I like to spend a little bit of time each day on something I like to call “on time” which I adopted from Todd Duncan. This can also be called a sales tip or a business booster because quite honestly so much of what we do in the mortgage and real estate market is tied to relationships. On time is simply working ON your business, not IN your business for a certain period of time each day. See, we really need to make sure we stop and focus on spending time on our processes, on our knowledge, on our self improvement and on and on. I think for those of us that really get this “on time” concept; it naturally flows over into our business and makes us better human beings. Heck, even if it doesn’t translate into a new deal or additional income, it will seemingly improve the health of our interactions with others.
John Maxwell is one of my favorite authors to read when I’m spending some on time. In his book 25 Ways to Win With People: how to make others feel like a million bucks, he talks about listening with your heart. How huge is listening??? It’s essential but most of us only listen to others because we know our turn to speak is coming! John says that to listen with your heart, your listening has to be active. He explains that the fundamental cause of nearly all communication problems is that people don’t listen to understand; they listen to reply. Is that true for you like it has been for me? I have worked to take a tip from John and write an ‘L’ at the top of my paper when I sit down to meet with someone so that I remind myself to listen. I hope that eventually this will become a habit.
It’s important that in our society we focus to eliminate the distractions such as phone calls, TV, pagers, email and texting when we are seeking to listen to someone. These things make good listening nearly impossible. Another major barrier to effective listening is assumptions. When you jump to conclusions with someone you are taking away your incentive to listen because you already have your mind made up. Finally, (a big one for me) is pride. Thinking we have little to learn from others is, perhaps, the most deadly of distractions because we leave little room for input from others in that situation.
When we strive for active listening we communicate that we are fully in the moment and the other person knows it. Maxwell reminds us that the best way to persuade is with your ears.
I hope that you can find a way to incorporate this “on time” into your business, but most importantly, into your life.
Monday, October 5, 2009
Friday, October 2, 2009
Arizona looking to ease the job loss pain in 2010
Although the Arizona Department of Commerce gave the state’s job loss an upward revision to 178,500 from the projected 146,000 for 2009, the outlook for 2010 appears to be moving things in the right direction. The pain will ease according to the new state economic forecast. Tourism, transportation and construction continue to be the hardest hit in 2009 as the recession rolls on and those industries feel the lack of consumer spending.
The Department of Commerce revised their numbers down from 21,600 jobs lost in 2010 to 17,400. While this certainly isn’t a report of positive job growth, it is an indication that things are stabilizing and that we could see an up tick in Arizona tourism, travel and construction projects.
The easing of the detrimental job cuts moving forward are hopes that sectors that have struggled this year will stabilize and those that had flat gains such as education, mining and health care will actually show job creation.
Let’s keep our fingers crossed that our state actually outperforms these projections and we further down the path to recovery.
The Department of Commerce revised their numbers down from 21,600 jobs lost in 2010 to 17,400. While this certainly isn’t a report of positive job growth, it is an indication that things are stabilizing and that we could see an up tick in Arizona tourism, travel and construction projects.
The easing of the detrimental job cuts moving forward are hopes that sectors that have struggled this year will stabilize and those that had flat gains such as education, mining and health care will actually show job creation.
Let’s keep our fingers crossed that our state actually outperforms these projections and we further down the path to recovery.
Thursday, October 1, 2009
FHA Streamline Refinances Are A Changin’: No Cost Option Going Away November 18, 2009
In a letter dated September 18, 2009, HUD announced that it will be changing the way it operates regarding FHA Streamline loans. The new changes will take effect 60 days from the issuance date. The biggest change has to do with the way no appraisal option is handled. Up until now, and for the next 7 weeks, you can still get your FHA loan streamlined and incur NO out of pocket expenses. That was the beauty of the FHA Streamline. You mean, I can lower my rate and take advantage of the current interest rates and I don’t have to get an appraisal, document my income or assets and/or pay anything out of pocket to do so? Yes. But…like all good things, (or so it seems) this too is coming to an end. The highlights of the new, revised changes are as follows:
At the time of loan application, the borrower must have made at least 6 payments on the FHA-insured mortgage being refinanced.
