Gil Kerbashian (847) 873-7295

Home Loan Application

FHA, VA, Conventional, Jumbo, USDA, Portfolio home loans  — Posted by gilkerk @ 22:21
 
 

  Loan Application: realestateloans.com/gilsapp.pdf

 

"When discussing the loan process with homebuyers, I stress that they must be completely candid with their loan officer, be incredibly detailed and provide as much documention as they can. This is the new norm for home loan approvals".     David Stevens -FHA

IMPORTANT OVERVIEW:  In the next few days or weeks you'll be looking at a handful of homes. One will catch your eye and you'll want to be completely prepared to make a strong offer. Most sellers give higher priority to buyers who have secured a full home loan prequalification review over homebuyers that have only been "phone qualified". A full prequalification review with assets, income and credit verification is the highest level of preparedness. The application process below is oriented toward a successful full prequalification. The following are some basic do's and don'ts:
  1. Avoid "cash, non-payroll or mattress money" deposits. All non-payroll deposits will need to be sourced carefully.
  2. Postpone any large purchases until after your loan closes.  If a re-verification of credit days prior to close shows you have recently increased credit balances it could jeopardize your loan approval.
  3. Notify me immediately in the event of a job change.
  4. Don't take any cash advances on your credit card(s) or personal loans.
  5. Don't allow any additional inquiries or credit checks.
  6. Do not open or close any creditlines or bank accounts.
  7. Continue to make all of your payments as agreed.
  8. Be expedicious with all documentation. Time is of the essence. 
  9. Your loan will be underwritten to nationally accepted mortgage guidelines. Investors are lending a great deal of money, please don't "self-underwrite" your own loan. Be prepared to offer all paperwork that is asked of you all the way to the day of close. A great deal of money and trust is being conveyed to you- please don't take the process for granted. Fact is, gathering paperwork is a blessings for all the funds you will be receiving.
  10. Ask me about locking your rate.
  11. (home purchase) Please send me a copy of your purchase earnest money deposit check front and back showing the check processed through the bank along with the official bank statements showing the earnest money deposit clearing the bank as soon as the check becomes available.
  12. Please send legible copies for all documentation in PDF. Send all pages numbered even if blank for your bank statements. 
  13. (home purchase) Email me directly if you would like me to NOT share your qualification information with participating agents or attorneys. Sellers often call lenders to assess the strength of a borrowers prequalification data. Borrowers that have not secured a full prequalification can expect to be given less consideration in multiple offer situations. Sharing your qualification information will assist agents in making the right decision.

(home purchase) Be mindful that lenders conduct quality control checks. Expect a call to verify your employment. Are you receiving down payment assistance from an outside source? Please be prepared to document all non-payroll deposits: 1) Gift letter, 2) donors bank statement, 3) bank statement to show the deposit was captured to your account, 4) copy of the gift check post deposit front and back from donor showing it went through the bank processing center and 5) copy of the donors bank statement showing the gift check clearing. Stay flexible in your closing timeline in case your closing is delayed. Once the purchase contract is accepted an appraisal deposit is required. The cost of the appraisal will be credited to you at closing.

After all of the above procedural stuff what really matters is... the season to enjoy your own home is coming and what a wonderful time to make the transition!!!

Your referrals are valuable. Do you know any friends, family and co-workers that can  use my services? Please kindly consider giving them my contact  information.

Cordially Yours, Gil Kerbashian (847) 873-7295


Fax: (847) 770-4850
The loan application has a very important list next to the signature lines that I will need in order to issue proper prequalification letter. Please call if you have any questions. You can fax or email the prequalification application and items, or we can meet at your convenience to go over the process. One Page Loan Application: www.realestateloans.com/gilsapp.pdf


Its not just your transactions, short sales are taking longer...

Its not just your transactions, short sales are taking longer...

"After a surge in short sales in late 2011 and early 2012, the favored disposition method for distressed properties is shifting back toward the more traditional foreclosure auction sales and bank-owned sales," said Daren Blomquist, vice president at RealtyTrac. "The combination of rapidly rising home prices - along with strong demand from institutional investors and other cash buyers able to buy at the public foreclosure auction or an as-is REO home - means short sales are becoming less favorable for lenders."

Short sales fell from 6.3 percent of sales in September and 11.2 percent in October 2012 to a 5.3 percent share of all sales in October 2013. States with the highest percentage of short sales in October included Nevada (14.2 percent), Florida (13.6 percent), Maryland (8.2 percent), Michigan (6.7 percent), and Illinois (6.2 percent).

Need a reliable lender? Here to help you.
realestateloans.com/approved.pdf

If you have an questions, I can be reached at 847-873-7295. You are not alone: reliable purchase money expertise is a phone call away.

