long island homes: Risk Based Mortgage Pricing To Be Revealed - 12/29/09 04:54 AM
In an important move, borrowers will know if their credit score impacted their mortgage rate.
The FTC and Federal Reserve want consumers to be informed if they’re receiving higher interest rates as a result of their credit history.  Beginning in 2011 (no, not 2010), consumers will be notified if they receive less favorable terms on their mortgages because of credit imperfections, according to a notice from the Federal Reserve and FTC.
Consumers with less-than-stellar credit will receive “risk-based pricing” notices when applying for mortgages and other types of loans, assuming their credit scores adversely affect the terms and/or interest rate they … (4 comments)

long island homes: Now is the Time to Get FHA Condo Project Approvals - 12/28/09 04:34 AM
On November 6th, HUD released two new condo guidelines.  The first set (2009-46A) is their temporary guidelines take affect on December 7th, 2009 and expire December 31st, 2010 include extending the spot check process through February 1st, 2010 as well as a lenient project approval process.  The second set of guidelines 2009-46B) are stricter guidelines that will replace the lenient guidelines that will be in place for 2010.
Before I dive into the details, I want to first press some urgency here.  First, if you’ve given up on a spot check transaction, the last extension allows you to do start a spot check … (0 comments)

long island homes: This Time of Year, Remember Our Military - 12/24/09 04:42 AM
At this time of year, our thoughts and prayers go out to the men and women of our military and the sacrifices they make.  As way of recognizing their sacrifice, the VA loan was established.  After almost 70 years, VA mortgages are still providing loans to members of the military.  In fact, this year, loan volume was up 80%.
However, more needs to be done when it comes to making our veterans aware of this program.  Only a fraction of the nation’s 24 million veterans have used their VA entitlement to buy a home. What’s worse, studies have shown that about … (0 comments)

long island homes: Buy a House, Get a Gun - 12/22/09 08:54 AM
I came across an interesting story on the web.  Apparently a real estate agent in Kansas has come up with a novel marketing campaign.  If you buy one of his listings, he will throw in a gun.  Click here for the web article.  Some states allow inducements, others do not.  I wonder what other inducements real estate agents have come up with to market their listings.  I guess in today's economy, you have to try anything.
(11 comments)

long island homes: New Required HUD Reading Material - 12/22/09 02:56 AM
Under the new RESPA rules, starting January 1, 2010 lenders are going to be required to give borrowers a HUD booklet within 3 days of applying for a mortgage.  Here is a link to see a copy of this booklet.  To call this a booklet is totally misleading.  Now a borrower will be handed this 49 page HUD publication that is supposed to make things easier for the borrower.  Keep in mind that it is not required that the real estate agent give it out, just lenders and mortgage brokers.
 
I do not see how giving a borrower a 49 … (3 comments)

long island homes: New FHA Rules for Appraisals - 12/17/09 05:57 AM
Effective January 1, 2010 FHA is changing the requirements for ordering appraisals.  It is some what similar to the Fannie HVCC but not quite.  Here are the highlights:
 
Cannot accept appraisals prepared by an appraiser who is selected, retained or compensated in any manner by a mortgage broker or any member of lender’s staff who is compensated on a commission basis tied to the successful completion of the loan Lenders must ensure that if an Appraisal Management Company (AMC) is used, the AMC fees must comply with the following:    FHA appraisers are not prohibited from recording the fee the appraiser … (4 comments)

long island homes: Reducing Mortgage Balances is a Win for Everyone, Including the Lender - 12/16/09 02:28 AM
One of my previous posts about forcing banks to reduce mortgage balances through the bankruptcy cram down procedure generated much discussion.  A prominent financier, Lewie Ranieri also believes that the way out of this mess is reduce mortgage balances on underwater homes.  If you want to read the entire article about Lewie Ranieri and his idea, click here for the Fortune Magazine article.  I will summarize it here.
 
At Salomon Brothers in the 1980’s Renieri was one of the people who developed the mortgage backed security.  For better or worse, this innovation expanded the amount of money available to lend … (2 comments)

long island homes: Open House for a Million Dollar Listing? - 12/15/09 03:06 AM
Well, actually it was not listed at a million but at $999,999.  I am working with a listing agent to prequalify potential purchasers when they attend an open house.  This was my third open house.  The listing agent is a very good producer and is well respected.  Unfortunately she did not attend this open house because she went on a cruise so she had another agent from her office handle the open house.
 
I asked her if it really made any sense to have an open house for such an upscale property.  If some one is interested in million dollar … (2 comments)

long island homes: Use Fannie HomeStyle on Forelosure Purchases - 12/14/09 02:44 AM
With all of the foreclosures, there has definitely been a demand for rehabilitation loans to help homeowners not only purchase but make improvements to the home they are purchasing. The most popular program for this has been the FHA 203K program.  However, the FHA 203K programs has limitations not found with Fannie Mae’s HomeStyle Renovation loan. It is available on a negotiated basis and not all lenders have access to this product.  The HomeStyle Mortgage offers borrowers of all income levels up to 90 percent financing for the purchase and improvement of a home. Financing is based on the "as-completed" appraised … (1 comments)

long island homes: Force Banks to Modify Their Behavior - 12/11/09 03:28 AM
 
There comes a point where the evidence is so overwhelming and so compelling that you are forced to reassess your position.  That has happened to me regarding forcing lenders and/or servicers to either modify mortgages or approve short sales.  My position was that even though lenders may act foolishly or even cruelly with regard to dealing with a home owner in trouble, it would be worse in the end to force a lender and/servicer to modify a loan or approve a short sale.  Not any more.  The evidence is in and we need to force banks to modify their behavior.
(44 comments)

