How Underwriters View Owner Occupied Vs. Non-Owner Occupied Transactions

There are many times when a homebuyer truly intends to occupy a home as a primary residence only to be told by a mortgage underwriter and subsequently their loan officer that their claim of having the intention to occupy a property as a primary residence was not adequately credible. This often happens when a property purchase is being made while another property is being retained. The consequence of a decision on the part of the underwriter to not agree with a homebuyer’s intent to occupy a property as a primary residence can lead to larger down payment requirements and inferior …

Fannie Mae and Freddie Mac Near Deal to Bring Back 3% Down Financing

The Wall Street Journal published that a deal between the FHA, Fannie Mae and Freddie Mac is much closer to becoming real than had been anticipated. Nobody knows the exact timing of the implementation of the deal but there are two significant parts that will benefit the consumer. The first element has to do with making it crystal clear to lenders what is expected of them when delivering loans to Fannie Mae or Freddie Mac or getting them insured by HUD. This clarity will mean that lenders won’t be afraid of loan risk nearly to the extent that they now …

Fannie Mae Increases Down Payments on MyCommunity® and Standard Loans

In another backward-thinking move, Fannie Mae has very subtly announced that they will be increasing their down payment requirements by decreasing their maximum Loan to Value Ratios for MyCommunity® mortgages and for standard mortgages on 1-unit primary residences effective on or after the weekend of November 16, 2013.  The previous allowed down payments were at 3% based on a Loan to Value Ratio (LTV) of 97%. The difference between 95% LTV and 97% LTV financing may sound slight but on a macroeconomic level, it’s huge.  It will postpone purchases for multitudes of buyers; particularly first time homebuyers who might find …

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 & …

A Permanent Extension of the Private Mortgage Insurance Deduction?

The tax deduction on private mortgage insurance has been bounced around like hot potato ever since 2007. The problem with the lack of predictability in tax deductibility of mortgage insurance is that when people are make decision on which of the four types of mortgage insurance they want on their loan, it’s typically with long term considerations in mind.  This lack of certainty has turned some mortgage insurance decisions into guesswork.  To date, the tax code has provided no long term predictability to aid the consumer in this important and difficult decision. With the help of Senators Debbie Stabenow and Mike …

Verifying or Sourcing Large Deposits for Your Mortgage – Make Sure You’re Not Being Asked for Too Much

In the last 4 years, an effort has been made on the part of mortgage lenders to ensure precise accuracy on income, liabilities but also on making sure that their money is really their money.  Consequently they look for “Indications of Borrowed Funds.”  One such indicator of potential borrowed funds is a large and irregular deposit on a bank statement and, when found, they can lead to the Spanish Inquisition of Letters of Explanation and documenting the origins of these funds.  When this guideline originally came out, it arrived without much clarity so naturally everyone took the strictest interpretation of …

If You’re Going to Claim to “Owner Occupy” Your Home, You Better Mean It

More and more, people are finding that their intent to occupy a home when getting a mortgage may not mean what they think it means.  More and more, loan officers are also finding out that it may not mean what they think it means.  One of the Mortgage Loan Officer national testing questions asked what intent to occupy meant and the correct answer, for testing purposes, was that the buyer would have to move in within 60 days.  Now, both on refinances and on purchases, it’s becoming important to know how long one will be staying there as well. While …

When it Comes to Your Credit Report, Be Yourself.

It’s important in life and in mortgage lending that you be yourself.  Accordingly, when your loan officer is presenting you and your loan application to an underwriter, you do everything you can to be as accurate and honest as possible.  You take a detailed loan application and cough up unending amounts of documentation so, . . you’re good right?  Actually, there’s a 25% chance that’s not quite right. One in four consumers found an error in a credit report issued by a major agency, according to a study by the Federal Trade Commission.  Five percent found errors that could lead …

Buy a Home Now vs. Wait – Who Needs a Forecast for that?

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 services. HBM II, Inc. works cooperatively with other real estate agents across the United States in attempting to find ready, willing and able buyers for homes …

Fannie Mae Requirements for Investor and Second Home Borrowers with Five to Ten Financed Properties

Most lenders will restrict the number of properties an investor can finance to a total of four properties.  This restriction was recently loosened to allow for up to ten financed properties.  There are unique restrictions regarding credit score, Loan to Value (or LTV) and reserve requirements that make getting them funded very difficult. Here are a couple of bullet point guidelines you’ll need to be aware of: No foreclosures in the preceding 7 years No late mortgage payments within the last 12 months 6 months of mortgage payments in need to be in reserves for each other second home or …

New Minnesota Housing Mortgage Loan Programs – not just for First Time Homebuyers!

