Beware of the advice you get

Had a Realtor call me...Got a deal, its a RUSH.. Shocker there. I had it somewhere else, but they closed. I have a DU approval. It's a previous short sale...can we close in three weeks.

So the first thing that pops up is no one is really closing right now. And it's a short sale, right? So when was the previous short sale completed? "Over two years" Ok that is an exception right there for conforming and not all lender investors or brokers are even considering these. So I ask further..."When was title transferred from your clients on the old house?" I don't know..So I call the title plant and pull the old deed and sure enough they have three more weeks until it is even two years. In addition the DU approval even tells the client it needs to be two years.

So I say send me the deal and let me do the research, which fewer and fewer LO's are doing. Of course, the Realtor doesn't like that I've just basically said no to his new buyer. Even though I've really only said you need to wait three weeks and THEN we need to re-run credit and submit to an underwriter for a TBD decision.

But that isn't good enough, so he calls someone else who has been in the business 30 years as opposed to my 25 years, and he said no problem, send it over I can do it now.

Call two days later and sure as you know what, he can't do it now AND can't do it later because he has an overlay that requires four years after a short sale.

The moral of this story is, you can find anyone to tell you what you want to hear, but a true professional will tell you what you NEED to hear.

Side note, the Realtor is STILL showing the buyer homes knowing full well he had no approval and doesn't even know if the buyer can find financing. Oh yeah the buyer wants the best rate too... And people in hell want ice water.

Oh Relitters!

Mortgage Brokers offer better pricing and can offer reduce rates when the market adjusts in your favor at no cost.

So the CFPB now effectively regulate all things financial, including mortgage lending. And I can guarantee you the biggest firms with the biggest wallets will have the greatest influence on the rules and and regulations "promulgated" going forward.

tr.v. prom·ul·gat·ed, prom·ul·gat·ing, prom·ul·gates

1. To make known (a decree, for example) by public declaration; announce officially. See Synonyms at announce.

2. To put (a law) into effect by formal public announcement.

It just is how it is...But you as a consumer, Realtor, mortgage originator can share a big difference that really ends up being a very real and valid reason to use a mortgage broker instead of a mortgage lender, or bank.

It's called up-selling or steering - also knowing as bait and switch in some cases. The cold hard truth is we have all been told the mortgage broker primarily caused the financial collapse of 2008 (which really started in 2007) but it isn't true. Sure the broker did plenty of things wrong and many broke the law and did loans in a way only a graphic artist could admire, but they didn't create the guidelines (lenders, investment bankers, secondary departments) and they certainly didn't pay exorbitant fees to obtain those loans (investment banks, pension funds, fannie and freddie).

But a lender doesn't share beneficial swings in the market to consumers like a broker can. Example, you lock your rate with Bank of America, and three days later the market rallies, everyone buys treasuries and demand for mortgages (by institutions) increases thereby decreasing the cost and interest rates being offered. Bank of America will pocket the difference and not allow you to relock at the new market rate, with-out a hit. Whereas, a broker can simply re-trade that loan with another investor at a lower price, and share the savings with you the borrower.

Even worse, assume you don't even know the market had improved and you just take the rate you locked. If the bank sells that loan for even more, they don't share it with you. The banks and direct lenders can offer the better pricing but don't most of the time.

Even the rules allow for variable commissions and "generally prohibit the acts that should ALWAYS be prohibited. Read the CFPB rule below - in summary:

             "To prevent incentives to “up-charge” consumers on their loans, the final rule generally
prohibits loan originator compensation based upon the profitability of a transaction or a
pool of transactions. However, the final rule clarifies the application of this prohibition
to various kinds of retirement and profit-sharing plans. For example, mortgage-related
business profits can be used to make contributions to certain tax-advantaged retirement
plans, such as a 401(k) plan, and to make bonuses and contributions to other plans that
do not exceed ten percent of the individual loan originator’s total compensation."