At the time of loan application, the borrower must exhibit an acceptable payment history as described below.
1) For mortgages with less than a 12 months payment history, the borrower must have made all mortgage payments within the month due.
2) For mortgages with a 12 months payment history or greater, the borrower must have:
a) Experienced no more than one 30 day late payment in the preceding 12 months.
AND
b) Made all mortgage payments within the month due for the three months prior to the date of application.
The lender must determine that there is a net tangible benefit as a result of the streamline refinance transaction, with or without an appraisal. Net tangible benefit is defined as:
1. reduction in the total mortgage payment (principal, interest, taxes and insurances, homeowners’ association fees, ground rents, special assessments and all subordinate liens),
2. refinancing from an adjustable rate mortgage (ARM) to a fixed rate mortgage,
OR
3. reducing the term of the mortgage
If a credit score is available, the lender must enter the credit score into FHA Connection. If more than one credit score is available, lenders must enter all available credit scores.
If subordinate financing is remaining in place, the maximum CLTV ratio is 125 %.
1. For streamline refinance transactions WITHOUT an appraisal, the CLTV is based on the original appraised value of the property.
2. For streamline refinance transactions WITH an appraisal, the CLTV is based on the new appraised value.
Revised Streamline Refinance Transactions WITHOUT an Appraisal:
The maximum insurable mortgage cannot exceed:
The outstanding principal balance minus the applicable refund of the UFMIP,
PLUS+
The new UFMIP that will be charged on the refinance.
Revised Streamline Transaction WITH an Appraisal:
The maximum insurable mortgage is the lower of:
1. Outstanding principal balance minus the applicable refund of UFMIP, plus closing costs, prepaid items to establish the escrow account and the new UFMIP that will be charge on the refinance;
2. 97.75 percent of the appraised value of the property plus the new UFMIP that will be charged on the refinance.
Discount points may not be included in the new mortgage. If the borrower has agreed to pay discount points, the lender must verify the borrower has the assets to pay them along with any other financing costs that are not included in the new mortgage amount.
The actual letter can be viewed at Mortgagee Letter 09-32: Revised Streamline Refinance Transactions
The moral of the story is: tell one, tell all to take advantage of the FHA Streamline Refinance as it exists now or be prepared to come in with cash. Maybe it’s just me but I find that most people are having a bit of a cash flow problem these days and need to take advantage of the underwriting guides as they exist.
At the time of loan application, the borrower must have made at least 6 payments on the FHA-insured mortgage being refinanced.
At the time of loan application, the borrower must exhibit an acceptable payment history as described below.
1) For mortgages with less than a 12 months payment history, the borrower must have made all mortgage payments within the month due.
2) For mortgages with a 12 months payment history or greater, the borrower must have:
a) Experienced no more than one 30 day late payment in the preceding 12 months.
AND
b) Made all mortgage payments within the month due for the three months prior to the date of application.
The lender must determine that there is a net tangible benefit as a result of the streamline refinance transaction, with or without an appraisal. Net tangible benefit is defined as:
1. reduction in the total mortgage payment (principal, interest, taxes and insurances, homeowners’ association fees, ground rents, special assessments and all subordinate liens),
2. refinancing from an adjustable rate mortgage (ARM) to a fixed rate mortgage,
OR
3. reducing the term of the mortgage
If a credit score is available, the lender must enter the credit score into FHA Connection. If more than one credit score is available, lenders must enter all available credit scores.
If subordinate financing is remaining in place, the maximum CLTV ratio is 125 %.
1. For streamline refinance transactions WITHOUT an appraisal, the CLTV is based on the original appraised value of the property.
2. For streamline refinance transactions WITH an appraisal, the CLTV is based on the new appraised value.
Revised Streamline Refinance Transactions WITHOUT an Appraisal:
The maximum insurable mortgage cannot exceed:
The outstanding principal balance minus the applicable refund of the UFMIP,
PLUS+
The new UFMIP that will be charged on the refinance.
