Minnesota Mortgage Blog

Government loan programs - FHA loans

2010-07-12T13:58:00.000-05:00

An FHA loan is insured by the Federal Housing Administration, a federal agency within the U.S. Department of Housing and Urban Development (HUD). The FHA does not loan money to borrowers, rather, it provides lenders protection through mortgage insurance (MIP) in case the borrower defaults on his or her loan obligations. Available to all buyers, FHA loan programs are designed to help creditworthy low-income and moderate-income families who do not meet requirements for conventional loans.

FHA loan programs are particularly beneficial to those buyers with less available cash. The rates on FHA loans are generally market rates, while down payment requirements are lower than for conventional loans.

Some of the other benefits of FHA financing:

a 3.5 percent down payment is required.
Funds may be available for downpayment assistance.
Closing costs can be financed.
Lower monthly mortgage insurance premiums and, under certain conditions, automatic cancellation of the premium.
More flexible underwriting criteria than conventional loans
FHA limits the amount lenders can charge for some closing cost fees (e.g. the origination fee can be no more than 1% of mortgage).
Loans are assumable to qualified buyers.

Minnesota Mortgage Rates Below 4.5%!

2010-07-01T13:41:00.000-05:00

I know many Minnesota first time home buyers are bummed out about the tax credit going away but hey, the fact is that with Minnesota mortgage rates hovering below 4.5%, now is still an incredible time to buy a home. Add to that the fact that Minneapolis homes prices have been falling for the past two years and you really don't have a lot of reason not to buy a home today!

When my wife and I bought our first home, we were able to assume the sellers 9% mortgage and we were thrilled. At the time mortgage rates in Minnesota were around 11%. In my humble opinion, anyone who is making excuses as to why this isn't the right time to buy a home simply wasn't a real home buyer anyway.

If you are paying attention to the falling home prices and rock bottom interest rates and you are thinking about buying a home in the Twin Cities metro area, visit www.mnonlinemls.com to get free access to the Minnesota MLS and see thousands of Minnesota homes for sale in every price range.

The fact is, owning a home will always be a smart component of your personal wealth plan so feel free to call Metropolitan Financial Mortgage Company with any questions you may have regarding financing your new home and locking in today's unbelievably low mortgage rates!

HAFA or Home Affordable Foreclosure Alternatives Program

2010-04-14T10:32:00.000-05:00

The Home Affordable Foreclosure Alternatives (HAFA) Program is the governments program to help homeowners avoid foreclosure.

HAFA gives incentives to lenders, and homeowners to allow and complete a short sale or deed-in-lieu of foreclosure. If your Minnesota home or Minnesota mortgage is in jeopardy of default, follow the link below to see if you qualify for this government program.

Are you eligible? Use this tool to determine your eligibility; HAFA Questionaire

Credit Score Tips for Future Home Buyers

2010-04-07T22:13:00.004-05:00

With the help of some easy -- if often counterintuitive -- steps, you can improve and retain a healthy credit score even in today's fast-changing credit environment.
Here is one of the five step I will share:

Open More Credit Cards
For years, credit experts warned that opening new credit cards will hurt your credit score -- not to mention enable you to run up huge debts.
That's still true: The length of your credit history and new credit make up 15% and 10% of the FICO score, respectively. But with credit issuers lowering credit limits left and right these days, having too few credit cards puts a much more important credit-score component at risk: credit utilization, or how much of your available credit you're using.

Credit utilization makes up 30% of your score. "More cards mean more available credit and more options if an issuer decides they don't like you," says John Ulzheimer, president for educational services at Credit.com. Generally, having four or five credit cards is better than having just one or two, he says. Expanding your credit-card portfolio isn't something you should do tomorrow -- it's a strategy to be executed over time. If you have just two cards, now is the time to open a third. But wait at least six months or a year until you apply for a fourth.

Please call Dominic at 612-247-8322 to find out more about your credit or for information about how to qualify for a Minnesota Mortgage.

How Changes To Credit Card Rules May Affect Your Credit Score

2010-03-27T21:25:00.004-05:00

Credit is important to obtaining a mortgage and I want people to know that the rules that credit-card companies have to live by changed dramatically with the enactment of new regulations last month. Now, some of the rules for consumers striving to maintain good credit are
changing, too.

For the most part, card holders would still do well to pay on time, keep their balances low and refrain from applying for too many credit cards at once. But some of the old tenets may not
always hold up, as credit-card companies continue to adapt to the new environment and look
for ways to run their for-profit businesses.

Case in point: Many issuers introduced annual or inactivity fees in the weeks leading to or
immediately after the Credit Card Accountability, Responsibility and Disclosure Act went into effect. "Now folks have to decide -- do they want this card badly enough to pay the fee, or do they close it," says Barry Paperno, the consumer operations manager at FICO (FICO). It's a
question of more than just losing a credit line. Closing a credit card can have a big impact on one's credit score. That is, unless you do some groundwork in advance.

In the next few blogs, I will discuss how you have to approach credit differently than before the act and what you need to do to continue to qualify for a Minnesota Mortgage.

Please call Dominic at 612-247-8322 for more information or to access the MLS Minnesota.

Time is Running Out For First Time Home Buyer Tax Credit

2010-03-26T21:38:00.002-05:00

There are only 45 days left to take advantage of the Minnesota first time home buyers program. A signed and accepted purchase agreement has to be in place by April 30th and a closing by June 30th. A first time home buyer is someone who has not owned a home in the last 3 years. Please call Dominic at 612-247-8322 for more information.

If you are looking for a first time home buyer seminar, visit http://www.firsthomeguide.com

$8,000 First Time Home Buyer Tax Credit is not the only home ownership help available to Minnesota Homebuyers

2010-03-09T09:28:00.002-06:00

Time is running out on you as you try to purchase your first home and beat the deadline of April 30th and be one of the privileged American's to enjoy the first time home buyer tax credit. The city of Phoenix is offering down payment assistance that does not need to be paid back if certain requirements are met. The city of Minneapolis is offering the city living program. The state of Minnesota is very proactive educating the consumer on option and choices made available to the public through The Minnesota Home Ownership Center and the Minnesota Housing Financing Agency.

Peter J Kiron, ABR - Prior Lake Minnesota Real Estate Agent - Realtor ® - Agentopolis

2009-09-05T21:15:00.001-05:00

Peter J Kiron, ABR - Prior Lake Minnesota Real Estate Agent - Realtor ® - Agentopolis

Posted using ShareThis

Fewer Minnesota Homes for Sales per Minnesota Home Buyer

2009-07-08T13:12:00.003-05:00

Currently, the inventory of Minnesota homes for sale is at a 4 year low with only 5 homes available for every Minnesota home buyer. While this may sound like a lot, it is lower than usual and will start to drive multiple offers on the good houses. This could be the beginning of home prices rising in Minneapolis, Minnesota metro area.

With rates still at historic lows, and time running out on the $8,000 first time home buyer tax credit, now might be a good time to start seriously looking for a home.

If you are interested in getting pre-qualified for a Minnesota home mortgage, contact Dominic DesMarais at 612-247-8322

Minnesota Mortgage Rates Dip Again

2009-07-07T18:35:00.003-05:00

Minnesota mortgage rates came out of the 4th of July weekend in good shape. Both FHA and conventional, Fannie Mae and Freddie Mac are offering Minnesota mortgage rates at around 5%. A great rate if you are looking to refinance or if you are a Minnesota first time home buyer.

For more information contact Metropolitan Financial Mortgage Company and Dominic DesMarais at 612-247-8233. To see MLS listings in Minnesota and all 50 states, visit www.mlsmaps.com

FHFA AUTHORIZES FANNIE MAE AND FREDDIE MAC TO EXPAND HOME AFFORDABLE REFINANCE PROGRAM TO 125 PERCENT LOAN-TO-VALUE

2009-07-02T11:39:00.003-05:00

This is great news for most American who did 100% mortgages at the top of the real estate market and now they owe more than their house is worth. This will give all those people who qualify a chance to refinance into today's low rates giving them a lower house payment.

If your loan is held by Fannie Mae or Freddie Mac and you are current on your mortgage payments, you may be eligible to refinance your mortgage loan even if your LTV is up to 125%. LTV, or loan-to-value-ratio, is a measurement that compares the principal balance of your loan (the amount you currently owe) to the actual value of the house. For example, if your loan amount is $300,000 and the current value of your home is $240,000, your LTV is 300/240, or 125%.

This applies to Minnesota mortgages so if you are in this boat and you want to explore your options, call Dominic DesMarais at 612-247-8233 at Metropolitan Financial Mortgage company or you can click on this link to read the FHFA news release

Minnesota FHA Mortgage Rates Improve

2009-06-26T14:02:00.003-05:00

Minnesota mortgage rates have seen a little improvement at the end of this week. Both the Minnesota FHA and a conventional 30 year fixed Minnesota mortgage are at around 5.25% (apr 5.672). Minnesota Mortgage rates were higher earlier in the week and have come down by about .375% since then.

Fewer Minnesota Foreclosures On The Market

2009-06-25T10:16:00.005-05:00

According to a recent report by the National Association of Realtors, NAR, the number of foreclosed homes for sale in Minneapolis, Minnesota has seen a steep decline since one year ago. If you haven't heard, Minnesota is one of only 6 states that have seen the number of home sales rising. This coupled with the fact that Minnesota mortgage rates are still very low and as recently as 5 weeks ago, the Minnesota mortgage rate for a 30 year fixed mortgage dipped below 4.5% are possible reasons for the supply of foreclosed homes in Minnesota going down.

There are still a ton of great deals on the market, especially for the Minnesota first time home buyers, who are still eligeble for the $8,000 tax credit. If you are a Minnesota first time homebuyer you may want to start getting serious about buying a home as the $8,000 tax credit is set to expire on November 30th, 2009.

For free access to Minnesota MLS listings visit www.mnonlinemls.com. For more information contact Dominic DesMarais at 612-247-8233.

Minnesota Mortgage Rates Dip

2009-06-15T09:41:00.004-05:00

Minnesota mortgage rates have seen a nice dip today which is good because as of last Wednesday, the 30 year fixed rate mortgage in Minnesota hit 6% for a brief period. Today, Monday June 15th, you can find a 30 year fixed Minnesota mortgage rate at around 5.375% conventional (apr 5.893%) , or 5.375% FHA (apr 5.936%). Again, these are very good rates and they may go up or they may go down so if you can afford the home you want at these rates, you may want to contact a Minnesota mortgage broker and lock your rate.

For more information contact Dominic DesMarais at 612-247-8322.

Minnesota Mortgage Rates Won't Stay Low Forever

2009-06-11T15:37:00.003-05:00

Minnesota mortgage rates have been on the rise lately but it' not to late to lock into a great rate. A few weeks ago, the 30 year fixed rate was at about 4.625% and if you can believe it, there were still a lot of people who said they wanted to wait for a lower rate. Sometimes greed can cost you big time!

Today, June 11th, the Minnesota Mortgage rate for a 30 year fixed is at about 5.625%. I can all but guarantee you that if the rate gets back down to 4.625%, those people who wanted to wait are going to jump in in a hurry. Problem is what will they do if the rates keep going up?

Bottom line is this, no one can time the bottom of the market and if you think you know someone who did, it was luck. I'm not lucky enough to gamble and if your like me, the best way to shop for mortgage rates is know your budget and lock your mortgage rate in when you get to a house payment you can afford. Trying to time the market is for Gamblers, are you a gambler?

President Obama Tells People to Take Advantage of Low Mortgage Rates

2009-04-09T11:52:00.005-05:00

If you didn't already hear the news today, President Obama is encouraging all of us to take advantage of today's low mortgage rates. Whether you are buying a new home or refinancing your current home, the historic low mortgage rates should free up some cash for everyone.

Home buyers can get into the home of their dreams for less than they had thought leaving more money for furniture and dinning out. Home owners who are able to refinance with an interest rate under 5% will be able to pick up hundreds of dollars each month in discretionary income. Bottom line is the government is using our tax dollars to buy down the rate so if you want to get your piece of the bailout that you are financing, get out and buy or refinance your home. Before things change and mortgage rates go back up again!

Don't forget to take advantage of the $8,000 first time home buyer tax credit!

Minnesota Mortgage Rate Update

2009-03-26T11:24:00.004-05:00

Since our last post rates have been on yet another wild ride ranging from a low of 4.5% on Thursday March 19th to a high of roughly 5.5%. A huge difference and one that obviously would make a big difference in your monthly Minnesota mortgage payment. This information is in reference to conforming or Fannie Mae and Freddie Mac 30 year fixed mortgage products . Incidently, if you are purchasing or refinancing in Minnesota and using a Fannie or Freddie product you need to have at least a 5% down payment for a purchase or at least 15% equity for a refinance.

FHA has slightly different guidelines and rates for Minnesota mortgages and should be seriously consider in both a purchase or refi situation. You may qualify for an FHA refinance at up to 97% of the value of your home. All of these guidines have been changing more frequently than ever so it is critically important for you to contact a true professional in the mortgage industry and plan out your purchase or refinance strategy.

For mor information about FHA or conventional rates and programs, contact Dominic DesMarais at Metropolitan Financial Mortgage Company at 612-247-8322.

