Fannie Mae & Freddie Mac change requirements for condos, are your listings ready?
Read these changes below and make sure your condos are listings are ready for the changes before your closings are held up.
FIDELITY Insurance Coverage Requirement (for projects larger than 20 units)
The owners' association must have blanket fidelity insurance coverage for anyone who either handles funds that it holds or administers, whether or not that individual receives compensation for services. The insurance policy should name the owners' association as the insured and the premiums should be paid as a common expense by the association. The policy for a condominium project must include a provision that calls for ten days' written notice to the owners' association before the policy can be canceled or substantially modified for any reason. This same notice also must be given to each service that services a Fannie Mae-owned or Fannie Mae-securitized mortgage in the condominium project.
A management agent that handles funds for the owners' association should be covered by its own fidelity insurance policy, which must provide the same coverage required of the owners' association
****The fidelity insurance policy should cover the maximum funds that will be in the custody of the owners' association or its management agent at any time while the policy is in force. A lesser amount of fidelity insurance coverage is acceptable for a project if the project's legal documents require the owners' association any management company to adhere to certain financial controls. Even then, the fidelity insurance coverage must at least equal the sum of three months of assessments on all units in the project.
To break down the math, if there are 140 units and the HOA is $150 a month there needs to be enough coverage for three months of the HOA times the number of units. In this case the coverage amount would need to be $63,000. (140 units X $150 = $21,000 X 3 months = $63,000)
Hazard Insurance Requirements
Fannie Mae & Freddie Mac now require that lenders verify that hazard insurance for all condominium projects with attached units, including two- to four- unit projects, covers fixtures, equipment, and other personal property inside individual units if they will be financed by the mortgage. Although this is something you want to encourage your buyer to get either way, this is now a requirement. The updated policy now requires that the borrower obtain a Wall to Wall coverage unless the lender it can be shown that the master policy provides the same interior unit coverage. Please note this insurance will NOT be escrowed and will be paid separate from the monthly payment.
Delinquent HOA Dues for Units in Attached Condominium Projects
Fannie Mae is updating its delinquent HOA dues policy to require that no more than 15 percent of the total units in a project can be 30 days or more past due on the payment of their association fee payments. This new policy applies all condominiums.
Clarification of Owner-Occupancy Ratio Requirements
Fannie Mae requires that established condominium projects consisting of attached units have an owner-occupancy ratio of at least 51 percent at the time the loan is originated (purchase or refinance) if the mortgage loan being delivered is secured by an investment property. Established projects where borrowers will occupy the unit or use the unit as a second home are not subject to any owner-occupancy ratios.
Due to current market conditions, many condominium projects are experiencing higher numbers of financial institution- owned REO units, which many lenders may be counting as non-owner-occupied under Fannie Mae's current requirements.
Fannie Mae is clarifying its condominium project owner-occupancy ratio policy to include REO units that are for sale (not rented) as owner-occupied units in the owner-occupancy ratio.
If you have any questions or need further details please call or e-mail, I look forward to chatting with you.
Catherine Eusea
Senior Loan Officer
National City Mortgage, A Division of National City Bank
2032 Caribou Drive, Suite 101
Fort Collins, CO 80525
720-300-6777 Cell
970-212-2228 Direct
APPLY ON-LINE
Here is the latest web update on using the $8,000 tax credit as a bridge loan. It's amazing what happens in a week from being released, pulling the mortgagee letter to not really going to happen at all. Please read below on the details.
Feds reverse rule to assist first-time home buyers
J. Craig Anderson - May. 19, 2009 12:00 AM
The Arizona Republic
Federal officials on Monday reversed an earlier decision to allow first-time home buyers to use an $8,000 tax credit to borrow the down payment on a home.
A week earlier, U.S. Department of Housing and Urban Development Secretary Shaun Donovan had told the National Association of Home Builders that HUD would let banks and local governments offer short-term "bridge loans" to cover the down payment for first-time buyers eligible for the tax credit. The loans would have been available to applicants for federally insured mortgages such as Federal Housing Administration loans.
