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FHA Foreclosures Rising

Rising FHA default rate foreshadows a crush of foreclosures

David H. Stevens (Andrew Harrer - Bloomberg)

By Dina ElBoghdady and Dan Keating

Washington Post Staff Writer
Tuesday, February 2, 2010

 

Cash / Mattress Money is a Deal Killer

- Cash / Mattress Money is a Deal Killer-

AHEAD OF THE CURVE ARTICLE BELOW

Below is a list of my top programs that should be in every agents resource
folder:

-FHA closed on time: [http://www.realestateloans.com/fhadonewell.pdf]
[http://www.realestateloans.com/fhadonewell.pdf]
www.realestateloans.com/fhadonewell.pdf

-100% Rural Development: [http://www.realestateloans.com/usda.pdf]
[http://www.realestateloans.com/usda.pdf] www.realestateloans.com/usda.pdf

-$100 down for HUD owned homes:
[http://www.realestateloans.com/100hudhome.pdf]
[http://www.realestateloans.com/100hudhome.pdf]
www.realestateloans.com/100hudhome.pdf

-Deferred maintenance homes:
[http://www.realestateloans.com/uglyhomes.pdf]
[http://www.realestateloans.com/uglyhomes.pdf]
www.realestateloans.com/uglyhomes.pdf

-100% pre-approval to closing ratio:
[http://www.realestateloans.com/concierge.pdf]
[http://www.realestateloans.com/concierge.pdf]
www.realestateloans.com/concierge.pdf

-VA 100% financing:  [http://www.realestateloans.com/va.pdf]
www.realestateloans.com/va.pdf

-Home Buyer job protection mortgage:
[http://www.realestateloans.com/rainydays.pdf]
www.realestateloans.com/rainydays.pdf

CASH IS KILLING DEALS:

I recently had a borrower call me and state she deposited $6000 into her
bank account from an unsecured loan. Without telling the Realtor or myself
she used this money for the contract deposit. Some form of outside monies
has been interjected into four of the last ten deals I've done and the
borrowers did it after reading
[http://gilkerk.realestateloans.com/condominiums/2009/05/07/i-need-to-make-a-home-loan-application-help.html]
my home purchase introduction link which clearly states that cash and large
deposits should be avoided.

Why isn't cash allowed into a transaction? It's the borrowers money right?
Several obvious reasons: Patriot Act/Banking Laws, Drug Money, Cash
Laundering, Straw Buyer considerations, Under the Table Seller Concessions,
Realtor or Loan Office contribution, Unsecured/unreported loan, Gift from
an unacceptable source, etc..

Loan officers and Realtors should never allow or encourage customers to
deposit or use cash for ANY part of the transaction nor turn a blind eye if
they know a client is borrowing money from credit cards or personal loans.
This type of mistake will certainly cause problems and create needless
tension. Now more than ever, loan files are being looked at with a fine
tooth comb. More and more careful verifications are being done a day before
closing- be prepared and don't let your deal die for dumb reasons.

Remember, FHA case numbers follow these loans. If one underwriter declines
a loan, the disposition will follow that loan. Realtors and Loan Officers
must work closely to prevent problems from day one.

Please call me at (847) 873-7295 to discuss nuances. Here to help you get
homes financed.

Is your loan officer less responsive than you'd like? Cut yourself free
from bad service, poor communication and start enjoying incredible support
today.

Could your team use an updated presentation to get agents up-to-speed on
loan program changes? Lending is a huge part of transactional business,
consider  scheduling my lunch and learn for your team.

