Jeff Belonger -- The FHA Expert.com -- FHA Loans -- FHA mortgages - USDA loans

FHA streamline loans are very beneficial in many ways. A few things to keep in mind. FHA streamlines don't take that long, up to 10 days, and the FHA streamline rates are the same as regular FHA loans.

When comparing FHA streamlines to conventional refinances, depending on your credit score, the FHA rate in many cases will be much better. Keeping this in mind, use a loan officer that is very familiar on how these types of refinances work. Just because it's easy to the naked eye, one still needs knowledge of how to make this work for you.

There are two types of FHA streamlines. Changes have been made as of September 18th, 2009 :

1. Streamline refinance with an appraisal : This is where you can include your closing costs within the loan amount. The lower of the two below would be used.

• Outstanding principal balance(a) minus the applicable refund of UFMIP, plus closing costs, prepaid items to establish the escrow account and the new UFMIP that will be charge on the refinance

OR

• 97.75 percent of the appraised value of the property plus the new UFMIP that will be charged on the refinance..

*** Important - Discount points may not be included in the refinance now. If the borrower does agree to these points, the lender must verify that the borrower does have the assets to cover such points. ***

2. Streamline refinance without an appraisal : The calculation for this is the original principal balance(a) of an existing FHA mortgage minus the original UFMIP (upfront mortgage insurance) that is left over plus the new UFMIP that is added to the loan amount.

Key Reminder - The outstanding principal balance(a) may include interest charged by the servicing lender when the payoff is not received on the first day of the month but may not include delinquent interest, late charges or escrow shortages.

These 2 types of refinancing are only for primary residences only. Investment properties that were originally bought as a primary residence, may only be refinanced without an appraisal to only include the outstanding principal and nothing more. Listed here : 4155.1 3.C.2.d and e

If you have a 2nd mortgage or any junior liens older than twelve months old, then this would be considered a regular refinance and could not be done as a streamline refinance. And then you would have to qualify with income and credit.

Some Key FHA streamline changes as of September 18th, 2009 (all of this goes into effect 60 days from the 18th of September):

• Seasoning : The borrower must have made 6 months of mortgage payments at the time of application.

• Payment History : Greater than 12 months or less than 12 months of mortgage payments.

A. Less than 12 months - no lates allowed

B. Greater than 12 months - allowed one 30 days late in the 12 months, but no lates allowed in the last 3 months prior to the date of the new application.

• Net Tangible Benefit : The lender must determine a net tangible benefit to the borrower, no matter if it's with or without an appraisal. The NTB (net tangible benefit) must benefit the borrower by :

the reduction in the new mortgage payment to include taxes & homeowners

refinancing from an adjustable rate (arm) to a fixed rate

(or) reducing the term of the mortgage

Keep in mind, that the new mortgage payment must be 5 percent lower than the old payment. This is the requirement when going from a fixed rate to a fixed rate. There are different requirements when going from an arm to a fixed rate or from a fixed rate to an arm. Please read the mortgagee letter, ML 2009-32.

• Maximum Combined loan to value : If subordinate financing is in place, the maximum combined loan to value, which is CLTV, can't exceed 125%.

For streamlines with an appraisal, it's determined off the new appraisal.

For streamlines without an appraisal, you use the original appraised value.

• Certifications & Verifications : The lender now needs to confirm that the borrower(s) have a job and income prior to closing. This must be done on the lender's letterhead and signed and dated by someone at the mortgage company. If assets are needed, the lender must verify and document this also.
  

*** there are a few more changes, when it comes to the FHA streamlines, yet very minor. All of these changes can be read in Mortgagee Letter 2009-32 ***

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Experience & Knowledge at its BEST !!!

_________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!

Copyright © 2009 by Jeff Belonger of Infinity Home Mortgage Company, Inc

FHA loans to 5% down? A 5% down payment for FHA loans?

I totally understand the issues at hand, that many agencies are now having more loans foreclose, that more loans are being lost on the books, and that lawmakers are re-looking at FHA's 3.5% downpayment to possibly raise it to 5%.

Here is the article in question written by Rich Edson of Fox Business. Proposal would boost FHA Down-Payment Requirement.