Minnesota Mortgage Rate Update

2009-02-26T11:48:00.002-06:00

In case you haven't noticed, Minnesota mortgage rates have been on the rise recently. This is due to a number of facts including;

To fund the stimulus package, our government is selling treasury bonds which compete with mortgage bonds, raising bond interest rates which raises mortgage rates.
Mortgage lenders are flooded with mortgage loan applications from both refinance and purchase borrowers so they don't need to be as competitive on rates.

What this means to a Minnesota first time home buyer or Minnesota home owner thinking about refinancing their Minnesota mortgage is, you may want to seriously consider doing something soon. While I don't claim to have a crystal ball and I would rather be proven wrong on this, there are certain market forces out of our control that are pointing towards higher rates.

The bottom line is we can't have our government stimulus and low rates too!

Stay tuned

Minnesota First Time Home Buyers To Get $8,000 Tax Credit

2009-02-19T12:15:00.007-06:00

It's finally official, the dust has settled! President Obama signed into law a fantastic incentive to first time home buyers this week. For Minnesota first time home buyers this means that now there are three good reasons to go house shopping;

An $8,000 tax credit from the government that you don't even have to pay back if you live in the home for more than 3 years.
Low 30 year fixed Minnesota mortgage rates, at roughly 5%, which is unbelievably low, just ask any home owner you know.
Minnesota home prices have been declining for the past two years and there are some fantastic deals out there in some great neighborhoods.

It's possible that falling home prices will start to stabilize soon as that is our governments intention with all the money they are throwing at the housing industry. With that in mind, this would be a good time to contact a mortgage broker and determine whether or not you qualify to buy a home, the qualifications have become much more difficult in the past few years, and how much you qualify for so you can start looking. It can take three months or longer to find a home so if your gaol is this summer, you'll want to get pre-qualified soon.

Tax Credit Aid For Minnesota Home Buyers May Double

2009-02-09T20:49:00.003-06:00

I'm not sure if you've heard yet but if you are a Minnesota first time home buyer, or a first time home buyer in any state for that matter, you may be eligible for a $15,000 tax credit. Originally only a $7,500 tax credit, which was still a great deal for Minnesota first time home buyers, having this doubled to $15,000 is starting to get some Minnesota home buyers of the couch.

With interest rates on 30year fixed Minnesota mortgages still at historic lows, home prices continuing to fall and now this $15,000 tax credit, I think the bottom of the housing market is getting near. I have already heard stories of multiple offers from local real estate agents and when you start hearing more and more stories like this, you know the housing market is slowly starting to reverse direction and home values will soon start to hold their own and then begin to rise again.

Don't think you can time the market and buy at exactly the bottom. If you find a house you like in a neighborhood you like at a price that is comfortably in your budget, then I'd say you should buy the house and get on with your life. Just a thought.

Minnesota Mortgage Rates Take Wild Ride in 2008

2009-01-02T09:43:00.005-06:00

For those of us in the business who watch rates daily, 2008 will go down as one of the most interesting years in mortgage rate history. Looking at national averages for the 30 year fixed mortgage rates, the rate has ranged from a high of 6.48% in August to a low of 5.14% at the end of December. The lowest Minnesota mortgage rate that we could offer in 2008 was 4.5% and that rate was available for a matter of hours in early December. Currently Minneapolis mortgage rates are between 4.875% and 5.25% for a 30 year fixed rate, depending upon who you talk to and this leads in to the point I want to make.

Over the past 18 months the mortgage business has gone through some radical changes driven by state and federal governments, the economy and your local real estate markets. As a result, many loan officers have left the business and huge companies like IndyMac Bank and Washington Mutual have gone out of business. Unfortunately while this has forced most of the bad mortgage originators out of the business, it has also forced many good ones to seek other employment as well. It is more important now than ever to choose your mortgage loan officer wisely. So what should you be looking for in a Minnesota mortgage professional?

Work with a mortgage broker versus a lender or national bank as brokers have access to more options.
Use local people versus someone in a telemarketing room, someone you can find if things aren't going as planned and someone who will be at your closing.
Smaller mortgage broker have less overhead than the big companies and can charge less in closing costs
Look for someone with at least 5 years experience.
Choose someone who has purchased and owns a home and has personally been through the experience of purchasing and refinancing a home so they can relate to you and your concerns.

The competition for your mortgage business is fierce today so you want to be working with someone who can negotiate with you, without having to go ask their boss/manager/VP etc. An independent Mortgage officer working for a local broker has the greatest control over what rate and closing costs they charge you. If you are someone who likes to negotiate and you are looking for the lowest mortgage rate and closing costs you can get and you don't like surprises, choose a local Minnesota mortgage broker.

First Home Guy Launches Video Series for First Time Home Buyers

2008-11-05T22:34:00.004-06:00

The First Home Guy has recently started adding video tips and information for first time home buyers on www.firsthomeguy.com He will be updating these video tips on a weekly basis as well as answering questions from first time home buyers. This site serves home buyers from all over the US including Minnesota first time home buyers. The First Home Guy will also have guest speakers from time to time from the real estate and mortgage industries who will also be providing short videos and blog posts to help insure that first time home buyers have a good experience and end up with a great home.

Guaranteed Rural Housing Program in Minnesota

2008-11-01T12:09:00.006-05:00

Minnesota home buyers can still buy a home in Minnesota with no down payment. It is offered through the USDA and applies to people buying homes in rural Minnesota. See list of areas below. The Guaranteed Rural Housing (GRH) loan program is a government insured single-family home loan program for low-to-moderate income borrowers looking to purchase a home in a rural development area. This program is an excellent option to offer Minnesota borrowers who aren't able to make a significant down payment on a home. It is an affordable way to achieve the dream of home ownership by helping them get into an affordable Minnesota Mortgage with no down payment and a very favorable Minnesota mortgage rate.

The circle around the Twin Cities where it is available is Goodhue County, Rice County, Northfield, Randolph, Western half of Carver County, Leseur, Sibley County, Elko, New Prague, Belle Plaine, Norwood, Cologne, Waconia, Mayer, Watertown, Delano, Buffalo, Monticello, Big Lake, Zimmerman, Isanti County, and all of Chisago County except Wyoming. Any property further out is qualified except St. Cloud, Duluth, Hibbing, Rochester, and Mankato.

For help finding a Minnesota real estate agent, visit www.Agentopolis.com and if you are looking for a web site where you can see Minnesota real estate, homes for sale and MLS listings, visit www.mlsmaps.com For First Time Home Buyer Information, visit www.firsthomeguide.com information

The $700 Billion Bailout and Buying a Home

2008-10-02T23:40:00.007-05:00

In case you haven't heard, seller fund down payment assistance officially ended on Tuesday, September 30th. Thanks to the wisdom of our government, the same brain trust that wants us to get behind a t $700 billion bailout of their crooked buddies on Wall Street. The implications will be far and wide and the trouble with the current proposed bailout is that it is coming before the full effects of the canceled seller funded down payment program will be realized by the housing markets.

Here is what's going to happen; The government is going to pass their pork ridden $700 billion bail out, in about 6-12 months home sales will have dropped off by another 20%, this will drive home values down further and faster than any of the geniuses at the government foretasted, there will be a new round of foreclosures, more bank failures, (after the $700 billion bailout that was supposed to save us) and in order to avoid another "economic Pearl Harbor" the government will need about another $500 billion dollars to bail us out again. Catastrophic! We did it to ourselves, I think it's time our country bit the bullet, let the whole thing more quickly run it's course, and then we can all get on with our lives and making a living.

That's the bad news. The good news is there are plenty of homes for sale and great deals to be had, so if you are actually looking for a place to live, raise a family and become part of a community, this is a great time to buy a home. If you are trying to sell a home you purchased in the past 2 years, you'll either want to wait out the storm or get ready to drop your price. This isn't true in every city and neighborhood as there are still pockets of strong housing values, usually associated with great school districts and highly desirable suburbs and neighborhoods.

The other good news is that there still is and always will be mortgage available for people to buy homes, as long as they have great, yes GREAT credit, in spite of what you have been hearing in the news lately about the credit crunch.

Happy House Hunting.

New FHA Loan Limits have little affect on Minnesota Home Buyers

2008-08-30T09:17:00.004-05:00

As part of President Bush's economic stimulus package, FHA loan limits will change across the country. The new loan amounts vary by state and county so in order to find out exactly how you may be affected, you can go directly to the FHA Mortgage Limit s page. As you will see, most counties FHA mortgage limit is $271,050 but a few counties like Hennepin, Anoka, Carver, Chisago, Dakota, and Isanti have FHA mortgage limits of $365,000 as they tend to have more expensive homes than some of the more rural counties. These loan limit numbers are for single family homes, there are different fha loan limits for multi-family homes. These fha loan limits were last revised on March 5th, 2008.

If you are looking for homes in Minnesota or any other state and you want to see all the homes available at the new loan limit, visit www.mlsmaps.com to see a list of all mls listings for free.

Minnesota First Time Home Buyers Lose a Big Down Payment Assistance Program

2008-08-02T10:11:00.005-05:00

Many Minnesota first time home buyers will not be able to purchase their first home after October 1st, 2008 as the government slipped something into the recent housing bill that will kill the current seller funded down payment assistance programs that occur through non-profits like Nehemiah.

While the government is supposed to be helping the housing market and making it easier to get home financing, the did a complete 180 degree turn on the issue of down payment assistance. According to the National Association of Realtors, 45% of first time home buyers need some type of down payment assistance. If the number were only 25%, imagine what will happen to the already battered housing market on October 2nd. If roughly 25% of home buyers leave the market, home prices will go down even further and faster. Inventory of mls listings is already at levels that make it difficult to quickly sell a home or sell a home at what it was once worth. These new changes are really going to wreak havoc on the housing industry over the winter but in the end, maybe we needed to get back to the days when there was no such thing as buying a home with nothing down. Who knows? Time will tell.

One Less Provider of Minnesota Mortgages

2008-07-22T07:20:00.006-05:00

The number of lenders providing Minnesota mortgages dropped by 1 this week as Wachovia reported a second quarter loss of $8.9 billion dollars and announced it will be exiting the wholesale mortgage business and slashing 6,350 jobs.

What this means for people looking for a Minnesota mortgage is there will be less competition for their business. The problem with fewer competitors in a free market like ours is the few remaining providers are able to start increase their mortgage rates without fear of one of many competitors coming in and offering a lower mortgage rate.

Still, the best thing to do when looking for a Minnesota mortgage or a Minneapolis mortgage is contact a Mortgage Broker as even with all the lenders closing their doors recently, brokers like Metropolitan Financial Mortgage Company have over 50 lenders they can go to when shopping for the best rate for their clients.

No Money for a Down Payment is Second Biggest Obstacle to Buying a Home

2008-07-16T22:32:00.005-05:00

According a Harris Interactive poll, the second biggest barrier to buying a home is coming up with the down payment. Roughly 28% of those surveyed gave this as their reason for not buying a home. 28%, think about it, if HUD has there way and is able to eliminate the down payment assistance program, 28% fewer first time home buyers will be able to buy their first home next year. This translates into roughly 28% fewer sellers will have a buyer for their home so they can move up.

If you're thinking about buying your first home in the near future and you have little or no money for a down payment, let your voice be heard by visiting SupportHomeOwnership.com to drum up public support for the programs. This Web site includes a form for submitting a letter to federal and state lawmakers. Don't leave it up to the "other guys" take action and reserve your right to the American dream, homeownership.

Fortunately first time home buyers in Minnesota can still qualify for a Minnesota FHA loan and Minnesota down payment assistance.

Incidentally, the biggest barrier to buying a home in the Harris poll was high home prices.

Minnesota Mortgage Loan Landscape Is About To Change

2008-07-14T10:48:00.004-05:00

Minnesota Mortgage Loans are about to change, again. The Feds, reacting to the Fannie Mae and Freddie Mac Crisis and the fall of IndyMac Bank, are coming out with yet another set of rules which will govern who qualifies for a Minnesota mortgage and who will not.

Ben Bernanke, the Fed Chairman and his colleagues at the Central Bank approved a plan Monday that would crack down on questionable lending practices in an effort to protect many of the riskiest "subprime" borrowers -- people with tarnished credit histories or low incomes. Here is a list of some of the proposed changes taken from an AP article today (follow link for complete article http://biz.yahoo.com/ap/080714/fed_mortgage_crisis.html);

-- bar lenders from making loans without proof of a borrower's income.

-- require lenders to make sure risky borrowers set aside money to pay for taxes and insurance.

-- restrict lenders from penalizing risky borrowers who pay loans off early. Such "prepayment" penalties are banned if the payment can change during the initial four years of the mortgage. In other cases, a penalty can't be imposed in the first two years of the mortgage.

-- prohibit lenders from making a loan without considering a borrower's ability to repay a home loan from sources other than the home's value. The borrower need not have to prove that the lender engaged in a "pattern or practice" for this to be deemed a violation. That should make it easier for borrowers to lodge a complaint.

While these are good rules, it's always sad when our government has to step in and put controls on a free market because as consumers, we don't appear to be smart enough to manage things on our own. Stay tuned as we follow these developments and how they will affect people looking for a Minnesota Mortgage.

