Appraisal Changes, Rates and One Bite at the Apple
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FHA : What are Origination and Discount Points?
Definition of a "Point": A "Point" is a financial term used in the mortgage business to represent a percentage of the loan amount. One Point would be 1% of the loan amount, two Points would be 2% of the loan amount, so on and so on.
Origination points: Points charged to originate a mortgage loan. FHA allows a maximum of 1 point to be charged on FHA insured transactions.
Discount points: Points charged by the broker or lender to obtain a specific rate. To "buydown" a rate from 5% to 5.25% may cost 1 discount point.
Origination and discount points are labelled as such and must segmented into their own categories on the Good Faith Estimate.
Discount points DO NOT count towards the minimum statutory committment amount.
FHA : Good Neighbor Next Door Program.. 50% Off of your Home Purchase
A great program that rarely gets used due to lack of industry knowledge.
Law enforcement, teachers, firefighters and Medical Technicians can utilize this program to purchase HUD homes at super deep price reductions.
The department of Housing and Urban Development wants to maker our neighborhoods stronger. The "Good Neighbor Next Door" program helps make this goal a reality by encouraging good citizen to invest in revitalization areas.
Benefits:
The purchaser may buy a HUD owned home at a 50% discount. For example, if a HUD home is listed for $200,000, an eligible buyer can buy it for $100,000. The make the deal even better an use the $100 down payment and/or 203k/ks rehab loan.
For more information please call (847) 873-7295 or the HUD counseling line at (800) 569-4287.
FHA : Common Repair Items
If you've been told that the property your looking at can not be financed using the FHA program, it may be due to the Soundness, Sustainability or Safety of the property.
The most common items that may or may not cause underwriting concern are:
Missing handrails, damaged exit doors, cracked windows, defective paint in homes constructed before 1978, plumbing leaks, defective flooring, pest infection, rotten kitchen surfaces, damaged walls, poor workmanship with the general construction, trip hazards, crawl space debris, lack of an all weather driveway,
Items that are more serious in nature are:
poor exits and entrances, faulty roof, structural problems, obsolete electrical/plumbing and utilities not turned on to evidence function.
If you are looking at a home with deficiencies, you may consider an fha 203k or ks loan: www.realestateloans.com/203ks.ppt
Take care.
Mortgage Bank or Mortgage Broker- Always Work With an Ultra Clean Service Provider
If mortgage lenders were all the same, then there really would be no reason for mortgage brokers.
The truth of the matter is that lenders vary greatly in the manner in which they underwrite loans. Though they share many of the same lending principles, they also have independent risk tolerances. Big banks such as Wells Fargo, Bank of America or Chase are very conservative in their risk tolerance levels. These larger banks, in addition to the many others across the country, have become much more risk averse in the last year. In some cases they've gone way beyond what was needed to rein in risk. Some say they've thrown out the baby with the bathwater.
If you are looking for expertise and customization of loan terms, it's more often beneficial to work with a mortgage broker that does only mortgages and not car, credit card or commercial loans. Work with an ethical mortgage broker that operates a clean shop, follows strict compliance guidelines and is committed to privacy standards.
One way to know if your mortgage broker is a good one is by visiting them. Are their desks clean? Do you see files and loan applications strewn all over the office? Do you see a shredder present? How is the office staff dressed? Do they treat the work environment as a professional organization or do they look like they are ready to go nightclubing? Look for little signs that the management cares about privacy, procedure and protocol.
I've see large bank processing centers in complete disarray with people working there that look like they could have served jail time. Some banks are notoriously low wage payers causing them to hire a certain level of front line worker. I've also seen messy, very messy operations with mortgage brokers also.
Ideally, you can meet with your mortgage originator, at least to drop off your file, and take a look at how their operation is managed. Listen to the way they speak to you. Is it respectful? Do they return calls? Do they have a receptionist that sounds like she cares? Don't just give your business to anyone. There's a lot of personal data that goes into a loan file, make sure it's treated carefully.
HUD Starts Sending Auditors to Banks for Surprize FHA Reviews
Alerted that bad lenders are originating and brokering Federal Housing Administration insured loans, Housing secretary Shaun Donovan said the government is sending out "SWAT teams" unannounced to check up on problem lenders.
In Senate testimony today, Mr. Donovan stated that the number of FHA approved brokers now stands at 36,000 compared to just 16,000 in the middle of 2007.
FHA approved lenders have increased by 525% since 2006 to 3,300. Senators on a HUD subcommittee concerned that FHA delinquency rates are rising rapidly state that problem lenders that were funding subprime mortgages are now stuffing junk into the FHA program.
Mr. Donovan admitted that early payment defaults on FHA loans "have increased substantially" but said the growth in problem loans is slower than the overall growth in FHA fundings. He blamed rising defaults on the economy and job losses.
Why are licensing standards so low for mortgage bankers and how long we'll we have to deal with corrupt lenders in this once great business?