Revised Streamline Transaction WITH an Appraisal:
The maximum insurable mortgage is the lower of:
1. Outstanding principal balance minus the applicable refund of UFMIP, plus closing costs, prepaid items to establish the escrow account and the new UFMIP that will be charge on the refinance;
OR
2. 97.75 percent of the appraised value of the property plus the new UFMIP that will be charged on the refinance.
Discount points may not be included in the new mortgage. If the borrower has agreed to pay discount points, the lender must verify the borrower has the assets to pay them along with any other financing costs that are not included in the new mortgage amount.
The actual letter can be viewed at Mortgagee Letter 09-32: Revised Streamline Refinance Transactions
The moral of the story is: tell one, tell all to take advantage of the FHA Streamline Refinance as it exists now or be prepared to come in with cash. Maybe it’s just me but I find that most people are having a bit of a cash flow problem these days and need to take advantage of the underwriting guides as they exist.
Tuesday, September 29, 2009
The Death of the Mortgage Broker?
With all of the upheaval and continued government involvement in the mortgage industry, the mortgage broker has been added to the endangered species list if you haven’t already noticed. A mastermind group of some of the top originators in the country over years past addressed this issue of how the mortgage broker will survive in this industry and will be able to continue originating loans. That group saw the writing on the wall back in March of 2009. With HVCC (Home Valuation Code of Conduct that requires all conventional loans to be handled through a 3rd party Appraisal Management Company with no communication allowed between the mortgage broker and the appraiser) now required on each and every Conventional (Fannie Mae/Freddie Mac) loan as well as the new HERA and TILA guidelines in effect on every loan, this further pushes the broker to the brink of extinction. Let me be sure to make mention of the fact that HVCC, HERA and TILA were all instituted very recently and AFTER this group spoke in March about the very real issues facing mortgage brokers. Since then we have also seen Colonial Bank file for Bankruptcy. They have been reported to have supplied 25% of the warehouse lending available to the mortgage market for mortgage brokers to utilize to fund deals through wholesale lender channels. And if that wasn’t bad enough, we recently saw Taylor Bean & Whitaker be forced to close its doors by the government due to being “cut off” for failure to provide proper documentation to HUD and other government agencies. They were one of the largest wholesale lenders left in America and were a huge ally to the mortgage broker as a wholesale lender. They did not have a retail channel like what you see with Wells Fargo. They were the largest funder of Manufactured Homes in the country.
So what does this all mean? Well, lenders would impose tighter underwriting guidelines coupled with a very strict policy on loan fallout(loans that don’t close) in order to continue to do business with mortgage brokers. This creates a chicken before the egg or the cart before the horse kind of a dilemma. You see, for the most part, tighter guidelines and absurd loan conditions from underwriters are causing loans to fall out and thus causing lender/broker relationships to be severed. That clearly leaves the broker in a major predicament. No where to send loans!! In addition, for the brokers who still have wholesale lending partnerships to be able to send loans to; underwriting, review times and appraisal issues and blah blah blah have made it near impossible to close a loan in an acceptable time frame – say 30 days or so. Is that broker funding FHA loans? Well, I was told that about only 10% of brokers are FHA approved and guess what, most loans are now FHA (cue the daunting music.)
And now for what is potentially on the horizon: the elimination of YSP or Yield Spread Premium which is how the majority of mortgage brokers are compensated for sending loans to lenders. This would just about break the back of the mortgage broker.
Well, with all of this being said, it’s good to be a mortgage banker! We are underwriting our own loans and funding our own deals. If I have a question about an underwriting condition I can just pick up the line and discuss it with them directly. We can close loans in about 10-12 days thus eliminating the issue of putting the deal into another lender’s hands to take 45 days because they don’t care about the borrower.
I have nothing to back this up but I would venture to say that almost every mortgage done moving forward will be through a mortgage banking relationship. Let me also say that as a former mortgage broker I have had to deal with every single one of these struggles. It’s about positioning yourself for the long haul. So here I am – positioned well to move forward. I look forward to helping you or your clients!