Minnesota mortgage rate and Payment calculations

2008-07-07T11:19:00.003-05:00

I have been getting a few requests lately for a table showing the mortgage payment per $1,000 of mortgage debt for different interest rates. The table below is for 15, 20 and 30 year mortgages with a 1/8% change between interest rates. If you have any questions about this information or you would like to use our online mortgage calculator, please visit www.firsthomeguide.com. If you would like access to millions of homes for sale and mls listings all over the country, visit www.mlsmaps.com.

Monthly mortgage payment per $1,000 of mortgage


% Rate	15 Year	20 Year	30 Year
4.625	$ 7.71	$ 6.39	$ 5.14
4.75	$ 7.78	$ 6.46	$ 5.22
4.875	$ 7.84	$ 6.53	$ 5.29
5	$ 7.91	$ 6.60	$ 5.37
5.125	$ 7.97	$ 6.67	$ 5.44
5.25	$ 8.04	$ 6.74	$ 5.52
5.375	$ 8.10	$ 6.81	$ 5.60
5.5	$ 8.17	$ 6.88	$ 5.68
5.625	$ 8.24	$ 6.95	$ 5.76
5.75	$ 8.30	$ 7.02	$ 5.84
5.875	$ 8.37	$ 7.09	$ 5.92
6	$ 8.44	$ 7.16	$ 6.00
6.125	$ 8.51	$ 7.24	$ 6.08
6.25	$ 8.57	$ 7.31	$ 6.16
6.375	$ 8.64	$ 7.38	$ 6.24
6.5	$ 8.71	$ 7.46	$ 6.32
6.625	$ 8.78	$ 7.53	$ 6.40
6.75	$ 8.85	$ 7.60	$ 6.49
6.875	$ 8.92	$ 7.68	$ 6.57
7	$ 8.99	$ 7.75	$ 6.65
7.125	$ 9.06	$ 7.83	$ 6.74
7.25	$ 9.13	$ 7.90	$ 6.82
7.375	$ 9.20	$ 7.98	$ 6.91
7.5	$ 9.27	$ 8.06	$ 6.99
7.625	$ 9.34	$ 8.13	$ 7.08
7.75	$ 9.41	$ 8.21	$ 7.16
7.875	$ 9.48	$ 8.29	$ 7.25
8	$ 9.56	$ 8.36	$ 7.34

As always, feel free to call me with any questions, Ken Horst, at 612-251-8237.

Minnesota First Time Home Buyers Flock to First Home Guide

2008-07-01T14:21:00.003-05:00

Minnesota first time home buyers have been coming to www.firsthomeguide.com in droves lately motivated by falling home prices and low interest rates. Here is a list of some of the terms Minnesota first time homebuyers were typing into the search engines to find First Home Guide, Minnesota's premier first time home buyer resource and property search.

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First time home buyers from around the US also found www.mlsmaps.com very useful for helping them find homes and MLS listings in there local areas.

Minnesota Mortgage Rate Update for June 13th

2008-06-14T09:14:00.004-05:00

Minnesota mortgage rates have moved up significantly over the past two weeks. Below is a day by day history of 30 year fixed Minnesota mortgage rates for the week ending Friday, June 13th.
Monday = 6.375% apr = 6.623%
Tuesday, = 6.375% apr = 6.623%
Wednesday = 6.375% apr = 6.623%
Thursday = 6.50% apr = 6.746%
Friday = 6.625% apr = 6.937%

These Minnesota mortgage rates are brought to you by Metropolitan Financial Mortgage Company, a Minnesota mortgage broker in Richfield and represent the rates from one of our mortgage lenders.

For a current Minnesota mortgage rate quote, call Ken Horst at 612-251-8237

To see all the mls listings in Minnesota and in 230 other cities in the US, visit www.mlsmaps.com

Minnesota Mortgage Brokers Numbers Dwindling

2008-06-06T10:06:00.003-05:00

A recent article on StarTribune.com highlighted the plight of the yellow bellied Blue Jay and other rare breeds of life including the Minnesota Mortgage Broker. Acorrding to the article, the number of Minnesota mortgage brokers have dropped from 4,000 in 2007 to 1,319 today. Sightings are down for both of these but it appears that the Minnesota Mortgage Broker is still more prevalent.

Whew! Thank God for that because I am a Minnesota mortgage broker and the thought of extinction makes me nervous. After all, who else would work tirelessly to find their clients the lowest rates on mortgages or discount closing costs? Who else would be able to shop for the best rate from a list of lenders including Countrywide and Wells Fargo? Who else answers their phone what seems like 24 hours a day to answer questions from clients, Realtors, first time home buyers and other interested parties. Who else runs their business like an owner knowing they are 100% responsible for the results and making sure they have put together a team of professionals who can contribute to the goal of exceeding client expectations so as to keep their small business healthy and be able to offer mortgages at more competitive rates and costs than some of the countries biggest lenders?

So what exactly did Minnesota do for people looking for a mortgage? They made it easier for the honest, hardworking small Minnesota Mortgage Broker to be found by running out all the crooks, there by protecting the People of Minnesota from evil doers in the mortgage industry. It's funny to me how the larger percentage of Minnesota home owners and home buyers were able to sniff out and avoid these crooks without any government intervention. It's also good to know that with or without Minnesota's effort to save the people, even though they did it after the horse was out of the barn, the good people on Wall Street and investors all over the world had already taken care of a majority of the mortgage debacle by refusing to buy certain types of risky mortgages.

Thanks Minnesota and thanks to all the home owners and home buyers in Minnesota who have trusted me with their mortgage transactions over the past 6 years.

Down Payment Assistance for Minnesota First Time Home Buyers

2008-05-13T17:18:00.005-05:00

We have had a lot of interest recently from Minnesota first time home buyers inquiring about down payment assistance programs like the Nehemiah program, so we have scheduled a free online seminar where we will explain how the down payment assistance program works and how to find out if you qualify. Simply click on the link below to register.

Down Payment Assistance Programs In Minnesota

Join us for a Webinar on May 31

Space is limited.
Reserve your Webinar seat now at:
https://www2.gotomeeting.com/register/453570788

Learn about Down Payment Assistance programs available to Minnesota Home Buyers

Title:		Down Payment Assistance Programs In Minnesota

Date:		Saturday, May 31, 2008

Time:		11:00 AM - 11:30 AM CDT

System Requirements
PC-based attendees
Required: Windows® 2000, XP Home, XP Pro, 2003 Server, Vista

Macintosh®-based attendees
Required: Mac OS® X 10.3.9 (Panther®) or newer

More Restrictions for Nontraditional Minnesota Mortgages

2008-05-04T10:49:00.005-05:00

It's getting even tougher to get a mortgage in Minnesota and everywhere else in the country as Freddie Mac, one of two government sponsored enterprises that buys mortgages on the secondary market, pools them, and sells them as mortgage-backed securities to investors on the open market, said as of August 8th, 2008 it will restrict financing for a number of different types of mortgages. Additionally, some of the major providers of Private Mortgage insurance including Genworth Financial, PMI Group, and MGIC will also be tightening the standards on borrowers who want mortgages and don't have 20% for a down payment, or 20% equity in their home if they are refinancing. Here is a list of just some of the loan scenarios that will be tough if not impossible to obtain;

Cash-out refinancing
Loans to borrowers without full documentation of income, also know as stated income or limited doc loans.
Mortgages for some second home purchases.
Loans for investment properties where the investor already owns at least three other rental properties.
Mortgages to borrowers with nontraditional credit because they don't have enough traditional credit items on their credit report.
ARMs where the mortgage will adjust within five years.

There are more restrictions coming every week from a number of different players including Freddie Mac, Fannie Mae, mortgage insurance companies and individual lenders who are changing or dropping loan programs as it becomes impossible to find buyers for these loans on the secondary market.

For more information on this topic, read Kenneth Harney at the StarTribune.com

Minnesota Mortgage Rates Update

2008-04-26T16:16:00.005-05:00

Minnesota mortgage rates have moved up slightly over the past two weeks. Below is a day by day history of 30 year fixed Minnesota mortgage rates for the week ending Friday, April 25th.
Monday = 6.00% apr = 6.15%
Tuesday, = 6.00% apr = 6.15%
Wednesday = 6.00% apr = 6.15%
Thursday = 6.125% apr = 6.275%
Friday = 6.125% apr = 6.275%

These Minnesota mortgage rates are brought to you by Metropolitan Financial Mortgage Company, a Minnesota mortgage broker in Richfield.

For a current Minnesota mortgage rate quote, call Ken Horst at 612-251-8237

To see all the mls listings in Minnesota and in 230 other cities in the US, visit www.mlsmaps.com

Should I Escrow for Taxes and Insurance?

2008-04-20T08:45:00.005-05:00

I received a call recently from a past client who was asking about her escrow for tax and insurance. She had been talking with a friend who suggested to her that she try to close the escrow account and pay her property taxes and hazard insurance separately on their own. Her friends biggest reason for this was her belief that the lender is earning interest on your money, instead of you. Here are a few of the reasons why I suggested that she was better off escrowing taxes and insurance;

1. Most lenders will charge a slightly (.125 - .25%) higher interest rate if you do not escrow. Some lenders will allow you to wave this if you have a large enough down payment, at least 20% down.

2. Your money earns interest in your escrow account for you not the lender. Granted it is not a lot of interest, but it is interest earnings in the right direction.

3. You'll never have to worry about some unexpected expense, medical, major auto, etc., wiping out your tax and insurance reserves and causing a delinquent property tax situation.

One of the big arguments against escrowing is that people feel they can invest those dollars and earn a higher rate of return than the lender. Unless you are a seasoned investor, this rarely plays out and the higher the interest rate you are trying to earn with your money, the greater the risk. In addition to that fact, we are not talking about a lot of money to invest for most of us as your escrow balance is capped at only 3 months worth of property taxes and 3 months worth of interest. Your taxes are paid every 6 months, which generally isn't enough time to make a killing in the stock market and your property insurance is paid every year but is usually under $1000, depending upon where you live and the replacement cost of your home, not a lot of money for your stock broker to play with.

So the bottom line is this, I recommend escrowing for most of my clients and I have always escrowed my own taxes and insurance. At a three month reserve cap, we are generally not talking about a lot of money and the amount of time you will need to manage that money and try to earn a better rate of return may not be worth the return, especially if your investment idea tanks and you end up losing your reserves in the market.

Nehemiah, FHA, and Minnesota Home Buyers

2008-03-06T07:20:00.006-06:00

Minnesota Home Buyers, primarily those with moderate to low income, got a big break recently as a federal judge ruled that HUD did not adequately explained their decision to reverse a policy allowing seller-funded down-payment assistance on FHA-backed loans.

What this means for home buyers nationwide is that 100% home financing is still available through a combination of the FHA and down payment assistance (DPA) companies like Nehemiah. This was seen as a huge victory for home buyers but one that may not last forever as it appears as though HUD is not giving up on the rule change and wants to replace DPA programs with risk-based pricing, which HUD says will lower or eliminate down-payment requirements for some borrowers.

Here are some of the features of the Nehemiah program:

Gift funds up to 6% of the final contract sales towards your downpayment and/or closing costs
Gift funds for both first time and repeat homebuyers
(Nehemiah charges a nominal processing fee that may be paid by the seller, homebuyer, or lender.)
Gift funds for both new construction and resale homes
No repayment of gift money
No income or asset limits
No geographical restrictions

If you are a qualified homebuyer using an eligible loan program, such as an FHA loan, you may be able to move into your new home with zero cash out of pocket! The Nehemiah Program can help you become a homeowner!

For more information or to see if you qualify, call Ken Horst at 612-251-8237

Minnesota Mortgage Rate Update

2008-03-02T10:04:00.004-06:00

Starting next Friday, March 7th, MN Mortgage Blog will be posting the "Minnesota Mortgage Rate Weekly Review". This will allow Minnesota home buyers and owners to see for themselves just how wildly interest rates have been fluctuating lately, and give you a better understanding of the rate trends so you can better determine the best time to lock in your rate whether for a refinance or to purchase a home in Minnesota.

Ever Since the 30 year mortgage rate hit 5.00% for about an hour on January 23rd, I've had a ton of people call and email me asking me to keep an eye out for a certain rate that they are hoping and waiting for.

Starting next Friday we will also have a way for you to subscribe for our "MN Rate Watch". It's free and it's the best way to make sure you don't miss out on the next big rate drop as they seem to coming and going a lot faster these days. Stay Tuned!

Minnesota Mortgage rates closed Friday, February 29th as follows;

6.0% for a 30 year fixed mortgage (apr 6.43%)
5.25% for a 15 year fixed mortgage (apr 5.71%)

These rates are based on conforming standards regarding credit score, debt to income and loan to value ratios.

Call Ken Horst at Metropolitan Financial Mortgage Company at 612-251-8237 for more information or to get started.

The Death of 100% Financing in Minnesota

2008-02-28T21:37:00.007-06:00

I attended a meeting today with an account rep from one of the biggest lenders in the country. She told us that in the very near future we can pretty much forget about 100% financing in Minnesota for a number of reasons;

1. These are some of the loans that investors are currently losing their butts on.
2. There are no longer any investors who want to buy these mortgages.
3. The mortgage insurance companies have decided not to write mortgage insurance over 95% in Minnesota.
4. The market for second mortgages up to 100% died awhile back as lenders who wrote these loans have really taken a beating lately with all the foreclosures and short sales.