Lenders, home builders and real- estate agents had reacted favorably to the bridge-loan proposal, saying it would open up the housing market to more first-time buyers.
However, not everyone was in favor of using the tax credit as collateral on a down-payment loan.
"That tax credit should be savings, not debt," said Patricia Garcia-Duarte, executive director of Neighborhood Housing Services in Phoenix.
Garcia-Duarte said the proposal too closely resembled a now-illegal practice known as seller-funded down-payment assistance, which allowed a home's seller to "gift" the down payment to a specific buyer through a non-profit organization.
Phoenix loan originator Dean Wegner was among the housing-industry professionals who had expressed enthusiasm about the bridge-loan plan.
Wegner said the program would have boosted local home sales, but he added that the bridge loans likely would have come with a high interest rate.
The loans also could have created income-tax issues, according to the IRS officials who shot down HUD's plan.
There is more talk among Active Rain and local Realtors about the fall out on their files.
I would say your seasoned and new Loan Officers right now are relearning our jobs. ( I have never had a decline in my 7 year in the industry and then I had two in two weeks!) We have all had it way too easy for the past 7 years and now lenders are back to the old fashion way of doing business BUT with modern technology! Underwriters are overturning automated approvals; they are also running smart systems that search records everywhere for inaccuracies. (Ever see that movie Eagle Eye? Kind of feels like that)
the things that this system catches are something we typically miss or can't see and it happens at the very end. Even your best of the best buyer might have hidden issues that will kill the deal. Even more so, your borderline deals are taking twice as long going through underwriter after underwriter with monumental conditions. Your typical Loan Officer, even your good seasoned Loan Officer is scrabbling to adjust to the new requirements. As my processor puts it underwriters are picking lint right now.
So now it's all about setting expectations, with the buyers, with lenders and with the agents by pulling everyone out LaLa Land. We have had it way to easy in the past!
Buyers: For my 1st Time Home Buyers I start with summary of... I do everything I can to catch everything up front but for the next 30 to 45 days it's going to be rough. I'm requesting items, my processor will request items and when it gets to underwriting there may be even more things we need. Do not get out of your lease, do not buy anything for the house, and do not schedule movers until you have signed on the dotted line. If they cannot wait to do this because they can't afford an extra rent payment then they should wait to buy a home. Do not deposit cash or money not earned above $500 (yes we are back to the $500 rule), do not charge anything above $500 and do not borrower any money especially from a credit card. We also have underwriters randomly pulling credit at the very end. Underwriters make us source every check above $500 that is not direct deposited. On your borderline deals underwriters do not want to see you dip low in your accounts, no negative balances (very common) and if your payment is going up dipping low in your bank accounts is a huge issue. I have also seen underwriters over turn approvals do to lack of reserves (gift money doesn't count). From there I remind them that they are going to get an $8,000 tax credit for 45 days worth of work, it might be some work and then again it might all go okay. I GIVE EVERYBODY A QUICK RUN DOWN OF THE TOP 88 THINGS THAT MIGHT CAUSE TURBULANCE IN THE PROCESS. Right now 3 out of 5 deals are running smoothly. With your move up buyers I'm explaining the same but reminding them that things have changed from the last time. Since doing this things are going much better as they were aware from the get go.
Agents: Please listen to your lender but more importantly it is about asking the right questions. I think if we can accurately describe an excellent borrower vs. a borderline borrower will help you set the right expectations in the transaction. Your excellent buyer can easily close in 30 days your borderline borrower give us 45 day, we may not need them all but this has been helping. If we don't have this you're going to run the risk of extending contracts, spending more time and possibly putting the earnest money at risk.
What is an excellent buyer? Credit above 680 with only a few blemishes but paid credit history, coming to the transaction with their own money down, same line of work for 2 years (typical salary) without any breaks, good reserves and no prior bankruptcy's, foreclosures or short sales.
