This week’s update will be dedicated to the ‘ones I love’ (realtors). In the spirit of working together, and making transactions smooth, here are some tips for the New Year. You can call it ‘Survival in 2010’ if you like!
APPRAISALS (HVCC)
Yes, it’s still in effect, and no sign of a moratorium. Did you know that Patriot has its own ‘short list’ of appraisers that we choose from? We do NOT use Appraisal Management Companies (AMC’s) as does some of our competition. AMCs pad fees, and they pad turn times on appraisals. Beware.
TIP: Interview the lender once you receive the approval letter! Whether you are the buying or selling agent, you have the RIGHT to know!
Sample Questions to Ask a Lender:
· How does your company order appraisals? Do you use an appraisal management company?
· How many days on average to receive the appraisal once ordered?
· When will you order the appraisal?
· What are your underwriting turn times?
· Do you release documents early on average? How early?
· How many files does your processor work on at one time?
· Where does the loan get processed? Local? Out of state?
· Where is the loan underwritten?
· Are you a broker or the lender?
CONDOS (not Townhouses)
Investors, first time home buyers and empty nesters LOVE them! Lenders cringe at them. This is because condos are a haven for foreclosure. Heavily investor-owned, it is the first investment to go bad, especially when dues are not being paid and the property begins to deteriorate. We have seen this happen in Houston! There are entire buildings around town that were foreclosed upon as the result of ‘straw’ buyers and dishonest developers. You know which ones they are.
Questions to ask the HOA at the time of listing OR if you are buyers agent (before showing) ****if we wait until contract, it could be too late, and buyer and seller have wasted their time – not to mention you!
· Owner Occupancy rate (50% for FHA, 70% for Conventional)
· Are >15% of the owners delinquent on HOA monthly dues
· Is there a min. of 1 mm fidelity bond insurance in place? (***this is addressed on the ‘master’ policy, and can often be missed until closing **)
· Are there and pending lawsuits (if so, what are the details)
· Does the budget allow for deferred maintenance (meaning….there is none, right?) *we will want to see reserves on their operating statement too- to avoid deferred maintenance
· Does more than 1 entity (aka, person, bank, etc….) own >10% of the units? **Bank foreclosures are NOT exempt from this equation!
DEBT TO INCOME maximum allowed is 45%
In the heyday, we could go up to 65% debt to income ratio if the client had 10% down, and an excellent credit score. That is taken from gross income! Very generous indeed. Then last year, that went to 20% down in most cases. Well, as of Dec 12, it is 45% debt to income, regardless of who you are, or how much money you have in the bank. End of story.
But good ole FHA is still our friend at 55%, at least for now.
Tip: Buyers to get qualified EARLY, EARLY, EARLY! But you already knew that!
GOOD FAITH ESTIMATE (GFE)
The joys of change... The biggest take away is that now the good faith estimate discloses ALL charges, no matter who pays them (buyer or seller). So at first glance, and left without interpretation, the buyer can be in the dark and confused and hesitant to buy the home.
Tip: Ask questions to the buyer, or be prepared for their questions.
· Did they know that a good faith estimate will not likely be given until they are under contract?
· Have they received a ‘cash to close’ and/or a ‘monthly payment’ summary in conjunction with the good faith estimate?
· Prior to having a contract /property, they will get a summary, likely called a ‘Fee Worksheet’ (just a change in terminology)
· They need to be prepared that they will not receive fees/rate unless they have given the lender documentation and pulled credit
· Rate is 90% dependent on credit score! (a lender credit score, NOT a ‘myfreecreditreport.com’ credit score )
I hope you found this information helpful. Enjoy the glorious weather, and as always, you can count on us for all your mortgage questions!
Friday, January 22, 2010
Wednesday, January 20, 2010
All shook up
For the last 2 weeks, my papers have been piling up at home. “Why have I not read them? “My husband asks, saying that I am wasting money. The truth is, I have not missed much. Do you ever get that feeling? Maybe it was the holidays, or maybe I just needed a break, to get that feeling of newsworthiness back again. I think I’ll start reading tomorrow and get back on track.
I even went online to cruise msnbc.com, and I still feel I not missed much. However, the earthquake in Haiti is horrible and my heart goes out to those people. Is it a sign of global warning? All this extreme weather is making me nervous! Does this have much to do with mortgages? No and Yes. Feelings and the habits of traders are what make the bond prices go up and down.
This week, retail sales showed that 09 dropped -6.2 total, and furthermore, unemployment is on the rise, higher than expected. A total of 4.6 million people. In addition to that, there are still 10 million that have part time jobs that want full time jobs.
As long as the unemployment is high, and other economic factors look grim, the FED should keep rates steady. They have a difficult game to play, and not rising too soon, or the economy may tumble. But be careful what we wish for. Economic recovery and good news will surely bring higher rates, and probably quickly.
