I will admit that I can be a very tough customer to please but I only expect the same kind of service that I provide to my clients. In this very crazy mortgage industry it seems that service for many companies has become a lost art. I have worked with several title companies over the past eight years and the level of service always seems to fluctuate between good and bad. I know you can never expect every closing to be perfect but when things go bad is when you get to see a company's true colors. Let's just say that most every time an issue has reared it's ugly head I have found out that I am just a number to these title companies.

About a year and a half ago one of my loan officers had mentioned that a title rep she had worked with in the past had moved to a new company and that I should give them a try. I told her I was happy with my current title company but I would keep them in mind. Low and behold a few days later I have a file that is funding and I get a call from my client. Mrs. Client was supposed to pickup a check but cannot seem to get a hold of the title company. She decided to take a drive over and the office is closed. I start making calls to find out what the heck has happened. After several calls I get someone who says that they just closed the office my client was supposed to pickup her check at. After a couple of more calls I am told that my client's check will be mailed in a couple of days and they will not overnight the check.

Wow talk about great service!!

Enter Acquest Title Services and my account rep Denise Friel...

I decide maybe it is time to give Acquest a try. I call to find out what their pricing is like and they are competitive with the other title companies in the area. I speak with our account rep and she tells me what I want to hear, "we have great service, just give us a try." Well I decide to place an order and am shocked at how quickly I get the order. Okay so far so good. I order a closing protection letter and some changes to the title which I receive back in about 30 minutes. Finally I call to schedule a closing for the next day because I have a lock that is going to expire and there are no issues even when I need the closer to go to the client's home for the closing after 7pm. Well time moves along and everything continues moving like a well oiled machine. A couple of minor issues have come up but they have been taken care of professionally and with an apology. No matter how many orders I place I am always treated like Acquest Title's most important customer.

I just wanted to take the time to thank everyone at Acquest Title for a great year and a half. If i listed specific names I am sure I would miss someone. I really appreciate everything that you have done to take care of me and my loan officers in these trying times.

For those of you in the Chicagoland area in need of reliable title company please contact Denise Friel with Acquest Title Services at 708-774-0731 or go to their website at www.acqt.com.

Reverse mortgages have gotten a lot of publicity over the past couple of years both good and bad. A reverse mortgage allows seniors (62 and older) to tap into the equity in their home while eliminating their mortgage payment. In order to qualify for a reverse mortgage senior must be 62 or older and own a home. How much the homeowners can borrower depends on the age of the youngest borrower, the appraised value of the home, where the home is located along with which rate option the homeowners choose. The rate options the borrower may choose from are the fixed rate along several different variable rate options. 

In the past the only way to use a reverse mortgage to purchase a home was by using the now extinct Fannie Mae Homekeeper program. The problem was that the Fannie Mae Homekeeper was very limited and thus was retired. In 2008 HUD announced that the HECM (Home Equity Conversion Mortgage) would be eligible for purchase transactions in 2009.

 Let's take a look at some of the guidelines of the HECM for purchase program.

General Guidelines:

Any repairs that are required by FHA guidelines must be performed before closing. The seller is responsible for all repair costs.

FHA flipping rules apply. The resales of a property may not occur 90 days or fewer from the last sale. Re-sales that occur between 91 and 180 days where the new sales price exceeds 100% of the previous sales price will require additional documentation validating the property's value.

The borrower must occupy the property within 60 days of closing.

No subordinate financing is allowed.

Property Types:

Existing one-unit properties where the construction has been completed and the property is habitable. This means no Cooperatives, newly constructed residences must have a certificate of occupancy, no boarding houses, or bed and breakfasts. No manufactured homes built before 6/15/1976 and existing manufactured homes built after 6/15/1976 that fail to conform to the Manufactured Home Construction Safety Standards and/or lack a permanent foundation.

Funds to close:

No gift funds, grants, seller contributions, or secondary financing is allowed. The funds to close must be the borrowers own money (cash on hand, money obtained from the sale of assets, or sale of current home.

