Comments (8)

Randy Bolton
None - Diamond Bar, CA

Hi Monica!

Let's see what we can do here.  Can you please provide more information.  Just write out everything you know about the deal.  How long has the person owned the house?  Is it a divorce forced refinance?  Will there be any cash out?  How did you determine value and amount of loan?  Etcetera, etcetera.

We get a lot of loans done in this group.  I hope to read your information soon.

Randy Bolton

Mortgage Broker

Financial Advisor

 

Feb 27, 2008 08:13 AM
Monica Westover
Real Estate Investor Financial Services - Lakeland, FL

She has owned the house since july 2006, she is on an arm mortgage trying to get a fixed rate.  somehow she owes 230,000 even though she borrowed 220,000.  There would be no cash out. 

Feb 28, 2008 12:32 AM
Randy Bolton
None - Diamond Bar, CA

Well,  The first thing to do is to really double check how much she owes by looking at her mortgage statement(s).  Does she really owe $230,000, or does she owe...  228, or 237?  Secondly, what is the house really worth?  Is it really worth $220,000, or is that just an estimate?  You need to get the absolute facts regarding the LTV?  Next..  Is the customer Full Documentation of income?  That makes a big difference in how much percentage a lender will loan on the house.

You mentioned the borrower is self employed.  Most people who are self employed have money in a business account or solo 401k or S.E.P. IRA retirement account they can borrow from.  In this situation, they borrower may need to pull some money from their retirement or business account and pay down someon their mortgage.  If you can get the person to 97% Loan-to-Value, FHA should do a rate/term refinance all day long.  In your initial statement you said the loan was 100% LTV.  Then you said the house was worth $220,000 and the borrower owes $230,000.  that's not 100% LTV, that's more like 103% LTV.  Did you calculate that the customer was going to pay down to $220,000 so that you are at an actual 100% LTV?  If that's the case, then just have the customer pay down 3% more so that are at a 97% LTV and do an FHA rate/term refi.  For more information on FHA refi's, simply visit 'The FHA Mortgage Group'.  You will find a lot of information there.

The first thing I would do is find a way to pay the loan down to 97% LTV.  I don't care if the customer has to pawn their car.  If they don't do something serious, they will end up with a payment that may be $450 to $900 more per month than what they are paying now.  Sell the boat!  Sell the big screen TV!  Borrow a few grand from relatives!  Get a 2nd job!  OR...  Face serious consequences when the interest on the mortgage adjusts, which could cause foreclosure.  Finally...  Several major banks do not want any more homes by foreclosure, as they have so many foreclosures already.  So...  many Big Banks and mortgage lenders have sent letters to homeowners stating they will KEEP THE CUSTOMER AT THEIR CURRENT RATE FOR AN ADDITIONAL 2 YEARS.  Did your customer get one of these letters????  You need to call the servicer and see if they have that program.  This would allow the customer two more years at their low rate; in which their payments will lower the loan balance, and give the homeowner a chance to actually build some equity.

Mar 01, 2008 09:05 AM
Matt Walsh
Cleveland, OH

Monica,

My first thought when seeing this post was....uhoh.  But as Randy stated, your borrower will need to get creative.  She will also need a LO who is educated enough to fit her needs.  FHA will finance to 97% and they are working diligently to help those in ARM's that are adjusting.  That is the best bet now.  Borrower must be able to document income.....being self-employed, that may be easier said than done.

Can she bring money to close?  I know some think it's unheard of on refi's, but with values dropping this is becoming more and more commonplace.  It sounds to me like she has been put in some sort of Neg. Amortization loan. 

Mar 05, 2008 04:32 PM
Anonymous
Anonymous
ok. So i spoke to the customer today, and she is on a neg. amortization loan.  she definetly has money to bring to close.  She might be able to come up with the $10,000 to bring it down to 97% ltv.  Also, her business she has owned for over 10 yrs in Puerto Rico was recently incorporated in Fl.  Is this going to be a problem? And credit agencies only reporting 2 scores:  661 and 638.  Is this going to be another problem? 
Mar 07, 2008 03:26 AM
#5
Randy Bolton
None - Diamond Bar, CA

Monica,

The beauty of FHA is it's ability to 'get creative'.  FHA will probably do this deal.  I understand the business is in Puerto Rico, but Puerto Rico is an American province, so I don't see a problem here.  The FHA underwriter may ask for two or three years of bank statemnts in order for the borrower to prove her income.  They may ask for some different kind of income verification, I don't know.

As for only having two scores...  FHA is NOT score driven.  They don't care if a person has one score or no score.  They do however require some good tradelines on the credit report.  They will also accept 'altermative credit' such as car insurance paid on time and other items. 

Hang in there!  We will get this loan closed, and get you a well deserved commission!  Loan scenario helpline is one of the best groups on A.R.  Make sure to save us to favorites!!

 

Mar 08, 2008 11:23 AM
Matt Walsh
Cleveland, OH

Monica -

Randy is 100% right, the beauty of FHA is the creativity and common sense approach they take to underwriting.  If you have a story and your clients deserves a loan, a good L.O. can get it approved.  She must have verifiable income.  Lenders will require 2 years tax returns to show income.  A business license and CPA letter will not fly with FHA.  I think you can get that done.

Mar 10, 2008 07:10 AM
Lewis Poretz
Apex Home Loans - Annapolis, MD
Business Development Manager

Better check and see if that pay option bomb has a three year prepay or not.... if the loan originator who sold the option arm wanted to max out their fees, a prepay was usually added to these loans..... which would make the payoff that much more negetive..............

Sep 16, 2008 02:21 PM