Donne Knudsen

As a part of the Down Payment Assistance Resource Group, I was recently asked by the group founder, Ron Withers, to provide info on California's Mortgage Revenue Bond (MRB) programs. As a true believer in the American dream of home ownership, I believe that everyone who wants to own a home should have all the information they need in order to make the right decisions in trying to make that dream come true. On that note, I'm happy to provide the Rain's DPA Resource Group info on CA's MRB programs.

The California Housing Finance Agency (CalHFA) provides low-medium first-time homebuyers with safe, decent and affordable home loan programs. CalHFA was chartered as the State's affordable housing bank to make low interest rate loans through the sale of tax-exempt bonds. A completely self-supporting State agency, bonds are repaid by revenues generated through mortgage loans, not taxpayer dollars.

Working with lenders and mortgage brokers around the state, CalHFA finances traditional 30-year fixed rate mortgage loans as well as a number of programs for down payment and closing cost assistance with competitive interest rates. The first mortgage loan program features a low, fixed interest rate fully amortized loan over a 30-year term. It has a maximum LTV limit of 95% and may be used with CalHFA-approved down payment and/or closing cost assistance options for a maximum CLTV limit of 102%.

CalHFA down payment assistance loan programs include:

• Affordable Housing Partnership Program (AHPP) - A joint effort by CalHFA and a number of city and county agencies that offers a deferred payment subordinate loan by the first-time homebuyer to assist them with down payment and/or closing costs.
• California Homebuyer's Downpayment Assistance Program (CHDAP) - Offers a deferred-payment junior loan of an amount up to three percent of the lesser of the purchase price or appraised value.
• Extra Credit Teacher Home Purchase Program (ECTP) - A low interest rate CalHFA first loan, together with a forgivable interest CalHFA junior loan to assist eligible teachers, administrators, staff members and classified employees to purchase their first home.
• School Facility Fee Down Payment Assistance Program (SFF) - A conditional grant program that provides assistance to buyers of newly constructed homes throughout California.

The requirements for CalHFA qualification are:

• To not have owned and occupied your own home during the last three years. CalHFA with waive previous homeownership if the property is located in a Federally designated target area.
• Have an annual household/family income within CalHFA's income limits for the family size and county in which the home is located.
• Purchase a home that is within CalHFA's sales price limits for the family size and county in which the home is located.
• Live in the home you are purchasing for the entire term of the loan, or until the home is sold or refinanced.
• Meet credit, income and loan requirements of the CalHFA approved lender and mortgage insurer.
• Be a citizen or other national of the United States or a qualified alien.

Just recently, CalHFA expanded their programs to help communities hardest hit by foreclosures by helping first-time homebuyers purchase foreclosed homes. Under the program, first-time homebuyers will be eligible for below market rate loans to purchase foreclosed homes in ZIP codes with some of the state's highest foreclosure rates. Several lenders have agreed to partner in the program and offer sales prices on foreclosed properties in those ZIP codes of at least 12% below the estimated value. The homes must fall at or under CalHFA's sales price limits, and families must meet income requirements.

For more information and a complete description of CalHFA's homeownership and mortgage insurance programs, visit www.calhfa.ca.gov.

It's happened again! Another one of my FHA clients has had her offer rejected simply because the bank chose to take an offer from a buyer with a conventional loan. The first 10 or 20 this happened during the first half of the year, I would always tell my clients that their time will come one day soon.

But it's now becoming absolutely ridiculous and the REO listing agents have no shame in dissing my clients simply because they're FHA clients. Today was the virtual last straw. Even though my clients had the best and highest offer, the REO listing agent told my clients Realtor "we chose the other offer because it was a conventional loan and not FHA". I'm so sick of these banks automatically disregarding my FHA clients and their offers simply because they think conventional loan transactions are easier and faster transactions.

Without going into the gory details of every file I've had this year, I could sit here and recite issue after issue that I as well as several other LO's in my office have had with numerous conventional loans transactions we have had this year. I could also tell you about some of the easiest loans we've had this year that were FHA transactions.

