Dan Green of the Mortgage Reports asks “When was the last time you had 20 people involved in anything and it went perfectly smooth?”
His conclusion:
Never schedule a purchase money closing for a Friday or the last day of the month — especially in the afternoon, and especially in the summer.
On March 9th Washington State’s Governor Christine Gregoire signed House Bill 2340 which will regulate all Loan Originators in the brokering of residential real estate loans. According to Washington Association of Mortgage Brokers the new legislation requires the following:
Washington Association of Mortgage Brokers (WAMB) also states:
(The licensing) creates new consumer protections by raising the bar for practitioners in our industry by achieving two key objectives: 1) it will help weed out those in the industry who do no have the consumer’s best interest in mind and creates a revocable license for those that employ unethical and illegal practices; and 2) it will strengthen our industry by exposing educational opportunities needed for brokers that care about doing things right, but may be lacking the knowledge to remain compliant in accordance with State and national regulations.
WAMB provided some interesting facts about other states that have implemented a licensing requirement:
Just as I was getting use to the old algorithm, now a new algorithm!
The nation’s three consumer credit reporting companies – Equifax, TransUnion and Experian – announced a new credit scoring system designed to simplify and improve the credit process for both borrowers and credit grantors.
By combining cutting-edge, patent-pending analytic techniques with a highly intuitive scale for scoring, VantageScore will provide consumers and businesses with a highly predictive, consistent score that is easy to understand and apply. VantageScore uses score ranges from 501 to 990.
There is more information on VantageScore here: VantageScore.
There has been much talk about providing borrowers and business with a more consistent method of evaluating credit. For even the most experienced people in the lending industry, credit scoring is a confusing subject. A few weeks ago I gave a presentation with Mark Armstrong, American Reporting Company to a group of real estate agents, and my impression was that they seemed starved for accurate information on the subject of credit. In the next few days, I will post parts of that presentation here.
For those of you who have thought about purchasing or refinancing, and have wondered if it makes sense to pay discount points to get a lower interest rate, Smart Money has an excellent article on understanding points.
Have you ever wondered where mortgage money comes from? Years ago, the money came from your local banker. If your credit was good, and the bank had the available funds, you had yourself a home loan, and you diligently made your monthly payment to that same bank.
These days, the majority of all conforming home loans begin the same way as they did years ago, but they now follow a trail that most often leads to three major institutions: Fannie Mae (Federal National Mortgage Association); Freddie Mac (Federal Home Loan Mortgage Corporation); or Ginnie Mae (Government National Mortgage Association), then on to Wall Street.
Please understand that there are many variation of this, and I’m speaking of standard conventional loans. Depending on a many circumstances, some loans follow different pathways.
We begin the process with a mortgage professional as we always have. We answer the questions, jump through the hoops, and sometimes feel our whole life is being reviewed, but all goes well, and we end up with a home loan. Now it’s here that the trail can take some turns.
If you placed your loan with a bank, it frequently appears that your loan is still with that bank, but in most cases the bank is simply “servicing
Lenderama turned 1 year old today!
Rather than let Lenderama slow down in its old age, it is pretty obvious that Todd Carpenter is going to make sure Lenderama is always on the cutting edge! Just before announcing his one year birthday, Todd released a dynamic bookmark tool that mashes-up the Firefox browser, RSS feeds and del.icio.us.
I’ve been playing with the bookmark tool for a few hours now, and I’m completely impressed. He’s categorized more mortgage related sites than I knew existed! It includes news sites, forums, directories, and a huge number of lenders. While this list could be useful if you’re a potential home buyer or a real estate agent, this bookmark tool is a must if you’re a mortgage broker.
To learn how to install this tool, check out the Bookmark Spotlight site.
Those of you with variable home equity line of credit, do you ever find yourself thinking, “I’ve got two loans -the first mortgage has a great rate and the second is a variable home equity line of credit with a steadily climbing interest rate.
[photopress:garden_wall.jpg,thumb,alignright]I always enjoy reading the perspective of Slate economist Daniel Gross… and when he covers real estate issues, it’s all the better.
