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 …

How to Refinance Your LLC Properties’ Mortgages into Your Own Name

Attempting to navigate the process of refinancing mortgages out of the name of a LLC and into your own name with a conventional mortgage can be a lot like walking across a minefield with a blindfold on.  Perhaps one of the main reasons for this is that the guidelines that affect these transactions have trickled out here and there, over a long period and have been amended periodically.  Here is a summary of guideline considerations to take into account when considering refinancing your investment property loans from a LLC into your own name: Are LLC’s eligible to be refinanced from …

How to Improve Your Credit Prior to Buying a Home

iLoan recommends iQualifier as a powerful credit analytics tool to show you the way. If you’re looking to pre-qualify for a home and want a lower rate or better loan program, iLoan recommends iQualifier to enable you to analyze your credit history with the same tools that lenders and credit agencies use. Additionally, it takes you beyond that analysis demonstrating how different financial decisions may affect your credit in the months ahead. iQualifier can help you: • Better understand your credit standing • Improve your financial decision making • Achieve your financial goals (& target credit score) • Save money …

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 …

The Only 10 Reasons a Lender Needs Tax Returns for a Fannie Mae Mortgage

Giving a pound of flesh in income and asset documentation has become the norm but it’s likely that unjustified lender paranoia has led them to ask for a bit too much of their clients.  My recent rant on this issue concerned verifying large, non-payroll deposits but now my rage has turned to the simple request of tax returns.  I’m not talking about FHA loans, VA loans, RD loans or Freddie Mac loans (although if you’re curious about Freddie, see attached), because if you’re looking for one of these, you’re going to be asked for a lot of paperwork.  I’m just …

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 …

How to Choose a Mortgage Lender When Buying Your Home

This episode of the Twin Cities Real Estate Radio Show covers different considerations when choosing a mortgage lender for a home purchase. 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. …

Buying a Home After a Short Sale using a VA Mortgage

I have had a lot of people ask me about how to buy a home after a short sale using FHA financing but it’s becoming more and more common that people are considering buying a home after a short sale using financing insured by the Veteran’s Administration.  These guidelines use to be murky but the issues concerning waiting periods after a short sale and underwriting guidelines are coalescing around an interesting blend FHA guidelines and Fannie Mae guidelines. There are six unique stipulations and they are as follows: The borrower must have made all mortgage and installment payments within the …

Can You Qualify in Today’s Market? Introducing the Professor’s Mortgage Qualification Tool

Reblogged with Permission VIA: http://www.mtgprofessor.com/Qualification/About_the_Qualification_Page.html Posted October 29th, 2011 View the Mortgage Qualification Tool One major difference between the housing finance system today and the system that prevailed prior to the financial crisis is in loan underwriting — the set of rules and procedures governing who is approved for a loan and who is rejected. The swing has been from lady bountiful to Mr. Scrooge. Rules have been tightened across the board. Where the major mistake before the crisis was approving loans to borrowers who should have been rejected, the major mistake today is rejecting loans that should be accepted. …

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 …

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 …

Criteria NEEDED by all Loan Originators to quote you a rate.

The lending environment has changed. I’m sure we’ve all heard this on the radio and TV for years now… right? We also know that the Government wants to make “mortgage rates” a commodity and make it EASY to shop for. But the problem arises when someone calls up and says “whats your rate?” and truly expects to get an instant answer back. I certainly wish I could answer that question with a simple “we’re at 4.25% today” or “3.5% for a 15 yr”… but its not that simple. In general I (and everyone else you talk to) needs to get …

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 …

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 …

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 New Real Estate Boom(ers): Purchasing with Reverse Mortgages

In October of 2008, HUD rolled out their reverse mortgage product and in March of 2009, they perfected it. With rates expected to rise and the tax credit setto expire, many real estate professionals are looking for new and under-served markets to reach out to. Since HUD has perfected their reverse mortgage, the Home Equity Conversion Mortgage (HECM) and the market for US residents 62 or older is expected to nearly double between now and 2050, perhaps now is their time. A reverse mortgage is a loan where home equity is converted into a lump sum payment or series of payments to …

Converting a Primary Residence into a Second Home or Investment Property

You may not be familiar with the term “buy and bail” but lenders are. And if you’re not familiar you may be very surprised when a lender denies your loan when you try to convert your primary, current residence into a second home or rental.  That is, unless you stumbled upon this blog.  First let’s talk about conventional loans (those backed by Fannie Mae and Freddie Mac.) If you are applying for a conventional loan, the guidelines are as follows: Borrowers who currently own their own home typically have three (3) options when they decide to purchase a new Primary …

Contract for Deed (CD) – Preparing for a Real Mortgage

I’m going to explore with you some ideas on how to structure a contract for deed when buying a home so that when it comes times to ditch the CFD and refinance into a regular mortgage you can choose your path.  First thing you should consider is an attorney to assist in writing up the CFD.  For those of you that don’t believe “if there is a will — there is an attorney”, then try this for some tips on protecting yourself when writing up the CFD. Most people that are buying using a CFD have either have damaged credit …