Over the past few days it has been a mad scramble by Minnesota real estate agents, loan officers, lenders and everyone else involved in the transaction to quickly close as many 100% loans as we could before they are gone for good. The next few months will be very challenging for Realtors, Minnesota mortgage brokers and home buyers as we search for ways to get people into homes who have little or no money for a down payment.

Our only saving grace may be FHA financing where borrowers can still qualify for 97% financing and may also qualify for a down payment assistance (DPA) program of another 3% bringing the total financing to 100%. If you are thinking about buying a home this year and you have little or no money for a down payment, you'll want to move fast as this last hold out of 100% financing may not last for long.

Also, keep in mind that there are still plenty of great homes for sale in the Minneapolis metro area. You can see about 20,000+ of them at www.mnonlinemls.com

Declining markets in Minnesota

2008-02-25T21:13:00.001-06:00

Recently I had a loan for a purchase pre-approved for a Minnesota mortgage by Fannie Mae for 100% financing. I called my lender rep and asked about "declining markets" and whether the county and city where my borrowers home was located was in a declining market. He said to the best of his knowledge. it was not. When we got our approval and moved on to the next step. Then the lender said that in fact the home was in a declining market and said we must cut our LTV (loan-to-value) to 95% and since it appeared that our borrower didn't have 5% funds sourced and seasoned, they denied the loan.

Get this, the appraisal, a rock solid appraisal I might add, came in at $219,000. The purchase agreement was for $198,000, approximately 10% below the appraised value. I asked my lender rep, "does declining markets refer to appraised value or loan to value?" He said he didn't know. I said, "well think about it, if the tag "declining markets" simply says that home prices in this area are going down and we are going to knock 5% out of the deal to cover our butt, than if you have a buyer who is buying a foreclosure or short sale in the area, and there is a solid appraisal which shows the value at 10% or greater than purchase price, wouldn't it make sense to allow 100% financing because the lender still has covered their butt and then some. The lender rep agreed that it made sense but wasn't sure if that is how it would go down.

Guess what? If lenders cry "declining market" all across the country and don't acknowledge the purchase of foreclosures and short sales well below the market to go through at 100% financing, we are all in for a rude awakening, especially the feds and our president because if you think the housing market and our economy is bad now, just wait until the few remaining buyers with good credit, good income and no money for a down payment get kicked to the curb.

In the end, I got the loan done at 100% but the future of 100% is not looking good and if it should go by the way side, get ready for another tough year in real estate.

How do I remove mortgage Insurance?

2008-01-31T00:59:00.000-06:00

Removing mortgage insurance is something that can happen when the loan-to-value of your home mortgage reaches 80% or less. This happens as a result of two things, paying down principle and your house appreciating.

If you get to the point where you think your mortgage balance is less than 80% of the value of your home, you must call your mortgage company and ask them to remove your mortgage insurance. Mots companies will run an AVM or automated valuation model to determine the value of your home. AVMs are generally accurate but not always, so if the value comes in low and you get denied, you still have the option of ordering an appraisal.

With most if not all lenders you still have the right to hire an appraiser and get a professional assessment of value. If your appraiser comes back with the right value, you can submit that to your lender and ask them to remove the MI. They still reserve the right to review the appraisal. If after review your lender agrees with the appraised value, they will remove your mortgage insurance.

In my personal experience, my appraisal came in a few thousand low and as a result I spent $300 for nothing. With hindsight I would have told the appraiser what I needed for value and asked for a comp check. This is where they give you a good estimate of value based on recent sales of comparable homes in your area. If they come back with what you need, you order a full appraisal and send it to your lender. If the comp check comes up short, you don't order a full appraisal saving yourself a few hundred dollars.

Call your loan officer and ask them to do this for you as most mortgage loan officers will probably be using the same appraiser they used for your last appraisal and be able to get you a comp check at no charge.

Mortgage Insurance Calculator

2008-01-30T14:36:00.000-06:00

Mortgage insurance has long been avoided with the 80/20 mortgage of late. These days it is getting harder and harder to find a lender that will offer a second mortgage up to 100% CLTV (combined loan to value) because in light of all the foreclosures, the companies holding the second mortgages are losing the most money.

One question that most loan officers struggle with when working with 100% financing is "What will my mortgage insurance payment be per month?" Worse yet, sometimes they forget to mention it as most of us loan officers have been writing 80/20 loans for the past five years.

To help loan officers and borrowers I have included a link in this blog for a mortgage insurance calculator. When loan officers and/or borrowers use this, everyone knows exactly what the MI will be.

To calculate your PMI ( private mortgage insurance ) payment follow this link, mortgage insurance calculator

Buying a foreclosure from Countrywide requires Countrywide loan approval

2008-01-19T10:42:00.000-06:00

I'm not perfectly sure if it is true or not but I heard this week from a real estate agent that if anyone wants to make an offer on a foreclosure that is owned by Countrywide, they will need to be pre-approved by Countrywide for the mortgage.

What a great idea for Countrywide. This would allow them to maintain their gigantic servicing business by simply switching out non-performing borrowers with better qualified lower risk borrowers.

Fortunately Countrywide has a very good wholesale division which allows independent mortgage brokers like me to offer home buyers even lower rates than Countrywide itself.

If you are shopping for foreclosures in Minnesota and come across something you like that is owned by Countrywide, please give me a call, Ken Horst at 612-251-8237. I'll be able to get you approved quickly and at a very competitive rate.

Minnesota Mortgage Rates

2008-01-15T15:43:00.000-06:00

Minnesota mortgage rates have continued to go down over the past few days and are now at;

5.5% for a 30 year fixed mortgage
4.875% for a 15 year fixed mortgage

On a $250,000 your payment would be $1,419.47 fixed for 30 years.

Call Ken Horst at Metropolitan Financial Mortgage Company at 612-251-8237 for more information or to get started.

List of FHA approved condo projects

2008-01-14T21:34:00.000-06:00

OK, after a little more research and the help of a great Lakeville Real Estate Agent, I can now offer you this link as well. It is a link to the list of FHA approved condominium projects on the HUD site for all states. I highly recommend you check this list before you look at or make an offer on any condos if you are planning to use FHA financing. Remember you can always try a spot approval if your property is not on this list and/or be sure to check with the HOA Home owners Association to see if the approval is already in process. Good Luck!!

FHA Approved condominium projects

FHA Loans For Condos in Non-FHA Approved Projects

2008-01-14T12:56:00.000-06:00

I'm in the middle of trying to get a loan done for a very qualified FHA candidate who is looking at condominiums. We have to go FHA as the borrower does not qualify for a conforming product. The home buyer has found a condo they are interested in but we have come to find out that the condo project is not already on the FHA approved project list.

Fortunately there is still a way to get these types of units done through the FHA. It's called "spot approval" and it is done on a unit by unit basis. The bottom line is the Home Owners Association must complete a Spot Approval questionnaire and if that comes back with all the right answers, you have a pretty good chance of getting the loan to go through. I have copied and pasted the guidelines and questions required for spot approval.

U. S. Department of Housing and Urban Development

Washington, D.C. 20410-8000

August 1, 1996

MORTGAGEE LETTER 96-41

TO:  ALL APPROVED MORTGAGEES

SUBJECT:  Single Family Loan Production - Condominium Units in

            Non-FHA Approved Projects; Mortgage Insurance

     On May 29, 1996, in 61 FR 26982, the Department issued a

final rule in the Federal Register, permitting the insurance of

mortgages on individual units in condominium projects that have

not been previously approved by the Department.  That final rule

established a "spot loan" procedure to provide home mortgage

insurance on individual units in condominium projects where there

is little likelihood that the project's homeowners association

would make the requisite changes to its legal documents (usually

to benefit one association member) to obtain FHA approval.  This

Mortgagee Letter provides further guidance on the use of these

spot loans.

     The Department's requirements for condominium projects are

set forth in 24 CFR 234.26 of the Code of Federal Regulations.

The spot loan provisions add a sub-section (i) to this section

and lists specific criteria that must be met.  The new spot loan

regulations also add a new section, 24 CFR 206.51, to the Home

Equity Conversion Mortgage (HECM) regulations.  The HECM program

incorporates by reference the project requirements set forth in

24 CFR 234.26(i).  Therefore, spot loans may be used under both

the Department's Section 234(c) and HECM programs.  Cooperatives

and planned unit developments (PUDS) are not eligible for spot

loans.

     The following requirements must be satisfied before a spot

loan is endorsed:

         The condominium project must be complete.  There should

     be no ongoing or anticipated addition of any units, common

     elements, and/or facilities.

         Control of the common areas of the project must have

been

     turned over to the unit owners association for at least one

     year.

-2-

         The owners association must provide evidence that the

     project has the appropriate hazard, liability and flood

     insurance.

         Individual units in the project must be owned in fee

     simple or be an eligible leasehold interest.  The project's

     legal documents must provide for undivided ownership of

     common areas by unit owners.  By virtue of this ownership,

     unit owners must have the right to use all facilities and

     unrestricted common elements.

         The project's documents should not place any legal

     restrictions on conveyance.  Any provisions that seek to

     limit the free transferability of title is generally

     unacceptable.  Such restrictions include rights of first

     refusal and restrictive covenants.  Certain governmental or

     nonprofit programs designed to assist in the purchase or

     rental of low-or moderate-income housing are exempted from

     the restrictions on conveyance provisions.  The Department's

     policy on the free assumability and transferability of

     property is set forth in 24 CFR 234.66.

         At least 90% of the units in the project must have been

     sold.

         At least 51% of the units in the project must be owner-

     occupied.

         No single entity may own more than 10% of the units in a

     project.  "Entity" includes an individual partnership,

     corporation, limited liability company, limited liability

     partnership, joint venture, investor group or other natural

     or legal person qualified to hold an interest in real

     property.  The 10% restriction does not apply when the

     ownership of less than three units would disqualify an

     otherwise eligible project.

         The Department recognized that the 10% cap on the number

of

     units that may secure FHA insured mortgages in a given

     project can place a small regime at a disadvantage, since

     only a few units will invoke the limit. Accordingly, a two-

     tiered system was established.  For condominium projects

     having more than 30 units, no more than 10% of the units may

     have FHA insured loans at any given time.  Condominium

     projects consisting of 30 units or less, can have up to 20%

     of the units encumbered by FHA insured mortgages under the

     spot loan rule.

-3-

     Mortgage lenders underwriting spot loans must perform

sufficient investigation and analysis to certify that the

condominium project satisfies the eligibility criteria.  Under

the regulations, mortgage lenders may employ a wide range

of approaches to ascertain compliance with the spot loan

requirements.  Project developers, appraisers, owners,

associations, management companies and real estate brokers are

among the sources of information lenders may use.  To the extent

that the Department has information that can be of assistance, it

will provide mortgagees with that information.  However, it

remains the lender's responsibility to ensure the accuracy of the

information it relies upon in making its certification.

     Attachment 1 is a suggested checklist lenders may wish to

use in their underwriting analyses.  It reflects some key

considerations in assessing the eligibility of a project for spot

loans.

     The standard Direct Endorsement Underwriter Certifications

applicable to condominiums under standard loan programs and the

HECM program are not sufficient for spot loan applications.  Some

modification is needed.  Accordingly, the following certification

is added to the list of Direct Endorsement (DE) certifications in

Appendix 3 of Handbook 4000.4, Rev. 1, Ch. 1 and to the list of

Underwriter Certification (HECM) in Appendix 3A of Mortgagee

Letter 95-54 :

     ( ) The property is in a project that has not received

     prior approval by HUD but the requirements of 26 CFR

     234.26(i) are met.

     This certification requirement will be in effect for all

mortgages executed on or after 30 days from the date of this

Mortgagee Letter.  A similar statement may be used until the

requirement for a certification becomes effective.

     Local HUD Offices and Regional Processing Centers will

conduct random reviews of mortgage loans insured under the spot

loan program.  Mortgage Lenders demonstrating a pattern of abuse

will be subject to those enforcement mechanisms and sanctions

governing FHA mortgage insurance activity.

     The spot loan program is designed to relieve a burden on

homebuyers in successfully-operating, non-approved condominium

projects where FHA involvement is limited; it must not be used to

circumvent the general requirement that a condominium project be

approved before a mortgage on any unit in that project can be

endorsed for insurance.  As previously noted, the approval

requirements for condominium projects are found in 24 CFR 234.26,

(a)-(h).  Additional requirements are set forth in Chapter 11,

HUD Handbook 4150.1 Rev 1, entitled "Valuation Analysis for Home

-4-

Mortgage Insurance" and reiterated in HUD Handbook 4265.1 ,

entitled "Home Mortgage Insurance - Condominium Units - Section

234(c)".

     Questions regarding spot loans and condominium project

approvals should be directed to the Single Family Division of the

local HUD Office.

Sincerely yours,

Nicolas P. Retsinas

Assistant Secretary for Housing-

Federal Housing Commissioner

Attachment

        SUGGESTED CHECK LIST FOR SPOT LOAN APPROVALS

_______ 1.  The legal documents of the homeowners association

do not contain a right of first refusal or restrictive covenant.

_______ 2.  The unit is part of a condominium regime that

provides for common and undivided ownership of common areas by

unit owners.

_______ 3.  The project, including the common elements, and those

of any Master Association, are complete, and the project is not

subject to additional phasing or annexation.

