance, the goal is to have them in a position where they can go "A" paper and refinanced out of their high interest rate subprime loan. As a lender we also expected that during this 2-3 year period of time, the consumers home as appreciated. So lower loan to value and better credit should equal a much better rate, Right? Yes, Right.......... That is where the problem lies, subprime went out on a limb got a bit crazy with 100% financing, with bad credit and stated income, the borrower is now approaching the two year mark and for whatever reason has not worked on improving their credit much, and uh oh values are the same and in some cases down from two years ago. The consumer is now faced with an adjustment on their loan - to approximately 11% ( based on the 6 month libor + a typical margin of 6%) - payment goes skyrocketing - foreclosure on the horizon - more foreclosures on the market drives our real estate values down further. I think we as resposbile mortgage lenders, must get to the clients as soon as we can and educate them on what is going down! They don't make following our business thier business, like we make it our business - ( gee that is a lot of business in one sentence) Anyways, just wanted to share what was on my mind.