So what does this all mean? Well, lenders would impose tighter underwriting guidelines coupled with a very strict policy on loan fallout(loans that don’t close) in order to continue to do business with mortgage brokers. This creates a chicken before the egg or the cart before the horse kind of a dilemma. You see, for the most part, tighter guidelines and absurd loan conditions from underwriters are causing loans to fall out and thus causing lender/broker relationships to be severed. That clearly leaves the broker in a major predicament. No where to send loans!! In addition, for the brokers who still have wholesale lending partnerships to be able to send loans to; underwriting, review times and appraisal issues and blah blah blah have made it near impossible to close a loan in an acceptable time frame – say 30 days or so. Is that broker funding FHA loans? Well, I was told that about only 10% of brokers are FHA approved and guess what, most loans are now FHA (cue the daunting music.)
And now for what is potentially on the horizon: the elimination of YSP or Yield Spread Premium which is how the majority of mortgage brokers are compensated for sending loans to lenders. This would just about break the back of the mortgage broker.
Well, with all of this being said, it’s good to be a mortgage banker! We are underwriting our own loans and funding our own deals. If I have a question about an underwriting condition I can just pick up the line and discuss it with them directly. We can close loans in about 10-12 days thus eliminating the issue of putting the deal into another lender’s hands to take 45 days because they don’t care about the borrower.
I have nothing to back this up but I would venture to say that almost every mortgage done moving forward will be through a mortgage banking relationship. Let me also say that as a former mortgage broker I have had to deal with every single one of these struggles. It’s about positioning yourself for the long haul. So here I am – positioned well to move forward. I look forward to helping you or your clients!
Want a raise? How to get a 16% increase in pay in 2010
“You don’t know what you have until it’s gone.” If you fit the category, you have a special opportunity. But, you have to act quickly! There are only a few more months to take advantage of the FREE $8,000 tax credit incentive provided through the Federal Government. This credit is specifically designed to motivate the 1st time home buyer. This is a credit, not a deduction. A credit is dollar for dollar where a deduction is percentage or an amount that reduces your overall adjusted gross income. The latest U.S. average household income is $50,233 and that number is from 2007. If I were to guess, it’s probably dropped since then. That means that an $8,000 check in your hands from the IRS is a 16% raise if you are “average” in the U.S. for 2010. Quite honestly, it’s a bigger raise than that for next year because the income is based on before tax income, not after tax. These 8,000 smackers are tax free.
Most 1st timers are looking for homes up to $200,000. With foreclosure home prices stabilized, if not on the increase in this price range, it is extremely important to be approved and ready to make an offer to meet the time line on this FREE money. I am now hearing stories from my realtor partners and from pre-approved clients that they are putting in 5-10 offers before being successful on an accepted contract.
What does this mean for you? It takes TIME. With the clock already ticking on the tax credit (November 30th it will expire) you must be prepared to be under contract by the end of October. Just to be safe, you should aim to be under contract by October 15th. That may seem like a lot of time but once you begin the home search and fight everyone else out there trying to beat the clock you will see that time is of the essence.
Luckily for my team, as a mortgage bank, we underwrite and fund our own loans so our time to close on a transaction can be as quick as 10 days. But, for the typical mortgage broker in today’s lending arena, about 45 days is what they will really need in order to be successful and make everyone happy by November 30th. If you find yourself in a position where you FINALLY are able to get under contract on a home and you are near the end of October or into the first week of November, don’t panic. While the big banks and the mortgage brokers will be hard-pressed to make that happen there will be mortgage banks available such as my own that will be able to service your mortgage needs.
Q: Who could use the $8,000? A: Everyone! I have yet to run into someone who has told me they aren’t interested in free money. Q: Will it be extended? A: The honest answer is maybe. Who knows? But if you don’t want to have to refer back to the quote that started this post, I suggest you get moving or get this into the hands of the person you know needs to get moving.
If you have any questions or concerns about this or other related topics, please contact me at jwilliams@mountainridgemortgage.com
Most 1st timers are looking for homes up to $200,000. With foreclosure home prices stabilized, if not on the increase in this price range, it is extremely important to be approved and ready to make an offer to meet the time line on this FREE money. I am now hearing stories from my realtor partners and from pre-approved clients that they are putting in 5-10 offers before being successful on an accepted contract.