______  4.  (a)  There are no special assessments pending.

______      (b)  No legal action is pending against the

condominium association, or its officers or directors.

______  5.  The common areas have been under the control of the

homeowners association for at least one year.

______  6.  At least 90 percent of the total units in the project

have been sold.  Verified by _________________________.

______  7.  At least 51 percent of the total units in the project

are owner-occupied.  Verified by ______________________.

______  8.  There are no adverse environmental factors affecting

the project as a whole or individual units .

______  9.  No single entity owns more than 10 percent of the

total units in the project.  Verified by ______________________.

______ 10.  The units in the project are owned in fee simple or

the units are held under a leasehold acceptable to FHA.

Leasehold in file.

______ 11.  The owners association has adequate common area

insurance coverage.  General liability, replacement coverage,

etc. reflects the character, amenities and risks of the

particular development.  Flood and other insurances carried, when

applicable.

______ 12.  General maintenance level of common elements is

acceptable and there is no deferred maintenance, based on the

comments by the Appraiser and/or the pictures.

______ 13.  The owners association has a reserve plan and a

reserve fund, separate from the operating account, that is

adequate to prevent deferred maintenance.  The amount of the fund

is $_________ as of __________.

-2-

_______14.  (a)  For projects consisting of over 30 units, no

more than 10 percent of the total units are encumbered by FHA

insured mortgages.  Verified by ___________________.

_______     (b)  For projects consisting of 30 units or less, no

more than 20 percent of the total units are encumbered by FHA

insured mortgages.  Verified by _______________.

____________________________________     ________________________

       (Mortgagee)                           (Reviewer)

____________________________________     ________________________

       (Address)ss)                             (Title)

____________________________________     ________________________

                                             (Date)

__________________________________        _______________________

  (Condominium Project Name)                 (FHA case number)

__________________________________

  (Address)

__________________________________

_______________

How soon can I refinance if I just purchased my home?

2008-01-10T08:25:00.000-06:00

This is another question that has been coming up more lately as people are buying homes and foreclosures at deeply discounted prices and want to know how fast they can tap into their equity and/or get rid of any mortgage insurance if the loan to value when they purchased was over 80%.

Recently I came across another Minnesota mortgage lender who offers a perfect solution to this problem. Historically most lenders would only allow a borrower to refinance a home they recently purchased by using the purchase price as the value for the new loan. After 12 months (the traditional seasoning requirements) the homeowner can get a new appraisal and tap into their equity and/or remove any PMI (private mortgage insurance). I can now offer Minnesota mortgage clients the ability to refinance their newly purchased homes right after the purchase using a new appraisal. There are a number of situations where this would make perfect sense.

One scenario is if you bought a deeply discounted home or foreclosure with little or no money down. These 100% mortgages are still readily available in the Minneapolis metro through Fannie Mae, Freddie Mac and FHA programs. For example you buy a foreclosed home with a purchase price of $124,000 with no money down so your loan to value is 100%. The home however appraises at $180,000. Your equity position based on the appraisal is 68% but because of how lenders use purchase price to determine loan to value, you end up with a slightly higher interest rate and having to pay mortgage insurance.

With our "no seasoning" requirements loan, you can now refinance that home within weeks of the purchase as either a rate and term, which means you finance the same amount as before with no cash out, or you could do a "cash out" refinance to tap into your instant equity. Either way, as long as you keep your new loan to value under 80%, you will benefit from a lower interest rate and no mortgage insurance.

Some things to keep in mind; you will have a closing costs again so you should go back to your original mortgage broker and ask them to do the new loan with no origination fee as they recently made a fair amount of money from your recent purchase.

The most important point for mortgage originators is to remember that many lenders will charge back your fees if your client refinances within a certain period of time, usually within 3-6 months. The bottom line is to work with your loan officer and plan for this scenario in the event that you are able to buy a home at an unbelievably low price and know you will want to refinance early to capitalize on your equity or lower your interest rate.

This option will be much more popular in the coming months as more homes go into foreclosure and banks are forced to lower prices even more because of the glut of homes on the market.

Can I refinance my home if it was recently for sale?

2008-01-08T12:15:00.000-06:00

With the tough housing market we are currently facing, many home sellers have decided to take their home off the market in hopes that they can put it back on the market when things have turned around. One of the questions I have been getting more and more lately is, "can I refinance my home if it was listed for sale recently?"

There are a couple of different answers to this question as the answer depends on what you are trying to accomplish. If you just want to do a "rate and term" refinance, which allows you to roll in your closing costs but doesn't give you any cash out, the answer is yes. The best news is that now through one of our lenders, you can do this only one day after your home has been taken off the MLS (multiple listing service).

There are two main benefits to doing this, one, if you can get a lower interest rate, either fixed or adjustable if you still plan to sell your home within the next three years, you can lower your monthly payments. The second benefit is that with a refinance, depending on when you close, you won't have to make your mortgage payment for two months. While there are those who would say the benefits don't out weigh the costs (closing costs) depending upon the home owners situation, it may in fact make perfect sense.

Imagine if you have lowered the price on your home multiple times while it was on the market and have realized that in this market your home is currently worth 5-10% less than what you originally listed it for. If by waiting 1-3 years to put your home back on the market you are able to regain some if not all of that depreciation, your closing costs are more than covered in that short period of time and you got the benefit of lower payments during the waiting period. In addition, the two month skip in mortgage payment could be critical to home owners who need that extra money to get caught up, or to make improvements to their home to make it more saleable in the future.

The other situation that people are asking about is can they refinance their home after it's been on the market and take some cash out. The answer is yes but for most lenders, they will have to wait until their home has been off the market for at least 90 days. Again, while not all lenders offer this mortgage option, as a Minnesota mortgage broker we have at least one lender who is promoting it especially in light of the current housing market.

H.R. 3915 Federal Legislation Summary

2007-11-04T21:22:00.000-06:00

Federal legislation (H.R. 3915) affecting our industry will be heard by the House Finance Committee in Washington D.C. on Tuesday, November 6th. While this proposed legislation includes items that our industry does support, such as broker registration, continuing education, etc, there are a number of items being considered which will make it even more difficult to get a mortgage or a competitive rate. This is another example of government coming to the rescue after the market has already corrected and adjusted. If anything I think the government should pass laws to make predatory lending practices illegal and impose sever penalties on the violators. Trying to change and destroy an entire industry because of a small number of bad eggs isn't good for anyone.

The following is a summary of the legislation
1 The Mortgage Reform and Anti-Predatory Lending Act of 2007
Section-by-Section Summary

TITLE I—MORTGAGE ORIGINATION
Sec. 101. Definitions.
Establishes definitions for various terms, including: "mortgage originator," "qualified nationwide registration regime," "qualifying state licensing law," "residential mortgage loan," and "securitizer."
Sec. 102. Residential mortgage loan origination.
Provides that all mortgage originators (including mortgage brokers and depository institutions that originate mortgages) will be subject to a federal duty of care that requires (1) licensing and registration under State or Federal law, (2) diligently working to present consumers with a range of residential mortgage loan products appropriate to the consumer’s existing circumstances, (3) making full, complete, and timely disclosures to consumers, (4) certifying to creditors compliance with mortgage origination requirements under this section, and (5) including in all loan documents the unique identifier of the mortgage originator provided by the qualified nationwide registration regime. This subsection expressly does not create an agent or fiduciary relationship, but mortgage originators are free to become an agent or a fiduciary if they so desire. HUD, OCC, OTS, and FDIC, in consultation with FTC, will jointly prescribe regulations to further define the federal duty of care.

Sec. 103. Anti-steering.
Provides that no mortgage originator can receive, and no person can pay, any incentive compensation (including yield spread premiums) that is based on or varies with the terms of a mortgage loan. HUD, OCC OTS, and FDIC, in consultation with FTC, will jointly prescribe regulations to prohibit mortgage originators from steering any consumer to a mortgage loan that is not in the consumer’s interest (such as a loan with predatory characteristics), and will seek to ensure that such regulations meet the conditions set forth in the legislation. However, nothing in this subsection should be construed as limiting the ability of a mortgage originator to sell residential mortgage loans to subsequent purchasers, or restricting a consumer’s ability to finance origination fees if they were disclosed to the consumer and do not vary with the consumer’s decision to finance such fees.

Sec. 104. Licensing and registration of mortgage originators.
Requires all mortgage originators to be licensed and registered pursuant to qualifying State licensing law or an equivalent Federal banking regime. If States do not pass qualifying laws that meet the standards set forth in the bill, then HUD will promulgate regulations requiring mortgage brokers in such States to act "solely in the best interest" of the consumer. States will have two years from the date of enactment of this Act to pass qualifying State licensing laws, and HUD will have the authority to extend this deadline by six months for individual States acting in good faith. 2

Sec. 105. Enforcement.
Provides that a cause of action will exist under section 130(a) and 130(b) of TILA for a mortgage originator’s failure to comply with this section. The maximum liability of a mortgage originator for violation of this section will not exceed three times the total amount of mortgage originator fees, plus the consumer’s costs including reasonable attorney’s fees.

Sec. 106. Regulations.
Except for the 24-month period (and possible 6-month extension) set forth in section 104 regarding HUD licensing and registration regime, regulations under this title will be promulgated within 12 months of the enactment of this Act, and take effect no later than 18 months after the enactment.

TITLE II—MINIMUM STANDARDS FOR ALL MORTGAGES
Sec. 201. Ability to repay.
Provides that no creditor may make a residential mortgage loan unless the creditor makes a reasonable and good faith determination based on verified and documented information that, at the time the loan is consummated, the consumer has a reasonable ability to repay the loan (including all applicable taxes, insurance, and assessments). OCC, OTS, and FDIC, in consultation with FTC, will jointly prescribe regulations regarding this provision. A determination of ability to repay will be based on the consumer’s credit history, current income, expected income the consumer is reasonably assured or receiving, current obligations, debt-to-income ratio, employment status, and other financial resources other than the consumer’s equity in the real property securing the loan. In making such a determination for nonstandard loans (adjustable rate loans, interest-only loans, and negative amortization loans), creditors will follow additional guidance as set forth in the legislation. To calculate monthly payments for principal and interest, creditors will make certain assumptions set forth in the legislation (including that the interest rate is a fixed rate equal to the fully indexed rate at the time of the loan closing).

Sec. 202. Net tangible benefit for refinancing of residential mortgage loans.
Provides that no creditor may extend credit for refinancing unless the creditor reasonably and in good faith determines, at the time the loan is consummated and on the basis of information known by or provided in good faith to the creditor, that the refinanced loan will provide a net tangible benefit to the consumer. The refinanced loan will not be considered to provide net tangible benefit if the costs of the loan, including points, fees, and other charges, exceed the amount of newly advanced principal. OCC, OTS, and FDIC, in consultation with FTC, will jointly prescribe regulations further defining the term "net tangible benefit."

Sec. 203. Safe harbor and rebuttable presumption.
Creditors and assignees may make the presumption, which may only be rebutted against creditors, that the minimum standards (reasonable ability to repay and net tangible benefit) are met for "qualified mortgages" and "qualified safe harbor mortgages." Qualified mortgages are prime loans with APRs that are not equal to or greater than 3% over comparable Treasuries and 175 basis points over the Federal Reserve H.15 rate for first lien loans, and 5% over comparable Treasuries and 375 basis points over the Federal Reserve H.15 rate for non-first lien loans. 3
Qualified safe harbor mortgages are loans with (1) documented consumer income, (2) underwriting process based on fully indexed rate (and taking into account taxes and insurance), (3) debt-to-income ratio not greater than 50% or some other percentage prescribed by regulation, (4) no negative amortization, (5) other requirements that may be established by regulation, AND (6) one of the following: (i) fixed payment for at least 7 years, or (ii) for adjustable-rate loans, APR that varies less than 3% over the interest-rate index. OCC, OTS, and FDIC will jointly prescribe regulations to carry out the purposes of this subsection and may make changes to these safeharbor provisions over time as products and lending practices evolve.

Sec. 204. Securitizer liability.
For loans that violate the minimum standards for reasonable ability to repay and net tangible benefits as set forth by regulation, a consumer has an individual cause of action against assignees, including securitizers, for rescission of the loan and the consumer’s costs. An assignee/securitizer will not be liable for a loan that violates the minimum standards if the assignee/securitizer: (1) provides a cure to make the loan conform to the minimum standards within 90 days of receiving notice from the consumer, or (2) (a) has a policy against buying mortgage loans that are not qualified mortgages or qualified safe harbor mortgages and exercises reasonable due diligence to adhere to such policy through a adequate, thorough, and consistently applied sampling procedure in accordance with regulations that OCC, OTS, and FDIC will jointly prescribe and (b) has obtained representations and warranties from the seller or assignor of the loan regarding not selling or assigning loans that violate the minimum standards and takes reasonable steps to obtain the benefit of such representations or warranties. Liability will not apply to pools of loans or investors in pools of loans.

Sec. 205. Defense to foreclosure.
A consumer who has the right of rescission may exercise such right when judicial or non-judicial foreclosure is initiated, and a third party may sell or assign a residential mortgage loan to an assignee, including a securitizer, to effect a rescission or a cure.

