Blog of the Mortgage

Cheap FHA Streamlines Make it Easier to Close

January 6th, 2009 9:52 PM

There's no doubt that there is some good juju floating around our offices now that we're all decompressed, relaxed & rejuvenated after the Holidays and time with our Friends and Family (okay..not ALL family is relaxing but I'm just noticing). :)
Shoot, all you have to say is 2009 and people start to smile!
By the way: It's the Year of the Ox in case you were wondering.
Here's something incredibly interesting and telling:
from Wikipedia:
"The Ox is the sign of prosperity through fortitude and hard work. This powerful sign is a born leader, being quite dependable and possessing an innate ability to achieve great things. As one might guess, such people are dependable, calm, and modest. Like their animal namesake, the Ox is unswervingly patient, tireless in their work, and capable of enduring any amount of hardship without complaint."
I don't know about you but this pretty well describes our plot as Mortgage originators huh?

here's what happened the last time (60 years ago) there was a year of the Ox (earth cow) again from Wikipedia.

Just a thought: Have you booked your FHA Streamline Presentation with me yet?? You need to! I'm booking two per day for the next 3 weeks and the calendar is almost full!

With Rates this low its hard to be disappointed about another crazy year in the Mortgage business!

Well, I'll give you another GREAT REASON to work with my Company.

Not only are we in the Top tiers for FHA pricing BUT we're also leading the pack for Streamline Refinance closing costs!
Our Admin Fee is only $250! That's less than a third of our normal cost, what's more, it's my understanding a certain Title Company that I personally Endorse (as fellow CAMB Statewide Affiliate Members) **Ahem** Old Republic Title Company.
Is offering super low rates on Refinance Title/Escrow packages.

So, Pick up the phone, call your borrower base with rates over 6% and Start the Streamline Refinance conversation.
Keep or Start building some customer loyalty and put a few (not much) extra shillings in your pocket with each deal..they add up quick and successful shops can do quite a few (like 20-60+/month) without thinking about it (since they're such light documentation loans).

I am really looking forward to 2009 and all of us having a much much better go-round than last year. See you in the field.

Posted by Raoul Badde on January 6th, 2009 9:52 PMPost a Comment (0)

MI not Applicable in 2009? High Balance elmintated from GE/Genworth

January 28th, 2009 10:05 PM

I gotta tell you, seeing this announcement come over the wires isn't all that surprising but daa-yyaam! It sure isn't any fun.

GE/Genworth (I believe the Largest MI Insurance company by volume at this stage in the game) is now limiting the Maximum loan amount to $417k in declining/distressed markets like CA.
That means 1 out of 7 MI companies is now NOT insuring "High Balance" or "Super Conforming" Loans in the Golden State.

Since we're covering this firm - don't bring them a customer unless you have:
720 Score
41% DTI (with DU approval but regardless of findings)

Every single MI Company is hemorrhaging buckets of cash right now. I can guarantee to you that there will be at least one or two more firms to follow suit as no one wants to be doing business simply out of adverse selection.

This is not to say that High Balance will be destroyed in California but when GE/Genworth pulls out of California, the largest origination state by volume (25% of all loan volume in 2006-2007) and units (20% of units) in the country...Boy Oh Boy...

As an aside: GE/Genworth is a subsidiary of GE Capital which early in December 2008 was declined "Bank Status" to gain access to TARP funds from the first $750B pile.

I'm looking forward to helping you close more loans in 2009! Have a great rest of the week.

You'll need the following links to download these forms:

Education Station
Government Loan Programs

Go out and have fun!

Posted by Raoul Badde on January 28th, 2009 10:05 PMPost a Comment (0)

Key Items - Checklist for 2009

January 27th, 2009 10:43 PM

2009 is not going to give us the bottom we hoped for in Real Estate until earliest end of Quarter 3, and even then we're only looking at inflation adjusted growth after a year or two of flat trend in home prices.
That being said we've got to be better prepared for 2009 and if you haven't yet seen or already and just need a reminder I'm posting some highlights for your origination this year.

AUS Engine Updates:
LP - Accept Plus Findings being removed from Engine
LP - Starting in February minimum of 45% DTI on
Conventional loans
DU - 7.1 now required and minimum income Documentation is 1 year w-2 & YTD paystub or 1 years
1040's.
DU - Verbal Verification of Employment removed from 7.1

GSE U/W Updates:(From late 2008)
FNMA/FHLMC requires 30% equity position in order to
count rents from home being vacated when moving up
or laterally moving. If there is not 30% equity one must
qualify with BOTH payments as well as 6 months PITI for
BOTH properties.