Ready, Willing and Able to Fund Your Purchase Money

Gil Kerbashian nmls 197757

(847) 873-7295

Ready to Fund

CFPB changes effective this month

CFPB changes effective this month

Many Homebuyers, Closing Agents, Loan Officers, Realtors and Attorneys will be caught off guard with the new settlement requirements that are due to implement this month. The CFPB has heightened scrutiny of settlement statements and increased standards and penalties for faulty settlement protocol.

How can you prepare?

Be aware that lenders and closers will be under a great deal of pressure to only approve and fund on closing documents that are extremely accurate. The worst scenario for most homebuyers is a transaction that is required to go into a cooling off period (delayed/cancelled closing).

The real estate industry has known about the coming change in closing protocol but general knowledge is limited. At my last ten or so closings, I've made it a point to discuss this matter with Closers, Attorneys and Realtors and most are unaware of coming changes. A few of the top tier Pro's I've talked to have heard and basically understanding that disclosure and closing protocols are under scrutiny.

Be prepared, show your expertise by counseling your sellers and buyers thoroughly, don't take smooth closings for granted and think about using lenders that are less bureaucratic in structure.

Need a good lending Partner? I can help.

realestateloans.com/approved.pdf


FHA - Back-to-Work Program

FHA's new Back-to-Work program is active now and it has become a great resource for friends, family, past clients and my Realtors. Please consider sharing this information with others that may be interested in buying while prices and rates are still attractive.

For agents that have past clients or current renters which were affected by a bankruptcy, short sale or foreclosure brought on by a major income reduction or job loss, you might want to notify past clients, friends and family about the Back-to-Work program.

The past credit incident needs to be clearly linked to a job loss or income decline resulting at least 20% income loss. New credit must have been re-established. Prior to job loss credit MUST have been sound. Strategic BK, short sale or foreclosure borrowers not allowed.

Not all investors will be offering this program.

Documentation will be strict so prepare your friends, family and clients. For responsible persons having suffered unavoidable credit damage to no fault of their own and want to buy rather than rent... this program is a second chance.

Need a good lending Partner? I can help.

realestateloans.com/approved.pdf

If you have an questions, I can be reached at 847-873-7295. You are not alone: reliable purchase money expertise is a phone call away.

Ready, Willing and Able to Fund Your Purchase Money

Gil Kerbashian nmls 197757

(847) 873-7295

Ready to Fund


Gil Kerkbashian

Chicagoland Home Loans — Posted by gilkerk @ 20:50

gil kerkbashiangil kerkbashian

gil kerkbashian home loans

gil Kerbashian

gil kerkbashian


Quality Mortgage (QM) and Rate Quotes

Yes, QM will affect your business!

For the past year or so various regulators, industry groups and the CFPB have been working to define what a Qualified Mortgage (QM) is. The process is complete and QM rules will commence on Jan 10.

QM is intended to promote prudent underwriting while offering a safety net for lenders called Safe Harbor.

How does it work? If a lender underwrites a loan using these prudent methods outlined below, the lender is deemed mostly “Safe” from consumer or regulator repercussion. Yes, lenders can still make loans that aren’t QM as long as they show the buyer has the ability to repay. But if a bank chooses to avoid QM standards there will be no Safe Harbor offered to the lender.

QM is more restrictive than what is currently offered in the market. Here are some guidelines:

• Maximum debt ratio of 43%
• ARMs calculated at full index rate
• Lender fees cannot exceed 3% of the loan amount
• Taxes and Insurance escrows required
• No exotics: Negative amortization, option-arms, balloon payments or interest-only loans
• Any loan that has been approved automated and underwritten to the AUS specs properly will meet QM standards.


**What are rates right now?** The single most asked question in the history of mankind (possibly). Asking what rates are for a mortgage without accurately knowing the credit scores of all borrowers, type of property, down payment, etc. is like asking what the exact temperature will be on February 7th 2014. If the loan file isn't in the system and the borrower isn't ready to lock their terms the day rates are quoted, a low rate quote is the proverbial pot of gold at the end of the rainbow. As you know, rates change daily, sometimes twice a day making the process all the more difficult.

Though securing a good rate and fair fees is very important, customers shouldn't get hyper-anxious while pursuing rates. No bank can have the best rates all the time (even if they say so). Overhead and constantly changing internal constraints put pressure on banks at different times throughout the year.

I use a secondary market rate monitoring service to confirm that on the day I lock rates for a client, the client is receiving rates that are in the best 10% of the industry. If rates change or go down (as they do sometimes), a client shouldn't kick themselves because they took the safe route the day they locked. You should know that its just too difficult to time the market!

Need a good lending Partner? I can help.

realestateloans.com/approved.pdf

If you have an questions, I can be reached at 847-873-7295. You are not alone: reliable purchase money expertise is a phone call away.