Sec. 206. Additional standards and requirements.
Prepayment Penalties: Prohibits prepayment penalties on "subprime" loans (loans that are not qualified mortgages as defined in section 203), and requires that all remaining prepayment penalties expire three months before a loan resets.
Renters in Foreclosure: In case of foreclosure, any successor in interest will take over the property subject to any bona fide lease made to bona fide tenant entered into before the notice of foreclosure. Bona fide tenants without a lease will receive at least a 90-day notice before being required to vacate.
Other Provisions: Prohibits single-premium credit insurance and mandatory arbitration. Requires securitizers to reserve the right in any document or contract establishing pools of loans to obtain access to such loans and to provide for and obtain a remedy under this title.

Sec. 207. Amendment to provision governing correction of errors.
Permits creditors to correct non-bona fide errors within 30 days of the loan closing and 4
prior to the institution of any action. Permits creditors to correct bona fide errors within 60 days of the creditors’ discovery or receipt of notification and prior to the institution of any action. A creditor may correct an error by making the loan satisfy the applicable requirements of TILA (including requirements of this Act) or changing the terms of the loan so the loan is no longer a high-cost mortgage.

Sec. 208. Amendment relating to right of rescission.
Provides that a person is not barred from asserting a right of rescission after the expiration of the statute of limitation as a defense to a foreclosure action.

Sec. 209. Amendments to civil liability provisions.
Doubles the amount of civil liability penalty currently applicable under TILA. Extends the statute of limitations from one year to three years.

Sec. 210. Rule of construction.
Except as otherwise expressly provided, no provisions of the new sections 129A and 129B added by this Act will be construed as superseding, repealing, or affecting any duty, right, obligation, privilege, or remedy of any person under any other provision of TILA.

Sec. 211. Regulations.
Regulations under this title will be promulgated within 12 months of the enactment of this Act, and take effect no later than 18 months after the enactment.

TITLE III—HIGH-COST MORTGAGES
Sec. 301. Definitions Relating to High-Cost Mortgages.
Amends the definition of high-cost mortgage in HOEPA to also include open end lines of credit. Codifies the existing Federal Reserve standard for the APR trigger which is set at 8% above comparable Treasury securities for first mortgages and Treasuries plus 10% for subordinate mortgages. Lowers the points and fee triggers from 8% to 5% for most loans. Establishes a third trigger for loans with prepayment penalties that exceed 2% or 30 months duration. Expands the definition of points and fees to include all compensation paid directly or indirectly by a consumer or creditor to a mortgage broker from any source (including table-funded transactions), certain insurance premiums, prepayment penalty charges under the loan, and prepayment penalties actually charged in a refinance by the original lender or the original lender’s affiliate. Excludes certain bona fide discount points and prepayment penalties (up to 2 points for near-market interest rate loans) from the determination of the amount of points and fees that trigger HOEPA protections.

Sec. 302. Amendments to Existing Requirements for Certain Mortgages.
Prohibits prepayment penalties on HOEPA loans with principal amounts below the FHA loan limit for a given geographical area. Prohibits balloon payments on high-cost loans unless the payment schedule is adjusted to the seasonal or irregular income of the consumer. Provides additional high-cost loan "ability to repay" protections. Creditors are allowed to consider a number of factors including current and expected income, current obligations, and employment 5
status (rebuttable presumption of ability to repay provided that the consumer’s total monthly debts do not exceed 50% of monthly gross income).

Sec. 303. Additional Requirement for Certain Mortgages.
Prohibits creditors from (1) encouraging that borrowers default on an existing loan when refinancing such existing debt with a high-cost mortgage, (2) charging multiple late fees on the same delinquent payment and caps any give late fee at 4%, (3) unilaterally accelerating the loan, (4) directly or indirectly financing points and fees for high-cost mortgages (the restriction applies to prepayment penalties if the lender or an affiliate is the noteholder of the loan being refinanced), (5) structuring loans to evade HOEPA protections, and (6) making a high-cost loan to a consumer unless the creditor has received a certification that the borrower received pre-loan counseling from a HUD-approved entity. Prohibits modification or deferral fees unless they can be proven beneficial to the consumer. Requires that creditors and servicers disclose and provide free access to payoff amounts.

Sec. 304. Regulations.
Requires the Federal Reserve Board to implement regulations under this title within six months of enactment.

Thank God For Patient Home Buyers

2007-11-02T15:53:00.000-05:00

I am working with a client who found a new construction home on his own and is in the process of purchasing it from the builder through the builders agent. There is no buyers agent so the process is a little more interesting than your standard fair, for instance as things change, the listing agent has been good to let their title company know, but hasn't been so good informing me, the loan officer or the buyer.

We were supposed to close on Tuesday of this week but as a result of an item or two not being quite finished, we got delayed until Friday only to come and find out that the certificate of occupancy has not been issued due to some other unfinished issues, and now the closing has been moved again to next Tuesday.

For anyone who has dealt with builders and new construction, this is par-for-the-course, but for a home buyer who has only ever bought existing homes, this has turned out to be a very confusing and frustrating event.

Lesson learned; try to remember that our buyers and sellers don't share the same experiences that we industry professionals do and try to prepare the clients in advance for every possible scenario so if and when it comes up, the client feels a little more safe and secure knowing that we called it and have a plan to take care of it.

FHA Saves The Day

2007-10-30T22:04:00.000-05:00

I'm doing an FHA loan for a client who would not be getting a loan without them. This client has had some mortgage lates and other credit issues along the way and one of the spouses is self-employeed and, like all good self-employeed people, doesn't show enough on their taxes to help the cause. As a result of the FHA loan that allows for non-occupant co-borrowers, this couple is getting into a 30 year fixed at 6.375% compared to the subprime products of late that would have given them a two year ARM at around 8.5%.

Maybe the death of sub-prime mortgages was a good thing after all?

BofA Dumps Wholesale Lending

2007-10-26T08:55:00.000-05:00

Bank of America is continuing to shape shift as it deals with it's own, while limited, exposure to the mortgage debacle. What this means for consumers is that now there is one less lender from who they can get a competitive rate. Typically, when a borrower goes through a retail channel of a mortgage lender, there is less room for negotiation on the interest rate and/or closing costs. Broker owners have always been able to give their clients a better deal and they are willing to do so in an effort to build repeat and referral business. The big retail mortgage shops tell their reps that they are giving value with great service, as if the brokers don't provide that.

Bottom line is there are still plenty of strong brokers out their and they are very competitive on rates and terms so do your due diligence and contact a local independent Minnesota mortgage broker before signing any papers with a lender direct rep.

Rates are improving, housing is not

2007-10-24T13:03:00.000-05:00

Once again I have to face the headlines on the Internet reminding me that the housing market is suffering. Yahoo today touted that, "Existing Home Sales Fall To Lowest Level In Eight Years".

Oh Well, the good news is that one of my lenders has lowered their rates and is offering a 30 year fixed conforming mortgage at 5.875%.

Countrywide On The Ropes

2007-10-11T12:16:00.000-05:00

Countrywide is reeling from an attack by the two headed monster, declining mortgage fundings due in part to stricter standards, and increasing foreclosures. According to an article today from Reuters, Countrywide has eliminated 4,935 jobs in September and plans to eliminate up to another 12,000 jobs by December.

Countrywide challenges stem from the fact that a large percentage of their loans over the past few years have been in the Alt-A and non-conforming loan products, especially the dreaded Option ARM. Only Countrywide knows just how much of their business came from these sectors and if in fact it was 50% or more, we will see even more bloodletting from Countrywide as they try to adjust their business model to the current state of affairs which is consisting of conforming and FHA loans.

Add to that the fact that Countrywide has not historically had the lowest rate in the market for the traditional 30 year fixed product, at least from a wholesale point of view, and you have another factor that will put added pressure on Countrywide's already shrinking revenue stream.

All in all I think Countrywide will survive this tragedy but not without quite a bit more pain and suffering in the coming months.

Another lender eliminates Stated Income Mortgages

2007-10-09T11:18:00.000-05:00

I just received this email from one of by larger national lenders, CITI mortgage;

"Greetings,
I was informed today that our Stated Income Verified Assets
program is going away effective Monday (10-15-07). We will be honoring all SIVA
deals submitted before midnight through Sunday at our web site. I've attached
our current rates and feel free to contact me with questions. Again effective
Monday we will be doing full doc loans/lines only.

Thanks for your time. "

It's a real bummer for home owners, home buyers, and the mortgage and real estate professions as this just makes it a little tougher to get a good mortgage if you are self employed or if your spouse contributes to your household income but because of their credit score, you don't want to have them on the loan.

Stay tuned as I think this trend will turn around in the next 6 months and in fact there still are lenders who are offering stated income mortgages in Minnesota and around the country.

Feel free to call me at 612-251-8237 if you are looking for a stated loan product.

Minnesota Mortgage rates update

2007-10-09T11:07:00.000-05:00

Minnesota mortgage rates are fairly unchanged today, Tuesday October 9th.

30 year fixed rates are at 6.375% (with a 30 day lock)
15 year fixed rates are at 6.000%

Most lenders are continuing to price the 3,5, and 7 year ARM out of the market as no investor wants to buy them.

Subprime mortgage rates have really gotten horrible in Minnesota ever since the Minnesota Attorney General ran pre-payments out of the state. If you have less than a 660 middle credit score, it's going to be tough for you to find a great deal unless you have some equity in your home. Visit www.firsthomeguide.com for a free credit score estimate.

Minnesota Mortgage Rates update for October 5th

2007-10-05T19:48:00.000-05:00

Wow time flies when you aren't getting around to writing in your blog. I promised myself I would stick to a writing schedule a month ago and obviously I had some trouble with that commitment. Sorry for that, I will continue to improve on my writing and my consistency.

Anyway, here are some current mortgage rates for people in Minnesota;
30 year fixed 6.375%
15 year fixed 6.000%
The 3, 5 and 7 year conforming ARMs have rates higher than the 30 year fixed so it would be crazy to even consider them.

Matt Carter of Inman News posted a great question today regarding the revising of the jobs data by our infinitely wise government officials and it's potential affects on rates and markets

Call me, Ken Horst, with any question at 612-251-8237 about these Minnesota mortgage rates and programs or any other mortgage programs you may be interested in.

Find a Red Realtor On Mars

2007-09-08T16:28:00.000-05:00

I got a call yesterday from a telemarketer trying to sell me Internet advertising. Having owned and managed a half dozen real estate related web sites over the past 5 years, I have some idea about web traffic, search engine optimization, and "Who's Who" in real estate directories, portals and destinations, Realtor.com being one of the most obvious. This gal proceeded to tell me that a web site geared towards Realtors that I have never heard of was getting 2 million hits per month. A pretty amazing feat considering some of the biggest and best known websites in real estate don't get a whole lot more traffic than that. But as I am always willing to learn and grow, I decided to let this telemarketer explain Internet marketing to me and how I needed to act today to take advantage of the great special she was only offering until the end of the day.

When I checked out the site my first impression is that I am under-whelmed. The site looked cheap and more like one of those domain names that cyber-squatters use to sell Google ads. When I asked her how people found her site she told me through search engines like Google, (she even asked me if I had heard of Google which I thought was cute) and a few other far more obscure search engines that many of us have never heard of. She did however inform me that these other search engines were the up and coming search engines of the younger generation so I should care. ( she was referring to dogpile, ask, and metacrawler, which have been around forever.)

When I asked her what keywords or phrases would bring her site up, she told me "find a realtor". Little did she know, I spend many hours a week doing keyword research, and I can tell you with great certainty that the phrase "find a realtor" does not get typed in 2 million times per month. Anyway, in an effort to really impress me she suggested I typed in "find a red Realtor on Mars", which I did and in fact the site she was promoting did come up on top. Impressive I told her, how much for the Mars territory I asked. She wasn't sure but she thought it would be very expensive. I think she was being facetious.

Bottom line is she wanted me to dole out $799 for a platinum listing in one city, and she would give me a one line listing in 3 other cities. I asked her what happens if someone else wants to advertise in the same city to which she replied they would appear under your listing. How many Realtors would you sell the same city too, I asked. She said as many as wanted to buy into it. But surely I said that an agent buying in at the 10th place wasn't going to be charged the same $799 as the agent who got the first place. Oh yes she said, everyone pays the same price after which she told me that they currently have 4000 agents signed up.

Two things came to mind as we concluded our call, number one, I thought that was a little pricey since I know there are far higher ranked sites offering premium placement for 5 cities and unlimited property listings for $29.99/month, and two, it couldn't be possible that there are 4000 Realtors or people in any other profession dumb enough to think this was a good deal.

So beware if you get a call from a telemarketer telling you to search Google for the phrase "find a red Realtor on Mars", odds are you could find a better place to spend your internet advertising dollars.

FHASecure coming soon to Minnesota

2007-09-06T08:52:00.000-05:00

Some of you may have heard on the news lately about a new goverment backed mortgage program designed to protect people from losing their homes due to their adjustable rate going up. This new program is being called "FHA Secure" and it will become available on January 1, 2008. While this program will not help Minnesota first time home buyers, it is a great program for distressed Minnesota homeowners. For more info on first time home buyer programs, check out www.firsthomeguide.com, otherwise for more information on the FHASecure program, check out this press release from FHA that came out on August 31, 2007;

For ReleaseFridayAugust 31, 2007

BUSH ADMINISTRATION TO HELP NEARLY ONE-QUARTER OF A MILLION HOMEOWNERS REFINANCE, KEEP THEIR HOMESFHA to implement new "FHASecure" refinancing product

WASHINGTON - President George W. Bush today announced that HUD's Federal Housing Administration (FHA) will help an estimated 240,000 families avoid foreclosure by enhancing its refinancing program effective immediately. Under the new FHASecure plan, FHA will allow families with strong credit histories who had been making timely mortgage payments before their loans reset-but are now in default-to qualify for refinancing.