Okay so now you are probably wondering why would someone use a reverse mortgage to purchase a home. By using a reverse mortgage and couple that may be downsizing may not want to have a mortgage payment which would require them to pay cash or the home. By using a reverse mortgage our senior couple would only need to pay for part of the house in cash thus freeing up some of their money for future needs. Since the reverse mortgage does not require a monthly payment our example seniors have got the best of both worlds.

What's the catch?

Okay as many of my senior clients ask, what is the catch? First off the reverse mortgage is not a cheap loan. The closing costs are typically higher than those for a normal mortgage so this is not a short term fix.

The other downside of a reverse mortgage is that it is a negative amortization loan. What this means is that since no payment is required on a reverse mortgage the balance of the loan increases each month. For many seniors this means their heirs will stand to inherit less from the proceeds of the sale of the home.

I have really just scratched the surface on how a reverse mortgage works but the point is that this loan may very well make sense for some of your senior clients looking to downsize or just move closer to their family. A reverse mortgage is not for everyone and it is more complicated than your normal loan but it is another option to consider when you are working with senior clients.

With many baby boomers becoming seniors every day the reverse mortgage is increasing in popularity every year, why not mention it the next time one of your senior clients is shopping for a home?

Wow, in time where we have become so used to bad news from the media about our industry it is nice to get some good news. As many of you know the Shaun Donovan, secretary of the US Department of Housing and Urban Development on Tuesday announced that the Federal Housing Administration is going to permit it's lenders to allow home buyers to use the $8000 tax credit as a down payment. This is something that Congress wanted to allow in the first place but no one could figure out how to implement it. While I am very excited about this news as many or you are as well. The only problem with the announcement is the details. As you and I both know HUD can take a while to get things like this rolled out. Here is a link to the actual article.

http://www.realtor.org/press_room/news_releases/2009/05/re_summit?lid=ronav0019

Will this be new life for the down payment assistance companies? How will lenders deal with this new development? Will some lenders decide not to allow this while others endorse the idea? Will this borrowed money be counted as a lien against the property and how will this affect the loan to value calculations?

While there are still many questions to be answered the bottomline is that this new way to use the $8000 tax credit could be just what the doctor ordered to get some of those buyers of the fence and into a new home.

Okay i am not a Realtor nor do I play one on TV. I have a lot of respect for what you Realtors do and in this market I cannot imagine the BS you have to go through. Yes on the lending side we have had some nasty hurdles to jump over and hoops to jump through. Okay enough about us let's talk about the banks.

I have several buyers who are out there looking for homes who have made offers on multiple short sale/foreclosure/REOs, whatever you want to call them. My borrower makes an offer the bank of $150,000 for a home that is listed at $175,000 but my appraiser says the home based on comparable sales will only appraise for $158,000. So the bank says no they have to have $175,000 or maybe they come down just a bit. Well unless my borrower has a boat load of money put down there is no way that a lender is going to give them a mortgage for this home. So rather than selling a home and getting a bad debt off their books the bank stand their ground and does not sell the house. Who knows when or if the bank will get a better offer. Heck unless someone comes along with cash it won't matter because the value is not there. Let's not even talk about how HVCC has completely thrown things out of whack already.

So this whole housing, mortgage and economic meltdown thing is nothing new. I know the banks are overloaded with short sales and foreclosures but hasn't everyone had enough time to get something figured out by now? Shouldn't there be some system in place to deal with these homes? I am no financial whiz but isn't getting a bad loan off their books now better than keeping that loan on the books and push things off for later? A client I was talking to the other day had an idea about how to deal with the foreclosures. Rather than modifying a loan why doesn't a lender do the following?

"Mr. Borrower looking over your financials we see that you cannot afford this home but we have another home that is a foreclosure in your area that fits your budget?" So you take someone out of a house they cannot afford and place them into a home they can afford. Now instead of two non-perfoming loans you have one loan that you are receiving payments. This also would help to stabilize the housing prices in areas since you now have less foreclosures. I know there are probably some legal and accounting complications to this but this is some outside the box thinking that could help.