I have a few concerns, not only what some politician wants to do, but the reasoning behind it. If you read the article,

Here is a comment by Chairman Ben Bernanke.. "I think it’s undeniable that the FHA loans -- because of the low down payments and so on -- are riskier than other mortgages being made, and therefore have a greater risk of loss which would be made up by the taxpayer,” said Bernanke."

Bernanke went on to mention this, "You can make the restrictions tougher and tougher, that reduces the risk to the taxpayer -- absolutely.” “And it reduces the number of people who can get mortgages.” - BINGO.. it will reduce the number of mortgages that people can get. Then where will the real estate market be?

Here is why I am so blue and upset, with confusion in the background. We talk about ...

• the housing bubble
• homes losing value
• foreclosures & bank sales
• people that can't afford their mortgages now
• skin in the game - larger down payments
• loans that are becoming harder to close
• higher credit scores hoping to make better mortgages

And the list could go on and on.... but one major question. Could a lot of what was mentioned above, be attributed to ...

• job losses?
  
• Less Income?
• Higher family expenses?
• Living expenses? (health care? School?)

Overall, if you don't have a job, or lose it in the process of owning a home, or just can't save because the cost of living is increasing... wouldn't this be a larger contributor to what was mentioned above? What about USDA loans and VA loans, that are 100% financing options. Yes, their default rates are increasing. But is it because of 'no down payment'? The economy? Unemployment? Job losses?

Let's dig a little deeper. I know a loan officer, Gerry Suarez, that has a client that bought a house and used a FHA loan as their choice of financing. She had put 3.5% down, had fair credit scores of 625, and in the last year, she is under water on the house. She has been paying her mortgage because she can afford making the payments. If she sold her house in today's market, she would owe about $40,000.

My point? She has a job, is responsible, and enjoys the American Dream of owning a home. How come we never read articles about those that put 10% or 20% down, yet went into foreclosure? It happens and happens more than you would think. I have been giving spreadsheets from other large mortgage companies, showing loans that weren't performing on their books with large down payments. It's scary people. And here is a great example of the government stepping up to the plate, thinking that they know best.

One other thing that was mentioned in the article. "The bill, proposed by Congressman Scott Garrett (R-N.J.), would also eliminate FHA financing of closing costs."

First off, this is how rumors start. FHA doesn't allow you to finance the closing costs, except on a 203-k loan. (a few things can be financed per se) You have what is called seller concessions. So I have to assume that this is what the author means, that they want to take away the seller contribution, which is at 6% at this moment. To take it away completely? And to add insult to injury, have the borrower put down 5%?

My thoughts and opinions. -

Do we really think another 1.5% extra, for a down payment, is going to solve this problem? What about focusing on jobs? What about welfare checks? Sending millions of dollars to other countries, to help them, but not helping ourselves.

Small solution? What about possibly lowering the debt-to-income ratios then? I have recently approved a borrower with 3.5% down, $2,000 in reserves, with a credit score of 710, and her ratios were 38.7% and 47.3%. That means that almost 39% of her money goes to her mortgage payment, to include taxes and homeowners insurance. And that 47% goes to the mortgage payment plus all other reoccurring monthly debt. And this is before taxes !!! But what is missing from this picture?

-- living expenses, such as food, clothing, gas, electric, gas for automobiles, etc, etc

Overall, I know we have many issues that need to be fixed, the housing market is one of them. But every time I see some government official or politician try to get the house and senate to approve something, that could hurt our industry more than help, it ticks me off. What ever happened to common sense? Rhyme over reason? What do you, the American people say? The tax payers, what do you have to say????

UPDATE 10/08/09 : continued discussion on skin in the game, having equity or not. Having a large downpayment or not. Please read : I Want your Skin in this game !!! Give me your skin now...

Solutions !!!!

(please read some of my solutions below in this comment - click link above)

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- FHA Loans - USDA Loans - VA Loans -

- Energy Efficient Mortgages -

- Conventional Loans - 203 k loans -

- Mortgages -

Experience & Knowledge at its BEST !!!

_________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!

Copyright © 2009 by Jeff Belonger of Infinity Home Mortgage Company, Inc

ADVERTISING – Those ads that seem too good to be true.