What is your borderline buyer? Shaky credit history with late payments & collections within the past 2 years and credit score of 580-679. Prior bankruptcy, judgments, foreclosures and short sales in their credit history, if there are negative incidents since any of those happened this is enough for an underwriter to overturn an automated decision. Break of employment, part time employment, change of jobs, commission or self employment. Deposits that we can not source, negative items in bank history, maxed out credit cards, less than 1 month of reserves in the bank and child support income received or paid. If they currently have another home and we need rents to qualify. I'm sure there is more that I'm missing.
Just being nosey and find out these things will let you know what type of deal you have on your hands. My agents knowing this have really been supportive throughout and things are going so much better. Please note that we follow your contract and if things are delayed in the beginning like inspection issues this can set everything further back, please adjust accordingly.
Now a word to Lenders...I think it's time to quit sugar coating things, not all tran
saction are messy but I'm sure those that "might be" would rather know than not know. Yes I'm sure there are lenders who can do it faster, cleaner and without any issues but as the industry changes things across the board will change with it. I think it's time to get the support from the real estate community by setting accurate expectations. Basically if you're living in LaLa land you will be pulled into reality pretty soon. I have spoken to title companies and as rosy as it seems now they have informed me that 4-5 deals out of 10 are not closing and being pushed out.
Please note this is not a bashing session but a wake up call for all, plus I think we would be doing each other a favor by changing the way we think.
If you have ran acrossed things that don't make sense or your wondering why it happened and was caught up front let me know and I can help. Anything else I can help with please just call or e-mail. I would love to know that this blog is helpful or that we are not alone in these issues.
Thanks for listening!-
Catherine Eusea
Senior Loan Officer
National City Mortgage, A Division of National City Bank
2032 Caribou Drive, Suite 101
Fort Collins, CO 80525
720-300-6777 Cell
970-212-2228 Direct
970-266-1076 Fax
APPLY ON-LINE
As the OBAMA plan rolls out we are getting information on how it works. The Loan Modification plan looks good and will help many people. I hope that the banks can keep up with the demand. There are many, many loose ends and I will keep you posted. There will be many posts to come on the different products rolled out.
The Obama Administration unveiled the final details of its "Making Home Affordable Program," which is designed to help up to 9 million American families refinance or modify their loans to a payment that is affordable now and into the future.
One of the initiatives in this program is aimed at helping struggling homeowners "modify" their loans to avoid foreclosure. Here are some common Questions and Answers about the Modification Initiative in the program.
MODIFICATION INITIATIVE
Who is eligible?
To apply for a Home Affordable Modification, you must:
Am I eligible if I missed some mortgage payments?
Yes. If you missed two or more mortgage payments and answered "yes" to the Modification Initiative requirements above, you may be eligible for a loan modification.
Do I need to be behind on my mortgage payments to be eligible for a Home Affordable Modification?
No. Responsible borrowers who are struggling to remain current on their mortgage payments are eligible if they are at risk of imminent default. Examples of being "at risk" include facing a significant increase in your mortgage payment or a reduction in your income. Contact me to discuss your specific situation.
I have a second mortgage. Am I still eligible?
Yes, but only the first mortgage is eligible for a modification.
I have an FHA loan. Can it be modified under this program? Are all loans eligible?
Most conventional loans including prime, subprime, and adjustable loans; loans owned by Fannie Mae and Freddie Mac as well as private lenders; and loans in mortgage backed securities are eligible for a modification. Contact me to discuss your specific situation.
I have a mortgage on a duplex. I live in one unit and rent the other. Will I still be eligible?
Yes. Mortgages on two, three and four unit properties are eligible as long as you live in one unit as your primary residence.
What does the Modification Initiative do?
If you are eligible for this plan and are approved, you will be put on a trial modification for three months at a new interest rate and payment.