So next time you think about choosing a broker versus a banker or bank, or direct lender. Make sure you understand a broker works for you to aid you in finding the best deal from multiple investors. The direct lender is only going to offer you their best pricing that day. AND they can mark up there prices without you even noticing since disclosure laws are easier for direct lenders.

Realtor's CAN do loans; Subprime is back; Real Estate is hot. Those are some good headlines.

Full credit to Rob Chrisman   So it is an age old question, much like, What is meaning of life? What is Stonehenge? Do bears %^** in the woods?  Can a Realtor originate loans. It would appear in this article that the answer is YES!! If.... Point of fact, I am a mortgage broker and not an approved FHA lender. So if you are thinking about originating loans, AND you are a Realtor Broker - I want to talk with you!! 

Sometimes I am asked, "Can I work for a lender as a loan officer and as a realtor for another company at the same time?" or, "Can a loan officer of a sponsored third party originator also be a real estate agent?" Fortunately there are some talented folks, and government agencies, that know the answers to these. Barbara Werth (Mortgage Training Today - barb@mttoday@co) wrote to HUD and writes, "I went to the reference listed in the second section, 4060.1 Chapter 2, page 6. I don't think you can do both (as a sponsored TPO - not an Eagle lender - or 'broker', carrying a real estate license and mortgage originator license even if a state supposedly allows it)."

HUD wrote to Ms. Werth, "FAQ: Can I work for a lender as a loan officer and as a realtor for another company at the same time? No, FHA does not permit "dual employment" on a full or part time basis in any mortgage lending, real estate, or related field. The restriction applies to all employees who are employed by a FHA approved lender that work on FHA loans. This also applies to a lender's "wholesale account representatives" that originate loans through sponsored third party originators (brokers). This includes working as a real estate agent or broker for another company. A loan officer may hold a vocational or professional license in real estate but may not engage in realtor activities or make use of the license while employed by a FHA approved lender."

HUD also wrote, "The following information is regarding if a mortgage broker can work as a real estate agent. FAQ: Can a loan officer of a sponsored third party originator also be a real estate agent? Yes, if the sponsored third party originator is not a FHA approved lender or an employee of a FHA approved lender. However, the loan originators of non-FHA approved entities must comply with applicable federal, state, and local requirements governing their FHA loan activities. If the sponsored third party originator is a FHA approved lender, it is subject to the staffing and employment requirements in Handbook 4060.1, Chapter 2. FHA does not prohibit loan originators of FHA approved lenders from maintaining a real estate broker or sales agent license, as long as the FHA approved lender has controls in place to ensure the individual does not make use of their license."

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In other news, Subprime is back. No not necessarily stated income, but yes Subprime loans for credit impaired clients are back in full force. Rates start at 7.95% for 7 year fixed 30 year fixed

AND BANK STATEMENTS can be used for income (Personal or Business). Down payments are big as you would expect, but leverage up to 75% LTV is available. 

I have multiple sources for owner occupied properties and non-owner occupied properties. 

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In other not so shocking news, Real Estate is hot. Phoenix alone had 23% price appreciation YOY. 

California is following right behind that double digit YOY appreciation. So kids go buy some homes. If you income is good and stable, this is a great time to move up to that dream home. 

Financing is hard to find? Really? And FHA is STILL a great product.

Sometimes the press gets it right, and other times, you wonder where the heck they "heard that". When I watch www.CNBC.com lately, and I admit to being a news junkie, I've noticed they talk about financing being tough to get for homeowners and home buyers. So let's take a look at that theory.

First let's look at homeowners. So we have the HARP program, which allows borrowers who got a loan out prior to June 2009 AND whose loan is owned (this does not mean serviced - or who collects your payments) by Fannie Mae or Freddie Mac, to refinance with little to NO worry about the value versus the loan amount, or LTV (Loan to Value). They allow credit scores and you can even have a late mortgage payment over 30 days in the last year.

There is also the FHA Streamline program with allows current existing FHA borrowers to refinance at today's low rates in many cases with NO INCOME DOCUMENTATION and NO APPRAISAL requirement. Wow, that sounds like the old days.