Gil Kerbashian

Mortgage Lending Since 1997

Gil's Loan Answer Hotline: (847) 873-7295

FANNIE MAE'S NEW DEBT TO INCOME RATIO'S

USDA Homeownership Website Links

Subscribe to receive Single Family Housing News for GUS & GRH: http://www.rdlist.sc.egov.usda.gov/listserv/mainservlet

USDA Rural Housing Home Page: http://www.rurdev.usda.gov/RHS/

Rural Development Contacts Page: http://www.rurdev.usda.gov/RHS/Admin/contact.htm

Rural Development Regulations Page: http://www.rurdev.usda.gov/regs/

Rural Development FAQ Page: http://www.rurdev.usda.gov/rd/faqs.html

Rural Development Income & Property Eligibility Site: http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do

Single Family Housing Guaranteed Loan Income Limits: http://www.rurdev.usda.gov/rhs/sfh/sfh%20guaranteed%20loan%20income%20limits.htm

Loan Application Package Checklist: http://www.rurdev.usda.gov/regs/an/an4470.pdf

Rural Development Regulations: http://www.rurdev.usda.gov/regs/

Rural Housing Origination Handbook 1980-D: http://www.rurdev.usda.gov/regs/regs/pdf/1980d.pdf

GUS Lender User Guide 2008: https://usdalinc.sc.egov.usda.gov/docs/rd/sfh/gus/lender/GUSLenderUserGuide.pdf
GUS Login Page: https://pws.sc.egov.usda.gov/login/login.aspx?TYPE=33554433&REALMOID=06-f8405ea7-471f-474d-8a4e-731f76f1e536&GUID=&SMAUTHREASON=0&METHOD=GET&SMAGENTNAME=-SM-S3%2fpukYCkOnlZ%2feImVktFvcBZTmcxsBEbQyvAIf2sN6XculadBu%2f5WF4TmWxHg2x&TARGET=-SM-HTTPS%3a%2f%2fgus.sc.egov.usda.gov%2faus%2findex.jsp%3fcallingPath%3dusdalinc.sc.egov.usda.gov%2fRHShome.do

Administrative Notices for Loan Origination and Underwriting: http://www.rurdev.usda.gov/wi/programs/rhs/sfhg/handbook/originating/ans.htm
USDA Rural Development Forms Library: http://www.rurdev.usda.gov/regs/formstoc.html

Rural Development State Office/Service Center Locator: http://www.rurdev.usda.gov/recd_map.html

USDA Live WebEx Training Schedule: https://rurdev.webex.com/mw0305l/mywebex/default.do?siteurl=rurdev&service=7

USDA LINC Training and Resource Library: https://usdalinc.sc.egov.usda.gov/USDALincTrainingResourceLib.do
Guaranteed Rural Housing Consumer Marketing Brochure: http://www.rurdev.usda.gov/RHS/sfh/GSFH_Information/Common/09_2009_Website_%20Hooray%20For%20Housing%20GRH%20Brochure.pdf

Guaranteed Rural Housing Consumer Marketing Booklet: http://www.rurdev.usda.gov/rd/pubs/pa1501.pdf

Rural Development Lender Information Page: http://www.rurdev.usda.gov/rhs/sfh/GSFH_Information/lenders.htm

Digital Rights and Copyright

Most information presented on Rural Development's website is considered public domain information. Public domain information may be freely distributed or copied, but use of appropriate byline/photo/image credits is requested. Attribution may be cited as follows: "USDA Rural Development."
Some materials on the Rural Development site are protected by copyright, trademark, or patent, and/or are provided for personal use only. Such materials are used by Rural Development with permission, and they have made every attempt to identify and clearly label them. You may need to obtain permission from the copyright, trademark or patent holder to acquire, use, reproduce or distribute these materials.

Fannie Mae New Debt to Income Ratio Requirement

FHA 203ks

Ahead of the Curve

For Active Real Estate Marketing Professionals...

Distressed Homes.. How do we finance these homes so that Realtors can
actually sell them?:  I'd like to offer this website if you would like to
learn more about securing financing to sell homes with difficiencies:
[http://www.203kspro.com] www.203kspro.com

Many, many, many (almost an understatement) Realtors and buyers are
contending with properties that have been damaged through the foreclosure
process or neglected due to a distressed sale situation.