I have been in the mortgage business for 17 + years. I have seen so much advertising when it came to mortgage companies and how many of the ads were misleading or just flat out lies. Those companies advertising low rates that didn't happen. This easily went on from 1992 to 2002. I always wondered why this wasn't regulated as strongly as it should have been. I found out that some of these companies had 100's of complaints, yet they still operated for those 10 years. I think this is misleading and I call it Shark Advertising. It's dangerously misleading, yet it worked for many companies, at the expense of the borrower.

If anyone has noticed, we haven't see as much advertising from mortgage companies or large banks in the last 18 months or so. I am now seeing a few mortgage companies advertise on the radio and as of lately, a few advertise on TV, especially ESPN. The ads are misleading because they appear to make you believe that it's being backed by the government. (Miriam Bernstein made this comment below that explains this part.. - Comment # 30 -)Has anyone seen a few ads on tv that look like a news update, a spokesperson telling you about government funded programs or that the government is helping in sponsoring these programs. Yet if you read the fine print, it's a mortgage company, disguising this ad very carefully, spinning it as thought the government is putting this out to the public??

I am even seeing this more and more in such places as Facebook. Below are a few that I am seeing on Facebook now.

Here are some ads found on facebook and comcast.net. As you can see, these mortgage companies and or companies that are lead generators, make you think that the government is behind this. Obama hasn't asked homeowners to refinance. The first one on the left, upper left, is from a company called Lower My Bills. They sell leads to other mortgage companies, after they have gathered your information online. Then you have like 4 to 10 lenders call you, sometimes daily.

People on Facebook that give basic information – eye catchers to pull you in.

Here is a loan officer on Facebook that placed this on his Wall, to capture the attention of others. You just need to be aware of what you read. Sure, this can happen, but there are some unknowns not mentioned. And sometimes the loan officer will raise that unknown, so you can't obtain that great rate and get the next best thing. Keeping in mind, it's not always about the Best Rate. How service? Integrity? Educating the borrower? And so much more.... Please read : I want the same deal that my friend receivd... & Mortgage payment vs Interest Rate

Web Sites that are deceiving !!!!

As I explained in this blog post, deceptive web sites, here is a great example above. Doesn't this look like it could come from the USDA themselves? But it isn't. It acts as a lead catcher, catching your info to call you and or sell you about USDA loans or any other type of mortgage loan. No Cost Obligation is mentioned on the site. - We always love to hear about free things, but are they free overall?

Here is a FAVORITE of mine !!!

I am sure many of you have seen this one on tv, FreeCreditReport.com. The commercial announces a free credit report. But at the very end, it says that you need to enroll in their Triple Advantage program.

A free credit report? They have tons of commercials & commercials cost money to display on TV. They also have like 3 to 4 different kinds of commercials and. producing commercials cost money.

Well, I feel like an investigative reporter for the news. I filled out my info online, trying to see what I get. It says that it takes 3 to 5 days for me to obtain these credit reports from the 3 credit agencies. (giving my credit card #) And then there is a button that says, to obtain your 3 reports now, click here. Imagine that, it's asking for $24.95 now. See the 2nd paragraph on the left, highlighted in yellow? It talks about the new Federal Law and I am wondering if that is what they are sending me now, because that is free. But from what I know, you have to go to annual credit report to get the free reports.

All 6 commericals - Free Credit Report.com

Conclusion : Just be very careful of what you read and what says free, when it might not be free. I always have said, someone has to pay for it from some where. Is it you? Is it me who pays for it?

Overall....No matter what, consumers will fall for some of these ads. It's called false hope. Especially when desperate, you just want to believe that someone can help you.. or, that it's cheaper with them than the others. thanks

• Shopping for mortgages - The Public Image of Advertising that is misleading !!!! - Part 1 of 2

• Shopping for mortgages - The Lending Trees of the World (lead generators) - Part 2 of 2

Advertisements - Is the grass greener on the other side?

FOLLOW ME ON FACEBOOK

- FHA Loans - USDA Loans - VA Loans -

- Energy Efficient Mortgages -

- Conventional Loans - 203 k loans -

- Mortgages -

Experience & Knowledge at its BEST !!!