I could go on and on about how the system is definitely messed up right now as I am sure many of you could. I truly wonder what the banks are thinking these days, or are they?

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Lately a couple of the realtors i work with have been showing our clients a lot of bank owned properties. Many of the buyers have been shocked at the condition many of these homes are in. While our clients really like the house and the area they just don't have the money to do the repairs that are needed, heck who does. 

Enter the FHA 203k(s). Many of you may already know about the FHA 203k(s) loan but for those who don't this loan can be a godsend in the current market. I know what the heck does the S stand for? In this case the S means this is a streamline loan. The 203k streamline is a much easier program than the typical 203k but the total repairs/upgrades are capped at $35,000. So let's say your client loves the fixer upper but hates the flooring in the kitchen, wants to replace the ugly green carpeting on the first floor and wants to finish part of the basement. For many buyers this is enough to make them scratch this home off their list. With the 203k they can take care of this list of items with the same loan they are using to buys the house.

So what kind of work can be done with the 203k?

·        Repair/Replacement/upgrade of existing HVAC systems

·        Repair/Replacement/upgrade of plumbing and electrical systems

·        Repair/Replacement of flooring 

·        Minor remodeling, such as kitchens, which does not involve structural repairs

·        Painting, both exterior and interior

·        Weatherization, including storm windows and doors, insulation, weather stripping, etc.

·        Purchase and installation of appliances, including free-standing ranges, refrigerators, washers/dryers, dishwashers and microwave ovens

·        Accessibility improvements for persons with disabilities

·        Lead-based paint stabilization or abatement of lead-based paint hazards 

·        Repair/replace/add exterior decks, patios, porches

·        Basement finishing and remodeling, which does not involve structural repairs

·        Basement waterproofing

·        Window and door replacements and exterior wall re-siding

·        Septic system and/or well repair or replacement

So as you can see maybe that fixer upper is not such a bad deal now that you can actually finance the improvements. With this loan you are not worried about the value of the house now but the value of the house once the repairs are completed. So the next time your client is looking at a fixer upper or you take a new listing on a fixer upper makes sure you remember the 203k Streamline, or just have your client give me a call and i will walk them thru how this loan can help them.

In the current mortgage climate it seems that everyone is getting into the mortgage modification business. Just this week i was contacted by three different companies wanting to take my turn downs and turn them into cash. The pitch goes something like this, "Roy we can take your dead files and pay you $500-1500 for everyone we get to sign up for a modification". Okay, i will admit the first few calls i received about mortgage modifications piqued my interest. After doing some research unfortunately most of these so called modification companies are fly by night at best and only looking to collect an upfront fee for a service they will never be able to deliver on. First lets go over some of the basics.

What is a Modification?

A mortgage modification is when someone with a mortgage contacts their current mortgage company and attempts to get the original terms of their mortgage changed or modified. Usually the borrower is facing some kind of hardship such as losing a job, death in the family, or even an adjustable rate mortgage that has adjusted higher than the borrower can afford. In many cases the borrower is looking to get the interest rate lowered or fixed and in some cases the lender is taking delinquent payments and adding them to the principal balance so that the borrower can start fresh with the new payment. Unlike a refinance the modification does not require an appraisal or credit check but will definitely require an analysis of income vs expenses. Until recently modifications were done but very rarely. With the recent downward spiral in property values and the staggering number of foreclosures modifying a loan has become an alternative to foreclosure for lenders. Why wouldn't a lender accept a lesser payment and tack on the past due payments to the end of the loan rather than go thru the expense of foreclosing on a home? For the lender they now have a performing asset once the modification is done rather than a negative on their balance sheet. For many homeowners being able to start over rather than having to worry about catching up late payments and make a payment they could not afford this is a godsend.