FHA has introduced a safe and streamlined mortgage program that I offer
which will provide the buyer the money to purchase the home AND receive an
additional $5,000, $10,000, $20,000 up to $35,000 for upgrades and
difficiency correction. This is a very safe loan offered today with a 30
year fixed term in the mid 5% interest rate range.

I enjoy doing this loan and have done many of them in the past two years.
This is a wonderful program for Realtors to help their sellers and buyers
with. Agents use the same purchase contract and there are no additional
addendums. The process has recently been streamlined so that buyers aren't
burdened with a complicated process. Its truly a deal saver!

Please take a moment to look at the above website for more details or call
me at (847) 873-7295 to discuss nuances. Here to help you write them up.

FHA Condo Updates

Here is some insight as to what you might expect to see in the way of condo requirements. The final HUD condo requirements have not been finalized yet.

1. FHA concentration will remain at 50 percent.
a. In "well established" project, the concentration may go up to 100 percent.
b. "Well established" buildings show clear financial stability, including a minimum of 10 percent reserves, owner occupancy of 50 percent, and a transfer of title.
c. In the ML, HUD will provide an explicit definition of "established."

2. Owner Occupancy will remain at 50 percent.
a. REOs will be excluded altogether from calculation.

3. Pre-sale requirement will be 50 percent.
a. FHA will accept a spreadsheet from the developer as certification under the pre-sale requirement.
b. Additionally, FHA has created a specific document that developers must sign to certify that all of the information is accurate.

4. Temporary Certificate of Occupancies will be accepted.

5. All 40,000 + condo projects currently approved will remain approved

6. HUD Review and Approval Process (HRAP) is permissible in Florida.

7. The ML will clarify that under Direct Endorsement Lender Review and Approval Process (DELRAP), a lender is not responsible for another lender's approval process (specifically, additional project review is not required).

8. New ML will clarify that reserves should be at 10 percent, if not then a lender can request a reserve study.

9. New ML will add specific guidance on insurance (specifically, gap insurance).

10. Transfer of control requirements will be dictated by the state and local requirements.

11. New ML will clarify the definition of site condos.

12. New ML will clarify phasing requirements.

Courtesy of Stacey Sprain

F

Condominiums Hit Hard by Mortgage Insurance and Risk Based Pricing

Condominium buyers are charged an additional .75 point for conventional loans with less than 25% down payment. Also, most mortgage insurance companies at this writing won't cover a condo with less that 15% down payment.

FHA will require the condo complex be on their approved list. 

I need to make a home loan application - help!

** IMPORTANT **

Please print this article and use it as a checklist, note pad and also to have my contact information always at hand. Write your service provider information below:

Your Realtors Phone:________________________________________

Your Attorney's Phone:______________________________________

Gils Phone:_______(847) 873-7295____Fax: (847) 770-4850_______

The new lending environment requires home loan borrowers to be fully committed to their own success. Detailing every aspect of a home loan applicants financial picture is the new norm. In the next few days you'll be looking at a handful of homes, one will catch your eye and you'll want to be fully prepared to make an offer. Most sellers these days give preference to buyers that have obtained a full home loan pre-approval.  

Regarding the home loan process: How much of a committment would you ask of someone you were lending $100,000, $200,000, $300,000 or $500,000 to? Most people would not lend that much money to anyone unless the borrower signed over Fort Knox as collateral. Why would anyone expect that a lender handover that much money with minimul effort and documentation on the part of a borrower? The lending climate has gotten much more serious and anyone telling you different is not being honest. Yes, it's a serious and very detailed process but it doesn't have to be a difficult one. As long as we work together and commit to doing things correctly all the way through to the day of transaction closing!

