As of March 9, there are more restrictions being passed down from the powers that be (who are they anyway? ). Mostly having to do with condo's , and PMI. This week I actually had 2 actual clients affected mid process. They were approved, and then sort of , and then not...as we needed more 'stuff' after these new rules were released. This kind thing does not happen to me! Well, I almost truly cratered this time. Delayed closings, sellers and buyers affected. I was face to face with a seller that let me have it for not providing the funding number that afternoon (the FIRST time that I can remember in 3 years). We fund on time ! Not that day. The stress is unimaginable. But we are got through it, and that is the important thing.
As for the cumulative changes affecting our industry as of date, here is a summary:
CONDO's:
LOTS of more questions to ask. We used to get by with 'limited reviews' (kind of like a stated income for condo projects! ). Well , no more. We have to ask the HOA questions like: 'How much fidelity bond insurance do you have? ' , ' Are more than 15% of the homeowners delinquent on HOA dues?', 'In event of foreclosure, confirm we do not have to notify the HOA we are doing so...' Are blanket mortgages allowed?' .... WHAT!!!!!!!!!!???? All this detail makes your head spin. But there is a reason to this madness, believe it or not. Condo's attract investors, and they also attract fraud. There are entire buildings in Houston that have foreclosed from fraud schemes. So any triggers that pre empts a red flag is being asked. Also, when large percentages of condos in a project are suffering from foreclosures, units become in disrepair, the HOA does not have money to function, and deferred maintenance occurs. My Advice: be sure your lender has access to the HOA EARLY!
Mortgage Insurance-
out of 6 companies total in the US that offer PMI: Only 1 will allow a 5% down condo purchase. Otherwise, 10% down is the minimumThree companies require a 680 minimum credit score - the trend here is that no one with <680 will be able to have PMI. Many of the 2nd lien lenders are 680 too. So where do they go???? They put 20% down (this is a forecast, not fact yet)Two companies allow Second homes investors are not eligible for PMI - so 20% down minimumFive companies require maximum debt to income ratio of 45% (even if Fannie Mae allows to 55%- they don’t care!)**One of the PMI companies is owned by AIG- HINT, that is where your tax money is going, to keep them in business, and help homeowners! So that is why we should be in favor of some big business bailouts (some of them) Mortgage Insurance Companies are losing billions of dollars. The way it works is that (for example) on a 5% down loan, the MI company insures the lender 30% of the loan in case of default. So if a $100,000 mortgage goes into foreclosure, they pay a premium of $30,000. With foreclosures at current levels, the loss is absolutely huge.
CREDIT:
Any open accounts in dispute must be resolved or removed - this could take up to 30 days with the bureaus! We need to see your clients’ credit to prequalify early!!!!!!!!!!!!!!!!FHA new minimum score is 620- all lenders have adopted this.Credit scores <720 have severe hits to the interest rate. 740 is the new 'best score for pricing'Remember- it only takes ONE collection for $5 to bring your score down 70-100 points. No kidding. Get those clients with a lender 3-6 months in advance...so we have time to correct issues.
How do we survive this chaos? Put your two feet on the ground, smile, and get through each day with a positive attitude, and last but not least, refer Jennifer Hernandez to your clients in need of mortgage financing.
No comments:
Post a Comment