Does Your Loan Officer Wear Lime Green Polka Dotted Underwear?

Okay, perhaps that’s a little TOO much information!  Perhaps you really don’t need to know what splash of color your loan officer is bestowing on his or her bloomers on any given day. But what you SHOULD know is who your loan officer IS. Let’s see….scum bucket, slime ball, scammer, fraud frog…any of these ring a bell?  They do to a whole lot of people, as our industry has been historically speckled with less than scrupulous loan officers committing fraud and scamming the innocent.  Unfortunately, those LO endearments have, in many cases, been very well founded.  (And how embarrassing that …

Wanna Be a Good Mortgage Applicant? . . Then it’s Time to Get Naked!

Qualifying for a Mortgage, we went from one extreme to the next!  3 years ago, if you had a social security number, stated your income and ordered an appraisal (with practically a stated value), you were good to go. Today, when The Mortgage Lady meets with a potential client, one of the opening statements is “we are going to be required to document your documents” and, ask them to not be insulted when the investor has conditions that are beyond what they would expect. We live in a country where our justice says, we are innocent until proven guilty, everyone …

Who Is Going To Write These Loans?

The mortgage industry has seen much blood shed in the last 2 years, particularly in the last year.  After reading a very interesting magazine article, I began to think about the future…the eminent future and a big question arose, “Who the heck is going to write these loans”?  What is the MN Mortgage Mom rambling about now?  Well, let me take a step back a few years first. In the early to mid-2000’s, loan officers were a dime a dozen.  We were in offices, working out of our garages and in the comforts of our living rooms.  We were dressed in …

Fannie Mae Guideline Changes – Gifts, 97% Financing and Mortgage Insurance

There has been some recent excitement about Fannie Mae (FNMA) changing her guidelines on down payments and allowing gift funds as an acceptable form of down payment in lieu of a borrower’s own funds. Before we all get excited about FNMA getting a little FHA in her with respect to gift funds, we need to realize that the guidelines for mortgage insurance and FNMA are not aligned. So long as they aren’t, this change will only have minimal effect. This chart outlines the new accepted forms of down payment from FNMA’s perspective: Here’s the Fannie definition of acceptable donors for …

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 …

Bank LO’s vs SAFE Brokers and Lenders… oh my!

Alright, alright, alright…  MOST everyone in Mortgage and Real Estae has heard about the S.A.F.E Act right?  The Secure And Fair Enforcement for Mortgage Licensing Act was passed into law a while back but in last stages of being implemented RIGHT NOW.  There’s a bit of a rush going on right now as its supposed to be completely implemented by January. All originators from coast to coast need to get on the list and registered.  Some LO’s (Loan Originators) will need much more.  There’s 2 distinct groups of LO’s and I’ll try to provide direct clear hyperlinks… (mostly for the LO’s who don’t need education and …

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 …

FHA vs. Fannie Flex 97 for Low Down Payment Buyers

For those of you who are such industry dinosaurs that you remember how to do a FLEX 97 loan with Lender Paid Mortgage Insurance (LPMI), you’re in luck because, aside from 95% conventional with single premium financed mortgage insurance (SPMI), the time has come where this is the best high loan-to-value product for purchases. Soon, allowable seller concessions for FHA loans will be lowered from six percent to either four or three percent. When that happens, there will nearly no instance where FHA is superior to this loan product choice.  Take a 200000 dollar purchase for a buyer with a …

Unsolicited Advice for a Loan Officer’s Evolution – Learn to Underwrite

Since mid 2007, the mortgage originator as we know it has ceased to be. The requirements for technical knowledge, industry awareness and precision have skyrocketed to the extent that a modern day loan originator is more of an “Under-iginator.”He/she must be 50% loan officer, 15% customer service/sales rep, 5% appraisal reviewer and 30% underwriter to have any business talking to a customer about a mortgage. As well, the role of a processor has too changed. Some repetition-based duties have been replaced with technological automation. While those responsibilities have gone to the wayside, the secondary mortgage market has forced the job …

Buying a Home after a Short Sale – Don’t Believe the Naysayers

I’ve written on this subject before but I want to be more thorough this time. There have been too many articles put out lately that discourage people from contemplating a home purchase after doing a short sale. These articles express cynicism about home sellers’ financial habits and cynicism from Realtors as well. Most Realtors doing short sales know how to cover the bases for their client to make sure they’re in a good position to buy a home down the road. Further, in my area (Saint Paul, MN), nearly 1 in 10 homeowners in the twin cities are upside down on their …

Monthly Private Mortgage Insurance – It Doesn’t Make Any Sense. . .

Few know that there are more than 22 different types of private mortgage insurance that can be used what a homebuyer puts less than 20% down on a conventional loan.  Most assume they’ll be saddled with monthly mortgage insurance which, more often than not, makes the least mathematical sense.  A different application of private mortgage insurance to a conventional loan can reduce monthly payments, add tax advantages, increasing a homebuyer’s purchasing power and save many thousands of dollars. As though there isn’t already enough to know, real estate professionals need to know the differences between the mortgage insurance providers (i.e. …

Upside Down on Your Home? – Here’s Your Playbook

In my home state of Minnesota, Minneapolis and Saint Paul have nearly 39 percent of homeowners under water. I’ve had the question, “I’m upside down on my home, what are my options?” so many times that I wanted to prepare a menu of options for people to reference. This article briefly outlines 9 potential solutions that may serve you well. The target audience here is not necessarily someone who’s in default on their loan but simply one who owes more than the home is worth. All too often, when one is upside down on their home and/or struggling with their …

So Banks Think There’s No Such Thing as “Too Big to Fail” – The Audacity of Dopes

On Friday the 13th, the Chairman and CEO of J.P. Morgan Chase decided to weigh in on whether a bank could be too big to fail. I’m sure you’re on the edge of your seat wondering which side of this argument he’d be on. I know I’ve been breathlessly waiting for one of the titans of Wall Street to tell me what the best way to regulate their businesses would be. Thank heavens I finally know what to think! Before we evaluate the points, let’s consider the timing and the source. This op ed wasn’t benevolently shared with us in …