Just because it's an FHA loan doesn't mean your dump, oh excuse me, your listing won't appraise at value. Some of the biggest appraisal issues I've had this year were on conventional loan transactions, not FHA loan transactions. FHA appraisers are not the monsters that Realtors think they are.

There are so many misconceptions about what FHA appraisers are focused on. I've made it my mission now for the past few months to educate the Realtors that I work with on how FHA appraisal requirements are not all that different from conventional loan appraisal requirements. I've had my FHA appraisers speak with Realtors about some of the facts and fallacies of FHA appraisals in an effort to alleviate some of their concerns.

Hopefully, one day soon, these REO listing agents and the banks will realize that FHA prospective buyers and their offers are just as valid and worthy as other prospective buyers and their conventional loan offers. As for my clients, I still continue to assure them that their day will come one day very soon. It simply has to; it can't go on like this for very much longer. Can it?

Recently, I read a blog, a good one too. The writer, Realtor Pacita Dimacali, wrote about how a couple she was working with lost a home they really liked because they made a low-ball offer, regardless, of the advice that Pacita provided to educate and inform the clients of what they needed to offer to get their offer accepted.

Almost all of the comments to her post were from Realtors who were complimentary about her blog and agreed with the way that she had carried out her duties for her clients. However, there was one comment, from a consumer, that bothered me. Throughout my day, that consumer's angry rant about how much she disliked Realtors popped in and out of my head at the oddest moments. As far as this consumer was concerned Realtors didn't care about their clients or what they could or could not afford. She continued to rant that Realtors were so greedy that all they cared about was selling the highest priced home because they could make more off of the buyer.

I felt sorry for this consumer; she obviously has had a bad experience with a Realtor. While part of me can sympathize for her situation, having worked in the mortgage lending industry for seven years, I've certainly met my fair share of Realtors that I felt less than gracious and complimentary about.

However, I've also met dozens and dozens of other Realtors who go above and beyond the call of duty to serve their clients. As the Family Support Chairperson for the local Ventura County Habitat for Humanity affiliate office, I've had the pleasure of working with a group of Realtors for the last two years who have devoted their time, energy and money to not only benefit their community but to also help a local family here in Simi Valley realize the dream of homeownership.

Recently, the Simi Valley Moorpark Association of Realtors (SVMAR) raised more than $110,000 for Habitat for Humanity and sponsored a home for single mom Gabriella Silletti and her three children Brianna, Donovan and Melinda. Gabriella never in her life ever thought she would be able to provide a decent home for her and her children that she would be able to afford. But with the help of Habitat for Humanity and the generosity of the Realtors of SVMAR as well as the countless hours from the volunteers who have worked on her home, Gabriella and her children will now have decent and affordable shelter that they can call their own.

I wish I could say that all Realtors are as kind and compassionate and as generous as the Realtors for SVMAR but unfortunately, they are not, as the consumer in the blog that I read discovered. In every profession and every industry, there are always going to be those who give the profession a bad name, the real estate industry is no different.

By the end of the day, I felt sorry for that consumer. I felt compelled to write her and tell her not all Realtors are alike. Would it make a difference? I don't know. I ended up saying something lame like don't judge all Realtors based on the actions of a few "bad apples". But it's true though. Isn't it?

In an effort to brush up on the VA loan program, I read several of the blogs on AR and especially liked Greg Zaccagni's blog (Greg's Blog) where he compares VA to FHA. After reading Greg's blog, it prompted me to write about my recent re-introduction to the VA loan program.

The Veteran's Administration (VA) loan program was another one of those programs that I learned how to do very early in my career. Having pushed through a couple of these loans, after the last one I did, I prayed that I would never have to do another one again. They were very challenging. However, these days I find myself grateful for the learning experience and to now have the opportunity to say "yes, I know how to do VA", which has come in handy lately. Plus, since that last VA loan I did, the VA loan process has simplified some; it's been revised to be more efficient and less time consuming (YEAH!!!).