long island homes: Good Riddance to Lend America - 12/07/09 03:53 AM
FHA finally did the right thing and pulled the license of Lend America. Lend America, which operates in 46 states, is an example of what is wrong with the mortgage industry.  It is yet to be determined how much damage Lend America has caused.  The reasons given by FHA for pulling its license include the following: -A disturbing pattern of senior officials and underwriters not knowing  what they were doing or not caring -Fraudulently manipulated borrower's credentials to give FHA mortgages to people who may not have the means to pay them back -A history of fraudulent practices which included sending … (11 comments)

long island homes: Bank of America to Pay back the Government - 12/04/09 02:25 AM
Here is some good news to all of you that are worried about all the money the government is spending.  Apparently the executives at Bank of America woke up this morning and discovered to their amazement that they had an extra $45 billion lying around.  They decided to pay back the $45 billion that the Federal government gave them.  I guess that is a $45 billion less that us tax payers have to worry about. With that out of the way, maybe Bank of America can concentrate on approving loan modifications and short sales.  In addition perhaps they can also find … (5 comments)

long island homes: One Reason Why a Lender Will Not Agree to a Modication or Short Sale - 12/02/09 06:06 AM
I wrote a post the other day about a judge in Suffolk County on Long Island who voided the mortgage because he ruled that the lender was being arrogant and uncooperative.  The lender refused to consider modifying the loan or agree to a short sale.  I was talking to some colleagues about this case.  I could not understand why the bank would want to have the house go into foreclosure.  It would seem that a short sale or a loan modification would be in their best interest.  I was informed that because of a sweet heart deal that the FDIC has … (6 comments)

long island homes: Fannie Mae Guidelines are Changing on December 12 - 12/01/09 04:14 AM
Please beware!  On December 12,  Fannie Mae is toughening its underwriting criteria.  The borrower must have a 620 and an DTI of less than 45%.  It will approve a DTI of up to 50% if there are other compensating factors such as low LTV, good credit or a large amount of liquid assets.  If your client's DTI is 50.01%, it will not be approved. Keep in mind that this applies to all loans that have not funded before December 12.  If the loan does not close by this date, all prior approvals are meaningless.  It would seem that more and more … (2 comments)

long island homes: Angry Judge Voids Mortgage - 11/30/09 03:20 AM
A judge in Suffolk County on Long Island had enough with a bank’s arrogance and attitude and completely voided a mortgage.  This may be the start of a trend where now the judicial system is getting fed up with lenders and are taking matters into its own hands.
 
The case is actually pretty straight forward.  A couple purchased a house in 1994 and refinanced in 2004.  They fell behind on their mortgage payments because of loss of income due to the wife having triple bypass surgery.  The couple tried to work out a payment plan but the bank refused and … (13 comments)

long island homes: Now Is the Time to Buy! - 11/25/09 05:08 AM
I cannot think of a better time to buy.  This morning  I was reviewing the rate sheets and I nearly fell out of my chair.  I have never seen interest rates this low.  It is possible to get a 30 year fixed rate mortgage for 4.5%!  If you want to take a chance on a 5 year ARM, the rate is 3.5%.  If you cannot only afford a small down payment, 30 fixed FHA loans are as low as 4.75%.  Every day I say that rates cannot get any lower, but they do. Right now we have three factors in the … (3 comments)

long island homes: Sometimes "No!" is the best answer - 11/24/09 03:09 AM
Most times persistence is a good quality to have.  However, good judgment is even more important so when enough people say “No”, it is time to move on.  This is especially true with regard to the real estate area.  Loan officers fall into this trap all the time.  They will receive a referral from a realtor and get all excited about getting this new borrower approved so they can prove how good they are.  They will get all the details about the borrower and that is when reality sinks in.  It looks like they cannot qualify for a mortgage.  Not willing … (25 comments)

long island homes: My First Open House - 11/23/09 03:33 AM
A realtor invited me to sit in on an open house this past Sunday.  I would answer any mortgage related questions and if possible, prequalify anyone for a mortgage who asked.  This was the first time I ever went to an open house at the invitation of the listing agent.  This house was located in Levittown on Long Island.  This area is historically significant because it was the first suburb.  After World War II, William Levitt bought a potato farm and built mass produced houses.  Many were sold to veterans who were able to afford these homes under the GI Bill.  … (4 comments)

long island homes: Give a Gift of a House for the Holidays - 11/20/09 03:13 AM
This holiday season, what better gift can a person receive than a house?   Well, not an entire house, but enough money to be able to qualify for a home.  Under FHA programs, a borrower can use funds from a relative not only to pay for house, but for closing costs as well.  Even though FHA offers programs with as little as 3.5% down, a cash gift from family members can prove very useful, especially in states like New York where the closing costs can be very expensive.
One of the unique features of the FHA program is that it allows 100% … (1 comments)

long island homes: Understanding How ARM Interest Rates Are Determined - 11/19/09 12:47 AM
One of the ways to take the fear and loathing out of an ARM is to understand how the interest rate is determined and how much it will change. Once the initial fixed period of the ARM expires, the mortgage calculates a new interest rate by adding the index of a mortgage to the margin  To calculate the new interest rate of an ARM, you simply add two variables together and round up to the nearest .125% interest rate.  These two variables are the loan’s index and margin. Remember that the amount an interest rate can change is limited to the caps … (0 comments)

 
Paul Warkow (Paul Warkow-D.G. Weber Law Associates)

Paul Warkow

Hauppauge, NY

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Paul Warkow-D.G. Weber Law Associates

Address: 300 Wheeler Road, Suite 101, Hauppauge, NY, 11788

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