Through the Minnesota Housing Finance Agency (MFHA), the State of Minnesota offers eligible homebuyers loans with subsidized interest rates and mortgage insurance for low-to-moderate income homebuyers, that is correct, it is not just for first time homebuyers anymore! Start Up is the new Minnesota Housing statewide mortgage loan program for low-to-moderate income first-time homebuyers.  Click here for detailed information on Start Up (first-time homebuyer loan program). Step Up is a new Minnesota Housing loan program for non-first-time homebuyers to purchase or refinance a home.  The program offers affordable fixed-rate loans and access to down payment and closing cost loan options …

Low Appraisal Challenges in a Newly Inclining Real Estate Market

After half a decade of falling home values, the real estate industry has become well versed in the language of declining markets. Buyers have learned to be skeptical, buyers’ agents have sharpened their teeth advocating for lower purchase prices and appraisers have become increasingly conservative in order to meet the demands of an equally conservative lending industry. Enter: 2012 Twin Cities Real Estate Market. New to the scene and largely forgotten by all arrives a balanced market which quickly reveals itself as an inclining market. This new market was initially greeted with skepticism and disbelief by much of the real …

New Rules: If You Want an Adjustable Rate Mortgage (ARM) You Better Have Cash

Rest assured, if homebuyers or Realtors think they may have a good idea for a low down payment purchase loan program, they needn’t bother thinking since Fannie Mae has decided to make that executive decision on their behalf.  As of October 20th, the new choice will be between a fixed rate mortgage, fixed rate mortgage or fixed rate mortgage.  What’s best for the homeowner has now been mandated by Fannie Mae. The maximum Loan to Value for ARM’s (Adjustable Rate Mortgages) is being dropped from 97% to 90% for all purchases and no cash out refinances (seriously, this is not …

The Breaking Mortgage Industry

This excerpt from the Twin Cities Real Estate Radio Show covers the pressures that are bringing the mortgage industry to its knees. 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 services. HBM II, Inc. …

The Return of the Subprime Mortgage

Fear, regulatory uncertainty, market instability and a lack of consumer confidence has kept the reemergence of these products at bay.  Make no mistake though; the money for these products is there.  Reemerging market stability has helped to abate the fears of some mortgage investors on the secondary market.  Consumer confidence has not recovered but it is up.  The big issue has been regulatory clarity.  Two significant events are unfolding that are likely to bring that to an end. The first is the move by the FDIC to provide the new definition of subprime mortgages.  The first thing they did was rename subprime loans as …

The Cost of Waiting to Buy a Home in fall of 2013 vs. Now

With all of the recent strength in the Twin Cities housing market and Minnesota’s relatively low unemployment rate one might be confused about why we’re experiencing all-time lows (ours are even lower) in mortgage rates since typically the beginning of a recovery is followed by higher interest rates. But the truth is that the Minnesota story is not the national or global story. Events on the national and international stage have caused the Federal Reserve and global bond markets to drive US mortgage rates down. This too will end and will carry a cost to those contemplating a mortgage. First, …

Say Goodbye to the Lowest Minnesota Mortgage Rates in History

The market is at a turning point for the worse due to growing worries about inflation. While it is not a problem right now (although the consumer price index did just rise the most in 10 months), there are several strong economic factors emerging that typically lead to higher prices to the consumer and thus higher mortgage interest rates down the road. While the Federal Reserve said they wouldn’t raise rates until 2014, Mark Zandi, chief economist at Moody’s Analytics and many more economists don’t believe that they’ll be able to stick to that promise. A stronger dollar, improving jobs …

Fannie Mae and Freddie Make Mac Move to NO Loan to Value Limit Loans on HARP

The Federal Housing Finance Agency, with Fannie Mae and Freddie Mac, has announced a series of changes to the Home Affordable Refinance Program (HARP). This program was designed to be able to help people who were in a position of negative equity. Now, it someone is upside down on their home, there will be no limit to how far upside down they are in order to qualify for these loans. This program will continue to be available to borrowers with loans sold to the Fannie Mae or Freddie Mac on or before May 31, 2009 with current loan-to-value (LTV) ratios …