Commit yourself for the next 30-60 days to being very detail oriented and supplying all the needed paperwork when requested. There is no standard loan package, different underwriters require or want different items. Some underwriters require more paperwork than others, that's the underwriters perogative and they do so to protect their license to underwrite loans. We'll work closely together to make sure your file is correctly submitted for approval.

At the bottom of this letter you'll find an internet link to a basic home loan application for you to complete. Please click on it after you read this letter. Always call if you have any questions. I enjoy helping my customers and look forward to helping you, your friends, co-workers and family. Referrals are always appreciated.

1. PLEASE DO NOT MOVE ANY MONEY AROUND UNTIL YOUR LOAN CLOSES.  If a bank verification shows a recent increase in your accounts an explanation of the increase will be required and may cause delays. No "cash" should be introduced into any part of the transaction.
2. Postpone ANY LARGE PURCHASES until after your loan closes.  If a re-verification of credit shows you have recently bought a car, or your charge account balances have increased, it could jeopardize your loan approval.
3. Do not quit your job. Notify me immediately in the event there is 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 (credit checks) on your credit.
6. Do not open or close any credit or bank accounts.
7. Continue to make ALL of your payments as agreed.
8. Quickly return all documents from the lender or settlement company. Send them to me also for review immediately.
9. Your loan will be underwritten to nationally accepted investor guidelines. The investor is lending a great deal of money, please don't "self-underwrite" your loan. Be prepared to offer all paperwork that is asked of you all the way to the day of close. A lot of money and trust is being conveyed to you- don't take the loan or process for granted. Gathering paperwork is a cheap trade for all this money.
10. Once a contract has been accepted your mortgage rate and terms need to be locked. You must email or call me directly after the accepted contract to discuss where rates have settled on this day. If you don't call, I may lock your terms the day I receive the fully executed contract at then market rates.

For most borrowers the following items are redundant, but I have to mention them because occasionally people neglect the obvious and sabotage themselves: please pay all monthly bills on-time, avoid opening up new charge accounts or increasing debt (NO credit inquiries) until after close of loan, continue building savings and keep income stable. If anything changes with your personal profile or the aforementioned items, please let me know immediately.

Your rate can be locked or it can float, this is your choice. My recommendation will be to lock unless you think rates will be going down. Either way you should let me know as soon as you have an accepted purchase contract. Rates change daily and sometimes twice a day depending on the financial markets.

Be mindful that all mortgage underwriters can choose to conduct quality control measures. This could mean calling to verify your employment or savings. Please note: ALL funds to close must come from verifiable sources- always avoid cash deposits or unexplainable deposits. Due to new fraud avoidance measures industry wide, underwriters are now required to question ANYTHING that seems "out of place". ASSUME THAT EVERYTHING WILL BE CAREFULLY REVIEWED.

Closing funds required over and above any seller credits will need to be paid with a bank cashiers check drawn on a bank account listed on your loan application. Funds from outside sources MUST be reviewed and documented early on by an underwriter***.

Closing cashiers check: You'll want to obtain a cashiers check one business day prior to closing made out to yourself to be endorsed over at closing. Please bring your drivers license(s), checkbook and a second form of ID to closing.

***Are you receiving down payment assistance from an outside source? Please be prepaired to document all non-payroll deposits. If the source is a gift from a close relation, you'll need: Gift letter, donors bank statement, copy of the gift check made out to you, copy of deposit slip going into your account, bank statements to show the deposit was captured to your account and copy of the gift check front and back from donor showing it cleared. Each underwriting entity may differ in their requests, please be prepared to fully document deposits, gifts and downpayments funds. NO cash or loans for closing funds.

Two weeks prior to closing you will want to call your insurance agent if any insurance coverage is needed and pay for a full policy and have them fax the policy to me. You will also want to call the utility, telephone and cable companies, banks, credit card companies, family, friends and postal service (usps.com) to inform them of your new address. Stay flexible in your closing timeline in case something gets delayed. Have a plan B for movers and such.

