Blog of the Mortgage

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)