In addition, FHA will implement risk-based premiums that match the borrower's credit profile with the insurance premium they pay-i.e., riskier borrowers pay more. This common-sense, risk-based pricing structure will begin on January 1, 2008.

"Many hard-working American families who were able to make their mortgage payments under the initial teaser terms of the exotic loan are now struggling to make ends meet because their rates have doubled or tripled," said HUD Secretary Alphonso Jackson. "FHASecure will bring stability to the housing market and give eligible families who were in good financial standing before their loans reset a chance to keep their homes."

The combination of FHASecure and risk-based premium pricing will permit FHA to return to the role it was originally designed to play, bringing stability to the real estate market by helping break today's cycle of foreclosures and price depreciation and creating much needed liquidity in the now-constricted mortgage market.

FHA has recently experienced a substantial increase in the number of conventional borrowers refinancing into FHA products. With FHASecure, it can help even more. The number of these refinancing transactions has tripled since the start of 2006. FHA's transactions are projected to surpass 100,000 loans by the end of the fiscal year. To date, these figures do not include refinances for delinquent borrowers.

The FHASecure initiativewill operate under the same safe guidelines as the FHA's existing mortgage insurance program without affecting FHA's financial health. Eligible homeowners will be required to meet strict underwriting guidelines and pay a mortgage insurance premium, which offsets the risk to FHA's insurance fund at no cost to the taxpayer.
The risk-based insurance premium structure will further expand FHA's reach to additional underserved borrowers, particularly minorities and first-time homebuyers who have been disproportionately lured into exotic mortgages, and enhance the FHA's overall risk management. The move to risk-based premiums ensures that FHA remains on solid financial footing as a self-financed agency for the long-term.

FHASecure, like all FHA products, will be underwritten to ensure the borrowers have the ability to repay the loan, will require escrow for taxes and insurance, and will continue to offer unprecedented foreclosure prevention assistance. The FHA has never permitted and will not include pre-payment penalties or teaser rates that are common in exotic mortgages and have caused much of the current market troubles.
To qualify for FHASecure, eligible homeowners must meet the following five criteria:
A history of on-time mortgage payments before the borrower's teaser rates expired and loans reset;
Interest rates must have or will reset between June 2005 and December 2009;
Three percent cash or equity in the home;
A sustained history of employment; and
Sufficient income to make the mortgage payment.
"FHASecure is designed for families who are good borrowers but were steered into high-cost loans with teaser rates," said Assistant Secretary for Housing-FHA Commissioner Brian Montgomery. "These homeowners, many of whom are minorities, need a safe, affordable mortgage product that will help build wealth. All FHA borrowers pay mortgage insurance premiums to offset claims to the FHA insurance fund and ultimately prevent risk to the taxpayer."

FHASecure will also bring much-needed liquidity to the mortgage market. FHA anticipates more lenders will offer FHA-insured loans, pool them, and securitize them with the Government National Mortgage Association (Ginnie Mae), which has the full faith and credit of the U.S. government. This guarantee makes Ginnie Mae's mortgage-backed securities the safest on the market and helps to channel greater capital into the housing market, benefiting U.S. homeowners.

Since its inception in 1934, FHA has helped almost 35 million people become homeowners, making it the largest insurer of mortgages in the world. The 109th Congress introduced the Expanding American Homeownership Act in June 2006 which would enable FHA to be a safe option for more underserved low- and moderate-income and minority families so they can achieve the American Dream of homeownership. Today, President Bush also urged Congress to quickly pass the Administration's FHA modernization proposal to help more families in need.

The good news is this program is coming, the bad news is it won't be here until January 2007. There may be other options in the mean time so if you find yourself in trouble you should call a local minnesota mortgage broker or the lender who you have your loan with to discuss what options they can make to help you out. Many lenders will be making concessions to their borrowers in the coming months to avoid foreclosing on them.

White Horse is Coming for Subprime Borrowers

2007-08-31T12:43:00.000-05:00

President Bush chimed in today and is talking about a plan to help diminish the effects of the "Great Mortgage Debacle of 07". Imagine that!

I had commented on a post on Activerain by Jay Beckingham yesterday regarding his belief that there will be no replacement for the subprime mortgage. I had suggested that upon further review and analysis, investors will recreate and deliver a new set of subprime mortgage vehicles that will perform. When I wrote that post I imagined that these new sub prime mortgages would start to show up in 3-6 months. Now I am even more confident that we will see a new set of mortgage products aimed at the sub prime borrowers because now, our president is getting into the mix. For more about Bush's plan, you can read the AP article, Bush Outlines Aid for Mortgage Holders. I'm not sure exactly how this will help home buyers but it is definitely something that needs to happen to help keep a lid on the foreclosure rate.

Mark my words, we will see a re-emergence of the subprime category in the mortgage industry in the near future, 3-6 months, but it will definitely be more conservative than the flimflam of the past 5 years.
Thanks Mr. president, now maybe Wall street can have a good day.

100% Financing Alive and Well in Minnesota!

2007-08-30T12:35:00.000-05:00

Contrary to popular belief, it is still possible to purchase a home in Minnesota with no down payment. There are two great programs for Minnesota home buyers and most people can qualify for one or the other of these programs. While the 100% sub-prime loan is currently very hard to find if not completely gone, the FHA program still makes purchasing a home possible, even for people who don’t quite fit into the conforming or “A” credit” box. If you’re a Minnesota First Time Home Buyer or buying your next home, check out these great Minnesota mortgage options.

Below are some of the features of these two great Minnesota home buyer programs, feel free to call me if you have any questions about either one in Minnesota.

MY Community Program
Allows up to 100% financing
Low credit scores allowed
Higher qualifying ratios
40 Year Amortization available
Up to 6% seller contribution
No MI options available
2-1 buy downs allowed
Loan size up to $417,000
Standard appraisal requirements
Purchase or refinance (cash-out not allowed)
No Pre-payment penalties

FHA Program
No credit score requirements
No income limit
Fixed rate and ARMs available
97% financing with 3% gift funds
Up to 6% seller contribution allowed
2-1 rate buy down available
$263,150 loan limit on single family
Co-signed loans allowed (must be relative)
Higher qualifying ratios
Manufactured homes allowed
Controlled closing costs
Purchase or refinance
No Pre-payment penalties

If you need a real estate agent to help you buy or sell your home, use our real estate agent directory

Will Falling Home Prices Mean Lower Property Taxes?

2007-08-29T10:49:00.000-05:00

Well if there is any silver lining in the current home market it is that falling home prices should lead to lower property taxes right? We’ll see. It is pretty unlikely that the counties are going to be quick to spend the money to re-value anyone’s home only to find out that the county is going to receive less in property taxes. It is going to be up to us, the home owners to do our own checking and if there is a glaring discrepancy, we’ll need to get a new appraisal and go to the county to ask for an adjustment.

Just a thought.

Use the links below to check average home prices for your metro area and to find links to your counties web site so you can double check your tax appraised value.

City and county links – for property tax information

Median sales prices of existing single family homes

Another purchase closing delayed

2007-08-28T21:17:00.000-05:00

I participated in a purchase closing today that should have gone better than it did. We started closing about a half hour late and ultimately got the purchase closed and funded. Fortunately the sellers had already had their purchase closing a week earlier so this delay really didn't inconvenience anyone too terribly bad. That said, It was troubling to me to be the quarterback on a deal that got delayed, especially since we had our clear-to-close and good-to-go 5 days before. So what happened?

The lender I used, who I picked because of their phenomenally low rates has a policy of getting a verbal VOE (verification of employment) 24 hours before closing. All they need to do is get someone from the company on the phone who will verify that the borrower is still working there. Seems easy enough right? Wrong.

What happens if the lender calls the company for the VOE and the only person who can provide that information is gone for the day. Hard to believe in a company with thousands of employees that only one person can verify employment, but in this case it was true.

No big deal, just call the company first thing in the morning and everything will be fine as the closing package is all ready to go, the lender simply needs the VOE to release it. The closing isn't scheduled until 10:00a.m. so it won't be a problem, right? Wrong.

What if the next morning, bright and early your lender calls the employer and gets voice mail? We'll you say, simply leave a voice mail and they will call you right back, after all, the HR person probably doesn't have much else going on, right?

OK, so now it is 9:30a.m. and we still don't have our VOE or the closing package. The client is calling, the title company is calling, things are starting to heat up. So I ask my assistant, who is really good at her job, to try to get through to a decision maker so we can get or VOE and close this on time.

Oh she gets through alright only to have someone in HR tell her they do not do verbal VOEs and that we will need to send them the VOE as a document, and someone will fill it out and get it back to us in 7-10 days. Which is sort of a problem for us since we are scheduled to close this purchase loan in about 10 minutes.

So how did it finally end you ask? My assistant was able to get the HR person on the phone and explain the urgency of the situation and how it would have been difficult to plan ahead as this last event was lender driven and it is their policy to check for employment 24 hours before the close. Some how this person was able to miraculously give us our VOE in a matter of minutes and we were able to sit down and close only 30 minutes behind schedule.

So what's the lesson learned here? I think it is a lesson I have learned about 50 time in this business which is no matter how well prepared you or the other parties to a closing are, it never fails that something can and/or will go wrong and it's not about who's fault it is or who is to blame, but how can we quickly resolve the issue and get the job done.

Minnesota Mortgage Rates for 8/27/2007

2007-08-27T20:11:00.000-05:00

Wow! Good news for home buyers, 30 year fixed rates are closing in on the 6% mark again. As you may have seen recently, mortgage rates have been coming down and today, in Minnesota the mortgage rates are as follows;
30 year fixed rate = 6.125%

15 year fixed rate = 5.875%

These are conforming rates which means the loan amount must be under $417,000. Not to be confused with the purchase price. These rates are also based on 80% loan to value (LTV) whether a purchase or refinance and the borrowers must be able to prove income with pay stubs and w-2s, or tax returns.

These rates are from one of my conforming lenders who typically beats all other lenders in the Minneapolis metro. This lender offers great rates for other types of mortgages as well.

Call for rates on other programs, Ken Horst@ 952-842-8100

Sun Trust Eliminates 100% combo mortgages

2007-08-26T10:29:00.000-05:00

In response to growing industry-wide concerns regarding the uncertainty in today's secondary market, effective Monday, August 27, 2007, SunTrust Mortgage is eliminating the Combo 100 loan program.

So what does this mean to Minnesota Realtors?

Fewer borrowers will be able to buy homes.

Sun Trust is just one of many lenders who have been cutting their high loan-to-value programs lately. I would say by the end of September, there will be few if any options for people who don't qualify for conforming financing, Fannie Mae or Freddie Mac, and who don't have any money for a down payment. This is a category known as Alt-A and it is quickly disappearing as investors are running for cover as home values are flat or declining in many markets. The 100% financing category, while still alive through Fannie Mae and Freddie Mac, will all but disappear in the Alt-A and sub-prime markets. As a result, fewer people will be able to qualify to buy a home.

Now more than ever it is important for Realtors to quickly refer their buyer prospects to a capable mortgage professional for pre-qualifying and preferably a broker who has access to many different lender just in case the lender they are using goes out of business or cancels the mortgage program your buyer was qualified for.

For more information about which types of mortgage programs are still available and which are gone, contact Ken Horst at 952-842-8100.

Minnesota Mortgage Professionals?

2007-08-25T22:45:00.000-05:00

I got a call from a woman on Wednesday of this past week wanting to refinance her home. It turns out she had already gone through all the steps with another Minnesota mortgage professional but was puzzled when he stopped returning her calls, even after she paid for an appraisal and completed all the paper work.

At first I suspected that the appraisal didn't come in with a high enough value, or she simply didn't qualify for any programs that would benefit her so the other guy simply slipped away in search of a better mortgage prospect. On further analysis, I discovered that there was plenty of value in her home, as a matter of fact, she was only borrowing 65% of the value of her home. Additionally, she had good solid income and job history, a low debt-to-income ratio, and a descent credit score. Where did the other guy go? If anyone runs into him around town, please thank him for me.

As a result of his unprofessional service to his client, I not only gained a client for August, but as a result of my follow-up, honesty, and speed of delivery, I expect to earn some referrals as well.

I think people looking for mortgages in Minnesota will be running into this "disappearing mortgage guy" scenario more and more in the coming months as more mortgage lenders go out of business and many of the loan programs that we were able to offer only three months ago are no longer available to Minnesota home owners and home buyers.

I would have said you can thank the Minnesota Attorney General for this but unfortunately for us and for her, as she put a lot of work into saving the people of Minnesota from the evil independent mortgage broker, Wall Street beat her to it by simply not offering mortgage programs that didn't perform well for investors.

In a future post I will cover all the mortgage programs that are no longer available and what affect this is going to have on home owners in Minnesota and around the country.

Why Use A Mortgage Broker?