If you successfully make the payments and are current at the end of the three-month trial period, your servicer will execute a permanent modification agreement that will lower your interest rate to a fixed rate for five years.
What happens after five years?
Beginning in year six, the rate may increase no more than one percentage point per year until it reaches the "rate cap" in your modification agreement, which is basically the market interest rate on the date the modification is finalized.
That means your rate can never be higher than the market rate on the day your loan is modified. This is great news because rates are currently at historic lows... and you can lock in now.
How low can my interest rate go?
Treasury is providing incentives to your investor to write the interest down as low as 2%, if necessary to get to a payment that you can afford based on your income.
What happens if that is not enough to get to an affordable payment?
If a 2% interest rate is not enough to bring your payment down to 31% of your gross monthly income, your servicer can extend your payment term--for example, give you a 40-year loan rather than a 30-year.
If that is still not sufficient your servicer will defer repayment on a portion of the amount you owe until a later time. This is called a principal forbearance. A portion of the debt could also be forgiven. This is optional on the part of the investor. There is no requirement for principal forgiveness.
Are there any other benefits to this program?
Yes. For every month you make a payment on time, Treasury will pay an incentive that reduces the principal balance on your loan. Over five years the total principal reduction could add up to $5,000.
How much will a modification cost me?
There is no cost to borrowers for a Home Affordable Modification. You will not be asked for any money.
If there are costs associated with the modification--such as payment of back taxes--your servicer will add those costs on to the amount you owe. Your servicer will also forgive any late fees.
Is housing counseling required under this program?
Borrowers are strongly encouraged to contact a HUD-approved housing counselor to help them understand all of their financial options and to create a workable budget plan.
However, housing counseling is only required for borrowers whose total monthly debts are very high in relation to their incomes (55% of your gross monthly income).
If you would like to speak to a housing counselor, call 1-888-995-HOPE (4673).
How do I apply for the Modification Initiative?
If you meet the general eligibility criteria for the program, you should gather the following information:
Once you have this information, call your mortgage servicer and ask to be considered for a Home Affordable Modification. The number is on your monthly mortgage bill or coupon book.
My loan is scheduled for foreclosure soon. What should I do?
If your mortgage has been scheduled for foreclosure or if you have missed one or more mortgage payments, should contact your servicer immediately.
You may also want contact a HUD-approved housing counselor by calling 1-888-995-HOPE (4673).
As always, if you have any questions or would like to discuss how this may specifically impact you, I'd be happy to sit down with you. Just call or email me to set up an appointment.
Catherine Eusea
Senior Loan Officer
National City Mortgage, A Division of National City Bank
720-300-6777 Cell
970-212-2228 Direct
970-266-1076 Fax
APPLY ON-LINE
This is a bit delayed due to my accident but I wanted to send you some pictures of our 2008 Coat Drive and give an extra thanks to all that contributed.
Our goal was 500 Coats for Northern Colorado and we ended up with 658 Coats this year, I'm just amazed how many we had!
The winner of the Wii system was Diane Stroup-Heuman with my BNI Group, it helped that her name was entered over 50+ times because of all the coats she brought in! Way to go!
We had publications in the Coloradoan and a news special in Greeley. We had several kids coats and lots of adult coats.
This year because of my accident I couldn't do the deliveries this year I was so bummed! All of our coats went to communities that GIVE the coats free without any questions.
Thanks so much and we will go even bigger next year!!! Happy Holidays!
We all dressed as medical professionals for Halloween...too much fun!
I live by the motto...work from your heart by taking care of the heart of my business...my clients. I promote and have always promoted doing good loans & I accept nothing less.
With more than 12 years focusing on sales and customer service, I have learned first hand the critical importance of providing top notch customer service. My clients are my primary concern, and my goal is to build long-term relationships by earning their trust. To do so, I go the extra mile to ensure my clients are satisfied. I am extremely proud that referrals are the core of my business, which is a true testament to my unwavering commitment to meeting my clients' needs.