Credit Inquiries, Magic Wand, !! QM !!, Its a Bit Slow, internet

... "I just spoke to my plan administrator and the 401k payment won't show up on my credit because it was a loan from myself and I dont think it should be included in the calculations."

Wave your Magic Wand and make it go away...

The above was a comment from a borrower referred to me this week. A prudent agent asked me to take a look at the client after another loan officer had prepproved the buyer without income or asset verification.

The prior loan officer didn't ask and wasn't told by the borrower about some cloaked debts: A new $650 a mo. car loan (credit inquiries evident) and a $250 mo. 401k loan (loan evident on statements). These two cloaked debts accounted for $900 in additional monthly debt causing the borrowers debt-to-income ratio to exceed 53%.

The borrower was overly confident in her capacity to take on debt and the loan officer was too timid to ask questions. The result would have been terrible for all the parties involved had these items not been caught early because any Junior Underwriter would have turned these items up in teh 11th hour.

Changes with national lending programs and credit repair...

On November 16th, The GSE's and many large investors will start implementing a series of new guideline changes to reduce defaults, these changes may help keep at bay weak borrowers. Starting soon, 3% conventional downpayments will likely go away and credit repair and rapid rescores may not be allowed. The secondary markets want borrowers to "plan their home purchases more carefully". Along with the above changes, coming CFPB disclosure revisions will require Loan Officers and Realtors to be more sophisticated when building transactions.

If you have a buyer looking to get in the market and they have "a few credit issues", they would be well served to pull their credit report at the following website (including scores) and present their report to their loan officer first before their bank pulls the report: https://www.annualcreditreport.com/cra/index.jsp or myfico.com

Hear Ye Hear Ye, your business is going to change on January 10th .. just 55 days away... QM is going to curtail Debt-To-Income Ratios... Are you prepared?

The new QM mortgage standards will likely start being implemented on 01/10/2014. You'll want to have all your buyer borrowers re-qualified to make sure they are in compliance with the new rules.

Market has slowed down... don't panic, keep marketing...

The general (area exceptions) market is experiencing a slowdown which started about 8 weeks ago. The slowdown started with interest rate increases spurred on by the Fed's tapering news and likely has continued due to government shutdown issues and seasonal factors.

Would you agree that 95% of our problems nationally are mostly self-inflicted or political? If so, take 5 and call your representative now: http://www.house.gov/representatives/find/

Internet marketing support...

I've been employing an assistant to help with some of my internet marketing. If you find that you need to catch up in that area, call me to talk and I'll share what I've learned and see if I can help you directly.

Need a good lending Partner? I can help.

realestateloans.com/gilstopten.pdf

If you have an questions, I can be reached at 847-873-7295. You are not alone: reliable purchase money expertise is a phone call away.

Ready, Willing and Able to Fund Your Purchase Money

Gil Kerbashian

(847) 873-7295

Ready to Fund


HOME LOAN BANKRUPCTY, SHORT SALE, DEED IN LIEU AND FORECLOSURE SEASONING GUIDELINES

HOME LOAN BANKRUPCTY, SHORT SALE, DEED IN LIEU AND FORECLOSURE SEASONING GUIDELINES

While FHA may be willing to insure a new loan after one year STARTING IN 2013 FOR SOME BORROWERS, I do not know of a lender that will fund the loan regardless of whether FHA will insure it?

2013 FHA Bankruptcy – You may apply for an FHA insured loan after your bankruptcy has been discharged for TWO (2) years with a Chapter 7 Bankruptcy.You may apply for an FHA insured loan after your bankruptcy has been discharged for ONE (1) year with a Chapter 13 BankruptcyForeclosure - You may apply for an FHA insured loan THREE (3) years after the sale/deed transfer date.Short Sale / Notice of Default – You may apply for an FHA insured loan THREE (3) years after the sale date of your short sale. FHA treats a short sale the same as a Foreclosure for now.Credit must be re-established with a minimum 620 credit score

2013 VA Bankruptcy - You may apply for a VA guaranteed loan TWO (2) years after a BankruptcyForeclosure - You may apply for a VA guaranteed loan TWO (2) years after a foreclosureShort Sale - You may apply for a VA guaranteed loan TWO (2) after a short sale, unless it was a VA loan then restrictions applyCredit must be re-established with a minimum 620 credit score

2013 Conventional Fannie Freddie Bankruptcy – You may apply for a Conventional, Fannie Mae loan after your bankruptcy has been discharged for FOUR (4) years.Foreclosure - You may apply for a Conventional, Fannie Mae loan SEVEN (7) years after the sale date of your foreclosure. Additional qualifying requirements may apply,Short Sale / Deed in Lieu of Foreclosure - TWO (2) Years up to Maximum 80% Loan to Value | 20% Down PaymentFOUR (4) Years up to Maximum 90% Loan to Value | 10% Down Payment – Subject to Private Mortgage Insurance underwriting guidelines.SEVEN (7) Years above 90% Loan to Value | with less than 10% Down Payment – Subject to Private Mortgage Insurance underwriting guidelines.