What does this mean for you? It takes TIME. With the clock already ticking on the tax credit (November 30th it will expire) you must be prepared to be under contract by the end of October. Just to be safe, you should aim to be under contract by October 15th. That may seem like a lot of time but once you begin the home search and fight everyone else out there trying to beat the clock you will see that time is of the essence.
Luckily for my team, as a mortgage bank, we underwrite and fund our own loans so our time to close on a transaction can be as quick as 10 days. But, for the typical mortgage broker in today’s lending arena, about 45 days is what they will really need in order to be successful and make everyone happy by November 30th. If you find yourself in a position where you FINALLY are able to get under contract on a home and you are near the end of October or into the first week of November, don’t panic. While the big banks and the mortgage brokers will be hard-pressed to make that happen there will be mortgage banks available such as my own that will be able to service your mortgage needs.
Q: Who could use the $8,000? A: Everyone! I have yet to run into someone who has told me they aren’t interested in free money. Q: Will it be extended? A: The honest answer is maybe. Who knows? But if you don’t want to have to refer back to the quote that started this post, I suggest you get moving or get this into the hands of the person you know needs to get moving.
If you have any questions or concerns about this or other related topics, please contact me at jwilliams@mountainridgemortgage.com
Lenders Continue to Ask a lot of Mortgage Applicants
Borrowers need to prepare for items asked of them that seem “out of the ordinary” when going through the mortgage process these days. As the recession drags on and the flow of credit and money continue to tighten, so do the lending guidelines tied to mortgage applications. Gone are the days of the No Income No Asset, No Doc and of course the coveted 100% Zero Down loans. I get a lot more sleep at night knowing those mortgage products aren’t floating around out there any longer, but every day it becomes increasingly more difficult to fulfill lender guidelines.
In hearing from a fellow mortgage broker in the business, he was commenting on a loan approval he just received back from the lender. The approval contained 46 loan conditions that needed to be fulfilled in order to close the loan. 46!!! Three to four years ago you could have turned in a blank loan application to a lender and you wouldn’t have received 46 loan conditions! The first condition would have been: What is your first name? The second would have been: What is your last name? And so on and so forth. Lenders typically bundle their funded loans and sell them on the secondary market to investors. Well, with a damaged secondary market, lenders are extremely fearful of running across any loans on their books that they cannot bundle and sell to these investors. The inability to sell these loans keeps them from turning around and using those funds to fund new loans and thus the cycle. That is how we have the issues we are seeing today: extremely touchy underwriting.
Your mortgage broker is NOT trying to make your life miserable when they ask you for items that seem off the wall. My advice is to take a deep breath. Relax. Take it all in stride. After all, this apparently is all in the name of good underwriting practices and closing your mortgage loan.
Heck, at least you’ll be able to chat around the water cooler with your co-workers and say “So I’m buying a house and you’re not going to believe what my lender is asking me for…”
In hearing from a fellow mortgage broker in the business, he was commenting on a loan approval he just received back from the lender. The approval contained 46 loan conditions that needed to be fulfilled in order to close the loan. 46!!! Three to four years ago you could have turned in a blank loan application to a lender and you wouldn’t have received 46 loan conditions! The first condition would have been: What is your first name? The second would have been: What is your last name? And so on and so forth. Lenders typically bundle their funded loans and sell them on the secondary market to investors. Well, with a damaged secondary market, lenders are extremely fearful of running across any loans on their books that they cannot bundle and sell to these investors. The inability to sell these loans keeps them from turning around and using those funds to fund new loans and thus the cycle. That is how we have the issues we are seeing today: extremely touchy underwriting.
Your mortgage broker is NOT trying to make your life miserable when they ask you for items that seem off the wall. My advice is to take a deep breath. Relax. Take it all in stride. After all, this apparently is all in the name of good underwriting practices and closing your mortgage loan.
Heck, at least you’ll be able to chat around the water cooler with your co-workers and say “So I’m buying a house and you’re not going to believe what my lender is asking me for…”
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