With my excellent follow up skills and can do attitude, I adeptly guide my clients through the home loan process with ease. Honest, helpful, and trustworthy, I only make promises I can keep and do what I say I will. I apply my persistence and extensive knowledge to find options that are best suited for each client's unique situation. I love the variety the mortgage business provides and enjoy working successfully with all different types of borrowers.
90% of my business are working with 1st Time Home Buyers, my loan process from start to finish focuses on make sure that the first buyer understands the loan process. I try to make sure that my buyers not just trust me but know for themselves the type of loan they are getting into. I make sure that home buyers get the right start with the right loan. Because of this, I have been named as one of the top loan officer for Colorado Housing and Finance Authority for several years running. I'm an approved lender for the City of Fort Collins, Larimer County, Boulder County and the City of Longmont, CHAC down payment assistance programs. I'm not a lender who sugar coats things....I tell it like it is. If the deal is not doable at them moment then I will not waste your time. However, I will take the time to make sure to help the borrower get their loan in line.
I am a former military brat with my roots in New Orleans, Louisiana. I have lived and worked in Northern Colorado since 1996, with my husband Chad and our two boys David and Michael. I enjoy motorcycle riding, wake-boarding, football, hiking, scrap booking, photography, and traveling with my family.
Are you looking for a lender to have a true partnership with, a team member to your game plan and someone who works side by side with you? Well, lets sit down and chat!
I have been working with the Home Buyer Scouting Report for 6 years, I know everything about the system and I have had several successes on the site. I see myself as a partner with you on the site, helping you gain confidence with new buyers by working on your behalf. The great thing about this is I'm no longer waiting at the bottom for your leads, I'm right there with you developing them!
While other lenders are just learning FHA and other government loans, I'm teach classes on how to come up with creative ideas to counter act this market. In my 6 year career I have focused on government loans instead of subprime loans so this is nothing new to me.
Being first time home buyers, we found the Scouting Report to be extremely helpful on finding our perfect house. It was an easy time management tool because it eliminated houses that we were not interested in just from the snapshot online or location. We would save our homes of interest and when making an appointment with our Realtor, he would then only take us to the homes on our list. After viewing our homes, we could make notes in the Scouting Report to know why we may or may not be interested in our choices. On a financial side, we were able to only view houses in our budget and not even consider houses we knew would not be a good financial decision for us later on. Now after recently purchasing our home, we find that we still use the Report to know which houses around us are still on the market, or which houses in our neighborhood are now on the market and their asking price to compare the value of our home. We feel that had we not had this Report, we wouldn't have been as successful in narrowing down our perfect home. Thank you Catherine and your team for making this site available!!! First Time Home Buyer -Nicole and Matt Wickett
Catherine was excellent, I couldn't have asked for a more professional loan officer. She is an outstanding person and listened to our needs.
First Time Home Buyers - Karen & Mark
We had an excellent experience with Catherine Eusea. She was very informative about loan options and answering all our questions and phone calls promptly.
First Time Home Buyers - Brandon & Jenny
Catherine was a pure pleasure to work with. I was spoken to in clear and regular terms. I would highly recommend her to others looking for a mortgage.
Home Buyer - Chris & Shelly
Catherine was just a wonderful person to work with! She was very understanding of our situation as intimidated, frightened, nervous 1st Time Home Buyers and held our hand through the whole process...which is what we needed.
First Time Home Buyers - Diane & Steve
Catherine went "Above & Beyond" to help us find insurance on a unique property, I had called every company in the phone book...every company had already spoken to Catherine. She knows what she is doing!
Buyers moving here from California - Steve & Ruth
With your help I was able to buy a house where I wanted to live, not where I had to live! Thank you for making a dream come true!
Home Buyer - Tom
ActiveRain Corp. is not responsible for the accuracy of the site's content (which is written by members of the ActiveRain Real Estate Network) and does not endorse the views of the real estate agents, mortgage brokers, and others listed here.
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