 

Credit must be re-established with a minimum 660 credit scoreFannie Mae has reduced waiting periods in cases of extenuating circumstances but these are very hard to get through.


FHA Loan Limit Changes for Illinois Effective January 1

New FHA loan limits:

1 unit: $365,700

2 unit: $468,150

3 unit: $565,900

4 unit: $703,250

Median home price: $275,000

01/01/2014

CY2014

JAN 10 JAN 10 JAN 10 JAN 10 JAN 10 JAN 10
QM STARTING

PROTECT YOUR HARD EARNED TIME AND EFFORT: I strongly recommend that any lender prequalification letter you receive comes with verification or proof of a Fannie or Freddie automated approval.

MREP Video on QM: http://thenationalrealestatepost.com/snapshot-of-2014-changes/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+TheNationalRealEstatePost+%28The+National+Real+Estate+Post%29


Gil Kerbashian Responsive

FHA, VA, Conventional, Jumbo, USDA, Portfolio — Posted by gilkerk @ 16:39

HomePath Home Loans

Fannie Mae HomePath Mortgage Highlights:

No mortgage insurance. Fannie self insures these loans and buries the mortgage insurance into the RATE. Rates are typically .375-1% higher than regular conforming loans.

Eligible Products
?Conforming and high balance conforming conventional
?15, 20 and 30-year fixed rate loans
?3/1. 5/1, 7/1, 10/1 ARM loans

Seller Contributions
?Maximum 9% for primary residence and second home with less than or equal to 75% LTV/CLTV.
?Maximum 6% for primart residence and second home with greater than 75% LTV/CLTV
?Maximum 2% for investment property regardless of LTV/CLTV
 
Eligible Borrower
?Standard Fannie Mae borrower eligibility applies
?Non-occupant co-borrowers are allowed
 
Loan Purpose
?Purchase Only
 
Property Type
The following property types are eligible:
?2-4 units
?single family attached and detached
?co-op
?condo
?PUD

Occupancy
?Owner occupied
?Investment
?Second home
 
Maximum DTI
?maximum allowable per automated. Additional restrictions may apply
 
Minimum Loan Score
?660 required for LTV greater than 80%
?620 required for LTV less than or equal to 80%
 
Collateral Valuation
?No appraisal required. Use sale price to determine value
 
Maximum LTV/CLTV
?97-95% owner occupied
?90% investor
 
Down Payment
Eligible source of funds include:
?Gift funds from acceptable donors

Mortgage Insurance
?Not Required

 


Talk of Reducing Conforming Loan Limits

According to the WSJ, Fannie/Freddie will/may cut the size of conforming mortgages, thus reducing the maximum size of mortgages eligible to be purchased by Fannie/Freddie. But hey, if jumbo rates are lower, maybe that is an advantage? The picture becomes very cloudy with loan level price adjustments due to credit/property type, gfees, maximum buyups and buydowns, and the value of servicing on the .25%. Normally such a move would be considered an impediment for housing although note that banks have been eager to jump into the jumbo market and jumbo rates are now nearly inline w/conforming borrowing costs.