_________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!

Copyright © 2009 by Jeff Belonger of Infinity Home Mortgage Company, Inc

How many of us truly have a business plan? How many of us are still afraid of the internet? How many of us don't utilize the internet as they should? I am sure marketing dollars are tight for many of us. How do you target your marketing dollars. Keeping in mind, time is money. So how do you utilize your time and your money?

There are so many ideas and marketing strategies, even in a down market, when you don't have much money to use for marketing. In my opinion, I do believe that print advertising (not 100% dead) is out the door, that you can spend your money in better places.

I wanted to share three basic concepts that we might take for granted, and not utilize to our full potential. I was inspired to write this after reading Jay Beckingham's blog, "Rain Power" It's Awesome. Jay gave some good basic tips and talked about Googling yourself. I wanted to take this a step further.

3 Basic Concepts of Affordable Marketing

1. - Business Cards - Probably the cheapest way to advertise yourself or keep your name in front of other perspectives. Sure, you usually have to give that person your business card. I did write 2 informational blogs in regards to business cards, what they should look like, and how to utilize them by being creative.

• Business cards can help move your career forward -

• Business card tips - Part 2 -
  

But how about taking it a step further. If you write enough blogs, and or have a few different web sites/blog sites, and interact on the internet; how about just telling people to Google your name. I have talked about this in other marketing blogs and in my opinion, this could be a very powerful marketing tool. Not only powerful, but cheap. Sure, if you don't have a common name, this certainly helps. But even for those with a common name, if you write quality blogs and use some of the tips that Jay mentioned in his blog, you can sometimes pass those celebrity names. Overall, think about this, just telling a client to Google you. Or even write this on the back of your business card. I think it's a great way for a prospective client to get to know more about you.

2. - Testimonials - Now, I sometimes cringe while reading some testimonials, because I wonder if they are real. I actually saw someone copy someone else's testimonials. Yes, this actually happened. But what another great way to market yourself on your home pages or possibly to have a link on your business card, sharing some testimonials. Now, unfortunately, I can't give you my specific link to my testimonials on my blog page, because it's down for now. But people actually read these sometimes and it can help make a decision, if those testimonials sound sincere and real. Example : I just had a borrower call me yesterday, after having an issue with their current lender, and actually read my testimonials. What impressed her was that I seem to care, because someone wrote that I actually was on the phone with them until 11 pm, answering some questions. Showing that you care, without pushing it down someones throat, or harping on it, can and does work. PS... Video testimonials, which I wrote about a year ago, but I forgot to mention. Thanks to comments by Will and David, comments # 22 & 24.

3. - Internet marketing - Blogging & Social Networking - The basic concept here is having an internet presence. Knowing that 80% of the people that shop for homes and mortgages, first shop/search online. It doesn't mean that they make their final decision from searching the internet, but that it can play a large role in their final decision making process.

There are debates in blogging vs social networking, that blogging is dead, and that Twitter is the best way of doing business. I don't want to get into that debate. If you do want to hear a good topic on this, Jason Crouch and Ken Cook co-host a weekly radio show and talk about this stuff. Yesterday's talk show had Paul Chaney as a guest and they explored some good information. Social Media tricks & tips - (click here to hear yesterdays show)

Overall, I firmly believe that if you aren't actively blogging, that you are missing the boat. In many cases, the expense for this can be cheap, depending on what services you use. In my opinion, if you are new to Active Rain, AR is a great place and affordable to start your blogging with.

- Active Rain success stories -

2 posts on blogging -

Crash course on blogging

Blogging - short term and or long term?

UPDATE : Jeff Dowler wrote a very informative post : Social Media and your business - Tips, Strategies, and no nos...

PS. - And if you ever have any questions about Active Rain, starting a blog, or any thing else, please never hesitate to contact me. I will try my best in helping.

FOLLOW ME ON FACEBOOK

- FHA Loans - USDA Loans - VA Loans -

- Energy Efficient Mortgages -

- Conventional Loans - 203 k loans -

- Mortgages -

Experience & Knowledge at its BEST !!!

