How Not to Get a Deal Done

In my experience, people throw others under the proverbial bus for one of two reasons:

• They themselves don’t know what they’re doing so they blame someone else
• They don’t understand the intricacies of a situation so they look for an easy scapegoat to give a client an answer and make themselves look golden

Either behavior has no room in today’s mortgage loan and home buying business. Now more than ever before, everyone involved in a real estate transaction from the buyer to the seller to the Realtors to the Title Company to the lender to the mortgage broker have to roll as one because otherwise the deal with go south as sure as I’m sitting here.

Timing and disclosure are everything in the wonderful land of Oz with its new HUD; a sense of urgency must prevail above all. If you wait for a house to fall from the sky before you wake up and work the deal, your clients ain’t going nowhere. It is just not the climate for emails in lieu of direct phone calls and for not picking up the phone after 5PM when a deal is in progress and deadlines are looming.

And whether every industry professional wants to admit it or not, there comes a time when for example, the act of trying to balance the HUD sheet can make one’s head hurt. That’s because there’s a new HUD in town and new rules and it makes for learning curves that can complicate getting the parties to the closing table, so people have to help one another out to literally fill in the blanks and get the job done right for the client. At the end of the day, it is the client that matters most, not ego and attitude.

Every one of us is doing everything we can under extraordinary circumstances. There are a thousand things that can happen:

• Sometimes the lender’s software is not setup to handle the recognition of certain fees under the new disclosure rules
• Sometimes something needed by 4:30 on a Thursday arrives at 4:28 allowing for no margin of error
• Sometimes a fee that the mortgage broker is willing to absorb winds up showing as a borrower’s cost when it should not

When stuff like this happens the team behind the buyer just has to get it to work, it is not necessary to draw attention to the man behind the curtain who is spinning all the wheels racing against time.

The buyer doesn’t need to see all the machinations; the buyer has enough on his or her mind. The buyer just wants to buy their home, we are responsible for facilitating the process. Isn’t that what we tell them at the onset, that we are here to make things work smoothly on their behalf? When did it become about us and placing blame the other guy?

We are professionals; we just have to fix things and not point un-informed fingers at anyone. We stick together and we’ll get it done. At the end of the day, save the drama for your mamma.

Welcome to TriCounty Mortgage

Mortgage Loans – How to Get the Best Rates

Risk based pricing on mortgage loans; basically, that’s the name of the game. Stated income is out and asset verification is in. The interest rate you receive on your home loan is determined by the mortgage lender’s estimate of the probability that you as a borrower will default on the loan.

If it is determined that you are less likely to fail to pay, then you are rewarded with a lower interest rate. As I’ve said before, you can ask a bank about current mortgage rates or search for mortgage rates on the Internet, but nothing replaces the true picture painted by your history and your holdings in the hands of a mortgage professional. And any mortgage interest rate that sounds too good to be true definitely is, unless it is quoted with all the personal factors taken into consideration.

The top five things that impact your mortgage interest rates:

1. Credit Score
2. Loan to Value
3. Loan Size in terms of dollars
4. Property type being purchased (Condo, Single Family, Townhome)
5. Closing Date

The number one thing to be cautious about are the ubiquitous unsolicited rate offers seen in the paper and heard on the radio. The odds are that you as the borrower will not get that advertised rate. Even if it is offered as low as 4.00% followed by a slew of exclamation points, you’ll probably have as much chance of getting that rate as you do scoring the 100” HDTV for $10 in the after-Thanksgiving blow-out sale! One person is going to win; it is just not going to be you.

At the end of the day, numbers don’t lie. Your numbers tell the story. Just bear in mind that there are compensating factors that can counterbalance some unfavorable aspects of your history. And when you review the overall equation it can sometimes tally up in your favor.

Condo Financing Strikes Again

The world of condo mortgages is a battlefield, you have to be locked and loaded and on your guard. As a mortgage broker I have become crazy vigilant about preparing for the unexpected.

As most of you know, credit overlays are additional layers that a lender can impose on top of existing underwriting restrictions or government ordered guidelines. To each his own and financial institutions should do everything in their power to secure their interest. But to change a down payment requirement from 25% to 30% three days before a scheduled closing is a real kick in the condo.

We got the process change notification on a Thursday after 6PM stating that if all approvals weren’t completed by that Monday (a national holiday by the way) the new down payment requirement would go into effect.

The only thing we were waiting for was the financials and some insurance docs from the condo association; otherwise we were good to go until we were given only one business day to shake the association down for the paperwork that still had to go through several hands on a Friday before a three day weekend.

I wasn’t going to let that last minute hurdle kill this deal for my client, we managed to make it happen; we just had to go through a whole lotta hurt to get there.

At the end of the day you may not be able to distinguish between having a root canal and financing a second home condo. Perhaps mortgage brokers should be licensed to administer anesthesia to numb the pain until we get to the rinse and spit part of the transaction.

Buying Foreclosures – De-Flipping the Flippers

If you’re a real estate investor, then you’ve got a home buying bonanza for foreclosed homes for sale going on! The market is saturated with these opportunities. But enter the U.S. Department of Housing and Urban Development (HUD) to apply the brakes and give some relief to the traditional home buying-FHA mortgage recipient and the real estate market as a whole.

Traditionally a buyer wanting to use FHA financing to purchase a home meant that the seller must have owned the property for at least 90 days. This kept investors from buying these homes and fixing them up because they would have had to hold them well past the time it took to rehab them. This cost too much money for most.

But this HUD Waiver on foreclosed properties was made effective on February 1, 2010 and is in effect for at least one year. The governing principle here is to shield FHA borrowers against ‘predatory practices’ where a quick turnaround of a property will encourage its sale at an inflated price, hence the requirement on the part of the flipper to own the property for 90 days. It also opens the floodgates for FHA borrowers to purchase HUD-owned properties, bank-owned properties, or privately sold properties and should help price stabilization and community revitalization.

According to the release from www.hud.gov, “…This waiver is limited to those sales meeting the following general conditions:

•All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.

•In cases in which the sales price of the property is 20 percent or more above the seller’s acquisition cost, the waiver will only apply if the lender meets specific conditions.

•The waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for purchase program.”

I think trying to treat everyone the same is a good practice in theory. It reduces all opportunities to the lowest common denominator and ultimately helps us move toward this brand new market that is slowly emerging from the rubble.

But as we’ve seen, sweeping changes are still subject to credit overlays and time restriction overlays by the individual lender institutions. At the end of the day, we’re talking about guidelines; guidelines created in response to a situation that are still subject to the whims of the lender. Basically, the more things change, the more…they change.