FHA's Back to Work Program

Mortgagee Letter 2013-26
Date: August 15, 2013
To: All FHA-Approved Mortgagees
Subject Back to Work - Extenuating Circumstances
Purpose The purpose of this Mortgagee Letter (ML) is to:
? provide minimum underwriting standards and criteria for evaluating
borrowers who have experienced an Economic Event, as defined in
this ML, that resulted in a severe reduction in income due to a job loss
or other circumstances resulting in reduced Household Income;
? describe the use of housing counseling to qualify under the provisions
of this ML;
? amend HUD Handbook 4155.1, Chapter 4, Section C to add an
Economic Event to the list of examples of extenuating circumstances
and instruct lenders to use the guidance for Back to Work –
Extenuating Circumstances established in this ML as Chapter 6
Section G, to underwrite an applicant with an Economic Event; and,
? revise HUD Handbook 4155.1, 4.A.7.e, to clarify the process for
requesting a review of information contained in CAIVRS for
borrowers seeking an FHA-insured mortgage in accordance with the
provisions of this ML.
2
Mortgagee Letter 2013-26 Continued
Introduction
FHA is continuing its commitment to fully evaluate borrowers who have experienced periods of financial difficulty due to extenuating circumstances.
As a result of the recent recession many borrowers who experienced unemployment or other severe reductions in income, were unable to make their monthly mortgage payments, and ultimately lost their homes to a pre-foreclosure sale, deed-in-lieu, or foreclosure. Some borrowers were forced to file for bankruptcy to discharge or restructure their debts. Because of these recent recession-related periods of financial difficulty, borrowers’ credit has been negatively affected. FHA recognizes the hardships faced by these borrowers, and realizes that their credit histories may not fully reflect their true ability or propensity to repay a mortgage.
To that end, FHA is allowing for the consideration of borrowers who have experienced an Economic Event and can document that:
? certain credit impairments were the result of a Loss of Employment or a significant loss of Household Income beyond the borrower’s control;
? the borrower has demonstrated full recovery from the event; and,
? the borrower has completed housing counseling.
Housing counseling is an important resource for both first-time home buyers and repeat home owners. Housing counseling enables borrowers to better understand their loan options and obligations, and assists borrowers in the creation and assessment of their household budget, accessing reliable information and resources, avoiding scams, and being better prepared for future financial shocks, among other benefits to the borrower.
Effective Date
The guidance in this ML is effective for case numbers assigned on or after August 15, 2013 through September 30, 2016.
3
Mortgagee Letter 2013-26 Continued
Affected Programs HUD 4155.1, Mortgage Credit Analysis for Mortgage Insurance
Add Chapter 6 section G, “Back to Work – Extenuating Circumstances,” and the guidance in this ML in its entirety to this new section.
Add to section 4.C.2.f, Previous Mortgage Foreclosure, an Economic Event to the list of examples of extenuating circumstances and instruct lenders to use alternative guidance in Chapter 6.
Add to section 4.C.2.g, Chapter 7 Bankruptcy, instructions to lenders to use alternative guidance in Chapter 6 when the extenuating circumstance is a result of an Economic Event.
Note: This ML will serve as Section G until the 4155.1 Handbook can be updated.
Applicability
The guidance in this ML is applicable to purchase money mortgages in all FHA programs with the exception of Home Equity Conversion Mortgages.
Lenders must use the provisions of this ML when considering a borrower who experienced an Economic Event, as defined in this ML, which resulted in a foreclosure, short sale, bankruptcy or other negative impact on their credit, and whose application has been issued a “Refer” recommendation by TOTAL Scorecard, or received an “Accept/Approve” but is manually downgraded.
In addition to meeting the guidelines set forth in this ML, loans originated using these criteria must meet all other applicable FHA eligibility and policy criteria. Lenders remain responsible for determining whether the borrower meets all other HUD requirements before approving the loan.
4
Mortgagee Letter 2013-26 Continued
Eligibility for Borrowers affected by an Economic Event
Borrowers that may be otherwise ineligible for an FHA-insured mortgage due to FHA’s waiting period for bankruptcies, foreclosures, deeds-in-lieu, and short sales, as well as delinquencies and/or indications of derogatory credit, including collections and judgments, may be eligible for an FHA-insured mortgage if the borrower
? can document that the delinquencies and/or indications of derogatory credit are the result of an Economic Event as defined in this ML,
? has completed satisfactory Housing Counseling, as described in this ML, and
? meets all other HUD requirements.
Definitions
An Economic Event is any occurrence beyond the borrower’s control that results in Loss of Employment, Loss of Income, or a combination of both, which causes a reduction in the borrower’s Household Income of twenty (20) percent or more for a period of at least six (6) months.
The Onset of an Economic Event is the month of Loss of Employment/Income.
Recovery from an Economic Event is the re-establishment of Satisfactory Credit (as defined on page 5 of this ML) for a minimum of twelve (12) months.
The term borrower includes borrowers and co-borrower.
Borrower Household Income means the gross income of the borrower and all Household Members, as defined below, for purposes of assessing loss of income. The gross income of each Household Member must be computed in accordance with FHA income requirements.
Note: Household Member, for the purpose of this ML, means an individual residing at the borrower’s primary residence at the time of the Economic Event and who was a co-borrower on the borrower’s previous mortgage.
5
Mortgagee Letter 2013-26 Continued
Eligibility for Borrowers affected by an Economic Event- Continued
Note: Borrower Household Income is used for the purpose of defining an Economic Event. Only the income from the borrower, not Household Income, may be used as Effective Income for the purpose of qualifying for the new loan.
Housing Counseling, for purposes of this ML, means counseling from a HUD-approved housing counseling agency related to homeownership and residential mortgage loans that is provided in accordance with 24 C.F.R. part 214 “Housing Counseling Program” and satisfies the requirements identified in Satisfactory Housing Counseling.
Satisfactory Credit
