Archive for July, 2008

Client Questions

Wednesday, July 30th, 2008
Recently, I had a client pose a few questions relative to the mortgage process.  They are questions probably many people have, so I thought they were worth repeating.
 
Where does the money for the loan come from?
The money comes directly from us as we are a mortgage banker (the funds do not come from Fannie or Freddie).   At present, Fannie Mae has announced they will not be using the credit line offered by the Fed (they made a few billions dollars in the 1st quarter of this year).  The Fed more or less offered the “bail out” to calm the financial markets.  
 
What are the benefits/risks of working with a broker like Mountain Crest Mortgage?
There are two main benefits of going with a banker like us vs. directly to a bank.  1)  If the bank closes, borrowers with pending closings are out of luck.  For example, borrowers who were scheduled to close with IndyMac now have to re-apply someplace else and reschedule their loans.  If this is a purchase transaction, the impact can be disastrous.  As a banker we just take you to a different bank if one of them closes;  2)  We work on the wholesale side and have the ability to “shop” your loan to multiple investors to find the best overall loan package for you and your clients. 
 
What’s impacting interest rates so much?
Regarding the rates, what is driving them up (or down) is news of inflation.  We’re in a volatile market.  I’m advising all of my clients to lock early to avoid major swings in interest rates.  We have some investors who allow a “float down” so if rates dramatically improve after locking, we can still take advantage of the pricing improvement for our clients.  Rates for the past 7 months have been bouncing up and down between 6% and 6.5% with 0 & 0 points - I expect this to continue over the next few months.  
 
Have other questions?
Let me know.  I’d be happy to answer them here or privately.

Posted in Uncategorized, education, lending, licensing, mortgage | No Comments »

I Passed!!!!

Wednesday, July 30th, 2008
I am pleased to report that I sat for and passed the state mortgage broker licensing exam yesterday, July 24, 2008.  I now hold both the mortgage broker license as well as my Certified Mortgage Lender designation.
 
Let’s be candid for a minute. With record foreclosures, unscrupulous mortgage companies were part of the problem. 
 
To help combat mortgage fraud, predatory lending, and bait and switch tactics, the Colorado Legislature now requires persons who take mortgage applications to be licensed, carry an individual state bond, individual errors and omissions insurance, 40 hours of industry education by the end of the year, continuing education, and passage of mandatory state exams.  I have completed all of these requirements.
 
But the Colorado Legislature has no legal authority over national banks or state credit unions which are regulated at the federal level.  As a result, these lending institutions’ loan officers are exempt from the strict requirements placed on mortgage brokers and bankers (like Mountain Crest).  Their loan officers are exempt from the all of the above requirements.
 
Especially during these turbulent times, be sure to work with a Colorado-licensed Mortgage Broker.
 
Mary Steinmeyer
MB License #10017382

Posted in Mortgage Training Institute, education, lending, licensing, mortgage | No Comments »

FHA Risk-Based Mortgage Insurance

Wednesday, July 30th, 2008
This bears repeating as it goes into effect next week.  I’m still hearing many lenders quote FHA as the mortgage option with no penality for FICO score.  This is no longer correct. 
 
Effective with new FHA case number assignments on or after July 14, 2008, FHA will implement risk-based premiums on one- to four-unit single family mortgages.  Highlights of change include:
 
  • Upfront MI will range from 1.25 percent of the loan amount for lower-risk borrowers to 2.25 percent for riskier borrowers.
  • No borrower who qualifies for a FHA-insured mortgage will pay more than 2.25 percent on the upfront mortgage insurance premium and 55 basis points for the annual premium.
  • Borrowers with credit bureau scores must be risk-classified by FHA’s TOTAL Mortgage Scorecard.
  • Those in risk categories without a premium shown are not eligible for FHA-insured mortgage financing.
  • Borrowers without credit bureau scores will need to be manually underwritten and deemed as eligible based on criteria described in Mortgagee Letter 2008-11; the mortgage insurance premium will be determined by the loan-to-value ratio for the non-traditional column in the premium schedule.

First-time homebuyers who will be obtaining a mortgage with an LTV greater than 95 percent and whose decision credit score is in the 559-500 range are entitled to a reduction of their upfront mortgage insurance premium from 2.25 percent to 2.00 percent provided the homebuyer completes HUD-approved pre-purchase counseling. 

 
Pre-purchase counseling must be obtained from a HUD-approved housing counseling agency, a participating agency of a HUD-approved housing counseling intermediary or a state Housing Finance Agency receiving HUD housing counseling grant funds, and the counseling must occur prior to execution of the sales agreement.  With this requirement, it is FHA’s intent to encourage borrowers to participate in meaningful counseling prior to the decision to purchase a home, not to create an incentive or burden for lenders to have borrowers re-execute the sales contract in order to receive a reduced premium.  Borrowers can take the course within one year of purchase.

Posted in Mortgage Training Institute, education, licensing, mortgage | 1 Comment »

Buyers Can Select Title Company

Wednesday, July 30th, 2008
Did you know that buyers have the right to select the title agency for their purchase?  A new financial settlement between one of the country’s best known real estate brokerage firms offers homebuyers insights into the under-the-table games that might be played with settlement fees.  The settlement specifically examined the “affiliated business arrangements” many real estate offices have with title companies.
 
The bottom line is that Federal law guarantees the buyer the right to choose the settlement service provider, including title company.  The code specifically states that “no seller of property that will be purchased with the assistance of a federally-related mortgage loan shall require directly or indirectly, as a condition of selling the property, that title insurance covering the property be purchased by the buyer from any particular title company.  Any seller who violates the provision of subsection (a) of this section shall be liable to the buyer in an amount equal to three times all charges made for such title insurance.”
I was just able to leverage this to benefit my buyer.  The listing agent’s title company wasn’t going to be able to close on time on a bank short sale.  I moved the loan to my title company and closed on time.

Posted in mortgage | No Comments »