Blog of the Mortgage

• 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.
  

Many of you have wondered about our policy to require all appraisals have 2 closed comps in the last 90 days, 1 pending sale in the last 60 days and the Days on Market (DOM) for all comps within a subject’s neighborhood.

I can’t say many appraiser’s are used to having a lender actually REQUIRE appraisal conditions up front and we’ve had more than a few appraisers call us and you by the same token a bunch of lunatic crack pots.

The ire has been significantly raised when we asked for the list price to sales price ratio for the last 90 & 180 days. Talk about putting an industry on its ear (?). I suppose I can’t blame appraisers these days. This would be the very first time in history that their practices have been called into question. To have a new(to California) Wholesaler enter a new market with new customers and begin the push back has not been easy. Let me tell you!

Of course those of you who have dealt with the multiple MI companies first hand know that these aren’t guidelines pulled out of thin air. These are merely MI requirements. Heck, it lowers our liability and increases our viability and if nothing else it prepares YOU the loan officer for imminent changes forward. We’ve noticed as a group here that when we make a change the rest of the industry follows suit within 60-90 days.

Well, it’s not exactly 90 days but FNMA is now requiring a brand new form for ALL Appraisals (you’ll see Lenders begin requesting it in Late January and Early February).

FNMA is going to Require form 1004MC for ALL appraisals. Guys, this isn’t a bad thing. Appraisers that can’t actually deliver proper value will throw a royal fit but find that their appraisals are uninsurable/un-purchasable.

Hopefully the bad actors will shape up or simply ship out.

Some examples (items that will be very familiar to you J):

From FNMA Update 08-30 (Nov. 14^th, 2008)

Median Sale & List Price, DOM, List/Sale Ratio Section

The appraiser must analyze additional trends, including the changes in median prices and days on the market (DOM) for both sales and listings as well as a change in list-to-sales price ratios.

Foreclosure Sales and Summary/Analysis of Data

The presence and extent of foreclosure/REO sales is worthy of comment when analyzing market data and must be reported on the form.

Requirement to Provide the Sales Contract to the Appraiser

Fannie Mae is adding the requirement that lenders must provide the appraiser with the sales contract and all addenda, therefore ensuring that the appraiser has been given the opportunity to consider the financing and sales concessions in the transaction and their effect on value. If the sales contract is amended during the process, the lender must provide the updated contract to the appraiser.

That’s the easy part. USPAP will update the appraisers accordingly but send this notification as well as the FNMA Document out to your appraiser and get them ready. That way, when you ask for it in 45 days they won’t act surprised or irritated at the extra workload. Plus, we can be sure, appraisals will increase in cost (if only by $20/unit). This is extra work after all. Hopefully competition will keep the price down?

FNMA 7.1 Update being delivered 12.13.08.

While we were busy making preparations for Halloween FNMA quietly delivered changes to FNMA 7.0 (which just went into effect July 1^st) and is now bringing us 7.1 phew. I can barely keep up.

This was released on 10.16.08. You may have heard about these changes but likely not.

Here are some notable pieces:

· “High Balance” loan limits: max LTV of 75 % for 2units; Cash-out max of 75%; 1-2 unit investment max of 75%

· FICO Floor of 680 for “High Balance” (over $417k).

· For borrowers with Bankruptcy the time allowable before delivering approve/eligible findings is increased from the current 24 months to 48 months (thank goodness for FHA!).

· Second homes are investment properties are beginning to follow those requirements of the MI companies. More of us being lead by the Insurer. Those of us in California and declining/adverse markets will not notice a change since we’ve been living in this reality for months now.

· 7.1 adds a minimum 6 month ownership requirement or to have the property off of the MLS in order to take advantage of maximum financing opportunities.

Income & Employment:

The following will be the minimum income/employment documentation levels issued by DU Version 7.1:

· Salary/Bonus/Overtime: The minimum documentation level required will be one current paystub and a verbal verification of employment.

· Commission/Self Employment: The minimum documentation level required will be one year’s personal federal income tax return.

It sure is a Happy Friday today!
Especially if you are in: Sacramento, Sonoma, Napa, Salinas, Contra Costa, Alameda et. al.

Well, we've all been waiting anxiously for this announcement and thankfully it has been given to us nice and early before the Holidays.

The FHFA (The newly formed conglomerate of OFHEO and whomever else in charge of the GSE's) -Federal Housing Finance Agency has announced the new Conforming Loan Limits today as well as the new High Balance Loan Limits for 2009.

Conforming for 2009 will still mean $417k for the majority of California. This despite the precipitous drop in Median price over the last year and a half.
This is great news for all of us (not that many thought that $417k would get lowered).
The even Better news here is the High Cost Limits as allowed under FHFA/HUD rules and FNMA/FHLMC.

What will be different this upcoming year as opposed to 2008 will be the fact that IF your loan is one of these High Cost areas it will qualify for a Conforming Price.
No More looking for the adjustment or different page of ratesheets.
As I have posted on my Education Station earlier in October FNMA has given us the New "High Balance" loans as a feature of Conforming instead of as a seperate Product.

So... Get the Advertising Ready. Spread the word to your Realtors in these Counties and then download the Press Release from FHFA and the High Balance Loan Limits from my Site below on Education Station.

Some Examples of MSA's that are going to Benefit from High Balance Loan Features:
Napa County - $592,250
Sacramento (Incl El Dorado/Placer/Sac/Yolo) - $474,950
Salinas (Monterey) - $483,000
S.F./Oak/Fremont (Incl. Contra Costa/Alameda/Marin/SF/San Mateo) - $625,500
Santa Clara (Incl. San Benito/Santa Clara) - $625,500

We ALL KNOW that first time homebuyers are going to be the driving force behind our production for the next 24 months as values continue to FALL in many more areas. We WILL BE ABLE to fund FHA Streamlines as refinances but unless the borrower is Rate & Term 10% Equity Refinances will continue to move out of reach for us in Northern California.

Speaking of moving out of Reach. Thanks to the MI Companies for not making it any easier for us to fund business!!
The newest Grid is out and posted on my Education Station.
Over 80% requires : 680/700/720 score and 45%/41% DTI??
YIKES!!!
Under 80% many are limited to 55% and only with Compensating Factors can we exceed this limit.


You'll need the following links to download forms & see updates

Education Station
Government Loan Programs