1. Satisfactory Credit: Requirements
The lender may deem a borrower to have Satisfactory Credit if:
? the borrower’s credit history is clear of late housing or installment debt payments, and major derogatory credit issues on revolving accounts;
? any open mortgage is current and shows twelve (12) months satisfactory payment history. Mortgages may have been brought current through loan modification, which may be “temporary” or “permanent” so long as all payments have been documented as being received in accordance with the modification agreement(s); and
? the borrower meets the requirements of this ML.
6
Mortgagee Letter 2013-26 Continued
Eligibility for Borrowers affected by an Economic Event- Continued
When evaluating a borrower with non-traditional credit history, the lender may deem a borrower to have Satisfactory Credit if the borrower’s non-traditional credit history covering at least twelve (12) months in duration includes:
? no history of delinquency on rental housing payments; and
? no more than one thirty (30) days delinquency on payments due to other creditors; and
? no collection accounts/court records reporting (other than medical and/or identity theft).
Refer to Handbook 4155.1 Chapter 4 Section C for more information on analyzing a borrower with non-traditional credit history.
2. Satisfactory Credit: Required Documentation
The lender must verify and document a reduction in the borrower’s Household Income of twenty (20) percent or more for a period of at least six (6) months that resulted from the Loss of Employment, Loss of Income, or a combination of both.
A. Loss of Employment
The lender must verify and document the Loss of Employment by obtaining:
? A written Verification of Employment (VOE) evidencing the termination date or in cases where the prior employer is no longer in business:
o a written termination notice, or
o other publicly available documentation of the business closure, and
o documentation of receipt of unemployment income.
7
Mortgagee Letter 2013-26 Continued
Eligibility for Borrowers affected by an Economic Event- Continued
B. Loss of Income
The lender must verify and document the Borrower’s Household Income prior to Loss of Income by obtaining:
? a written VOE evidencing prior income; or
? signed tax returns or W-2s evidencing prior income.
For a Loss of Income based on seasonal employment, the lender must verify and document a two year history of seasonal employment in the same field just prior to the Loss of Income, in addition to meeting the documentation requirement above.
For a Loss of Income based on part-time employment, the lender must verify and document a two year history of continuous part-time employment just prior to the Loss of Income in addition to meeting the documentation requirement above.
C. Post Economic Event Income
The lender must verify and document the Borrower’s Household Income after the onset of the Economic Event in accordance with the guidance in Handbook 4155.1 Chapter 4 sections D-E & ML 12-3.
3. Satisfactory Credit: Analysis
The lender must then analyze the documentation to determine the Loss of Employment and/or Loss of Income resulted in a minimum twenty (20) percent reduction in income for a minimum of six (6) months.
Note: Even if the Household Member (as defined in this ML) is not an applicant on the current loan, the lender is responsible for obtaining the necessary authorizations to verify Household Members employment or income as part of the requirement to document reduction in household income at the time of the event.
8
Mortgagee Letter 2013-26 Continued
Analysis of Economic Event-Related Payments or Credit Deficiencies
The lender must first analyze and document (1) all delinquent accounts and (2) all indications of derogatory credit, including collections and judgments, bankruptcies, foreclosures, deeds-in-lieu, short sales, and other credit problems, to determine whether associated late payment, credit deficiencies or other credit problems were the result of an Economic Event, or an inability to manage debt or a general disregard for managing financial obligations.
To establish that borrower’s derogatory credit was the result of an Economic Event, the lender must review the credit report and determine that:
? the borrower exhibited Satisfactory Credit prior to the Economic Event Onset;
? the borrower’s derogatory credit occurred after the Economic Event Onset, and
? the borrower has re-established Satisfactory Credit for a minimum of twelve (12) months.
Required Documentation
A. Economic Event-Related Collections and Judgments
The lender must verify and document all collections and judgments were the result of the Economic Event.
For borrowers with open collection accounts or judgments, the lender must also meet the requirements of Handbook 4155.1, Section 4.C.2.e, Analysis of Collections and Judgments.
B. Economic Event-Related Mortgage Foreclosure
The lender must verify and document that:
? a minimum of twelve (12) months have elapsed since the date of foreclosure or deed-in-lieu; and
? the foreclosure or deed-in-lieu was the result of the Economic Event.
9
Mortgagee Letter 2013-26 Continued
Analysis of an Economic Event Related Late Payments or Credit Deficiencies-Continued
C. Economic Event-Related Short Sale
The lender must verify and document that:
? a minimum of (12) months have elapsed since the date of sale; and
? the short sale was the result of the Economic Event.
D. Economic Event-Related Chapter 7 Bankruptcy
The lender must verify and document that:
? a minimum of twelve (12) months have elapsed since the date of discharge of the bankruptcy; and
? the bankruptcy was the result of the Economic Event.
E. Economic Event-Related Chapter 13 Bankruptcy
The lender must verify and document that:
? the Chapter 13 Bankruptcy was discharged prior to loan application and all required bankruptcy payments were made on-time, or a minimum of twelve (12) months of the pay-out period under the bankruptcy has elapsed and all required bankruptcy payments were made on time; and
? the bankruptcy was the result of the Economic Event.
If the Chapter 13 Bankruptcy was not discharged prior to loan application, the lender must also verify and document that the borrower has received written permission from the Bankruptcy Court to enter into the subject mortgage transaction.
10
Mortgagee Letter 2013-26 Continued
Economic Event-Related Factor - Housing Counseling
Housing Counseling
1. Satisfactory Housing Counseling: Requirements
To qualify for purposes of establishing Satisfactory Credit following an Economic Event, participants in this FHA initiative must:
? receive homeownership counseling or a combination of homeownership education and counseling provided that each participant receives, at a minimum, one hour of one-on-one counseling from HUD-approved housing counseling agencies, as defined at 24 C.F.R. §214.100. The counseling must address the cause of the economic event and the actions taken to overcome the economic event and reduce the likelihood of reoccurrence. The housing education may be provided by HUD-approved housing counseling agencies, state housing finance agencies, approved intermediaries or their sub-grantees, or through an on-line course, and
? be completed a minimum of thirty (30) days but no more than six (6) months prior to submitting a loan application to a lender, as application is defined in Regulation X, implementing the Real Estate Settlement Procedures Act, 24 C.F.R. §3500.2(b).
Housing counseling may be conducted in person, via telephone, via internet, or other methods approved by HUD, and mutually agreed upon by the borrower and housing counseling agency, as provided for in the regulations at 24 CFR §214.300 and in the Housing Counseling Handbook.
A list of agencies can be obtained online at http://www.hud.gov/ or by calling 1 (800) 569-4287.
11
Mortgagee Letter 2013-26 Continued
Economic Event-Related Factor- Housing Counseling-Continued
B. Housing Counseling Fees
Housing Counseling provided to potential borrowers who experienced an Economic Event may be funded through any means permitted by the HUD Housing Counseling Program, see 24 C.F.R. Part 214 and Handbook 7610.1, Rev-5.
(http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/handbooks/hsgh/7610.1). However, any housing counseling fee must be charged in accordance with 24 C.F.R. §214.313, and must be reasonable, affordable, customary and commensurate with the services provided.
C. Required Disclosures
Housing counseling agencies must provide the following disclosures to all clients:
? An explicit description of any financial relationships between the agency and any lender;
? A statement that the borrower is not obligated to pursue a loan with a lender; and
? A statement that “Completion of this housing counseling program and receipt of a letter of completion of counseling do not qualify {you/the borrower} for an FHA loan. A lender will have to determine if {you/the borrower} qualify for a loan. You understand that you may not be approved for a loan.”
Furthermore, the agency must provide information on alternative services, programs and products that are available.
12
Mortgagee Letter 2013-26 Continued
Economic Event-Related Factor- Housing Counseling-Continued
2. Housing Counseling: Required Documentation
The lender must verify and document that:
? the borrower has completed the required pre-purchase housing counseling by obtaining a letter from the borrower issued by the Participating Housing Counseling Agency on agency letterhead and that includes the agency’s Tax Identification Number (TIN). The letter must state: the borrower’s name, the counselor’s name, that counseling was delivered in accordance with ML 2013-26 requirements, the date upon which counseling was completed, borrower’s signature and the signature of an authorized official of the counseling agency providing the counseling, and
? the borrower received the proper disclosures (C. Required Disclosures) from the housing counseling agency.
The lender must place the letter evidencing completion of the pre-purchase housing counseling and copies of the housing counseling agency disclosures in the FHA Case Binder immediately after the borrower’s credit report.
Insurance Application Processing
In order to identify loans utilizing the alternative guidance found in this section, lenders must indicate the application has been underwritten in accordance with the “Back to Work – Extenuating Circumstance” guidance in the insurance application screen on FHA Connection:
13
Mortgagee Letter 2013-26 Continued
Insurance Application Processing-Continued
Lenders must also complete the housing counseling information in the insurance application screen, including the housing counseling agency TIN:
Request for Waiver or Resolution of CAIVRS Indicator
In accordance with Handbook 4155.1, mortgagees are required to screen borrowers through CAIVRS. If CAIVRS screening indicates that the borrower has had a claim paid within the previous three years on a loan insured on the borrower’s behalf by FHA, the lender may submit a request for waiver or resolution of the unresolved CAIVRS indicator.
Prior to submitting the request for waiver or resolution, for loans that meet the requirements found in this Mortgagee Letter, the DE underwriter must:
? fully underwrite the application to determine all other eligibility requirements have been met; and,
? approve the loan subject to additional conditions.
On the direct endorsement approval, (HUD 92900-A page 3), indicate in the Additional Conditions under “Other:” “Subject to CAIVRS indicator resolution by FHA.”
14
Mortgagee Letter 2013-26 Continued
Request for Waiver or Resolution of CAIVRS Indicator- Continued
The Mortgagee may then submit the request, including the following information, to HUD at the address below.
? A cover sheet indicating CAIVRS clearance request for “Back to Work” FHA Case number, Name(s) of borrower(s) with CAIVRS indicators, Point of Contact for the Mortgagee, Page 3 of the 92900A, signed by the DE underwriter indicating “Subject to CAIVRS indicator resolution by HUD” under “Other”.
Send to:
US Department of Housing and Urban Development
Attn: Division Director, Home Mortgage Insurance Division
451 7th St. SW, Room 9266
Washington, DC 20410
HUD will review the request and provide the Lender with affirmation of the decision for waiver or resolution.
Paperwork Reduction Act
The current information collection requirements contained in this document have been approved by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. §§ 3501-3520) and assigned OMB control number 2502-0059. The new information collection requirements contained in this document are pending approval by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. §§ 3501-3520) and assigned the existing OMB control number 2502-New. In accordance with the Paperwork Reduction Act, HUD may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection displays a currently valid OMB control number.
15
Mortgagee Letter 2013-26 Continued
Questions
If you have questions regarding this Mortgagee Letter, please call the FHA Resource Center at 1-800-CALLFHA (1-800-225-5342). Persons with hearing or speech impairments may reach this number via TTY by calling the Federal Information Relay Service at 1-800-877-8339. For additional information on this Mortgagee Letter, please visit www.hud.gov/answers.
Signature
Carol J. Galante
Assistant Secretary for Housing-Federal Housing Commissioner