As we have said before, the time is now. I do feel like somewhat of a broken record, but it’s true! Have your clients get their finances in order, talk to a lender immediately and run their credit (did you know that the score on Equifax online is different than what a mortgage company generates? Drastically different! We are measuring risk of you defaulting on the mortgage. Equifax is not. They just spit out a general score to ‘satisfy’ the curiosity of the consumer).
Enjoy the weekend, and call us when you need anything at all. We remain your trusted friends in the mortgage industry!
I even went online to cruise msnbc.com, and I still feel I not missed much. However, the earthquake in Haiti is horrible and my heart goes out to those people. Is it a sign of global warning? All this extreme weather is making me nervous! Does this have much to do with mortgages? No and Yes. Feelings and the habits of traders are what make the bond prices go up and down.
This week, retail sales showed that 09 dropped -6.2 total, and furthermore, unemployment is on the rise, higher than expected. A total of 4.6 million people. In addition to that, there are still 10 million that have part time jobs that want full time jobs.
As long as the unemployment is high, and other economic factors look grim, the FED should keep rates steady. They have a difficult game to play, and not rising too soon, or the economy may tumble. But be careful what we wish for. Economic recovery and good news will surely bring higher rates, and probably quickly.
As we have said before, the time is now. I do feel like somewhat of a broken record, but it’s true! Have your clients get their finances in order, talk to a lender immediately and run their credit (did you know that the score on Equifax online is different than what a mortgage company generates? Drastically different! We are measuring risk of you defaulting on the mortgage. Equifax is not. They just spit out a general score to ‘satisfy’ the curiosity of the consumer).
Enjoy the weekend, and call us when you need anything at all. We remain your trusted friends in the mortgage industry!
Wednesday, January 13, 2010
Welcoming the new year
Looking back on 2009, I wore many hats other than the obvious loan expert: marriage counselor, lobbyist, financial advisor, mediator, and I am sure there are others not listed here. You see, in this new real estate environment we live in, it has forced a new set of standard for us professionals. We need to truly be experts in our field. We need to anticipate, forecast, and work together more than ever before!
January 1 produced new legislative compliance changes for lenders and title companies. The result: The good faith estimate has gone from 1 page to 3, and if left on its own with no explanation, will leave the borrowers confused more than ever before. Even experienced ones! But don’t have fear- embrace the change! Some good will come out of this, I just need another week to think of what it is! Really, we will adjust, and all will be fine in a few months. The takeaway here is that it is IMPERATIVE that you EDUCATE buyers like never before to get with a lender early. Know the lender, like the lender, and trust the lender, because once they have chosen, it is very difficult to change without closing and monies being affected. So choose wisely.
Rates have started to rise. Some say that in the final countdown to March of the government waning down the purchase of the mortgage backed securities, that it has already started. Once we see the ‘true’ and ‘unsubsidized’ rates….what will we find? I have heard many predictions, but 6.5%-7.0% seems to be sticking out more than most of what I hear. Who really knows?
This year, 2010, look for continued regulation of lenders. We will see fallout like never before. Lenders that will not survive, due to financial constraints imposed by the FDIC, HUD, Fannie Mae, and others. More reason for you to know your lenders, and fine tune your list of trusted mortgage professionals now.
At Patriot Bank Mortgage, we are owned by a regional bank, Patriot Bank. We are stronger than ever, and have the financial net worth, and cash to meet the stringent requirements surely to come. Our goal for 2010 is to give the best service ever, create raving fans of our clients and realtors, and become the best mortgage company in Texas.
The best is yet to come……………..and I look forward to seeing you at the top!
January 1 produced new legislative compliance changes for lenders and title companies. The result: The good faith estimate has gone from 1 page to 3, and if left on its own with no explanation, will leave the borrowers confused more than ever before. Even experienced ones! But don’t have fear- embrace the change! Some good will come out of this, I just need another week to think of what it is! Really, we will adjust, and all will be fine in a few months. The takeaway here is that it is IMPERATIVE that you EDUCATE buyers like never before to get with a lender early. Know the lender, like the lender, and trust the lender, because once they have chosen, it is very difficult to change without closing and monies being affected. So choose wisely.
Rates have started to rise. Some say that in the final countdown to March of the government waning down the purchase of the mortgage backed securities, that it has already started. Once we see the ‘true’ and ‘unsubsidized’ rates….what will we find? I have heard many predictions, but 6.5%-7.0% seems to be sticking out more than most of what I hear. Who really knows?
This year, 2010, look for continued regulation of lenders. We will see fallout like never before. Lenders that will not survive, due to financial constraints imposed by the FDIC, HUD, Fannie Mae, and others. More reason for you to know your lenders, and fine tune your list of trusted mortgage professionals now.
At Patriot Bank Mortgage, we are owned by a regional bank, Patriot Bank. We are stronger than ever, and have the financial net worth, and cash to meet the stringent requirements surely to come. Our goal for 2010 is to give the best service ever, create raving fans of our clients and realtors, and become the best mortgage company in Texas.
The best is yet to come……………..and I look forward to seeing you at the top!
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