2007-08-22T08:11:00.000-05:00

Because if Countrywide were to declare bankruptcy, your local experienced mortgage broker still has great mortgage products from quality lenders like Wells Fargo. Here is a recent memo from Wells Fargo to the mortgage broker community;

Together, We’ll Succeed

Since 1852, Wells Fargo has been delivering superior service to its customers based on their business needs. In today’s mortgage market, Wells Fargo stands out as a lender who is committed to its clients – one with a long track record of strength and stability.

Wells Fargo is a well capitalized, diversified financial services company – the only bank in the U.S., and one of only two banks worldwide, to have the highest credit rating from both Moody's Investors Service, "Aaa," and Standard & Poor's Ratings Services, "AAA." In other words, we have the financial strength to succeed in this market and continue to serve your lending needs.

There is no question that Wells Fargo Wholesale Lending’s success comes from our relationships with you, our quality brokers. We remain strongly committed to you and to the wholesale business.

Here’s How Wells Fargo Can Help You Be Successful

Products and Pricing: We remain committed to offering a range of lending options, including conforming, government and home equity loans and lines – with competitive pricing to help you fulfill the needs of your customers. Plus, we recently announced price improvements on some of our products, giving you even more to offer your customers.

Our Veteran Sales Team: Our account executives have tremendous mortgage experience and they’re eager to work with you to create a plan for success in this challenging market. They can answer any questions you have about our product sets, our pricing specials, program options, and our Direct ExpressSM loan feedback tool.

Operations and Customer Support: We have great teams prepared to serve you – experienced people to underwrite and process your files quickly and smoothly. And, we have knowledgeable support teams ready to answer your questions, discuss scenarios and smooth out any wrinkles that might arise.

Today, more than ever, you need a lender you can count on. Wells Fargo’s been going strong for more than 150 years. Rest assured we’re ready to deliver on the needs of your business, now and in the future.

Regards,
Kathleen Vaughan
Executive Vice President, National Manager
Wells Fargo Wholesale Lending

Don't be to quick to kick your mortgage broker to the curb. The good ones are in this business for the long haul and will continue to protect you and your home buying clients by maintaining many lender relationships to cover any catastrophe caused by a giant like Countrywide going out of business.

Liquidity Crisis Explained

2007-08-21T16:38:00.000-05:00

It was just a short time ago that investors from all over the world were hot for US Mortgage Backed Securities (MBS). Historically these investment vehicles performed well as US home owners made good on their mortgage payments. Think about it, in the olden days home buyers needed at least 10% down to even qualify to buy a home. Anyone who could manage to save a 10% down payment obviously had to be very responsible with their personal finances, and this fact played out in the return and relative safety of the MBS.

All of the sudden, there was more money available for people to buy homes than consumers were demanding, a liquidity surplus you might say, and with no room to muscle in on the "A" paper conventional mortgage markets, clever investors decided to create new and different types of mortgage loans to take advantage of all this investor money. Hence the birth of the Sub Prime mortgage industry.

With very little history as to the performance of these MBS, and a very hot US real estate market, investors and home buyers plunged into the market with reckless abandonment, ultimately leading to a person who was one day out of a chapter 7 bankruptcy with only a 580 credit score qualifying for a 100% home loan. (Credit scores range from 350 -850). By all known standards, this was a loan destined for default and in the past, no investor in their right mind would have made this loan. But money kept pouring in and an endless stream of home buyers and now people wanting cash out refinancing kept showing up at their local mortgage companies door and more recently at all the internet mortgage sites that promised hundreds of thousands of dollars for unbelievably low monthly payments.

It took a while but eventually, as history started to accrue for these sub prime loans, there appeared to be higher than expected rates of delinquency and default, which brings us to today and our current liquidity crisis. As more and more investors stop investing in these sub prime MBS vehicles, there is less and less money in the US for people who want to buy or refinance homes. Couple this with the fact that even some of the conforming or non-sub prime lenders are seeing higher rates of delinquency and default, and you have a situation where the mortgage arena, which recently had more available money than it knew what to do with, now is left with only a handful of investors who only want to buy the most secure of the MBS, those made up of people with high credit scores, a good solid track record of income, money in the bank and either a down payment or significant home equity in the case of refinance.

So there you have it, Liquidity Crisis, and if you are a real estate agent or mortgage professional, boy does it hurt!

MN Mortgage Blog Continues!!!

2007-08-21T16:27:00.000-05:00

I'm glad to be back blogging about the mortgage business. A lot has changed in the short time since my last post on this blog but I can assure you that I will contribute on a very regular basis in an effort to help home owners, home buyers, Realtors and other mortgage professionals navigate these stormy seas.

Feel free to comment on my blogs and Iwill do my best to respond to your comments and keep an open dialogue. Also, if you want to email me with questions, comments or suggestions, my email is khorst@thegreatrate.com

That's all for now but check back tomorrow.

I can remember being told that homeownership was a good thing

2007-04-17T14:22:00.000-05:00

Minnesota has been known as one of the easiest places in the universe to purchase a home. This is about to change. After getting past the last legislative stop, the new laws will go into effect in August assuming approval from our Governor. How will individuals who are the most difficult to qualify buy homes? Simple, they won’t be able to. However, they can still rent forever. And ever. And ever.* The lenders who have taken the biggest risk the last few years have paid the ultimate price by folding. This has brought us to an enormous market correction. Isn’t this enough?

*completly sucks

An Easter Gift from the Leader of Iran

2007-04-04T11:24:00.000-05:00

I could be wrong but it seems to me that ever since Iran grabbed the British Sailors, certain financial markets have been on pins-and-needles. As a result of this uncertainty in the markets and the concerns about the effects of this event on oil prices among other things, I have noticed the 30 year fixed mortgage rate increasing over the past two weeks. It hasn't gone up a lot but it is noticeably higher than it was before the incident in Iran. The reason I am painfully aware of this is because I have a number of clients for whom I am watching interest rates and I have seen the rates I was quoting two weeks ago slip away a little each day. From what I can tell today, it looks like this two week trend may be coming to an end today and hopefully the rates will start to improve based on more traditional, even handed factors instead of this Pirates of the Persian Gulf story that fortunately has ended well for the British and home owners all over America.

Trigger Leads & Mortgage Pirates

2007-04-02T22:26:00.000-05:00

Recently I had a client I was working with who called me about 3 days into the loan process and asked me if my lender had called her. I said I doubt it, the loan hadn't even been approved yet and in 6 years, I have never had nor heard of a lender calling a borrower in the middle of the process. (if at all) She said that she had received a call from someone saying her loan documents were ready and she could schedule a time to come in and sign them. She also told me that in the 3 days since I had pulled her credit as part of the loan application process, she had received no less than 10 phone calls from mortgage companies claiming they knew she was looking for a mortgage and they would be able to offer her a better deal.

What's happening is the result of a "mortgage trigger lead". It works like this, a mortgage company can ask to buy any persons name and personal info the minute that persons credit is pulled by another mortgage company. Imaging that! How better to qualify a person as a mortgage lead than to know that they have just had their credit pulled by your competition. The only problem is that the technique that is commonly used to lure someone away from there mortgage person is to promise them a better deal. Most of these promises are made to the borrower before the new mortgage person has done any qualifying and generally don't pan out. Bottom line is that if you are working with a reputable local mortgage professional that you may have even been referred to, you are probably getting a good deal on your loan. The best defense against these mortgage pirates is to ask them to send you a Good Faith Estimate and a letter guarantying the interest rate and closing costs won't change at the closing. Odds of any of these "phone room wonder boys" complying with that request are slim to none and you can get them off your phone and finish your dinner.

This whole thing really makes me mad but it should make you even more mad. In this age of privacy how is it that the credit bureaus can sell my name, credit score, loan amount, total consumer debt and other factors to any mortgage company with a ton of money.(one such marketing company charges $25,000/month for access to these leads) How is it that this information that we all thought was private is readily available to anyone to purchase? What is worse is the quality and caliber of the people who are calling us armed with this personal and private info. Using tactics like telling you your loan docs are ready, or they can beat any deal you have seen, before they have even qualified you, these mostly young kids, most of whom have never owned a home or much else for that matter, are desperately trying to close your loan as fast as they can before you figure out what is really going on. Generally these sweat shops or mortgage phone rooms are simply dialing for dollars hoping to stumble onto the one or two borrowers referred to in the famous quote, "there's a sucker born every minute".

Sadly much of the sub prime mortgage industry is based on that phrase but the fact remains that the credit bureaus are making it even easier to exploit that point by giving unscrupulous characters enough private information about us to make it seem as if they are the company we are working with. Fortunately for mortgage professionals who get most of their business from repeat clients and referrals, this ploy rarely results in the loss of a client, but it does non-the-less bring even more confusion to an already complex process.

I'm lucky, as far as I know, I haven't lost a client yet to one of these mortgage pirates but what concerns me is the increasing speed at which the calls start and the increasing number of calls. I almost feel bad for the sucker mortgage companies who are buying these leads. If they knew how many other mortgage pirates were also sold the same lead, they may be inclined to build a business around delivering on their promise and fostering long term relationships. Imagine that!

Mortgage Times are a changing!

2007-03-21T18:38:00.000-05:00

Oh the difference a few months can make. I am currently sitting with 3 loans on my desk that only 3 months ago would have been closed and funded in two weeks or less. Today I'm not sure if I will be able to find any lender who will take them. Here is a couple examples of what I'm talking about;

One borrower has a 615 middle credit score, which is not very good but could be worse. They have a good job and make decent money and they have never been late on their mortgage which they have had for about 17 months. They called me to see about refinancing to 100% and taking some cash out to make some improvements on the home. In the old days (3 months ago) anyone with a credit score of 580 a good job and income could get 100% financing, with cash out, in a heart beat. Today after exhausting 11 lender resources, I finally had to call the client and tell them that the best I could do was going to be 95% and the interest rate was going to be almost insulting. Fortunately this client is not desperate for cash and can afford to wait a month or two until their credit score goes up to 620 points, they new floor for 100% financing.

Another borrower I have been struggling with has a 649 credit score but is self employed and has had 1 mortgage late in the past 12 months. We are able to use bank statements as proof of income so this loan is treated as "full doc" which means it gets the same consideration as someone who has a full time w-2 job. In the old days most of the 75 lenders I have access to would have taken this loan without hesitation, but in this new world, this loan has been accepted but then "kicked to the curb" twice. The borrower is a little frustrated and I can't blame them. Trouble for mortgage officers in today's market is that compared with this borrowers last experience, I look like I'm incompetent. What looked like an easy loan 60 days ago has turned into another mortgage nightmare for both the client and me. Originally the client wanted a 100% refinance with cash out, we are down to our last lender who will even consider it at 95% which leaves the borrower far less cash then they really want. We will get the loan done but it has not been a pleasant experience for any one involved.

This interim period that we are in now, between when things were easy for everyone and the new way where the few sub prime lenders that are left are seriously tightening their belts, is awkward to say the least. Those of us in the mortgage business have to learn to look at each loan application with more discretion as we navigate the new and ever changing guidelines that will seriously change the home finance landscape over the next few months.

Hopefully everyone can hang on for the ride.

Subprime Lenders are Dropping Like Flies

2007-03-14T12:05:00.000-05:00

In case you haven't been watching the markets last week and yesterday, major sub-prime lenders are suffering and dying at an alarming rate of speed. D1, a subsidiary of HSBC reported writing off $10.6 billion in bad sub-prime loans in 2006. New Century, which is one of the top 5 sub-prime lenders in the country is rumored to be closing today, and Fremont Investment, another big sub-prime lender announced it was closing it's door yesterday. In addition, there have been many smaller sub-prime lenders that served the market with useful niche products who have also already gone out of business in the past few weeks. What does it all mean?
Well, all the federal and state government efforts to "fix" the mortgage industry may be a big waste of time as the industry is in the process of self correcting through market forces, imagine that. It is starting to look like the big problems that our wise government was blaming on unscrupulous mortgage loan officers was as much or more of an issue with overzealous lenders who were desperate to keep showing higher revenues and profits, and had to turn to more and more risky products to do that because all the "A" borrowers had already been taken care of when mortgage interest rates dropped over the past few years.
Secondly, if you think the foreclosure rate is high now, fasten your seat belts! One of my best sub-prime lenders and also one of the top 5 lenders in the country told me yesterday that it is going to be almost impossible to find 100% financing for the sub-prime borrowers. What this means is that as all the sub-prime 2 year ARMs come due and threaten to adjust UP roughly 2% points, seriously crushing the cash-flow of these home owners, they will have nowhere to go. Over the past 5 years these people were able to do a cash-out refinance to lower or at least keep their interest rate and payment the same while they tried to get their spending behavior under control and improve their credit scores so they could come back to the market and finally qualify for the coveted "A" paper 30 year fixed mortgage. With lenders closing out the 100% and 80/20 loans, and with home prices being flat or declining in most markets, all these sub-pime home owners will have no where to go but get second jobs or walk away, as in many cases they owe more than their home is worth.
When the dust settles, there will be far fewer sub-prime lenders with far fewer programs that will be much less risky for the investors and those who qualify to purchase a home in this "NEW MARKET" will actually be able to make their monthly payments in a timely manner. Go figure!
Does anyone want to go tell the people in government before they spend millions of dollars fixing a problem that will be mostly self corrected by the end of March?