Maximum Number of financed properties is now 4
(including the current subject being financed) IF
purchasing 2nd home or investor only - unlimited if
refinancing current owner occupied home.

4506 is required across the board and should be a form in
your disclosure packets. If it is not, start including it.

Maximum DTI on loans up to 80% is primarily 55%
regardless of DU findings though some will offer
exceptions.
Minimum Number of years from Foreclosure is now 4 years
and Bankruptcy has been increased to 5 years

MI Company Updates (From November 2008)
Minimum FICO for 90% is 720 in California
Minimum FICO for 85% is 700 with Radian (only one)
Maximum DTI for over 80% LTV is 45% however some dial
back to 41% DTI.

Appraisal Updates from FNMA:
Beginning in April 2009 ALL appraisals will be required to
carry additional data on the market in which the subject
resides **hint** it looks alot like Franklin American's
current appraisal requirements and mirrors the MI
companies current requirements. You can read about
here:

HVCC Appraisal issues on the Horizon:
The Home Valuation Code of Conduct has all of us lenders
scrambling to have something in place come April or May
1st. Beginning May 1st all loans sold to the GSE's MUST
have an appraisal completed through an AMC (Appraisal
management company) over which you will have zero
control and which will be one of your lenders selected
companies. You have already seen this be addressed by
Wells, Flag and a couple of other participants in the
market. Let me know how much of a nightmare it is. It's
not looking good for this to be removed BUT if you write
enough letters to Barney Frank...well, his boyfriend was
caught running a brothel from his home in Mass. (I'm
just saying) :)

HUD/FHA Updates:
Minimum Down payment on FHA Purchases is 3.5%
and no longer includes closing costs as previously
UFMIP is now 1.75% of the base loan amount for
purchases and conventional take-out refinances.
UFMIP for Streamline Refinances is 1.50%
Monthly MI for Max LTV is .55% and less than 95% is
.50%
Secondary markets now consider less than 600 FICO
(mostly) inadequate though you may find a last resort
player in the under 600 FICO world, but do you really
want to encumber that person with a mortgage?
This could get pushed up to 620 in the coming months
so don't hang your hat on 600 either..

Property Taxes and the County Assessors Office:
Here's a DOOZY! So, your borrower is buying that Sweet $600k house with a pool down the street from you for $300k? GREAT! (well kind of..) and we're qualifying them at 1.25% of the new home price for upcoming taxes.
WRONG!
While it's still okay to qualify at 1.25% of the purchase price we unfortunately have to collect the old amount as shown on the prelim because as the funding lenders we are all having to dish up large amounts of additional funds to cover the short impound accounts. So, now instead of the borrower paying an assessment they are paying an overage up front with their impound account and having to wait for a re-assessment in the months ahead which will also give them a right to a refund of overpayment.

This is a mess that is being delayed as thousands of homes get transferred and re-transferred in the Foreclosure/REO process and every county in the state is short staffed and unable to keep up.
Sacramento County is some 9 months behind schedule in re-assessing. Merced - 4-5 months behind. It's not pretty and unfortunately our borrowers who a getting such a great deal on that home at the end of the block are getting stuck with the problem until the counties catch up... if they ever do.

There is ONE solution: Gain an updated assessment from the County Recorder/Assessors office showing the new lower tax roll (not an estimate) and we can use that figure to collect lower(read: Proper) impounds.

Power of Attorney's/Foreclosed Deeds of Trust
So, that $300k house I mentioned..it's an REO.. Well at $300k in an former $600k neighborhood how could it not be?
Now you're being conditioned to obtain inordinate amounts of paperwork from your title company (well not yours but the seller-bank and frankly many are less than helpful).
here is a short list of items to obtain from the sellers title company:

A copy of the prelim

24 Month Chain of Title for the property

Copy of the Durable Power of Attorney granting the
individual authority to sign on behalf of the company or
entity shown on the sales agreement or

Letter on letterhead from the owner of record, signed by
an officer or higher, stating that XYZ Company has been
hired to manage and sell its REO or

Letter on letterhead from the owner of record, signed by
an officer or higher, stating that XYZ Company is a
subsidiary of the owner of record

A list of all the Authorized Signers for the REO Firm or firm
that is handling the sale.
Original Foreclosed on Deed of Trust (if this is a new FHA
loan).

I'm looking forward to helping you close more loans in 2009! Have a great rest of the week.

You'll need the following links to download these forms:

Education Station
Government Loan Programs

Go out and have fun!