And how about the home buyer? Surely, we lenders make it VERY hard for them to get a loan. Well you can put down next to nothing and buy a house today - even if your credit score if below 620. The FHA still offers home buyers options to buy with as little as 1% down. If you buy a HUD owned home as little as $100 down.

If you buy a home and you're a veteran...then you can get 100% financing.

If you buy a home in a rural area, USDA offers 100% financing on purchases as well.

And even if you just want a plain ole vanilla mortgage and have good to great credit, Fannie and Freddie will still offer purchase loans with as little as 3% down.

With all these options, its still amazing to me that some of my favorite news shows continue to talk about the lack of financing....I am here COME GET MONEY FROM ME!! I want to lend. 

FHA's are Assumable!

It's still a great time to buy IF you can get a house. Of course inventory concerns in better markets are a dilemma, let's look at some more positives of buying today with a FHA loan.

Guess what? FHA loans are assumable and why does that matter you ask? Well in 5-7 years, which is the typical amount of time for homeownership in one home, when you go to sell the home, you can sell with an assumable loan.

Well why does that makes sense? Well, if rates rise, as they are expected to do, and you are offering a 23 year fixed rate FHA loan that is assumable. Compare that to a new 30 year fixed mortgage at 5, 6, or 7%... The savings are massive to the new homebuyer.... and guess whose home those buyers may pick when looking to buy in an higher interest rate environment. So if you are in an FHA loan - here is another reason to feel great about getting that home.

New Real Estate Investor Mortgage Product

I am beginning to market a brand new mortgage program for private real estate investors that allows for quality long term fixed rate financing for their Residential Real Estate Portfolios.

This mortgage program is designed for Real Estate Investors who own, in aggregate, over $4 million dollars in investment property and can accomodate transactions up to $50 million is size.

This program allows these property owners to obtain one blanket loan, for up to 70% of the value of those stabilized and rented properties for refinance (cash out or rate and term) this program can also accomodate bulk acquisition of stabilized and rented properties in one transaction as well.

Program Terms:

Non-Recourse

ZERO Credit Score Requirements

50-70% LTV $4 Million-$50 Million Loan Amount

6-8% Fixed Term for 20 Years (4 Years Interest Only)

1.5% Total Points

Rate Term, Cash-Out, Bulk Acquisition

SFR, Condo, Units 1-4's

For more information - please call or email today. Mortgage Brokers are welcome to participate. Michael Foote michael@michaelfoote.com 949-584-4600 for details

Stocks Uncertainty Helping Rates

Hopefully investors will take a little off the top and force cash back into Treasuries which will help all of us Originators lock in lower rates for our clients. Little rally today is helping. A few more down days and we could retouch those lows of late last year and early 2013.

 

Financial turmoil in the tiny little island of Cyprus has investors shifting back into the safe haven trade of global Bond markets today feeling that it could lead other small Euro nations across the region.

US Stocks are trading lower on the news and giving a bounce to Mortgage Bonds this morning.

There are no economic reports due for release today.

The big standout this week will be the two-day Fed Meeting that begins tomorrow and ends with the monetary policy statement being released at 2:00pm ET on Wednesday.

There is no chance of a hike in interest rates but the Fed's rhetoric on the current stimulus programs will be closely scrutinized.

A Carefully Floating bias continues to be recommended, but as always, sentiment can quickly reverse.

HARP 3.0 or is it III - Bill introduced to Congress today

The new HARP 3.0 bill was introduced in Congress today. The goal of this program is to expand the already fantastic results of HARP 1.0 and HARP 2.0. The bills aims at making it easier for underwater homeowners whose loans ARE NOT owned by Fannie Mae and Freddie Mac to refinance. This program does not require mortgage insurance and has low market rates.

The new program aims to make it easier in regards to income, appraisal, and employement requirements. Basically, we are going back to stated for those that have shown they can continue to make payments on time.

I've personally spoken to many of you about this program and it's advantages. Now!! is the time to apply for this program...Yes I know its not even out yet. But I can tell you that if you wait until the program is announced finalised and launched you WILL BE too late.