If you see any issues arising that may hinder the transaction in anyway; property difficiencies or questions, job, savings, vacations, etc.. you must call me immediately to discuss. Help me help you!
 
Once the purchase contract is accepted by the seller we will need to order a property appraisal. Appraisals require payment directly to the appraisal company in advance. The cost of the appraisal will be credited to you at closing. As soon as you put a deposit on the home as part of the offer, you'll need to call the bank and request a copy of the canceled purchase contract deposit check -front and back- as quickly as possible. Most, if not all lenders will want to verify that the deposit funds actually cleared the bank.

Shortly after we start processing your loan, the package will be placed with a designated mortgage underwriter matching your credit requirements. This underwriter may or may not send out their own "paper wasting" compliance disclosure package. This package is standard procedure and is usually generic in nature, which means that the information in it probably won't reflect your terms ( typically a generic loan model and numbers ). Disregard this package as it has no bearing on your loan and is only used to stay regulatory compliant.

After all that nuts and bolts boring stuff what really matters is... The season to enjoy your own home is coming and what a wonderful time to make the transition!!! Thank you for letting me be a part of. Please call if you have any questions. Please also keep me in mind to help friends, family and coworkers. Thank you.

Cordially Yours, Gil Kerbashian
Cellular: (847) 873-7295
Fax: (847) 770-4850

Dr. Rick Thomas:
Gil was thorough and knowledgeable. He was their to answer questions whenever I needed and he never detached from the process. I was very happy with the support and service.

The loan application has a very important list of items at the bottom that I will need to gather in order to issue strong pre-approval. Again, please call if you have any questions. Once you print the application, you can complete it, fax it or we can meet quickly to go over it together and make sure you feel comfortable with the process.

Loan application: www.realestateloans.com/gilsapp.PDF

Closing cost estimate: www.realestateloans.com/gfe.pdf 

If you are applying for a purchase and rehab loan (203ks) to obtain money to purchase and fix up the property please click on this link also.

Please feel free to comment below about the service you've received from me. Thank you.

Mortgage Rates Now a-la-carte

Mortgage rates have gotten sliced and diced in very narrow catagories and credit score ranges. Last year we were able to pool 700 ficos with 650.. this doesn't hold true any longer. I've included the MAIN FANNIE MAE AND FREDDIE MAC matrix below for what we as mortgage lenders have to look at before we price a loan. There is also matrices for cash-out refinances, condo's, investment properties and 2nd homes.

Don't expect any of the mortgage rates you see in the paper or online to hold true. The mortgage rates you see online are "base" rates and are only offered to a very small percentage of the population with the highest credits scores and largest down payments.

With declining property values, high loan defaults and lower credit scores so common now you will be better served working with a mortgage person you can first trust and one that has access to many lenders. Access to many lenders will help you find the right rate and approval for your particular needs.

As you can see on the below matrix 720 credit scores with lots of equity home owners are getting the best rates. This matrix applies to conventional loans only not FHA or VA loans. FHA and VA loans offer there own risk based adjustments. Guideline changes have been almost non stop since the end of 2007 due to the disrupted nature of mortgage lending.

Below adjustments are strictly for addtional points added for risk based add-ons. 1 point equals 1% of the loan amount. EX: 1 point for a $100,000 loan is $1,000, 2 points for a $100,000 loan is $2,000, and so on.

A borrower that doesn't want to pay risk based 'points' can typically increase their rate to absorb points. It usually costs a .25% increase in rate to eliminate 1 point.

Example: .25% increase in rate may eliminate a 1 point charge, .50% in rate may eliminate a 2 point charge. A 5.0% rate may have a 2 point charge or the client may pay 5.5% rate with 0 points.

The below risk based point adds are national guidelines that apply to all conventional mortgage lenders. Some lenders can add on their own additional "regional" risk premiums.

Clients can choose to incur the below addtional points or a higher rate to offset any additional points that must be charged due to additional risk.