Mortgage Rates Near Two-Week Lows

Mortgage Rates Near Two-Week Lows

Posted to: Mortgage Rate Watch
Tuesday, August 27, 2013 6:14 PM
Forward this email: Send a copy of this story to someone you know that may want to read it.

Mortgage rates hit their lowest levels in nearly two weeks today. Conventional 30yr Fixed quotes for the most ideal scenarios (best-execution) are back down around 4.5% for some lenders and remain at 4.625% for many others. The most visible, mainstream explanation for the move is the geopolitical risk surrounding Syria and the effect global markets. Such risk can indeed motivate a "flight to safety" where investor demand tends to shift toward the least-risky assets like US Treasuries and out of more risky assets like stocks. While these two things are indeed happening, the whole story isn't quite that simple.

(READ THE FULL POST)

 

More from MND:


FHA's New Back to Work Program

I've been receiving a lot of questions regarding the new proposed FHA program- "Back to Work". Below is an overview of the program. You might ask, what's next??

Lenders will take time to make sure there aren't any servicing or underwriting descrepancies or issues presented by the program. They will want to make certain that if they choose to underwrite these loans, they will also be able to sell them to the secondary markets. Some lenders will put there own rules on top of FHA's rules. These lender specific rules are known as overlays. Each lender should/will establish underwriting guidelines internally as to how to accept and document these borrowers. Plan on very intense documentation on these transactions. 

Late last week, The Department of Housing and Urban Development on Thursday unveiled a new set of guidelines under the FHA program specifically geared toward homeowners and prospective homeowners adversely impacted by the Great Recession.  The "Back to Work" program, as it's called, doesn't constitute a free pass for those who would otherwise be unable to qualify for financing, but it does reopen the housing market to a great many borrowers who would otherwise have been waiting for 3-7 years to tick off the clock--depending on their initial credit issue--before being able to qualify for a mortgage.  In FHA's words:
 
"As a result of the recent recession many borrowers who experienced unemployment or other severe reductions in income, were unable to make their monthly mortgage payments, and ultimately lost their homes to a pre-foreclosure sale, deed-in-lieu, or foreclosure. Some borrowers were forced to file for bankruptcy to discharge or restructure their debts. Because of these recent recession-related periods of financial difficulty, borrowers’ credit has been negatively affected. FHA recognizes the hardships faced by these borrowers, and realizes that their credit histories may not fully reflect their true ability or propensity to repay a mortgage."

The program will require prospective borrowers to thoroughly document the nature of the "Economic Event," that it resulted in derogatory credit, and that there has been a satisfactory recovery from the Event per the new guidelines. 

Lenders will consider the Economic Event to have caused the derogatory credit if:
 •The prospective borrowers had satisfactory credit prior to the event onset
 •The prospective borrowers' derogatory credit occurred after the onset of the event
 •The prospective borrowers have reestablished satisfactory credit for at least 12 months since the the end of the event

Protocol to be established hopefully soon.


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