Lender are notorious for raising rates to cut back production when prodcution soars. And believe me production will sore again when this product hits the market.. So to quote an old adage, The early bird gets the worm.

Call me or visit my website to begin the application process. We will get your application all set-up and ready to go once the program is live. www.michaelfoote.com

SBA 504 - For Small Business this is the best commercial real estate loan

SBA 504 financing offers businesses below-market, fixed rate financing for the acquisition, renovation or construction of commercial real estate. SBA 504 loans provide long-term stability for businesses with the ability to retain working capital which can be used to further grow the business and create new jobs. The March SBA 504 interest rate is 4.29%, fully fixed for 20 years.

The SBA has been offering small business financing for a long time. And many believe today that financing is tight. Well the fact is the SBA WANTS to lend to small business and the 504 program is a great way to buy a building rehab an existing building or finance working capital for expansion.

Many banks and small lenders offer the product but rates vary greatly depending on who you speak to. And lenders also have overlays, or further restrictions in addition the the SBA minimum qualifying requirements. This is where a smart broker comes in handy.

Since the qualification process consists of a TON of paperwork. For the busy business owner, simply pile your last three years of taxes, your YTD profit and loss, and an executive summary and send it to a competent broker. That broker will qualify your loan before a bank ever sees it.

At that point, the broker can determine whose guidelines you fit in most compared to the lowest rate and cost out there. A broker's job is to work for YOU and shop and secure the best financing - so you don't have to.

Rates and fees for commercial loans aren't that easy to come by. There isn't

HARP Loans. Refinance Underwater Properties

HARP loans set another record this years. Surpasing most expectations for volume but many are still missing out on getting a lower mortgage rate. The HARP program allows homeowners who are underwater on their 1st and 2nd second mortgages and whose loans are owned by Fannie Mae or Freddie Mac to refinance into a new first mortgage at todays low rates. They cannot payoff the second mortgage but the savings on the first mortgage usually provides substantial overall payment benefit. The savings can then be applied to paying down their second mortgages. 

At www.MichaelFoote.com you can find a source for HARP loans with-out LTV restrictions. What does that mean? Well in many cases HARP is not the same from lender to lender. Some banks limit the LTV to 105% or 120% when in reality the program does not have a LTV or HLTV cap.

Make sure to visit my site and reach out to see if you qualify for a HARP loan. In some cases you may even qualify for a conventional loan with an even lower rate. With values rising at an ever increasing pace, its not uncommon for homeowners to not realize how much their homes are worth today.

If you have an FHA loan, don't forget about the streamline mortgage program. It MANDATES you have to save money and doesnt require a income documentation or appraisal. Just make sure you've made your first six payments on your current loan on time...and chances are you qualify.

Mortgages, Mortgages, More.

There is no trick to getting a great mortgage. At www.michaelfoote.com you'll find a independent mortgage banker who takes pride in trying to get the best deal possible and any given moment. Can I predict moves in rates, no. No one can. But what I can promise is my profit margin is much lower that most lenders and brokers and I can prove it. Big banks can mark-up their rates and consumers really have no way of knowing what the "mark-up" is. You see mortgages are really no different that apples. Apples are shipped all over the world and depending on the cost to bring that apple to market and the margin the company selling said apple needs to charge over their cost is the price you are going to pay for that apple. Mortgages are no different.

Today the vast majority of mortgage peeps are selling the same product. Sure there are small differences in product (Macintosh, Red Delish, etc) but they are all still apples. I don't have a large marketing budget, I don't deliver donuts to Realtors and I don't "pay-to-play" with Realtors, and I work from home. All this allows my costs per funded loan to be lower that some of the larger lenders and even some larger mortgage brokers.

The real conclusion here is you need to work with those you trust. Your gut should tell you who to work with and if you don't trust your gut. Go with a personal referral and NEVER deal with someone that won't put their offers in writing and guarantee your lock terms.