For many returning vets, VA used to be their only option when it came to buying a home. However, for many years now, there have been other programs that when compared with VA, often proved to be a better option for the vet than the VA loan program. Last month, I met the spouse of a soon to be returning vet at a local open house I was doing. We met again a few days later to discuss getting her and her husband pre-approved for a home loan. I went through my presentation of laying out their available loan options and as I presented the VA program (it had been a while since I had sat with anyone qualified for a VA loan), I became somewhat surprised that the VA program was actually looking to be the better option. I hadn't seen that in awhile, years actually.

With my primary clientele being low-medium income, first-time buyers, the bulk of my business tends to be FHA/CalHFA. With this couple being current homeowners who were not interested in purchasing their next home in a designated target area, they did not qualify for CalHFA, so it became a comparison between VA, FHA and a conventional loan program. Because of the recent declines in home appreciation, this couple had very little equity left in their current home (thank God they weren't upside down) so they weren't going to have much to put down, which reduced their options even further to VA and FHA. Now, even though VA and FHA are both government loans there are a few differences in how they are reviewed, approved and funded and I liked how Greg Zaccagni compared them.

Gurantee vs. Insure Privately Funded Mortgage Loans

FHA loans will insure up to 20% of the home loan amount to lenders. VA will guarantee a maximum of 25 percent of a home loan amount up to $104,250 limiting the maximum loan amount to the conforming loan limit, which is $417,000 ($729,750 for this year only). Between the two programs, VA loans can provide a lower risk factor for lenders than FHA. Both VA and FHA have funding fees that can be financed into the loan.

Loan to Value for Purchases

VA allows 100% financing of the loan value (no down payment required). FHA requires 3% down payment, which can be gifted to the buyer. Both VA and FHA allow closing costs to be rolled in with seller concessions provided the entire loan amount is not higher than the appraisal value.

Calculating Total Debt to Income (DTI) Ratios

The maximum VA back end DTI qualifying ratio is 41%. In the event the number exceeds 41%, the VA has a residual income guideline which may still allow approval above the 41%. VA loans require that borrowers possess a given amount of residual income after their mortgage payments each month. Most veterans with steady incomes meet these requirements. FHA allows back end DTI up to 43% and will allow higher ratios with favorable compensating factors such as years in the same industry, more money down and savings reserves that can be used to make mortgage payments.

Credit Issues

VA & FHA are so similar in this area that it's really not worth the space of going into detail about the few difference they do have.

Since meeting with that first spouse, she has referred me to a few of the other spouses on base and although every situation is different, I have a feeling that with a large percentage of vets returning home soon (especially once we end this #$%^ war), I will quite possibly see a comeback in the VA loan program.

For more detailed information on the VA loan program, please feel free to contact me or check out

http://www.homeloans.va.gov/index.htm

I recently came across this article and thought it might interest the AR community. A couple of months ago, this exact thing happened to one of my clients. Right after he applied for a home loan, got pre-approved and began his home search, he received a call from a collection agency regarding a "zombie debt". Apparently, nine years ago, while going through a really nasty divorce, his ex ran up a bunch of credit card debts. One particular debt, from a furniture company, went into default, was never paid and was eventually charged off from the creditor.

My client had no intention of paying the collection because for starters, it wasn't his debt. In the divorce agreement, his wife was ordered to pay that creditor. Secondly, the debt was nine years old and wasn't on his credit report. He knew that because having just been pre-approved, he knew he didn't have any derogatory debt. Fortunately for my client, he knew his rights and confirmed with me that this old debt of his ex-wife's was not going to have a negative effect on his ability to get a home loan. Since it wasn't showing up on his tri-bureau credit report, I told him to tell the creditor the next time he calls that "the debt is not yours and you are not going to pay one cent and if he doesn't stop calling you, you are going to report him to the FTC".

For information on how to deal with "zombie debt" see the following link.

http://money.howstuffworks.com/personal-finance/zombie-debt.htm