In Didn’t Pay Your Mortgage? Don’t Worry, David explains how banks are more forgiving than ever…
With the passage of the consumer-unfriendly bankruptcy law and the cram-down rampant, the personal finances of those with limited means are getting more precarious. But even in this Scrooge-y world, there are pockets of sweetness and generosity. At least one group of kind-hearted folks in the finance industry is willing to give customers a break when things don’t go their way: America’s heart-of-gold mortgage lenders, who are behaving with curious benevolence toward suffering clients. Even as housing prices have risen and grown more unaffordable, and as bankruptcy filings have soared, foreclosure rates have fallen. According to the Mortgage Bankers Association, the foreclosure rate has fallen from 1.49 percent in the third quarter of 2002 to 1 percent in the second quarter of 2005.
He goes on to explain that ” foreclosure—on anyone—is an onerous, time-consuming process. (Read: It costs money.) It also forces banks to get into a business far from their core competency.” In addition, “getting aggressive on foreclosure can damage a lender’s reputation.”
“It used to be that only gigantic banks and corporations like Citigroup and Chrysler were regarded as too big to fail. Today, the humble homeowner enjoys that status as well.”
It is definitely worth noting that if you are having trouble paying your mortgage, talk with your lender. For all the reasons that David notes in this article, it is quite possible that you can work a deal out that will allow you to keep your home until your finances improve!
Buying a home vs. renting is a big decision that takes careful consideration, as most mortgage consultants will agree. But the rewards of home ownership are great. For many years, purchasing real estate has been considered an extremely profitable investment. It is an achievement that offers a sense of pride, financial stability and potential tax advantages.
Yes, there are certain responsibilities associated with owning a home. Landlords will often argue the benefits of renting, and for obvious reason. If you are renting, you’re helping them make their mortgage payment.
The numbers are staggering if you look at it this way. If you are paying $1,000 per month for an apartment, and you know your rent will increase 5% every year, then over the next five years you will pay your landlord $66,309. If you are currently renting a house, you may be paying much more than that each month. Either way, you gain no equity by shelling out this monthly housing expense and you certainly won’t benefit when the property value goes up!
However, if you were to purchase your own home or condominium, you would be well on your way toward building equity within that same five-year period. By choosing a fixed-rate loan program, you can have the comfort of knowing that your monthly mortgage payment will never go up. In fact, you would have the option of refinancing to a lower interest rate at some point in the future should interest rates drop, and this would cause your monthly mortgage commitment to go down.
In addition to building equity, there are tax advantages that come into play with home ownership. Depending on your tax bracket, owning a home is often less expensive than renting after taxes. Interest payments on a mortgage below $1 million are tax-deductible, and your mortgage consultant should help you evaluate the tax advantages of various loan scenarios, and share this information with your tax consultant to glean feedback on your behalf.
To find the loan program that is right for you, your mortgage consultant will need to evaluate your monthly household income, current assets and savings, as well as any monthly obligations you may have for credit card payments, car payments, child support, etc. These prequalification factors, along with the report of your credit score, will determine how much house you can afford and what interest rate you will pay for financing. It is also important to let your mortgage consultant know what your future goals are, because this will help narrow down which loan option is the best fit for your long-term needs.
There are many different types of loan programs available, including “low
Why does the mortgage business seem so insane and unreliable? Well, there are a couple of reasons. One reason is there are a tremendous number of loan officers who came into the business during the boom of 2001 and have not had enough experience. A loan officer’s job is to make your loan work. When they look at a loan application, they examine all possible reasons that could be a problem. These are things like properties under construction, borrowers who are out of work, too much debt, not enough income, complex income situations, low credit scores, title problems, and much more. Loan officers with lots of experience have seen so many different situations with such complex problems, they know how to evaluate a new loan and spot potential problems. The next hurdle is with the underwriters. These folks work for the lenders and they review all of the information sent to them from the loan officer. They have guidelines and matrices which tell them what’s acceptable and what’s not. Underwriters will ask, or “condition