The iLoan Lock and Shop Program

Many buyers are concerned about rising mortgage rates and the implications on their plan to buy a home or sell their home and then buy another home.  The frequent question is, “Can I lock in my interest rate before I find my home?”  Typically one can’t do this until they have a fully executed purchase agreement and this amplifies a homebuyer’s fear prior to going under contract to buy their dream house.  Now, with the iLoan Lock-N-Shop program, this fear can be put to rest. Here’s an outline of how it works: The lock may be for 60 or 75 …

The FHA 1 Year Waiting Period After Short Sale, Bankruptcy or Foreclosure – Back to Work

Where was this three years ago?  Better late than never I suppose.  FHA is now insuring loans to homebuyers who have experienced an Economic Event (Short Sale, Bankruptcy, Deed in Lieu of Foreclosure or Foreclosure) in the past and can document that (1) their certain credit impairments were the result of a Loss of Employment or a significant loss of Household Income beyond the borrower’s control, (2) the homebuyer has demonstrated full Recovery from the event and, (3) the homebuyer has completed housing counseling. FYI, in the event of a short sale, this is for buyers who DID have late …

Tell a Veteran to Miss a Payment to Qualify for a Short Sale and You May be Up Against the CFPB

Statistically, over half of the Consumer Finance Protection Bureau (CFPB) complaints to the Office of Servicemember Affairs (OSA) have to do with mortgages.  Of these, 58 percent of them had to do with loan modification, mortgage collection practices or foreclosure . . . and yes . . . short sales would fall under this category.  While this is a broad range of complaints, I’d like to focus on servicemembers with Permanent Change of Station (PCS) orders and how they relate to short sales. For Realtors processing short sales on behalf of servicemembers, they’ll want to know that the CFPB is …

Different Mortgage Types and What They Mean to Buyers and Sellers in a Competitive Market

This podcast outlines the differences between Minnesota mortgage pre-approvals and how they affect purchase transactions.  Homebuyers and home sellers can learn the risks and benefits of each different type and how they relate to their transaction.  This is essential information for understanding the implications of your choice on loan type for your purchase in a seller’s market.  If you’re a seller, it’s essential for understanding the risks and advantages of accepting an offer that comes with one type of mortgage financing vs. another. Charles Dailey – Branch Manager, Loan Officer, Certified Military Housing Specialist – CA DOC, MN DOC & …

General Information on FHA VA and Conventional Mortgages

This podcast of the Twin Cities Real Estate Radio Show covers general pro and con information on different loan types such as conventional, FHA and VA. Charles Dailey – Branch Manager, Loan Officer, Certified Military Housing Specialist – CA DOC, MN DOC & WI DFI The Home Buyers Scouting Report® is provided directly to the buyer by HBM II, a licensed national real estate brokerage service company, not to or through a lender. The FREE home finding service is provided directly to prospective homebuyers by HBM II and its real estate brokers, as part of their ordinary real estate brokerage …

How to Choose and Calculate Your Private Mortgage Insurance (PMI)

Saving an eighth of a percent on interest rate can save a little on your monthly payment and shopping around on closing costs can save a little on your down payment but perhaps the most overlooked and costly mistake when buying a home is not choosing the right mortgage insurance if the down payment is less than 20%.  The wrong decision on this choice can cost thousands of dollars. Let’s take a generic purchase of 200,000 dollars with the minimum down payment and compare them but before that, here are some definitions that you’ll need: Borrower Paid Monthly Mortgage Insurance …

Buy Your Home With a Low Down Payment of $100.00!

During the fall of 2011, all HUD owned properties that are under the jurisdiction of the Denver and Atlanta HUD Homeownership Centers are eligible for the $100.00 down payment purchase incentive.  What this means, home buyers in Minnesota, Wisconsin and the additional states under Denver & Atlanta’s jurisdiction can purchase a HUD Owned Property with just a $100.00 down payment.   Purchasing a HUD property could be a great way to reduce out-of-pocket expense, but there are some things you should know first.  To purchase a home with the $100.00 down payment incentive the HUD Owned Property must be:  Owner Occupied. …

FHA Seller Paid Closing Costs to be Reduced

To much fanfare, FHA announced measures to better protect their insurance fund in a recent Final Ruling published in the Federal Register.  Slipped in as a footnote to this announcement was a declaration that FHA is deaf to the concerns of the real estate industry.  They are taking aim to again attempt to reduce the allowable seller paid closing costs.  Make no mistake; they wouldn’t be doing this twice if they didn’t fully intend to see it through this time (regardless of industry feedback). First, a little history (with a touch of nerdy stuff).  On July 15th of 2010, FHA …

Do I Need to be Late on My Mortgage to Qualify for a Short Sale? – Don’t Take Yes for an Answer!

I have a lot of people call me to get pre-qualified to purchase a home using FHA financing after a short sale. Early on, not a lot of these scenarios panned out but these days, more and more of them do. When they don’t, the number one reason is because they took bad advice from a party to their short sale transaction. That advice? “Mr. and Mrs. Short Seller, you need to be late on your mortgage to qualify for a short sale.” This is often false and has devastating consequences. In many cases, proving imminent danger of default is …

Getting Married? Buying a house? Why not use your registry for a Down Payment Registry?