Mortgage Rates Rebound

If you locked over the past week, you may have pulled the trigger too early. This morning we saw the 10 yr rebound nicely and that is starting to trickle down to mortgage rates. Today's best rate quote for a 30 year fixed rate conventional "vanilla loan" is 3.375% @ 3.419 APR. which is approaching a new low and will continue in this direction as the stock market retreats after approaching its all time highs again.

The moral of this story is don't always be in a rush to close, if your mortgage advisor isn't. A good mortgage professional will lock when he thinks it's a good time to lock, NOT just when it's just a good time to get paid.

If you have not checked in with a mortgage professional in the last 6 months its time to check in for a tune-up.

If you are still paying over 4% please check in with someone your trust and see if you can save some money - it can't hurt to ask and it's always free to get a quote.

FHA is pricing you out

FHA is losing money. They are in the red by billions. 10% of EVERY FHA is delinquent over 30 days. So it's no surprise that FHA has increased mortgage insurance premiums. They do this not just to cure deficiencies in the ole' P&L but to force private money to take it's place. But not all FHA borrowers should be in FHA loans. There are many loan origintors that run from conventional when the LTV reached 90%+. But not so fast. Many borrowers where loans are at 95-97% LTV on purchase transactions would be better suited if they took a look at conventional with MI. MI isn't that bad when compared to FHA. So when someone recommends FHA they better have a very good reason why conventional is not an option.

HARP 1.0? HARP 2.2? HARP 3.0? HARP Seals? HARPsicord?

National Mortgage News is running an article today noting that Two Senators have reintroduced a bill aimed at expanding HARP. HARP is of course the governments refinance program aimed at helping underwater homeowners who have a loan currently owned by Fannie Mae or Freddie Mac AND was closing prior to June 2009. Expansion of HARP could allow any loan currently owned by Fannie Mae or Freddie Mac to be refinanced regardless of closing date. And remember just becuase you send your payment to Bank of America or ANY other institution, it doesn't mean your loan isn't potentially owned by Fannie or Freddie.

There still appears to be no relief or recent commentary on Harp 3.0 which is rumored to be a similar product wherein FHA would refinance underwater homeowners regardless of Fannie Mae or Freddie Mac ownership of the first mortgage. This would obviously help a ton of borrowers in Jumbo, Option ARMS, Interest Only and Portfolio loans.

The bill (S. 249) is also designed to create more competition between lenders and servicers in refinancing Fannie Mae and Freddie Mac loans. This bill will help millions of borrowers with GSE loans to refinance at lower rates, according to the sponsors Sens. Barbara Boxer, D-Calif., and Robert Menendez, D-N.J.

“It is a win-win-win,” Boxer said. “Homeowners will have more money in their pockets, Fannie and Freddie will see fewer foreclosures, and the housing market and economy will continue building momentum.”

The Home Affordable Refinance Program was originally aimed at providing streamline refinancings of GSE loans with LTVs above 80% to 125%. The 125% cap was eliminated in early 2012. The Boxer-Menendez bill would expand HARP to include refinancings of all GSE loans, including loans with LTVs below 80%. “This bill prohibits the GSEs from charging upfront fees to refinance any loan they already guarantee, which is also in the best financial interests of the GSEs and taxpayers,” according to a summary of the bill.

To increase competition, the authors directed the GSEs to ensure lenders that refinance a GSE loan are subject to the same representations and warranties as the lender that services the loan. Currently, the new lender faces stricter rep-and-warranty liability than the lender that owns the servicing. The different standards pose a barrier to competition, “resulting in higher prices and less favorable terms for borrowers,” the summary says. The two senators introduced a similar HARP bill last year but it never reached the Senate floor for a vote.

New FHA MI Rates

Well it's clear FHA is broke... and if you want a new FHA loan it will cost a little more. And that's OK, FHA still offers some of the most leverage and is the most credit and high debt to income ratio forgiving set of guidelines out there. If your loan request is over 80% don't go straight to FHA check out MI rates at 90-97% LTV and you many be surprised. Here is the link to the FHA mortgagee letter.

http://portal.hud.gov/hudportal/documents/huddoc?id=13-04ml.pdf