Posted by Raoul Badde on January 27th, 2009 10:43 PMPost a Comment (0)

Refi Strategy While Rates Pause...

January 27th, 2009 10:37 PM

The Press has really been helping to get our phones to ring (well yours anyway- which leads to ours) by publishing stories about Rates headed down to 4.5% and being lower than any time in the last 50 years etc.
There's two sides to that coin.
1. Great free Press and with so many competitors having left in the last 18+ months and our marketing budgets being swallowed up by more important items like the Rent, food, insurance etc.
2. The flip side is you can't perform to a 4.5% rate even with 2 points cost today (1 for you and 1 for the borrower to get that rate).

That all makes for interesting conversation on the sales level. I will tell you though that the consensus in the marketplace is that rates will indeed eventually roll down hill into the high to low 4 world and you DO NOT want to miss that opportunity.

Capacity at Issue:
As you've already seen, many lenders with all of their cut-backs and layoffs and center closures are having significant capacity issues with respect to turn times.
30+ days in underwriting?
5 + days in conditions?
Funding based on lock expiration?
these are all issues that many lenders will encounter simply because they are the most well known or most popular or best priced in the market.
We all know that Pricing can be the end of consistent business when turn times stretch past the 1 week mark for underwriting (hence my company's commitment to proper staffing and faster turn times)

Solution with Franklin American:
There are a number of ways to be prepared for these capacity issues and the most successful shops I've seen in the busiest days would submit entire pipelines to their favored source (I know you'll choose us for our service levels and my commitment to your team and business).

These would all be floated in with credit approvals and appraisals pending. Sometimes these loans would sit about for 90+ days. But then the market would drop and the price and rate would be there and BOOM! The loans were approved and all that remained was condition clearing time frames and docs/funding which at Franklin American means all of 5 total business days right. Plenty of time to fund on a 15 day lock.

So, if you got an application that you know will perform once you have the right price don't risk it.
Send it in to us, get underwritten, approved and ready to go so that you can move quickly once the price comes into your zone.

There's a significant benefit to submitting before locking as well, your pull-through with your lending partners improves dramatically as you fund more of your locks. This not only benefits the lender with more profitable business but also benefits you as the Broker in gaining preferred relationship status with them for your quality business, nice exchange for a little planning eh?

You'll need the following links to download these forms:

Education Station
Government Loan Programs

Posted by Raoul Badde on January 27th, 2009 10:37 PMPost a Comment (0)

FNMA Changes Pricing (LLPA's)

January 6th, 2009 9:50 PM

Changes coming to Rate sheets in Feb/March

While we all try to count our loan chickens before they've funded and hope that there's enough value left in the properties our borrower's have in order to actually close FNMA announced a another change to LLPA's (pricing).

We know that FHLMC is requiring a maximum DTI of 45% now (or shortly depending on your lender) and now it's going to get more expensive for many of those last conventional deals we're hoping to improve our customers cash flow on.

In any case while the most of us were trying to enjoy our Christmas vacation and relax after the frenetic year that was 2008
FNMA sent out announcement 08-38 on 12-29. Print it out here.
These changes will go into effect on April 1st, 2009 so likely you'll start seeing the new adjustments on all our rate sheets in early February (to cover ourselves for 60 days locks) or shortly thereafter.

I really looks like the newly created FHFA is trying to get the FNMA ship right sized besides just throwing billions at it. In the middle of a potential refinance boom they're guiding our business to be over 740 FICO's. Everything else can go into the HUD bucket.

Notably missing are the fee improvements for FICO's over 720 with LTV's 85% (remember that .25% extra you got back?)
Since the grid is somewhat compacted and since many of you have likely been looking at the unadjusted Government pricing for so long this one took a second.
For FICO's under 700 (680-699) it just got roughly .500% more expensive in fee (remember when these were the benchmark borrower group?).
For FICO's from 660-679 the fee to gain a conventional conforming loan just increased by .750%! Wow! How about a 2.500% fee just to run a 75.01-80% LTV loan?
You found a borrower with actual equity? They want to pull some cash out for the sake of I don't know? paying the bills, saving for college, getting 70% at the Sears? the Cost for borrower's with under 720 scores on Cash-out loans is now .500% more expensive.
Condo's have been the ire of almost every single lender, especially those that were over exposed in Florida and other over built parts of the states. FNMA is now tossing in an extra .750% increase for Condo's over 75.01% LTV.

Posted by Raoul Badde on January 6th, 2009 9:50 PMPost a Comment (0)