_________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!

Copyright © 2009 by Jeff Belonger of Infinity Home Mortgage Company, Inc

HUD released a new mortgagee letter on September 18th, 2009, mortgagee letter 2009-28, that is titled Appraiser Independence. HUD wanted to clarify a few things in regards to FHA loans and adopt some of the guidelines from the HVCC guidelines for conventional loans. HVCC - Home Valuation Code of Conduct

FYI – I read a blog from Friday that was title, FHA is adopting HVCC as of January 1^st.

This is misleading and I wanted to clarify this. HUD is adopting some of the rules & guidelines set within the HVCC. In the new FHA mortgagee letter, it specifically stated this :

"FHA does not require the use of AMCs or other third party organizations for appraisal ordering, but recognizes that some lenders use AMCs and/or other third party organizations to help ensure appraiser independence."

This came directly from page 2 of mortgagee letter 2009-28.

What are some of the key changes or things to keep in mind from the mortgagee letters mentioned? -

• Mortgage Brokers & commissioned lender staff - Hence the mortgagee letter, Appraiser Independence, "FHA approved lenders are now prohibited from accepting appraisals prepared by FHA roster appraisals who are selected, retained or compensated in any manner by a mortgage broker or any member of a lender's staff who is compensated on a commission basis tied to the successful completion of a loan." - directly from mortgagee letter 2009-28 - My opinion, many lenders will just order FHA appraisals through AMC companies. (appraisal management companies) - This will ensure any confusion and or finger pointing.
  

• Appraiser Engagement - An appraiser should or must have knowledge of the area or type of properties that they are appraising. The lender should not assume such knowledge and it's also the lenders responsibility to ensure accuracy and quality, along with that FHA appraiser. This is on page 4.

• Prevention of Improper Influences on Appraisers - This has been addressed in mortgagee letter 1996-26. HUD wanted to reaffirm that no member of the lender's staff or anyone commissioned that oversees the completion of that loan, be allowed to have such communications that would have any impact of the valuation, to include having the ability to order or manage the appraisal assignment. The DE underwriter is allowed to request clarifications and discuss with the appraiser components of that appraisal that influence its quality. Bottom of page 2.

• Appraisal Portability - FHA appraisals were always allowed to be transferred to another lender, when the FHA case number was assigned.. This new mortgagee letter, mortgagee letter 2009-29, is clarifying that it is allowed, but adding some new rules if the first lender is delaying the transfer of the original appraisal. It just says that a second appraisal can be ordered under certain circumstances, which is listed on page 1 of mortgagee letter 2009-29.

• Appraisal Validity Periods - Mentioned in mortgagee letter 2009-30, it states that the appraisal is only valid for 4 months from the date of the appraisal, no matter if it is an existing property, proposed property, and even under construction.
  

My opinion : I know how many realtors are in an uproar about the HVCC issues and how they are affecting the conventional loans. Even though it's not mandatory that FHA loans are done the same way, HUD is just implementing safe guards. I think many of the HVCC issues stem from brokers that have to rely on the banking institution that they are passing the loan to and those larger banks that are just so busy, that they just pass it to a management company that might not be organized. As a mid-sized banker, I have not seen any problems from neither side, even if I have ordered my appraisals through the AMC company. Yes, we started to implement this already on the FHA loans, in fear of some issues. But it has not slowed down the process of my loans one bit. Just food for thought.

On another note, most things mentioned in mortgagee letter 2009-28, are just repeated from prior mortgagee letters from over 12-14 years ago. If any new changes, it was the appraisal validity period and the appraisal portablity, which were mentioned in 2 new mortgagee letters, mortgagee letters 2009-29 & 2009-30.

All guidelines/rules go into effect for all FHA case numbers assigned on or after January 01, 2010.

DISCLOSURE : I am not a certified appraiser. The information that I obtained came directly from HUD's new mortgagee letter. Being the first out there with any new changes, is not always the best, especially when it's misleading or not correct.

FOLLOW ME ON FACEBOOK

- FHA Loans - USDA Loans - VA Loans -

- Energy Efficient Mortgages -

- Conventional Loans - 203 k loans -

- Mortgages -

Experience & Knowledge at its BEST !!!

_________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!

Copyright © 2009 by Jeff Belonger of Infinity Home Mortgage Company, Inc