The Bad

So far this is a no brainer for everyone involved. The first problem borrowers run into is that lenders are overwhelmed with the number of modification requests they are receiving. Some lenders seem to understand how this is a better choice than foreclosure while other lenders think this is still 2005 and property values are still moving upwards. If you really think about it why does a lender want to foreclose on a home that is worth $300,000 but the current mortgage is $420,000. I will tell you that there are good lenders and bad lenders when it comes to modifications. I know of a couple of lenders who have modified a loan to a 30 year fixed with just a call from the borrower. I have also had the unpleasant experience of working with lenders who flat out refuse to just lock in the current rate for 5 years and would rather foreclose.

The turbulent times in the mortgage industry have caused many mortgage brokers to turn to mortgage modifications as a way to supplement their income. I have no problem with mortgage brokers tapping into the modification business because lets face it we talk to borrowers everyday who need our help but we cannot help. The problem with modification companies and brokers is that many people are looking to replace their income by doing modifications. The cost of a modification ranges from one mortgage payment, $1995 and i have even seen someone charging $5000. Many companies offer no money back guarantee and want all of the money upfront. some companies will offer a payment option but will not begin the work until they have received the full payment. My problem with the modification community is the idea that since someone has not made a payment in a 2-6 months they must have extra money laying around and heck why not charge as much as you can. When i asked one modification company "how the heck they could sell the cost of $4500 to someone whose mortgage payment is $1500" the answer i was given is "Roy if they haven't made their payment for the last 4 month then they obviously have the money and if they don't want to come up with $4500 then they don't want to save their home". Besides i was told if they pay $4500 you will make $1500 just for referring the file to us. This is the same kind of thinking that helped get us into the mortgage mess. I am all for someone making something but i also believe in Karma and this just does not sit right with me.

The Good

There are some very good modification companies out there that do a good job and will not charge an arm and a leg. When looking for a modification company try to find one with a guarantee, or one that charges a processing fee upfront to review your file to see if there is a good fit for a modification. There are a couple of companies i have worked with that will charge a fee of $495 to review your file which they will refund if they do not feel you have a strong enough case. The good modification companies truly can cut thru the red tape that the individual homeowner will run into because they have dealt with the specific lender many times before and they have the contacts who get things done much quicker. Many lenders are quicker to work with an attorney backed modification company rather than an individual homeowner. This is due to the fact that a lender is going to respond to an attorney representing the homeowner. Unless you have a lot of extra time to make multiple calls everyday to your mortgage company i do not recommend trying to do a modification on your own.

In the end i think it is great that some lenders are trying to help homeowners stay in their home rather than put a family out in the streets. Many states are putting legislation in place to regulate the modification companies and to eliminate the fly by night companies that are not helping anyone. What is a reasonable cost for a modification is really up to the individual homeowner. If the modification company is able to get $15,000 in payments added to the principal balance and get the interest rate lowered from 10% to 5% as well as getting the rate fixed for 30 years, maybe $4500 is not too much. As with many other things in the real estate world ask questions and make sure that you know what you are getting into.

There has been a lot of talk lately about down payment assistance programs like Nehemiah and Ameridream going the away like the dinosaurs. Many people are saying that down payment assitance will be back but in some other form while others are under the impression that you can no longer use down payment assistance. The recently passed HR 3221 states that as of October 1st down payment assistance will no longer be available. Some lenders have already stated that they will no longer accept loans using down payment assistance. While there are still many lenders that will allow borrower to close on the purchase of a new home right up to the October 1st deadline there is an alternative to the FHA loan.

Very few borrowers, loan officers and realtors know about a government backed program that allows for 100% financing with no monthly mortgage insurance. This program actually allows the borrower to finance up 100% of the appraised value not just the purchase price. What this means for the borrower is that in many cases they can roll in all of the closing costs as well as the purchase price of the home. Interest rates on this program are comparable to FHA rates. Now your thinking this is a great program but it does get better because the seller can contribute up to 6% towards closing costs or rate reduction. Feel free to email me with any questions you may have.