If you are planning on getting married soon and buying a home — then why not use your registry as a Down Payment Registry.  This is a nice way to help add to your down payment funds. FHA has a Bridal Registry Program that allows the funds you receive as wedding gifts to be used towards your down payment. Guidelines for the Bridal Registry Program This program was originally introduced in 1996 as a way for FHA to promote homeownership. For many years this program sat almost dormant, but in the last several years with the economy tightening up newlyweds have …

FHA’s Short Refi Program

The FHA Short Refinance Program has always existed in an unofficial form but became a formal program on December 16, 2009 with Mortgagee Letter 09-52.  It was “refined” on August 6th of 2010 with Mortgagee Letter 2010-23.  It was designed to provide more mortgage options to those that owe more than their house is worth.  There are many requirements for this loan but for most borrowers who are upside down on their home and have good credit; these criteria are likely to be met with the cooperation of the existing lenders about to be paid off. For these transactions to …

Buying After a Short Sale is an Excellent Mortgage Credit Risk

While lenders will admit that it’s technically possible to provide mortgages to homebuyers who recently had a short sale without a waiting period, most lenders are not offering this product (for the record, we are offering it).  Because of the complexities of the process involved with closing these loans that creates perceived risk, most lenders elect not to do them and fail to ask the more important question. . .  “Are they a good credit risk?”  The principles of underwriting mortgages and loans in general are outlined in the Four C’s (Credit, Collateral, Character and Capacity).  By these measurements, borrowers …

Seller Contributions Towards Closing Costs on a Home Purchase

Doesn’t the Seller Pay for All of Our Closing Costs? We all have to remind buyers that they are responsible to pay the required down payment percentage (3.5% for FHA or 3-10% etc for Conventional) AND their closing costs/pre-paids too. Even if you stipulate that the sellers contribute towards “closing costs and pre-paids” in the purchase agreement it may not cover ALL of those fees. If you want a smooth purchase transaction make sure that you ask your favorite mortgage guy if there is a NEED to try to get all/most of the closing costs/pre-paids included with the offer. It …

Can I Buy a Home While I’m Getting Divorced in Minnesota?

It has been widely and wrongly asserted that someone who is getting divorced in Minnesota cannot purchase a home prior to finalizing a divorce decree and at the same time prevent their soon to be ex-spouse from being entitled to marital property rights in the newly purchased home.  This used to be a serious problem that made the already long and painful process of getting divorced in Minnesota even longer and more painful yet.  In 2004, the Minnesota legislature put this recurring issue to rest. In 2004, the MN legislature enacted MS 507.03 PURHCASE-MONEY MORTGAGE; NONJOINDER OF SPOUSE.  Amongst other …

Short Sales DO NOT Require a Delinquent Mortgage – “Imminent Danger of Default”

Clearly, many if not most short sales involve a loan presently in default. As well, many times a short sale might involve a current borrower who can currently afford the payment. In several other situations, a seller may be “just hanging on” and the smallest thing could put them irreparably behind on their loan. Welcome to “eminent danger of default.” In a hardship letter for a short sale (also known as short payoff), if a borrower/seller is currently not in default but can justifiably make the case that it is nearly unavoidable despite their willingness if circumstances were otherwise, they …

Before You Shop for a Condo, Pre-Qualify Your Lender First

If you’re a FHA buyer shopping for a condo, you’d better pre-qualify your lender first. If you’re listing a condo and a buyer gives you a FHA pre-approval letter, you’d better pre-approve that lender first. Because Spot Approvals are a thing of the past, it’s important to know which of the two remaining FHA condo approval processes your lender will be using: Direct Endorsement Lender Review and Approval Process (DELRAP) or HUD Review and Approval Process (HRAP) as outlined in MORTGAGEE LETTER 2009-46 B. DELRAP is only available to lenders who have unconditional Direct Endorsement authority and staff with knowledge and …

The Statistical Relevancy of the 7/1 ARM vs. the 30 Year Fixed

Each person’s personal circumstances and long term objectives determine the type of mortgage they choose. For the past couple of years, the clear favorite has been the 30 year fixed rate mortgage because the yield curve between short term and long term bonds has been flat.  When this happens, there is very little difference in the interest rates between adjustable rate mortgages (ARM’s) and fixed rate mortgages.  But things are changing.  That yield curve is bending and significant differences between fixed rate mortgages and ARM’s are emerging.  What’s more, people are becoming more and more mobile.  Consequently, they don’t need as …

C’Mon Minnesota Legislature, . . Just Ban Deficiency Judgments

In some regards, the MN legislature was ahead of the curve on the mortgage and housing crisis. They regulated non-bank lenders and brokers in ways that other states hadn’t even considered. They got ahead of abusive practices towards distressed homeowners and shady loan modification companies. What they have unequivocally failed at is aiding homeowners who are upside down on their homes. Their greatest impact could be with those contemplating a short sale. Other states have already taken steps. Perhaps the best example would be those taken in California. For some time now, CA has not allowed deficiency judgments in the …

What Does SB931 Mean to Your Seller? . . . It Means That They’re a FHA Buyer!

California has taken, barring the stupidest veto ever, a clever step towards opening doors for homeownership. A primary intention of this bill no doubt was to flush the market of negative equity and aid struggling homeowners. It has an added benefit of streamlining continued homeownership for those who will do a short sale after January 1, 2011 by making a difficult FHA loan approval that much easier to get done. Buying a home after a short sale has been possible through FHA for some time now. While many investors are willing to purchase and securitize these loans, few have been …

Waiting Periods on Bankruptcy, Foreclosure and Short Sales for Mortgages

Since late 2007 and the MORTGAGE MELTDOWN started we’ve had many “inquiries” from prospective MN & WI buyers who’ve wanted to get into a new home or BACKinto home ownership.  The last couple years have been hard on many people even though the Federal Government says that the recession is behind us.  People have had their incomes cut back, lost jobs, bankruptcies, foreclosures and short sales. What I wanted to share with you is a current (as of today) crib sheet of how long certain negative things need to be “seasoned” before different types of mortgage financing can be offered. Let’s …