Joshua Burley

Most folks think that 100% financing is a thing of the past, these people are not educated in USDA mortgages. USDA is offers 100% mortgage financing on home in rural areas up to $417,000. The good news is, you do not have to move to Nebraska to take advantage of this great program. Almost all of Virginia is eligible and a huge portion of Maryland too. To find out if your area is eligible for a 100% USDA mortgage, click here.

For updates USDA, FHA , VA, Conventional and Jumbo mortgage rates go to www.joshburley.net .

Josh Burley
Sr. Loan Officer
Choice Finance Corp.
www.joshburley.net
www.choicefinance.net
301.881.8900 x125

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Josh Burley
Sr. Loan Officer
Choice Finance Corp.
www.joshburley.net
www.choicefinance.net
301.881.8900 x125

Check me out on Facebook

"I locked my interest rate at 5.5% and now rates are going down, what do I do?"

With rates returning to the 5% level and possibly going lower, many consumers who "locked in" their interest rate over the past 3 weeks are now left asking this very question.

First I must say, that you were not a fool for locking in a great rate in a volatile market when rate were rising. The probability that rates would continue to rise was just as great, if not greater than the chances they would fall. I say to clients all day long :"IF YOU ARE COMFORTABLE WITH YOUR PAYMENT, LOCK IN NOW AND DO NOT LOOK BACK". If you are refinancing for the sake of refinancing, or you need a certain payment to fit within your budget, by all means float your rate. Otherwise, LOCK!

With that disclaimer out the way, I digress to the conundrum that faces many consumers today: They locked and rates got better, now what?

The first thing you need to do is ask your broker about the lenders "Float down policy" Click here to find out what a float down is

Ideally, you should have this discussion with your broker PRIOR to locking your interest rate. If your lender does offer a float down, discuss the parameters with your broker. Most lenders will not offer floats until your loan is cleared to close.

If your lender does NOT offer a float down, you need to make sure that difference between your locked in rate and proposed new rate is great enough to consider going to another lender. When you switch lenders, there are many repercussions that are felt by all parties.

For Lenders, they lose money on a lock not being delivered. Up to .375% of the loan amount. For the broker, they are penalized with worsened rate pricing from the lender. For the consumer, rates will not fall as fast when the market moves because lenders need to hedge there losses. The consumer also loses valuable time and money. With the new HVCC rules, you will likely need to pay another $4-500 upfront for a 2nd appraisal.

As a broker, when rates go down it can actually put me in a tough spot. My allegiances first and foremost are to my client. I will always act with my clients interest in mind. To do that, I must also act in my investors best interest. If I perform well for them, I receive preferred rates and faster underwriting turn times to pass on to my clients. That said, I will never penalize my client for locking in rate. My rule of thumb is, if RATES drop by .375% or more, I will do everything in my power to renegotiate with the lender. If that is not an option, we will look at options with another lender. We will only do this after you fully understand the risks and rewards of switching lenders.

Got questions? I would love to answer them. Please call or email me at any time.

Josh Burley
Sr. Loan Officer
Choice Finance Corp.
www.joshburley.net
www.choicefinance.net
301.881.8900 x125

Check me out on Facebook

A float down is when rates improve after you have "locked in" your interest rate and the lender agrees to float your interest rate down to the market rate for that given day.

Q: Do all lenders offer this?

A: No. Every lender has a different policy. Some do not offer a float down option at all

Q: How do I know if the lender I am locked with will offer a float down?

A: Ask your mortgage broker. Ideally, you would want to ask this question prior to locking.

Q: What do I do if I am already locked and my new lender will not float my rate down?

A: Here are some options:

1. If you are purchasing a homeand settlement is near, you want to close on time. In this situation, I would recommend staying put to ensure a timely settlement
2. If you are refinancing, you need to have a candid conversation with your broker. If rates have only moved .125%, the broker should keep the process flowing with the selected lender. Moving your loan from one lender to another is not as easy as it sounds. Particularly now that we are dealing with HVCC (this is an entirely different post) .

Q: What happens if I break my lock?

A: The lender has to pay a fee up to .375% of the loan amount for a loan that is never delivered. The broker will receive worse rates from that lender in the future to cover losses and the consumer ultimately loses

Summary:

In short, ask the proper questions up front. Ask your broker what they are going to do for you if rates improve. Do business in good faith, understand that when you lock a rate in, you are making a commitment to your broker and your lender. Should you break that commitment, it does matter. Know the broker that you are working with is a seasoned professional that you can trust to give you honest answers. If you do these simple things, you will get the best rate available for you and have a positive experience.

Josh Burley
Sr. Loan Officer
Choice Finance Corp.
www.joshburley.net
www.choicefinance.net
301.881.8900 x125

Check me out on Facebook

HVCC stands for Home Valuation Code of Conduct.

In short, it restricts the consumer as to who can perform there appraisal and puts it in the hands of a selected lender. This lender will order your appraiser through a NATIONAL company. This is significant because you will often have a an appraiser that lacks the necessary local knowledge to properly assess your home and give it full value.

It also commits you to that lender, if your or your broker decide it is in the best interest to utilize another lender, you must fork out another $4-500 for a NEW appraisal and go through the whole ridiculous process again.

HVCC was conceived to supposedly improve the home valuation process, but was very poorly thought out and put into action. It is nothing but political grandstanding by New York Attorney General Andrew Cuomo. It forecloses on your right to choose who performs services for you, it encourages shoddy work by not allowing appraisers to be compensated fairly for their work and actually takes away accountability for the appraiser as they have no motivation to perform the full scope of work necessary to offer a fair valuation of your property.

What can you do about it?

Read this MEMO that I received form the National Association of Morgage Brokers:

June 22, 2009

HVCC CALL TO ACTION
New contact information for Fannie Mae

To: All Mortgage Brokers, Real Estate Agents, Appraisers, Lenders, Home Builders, Title Agents, and Consumers
From: Marc Savitt, CRMS, President- National Association of Mortgage Brokers

After more than a year of exhaustive negotiations with Fannie Mae, Freddie Mac, James Lockhart, Director of FHFA (GSE Regulator), and NY Attorney General Andrew Cuomo, NAMB believes the time has come for your individual voice to be heard.

In order for this "Call to Action" to be effective, we ask that you fully participate, encourage others to join the action and continue calling and emailing everyday, until advised to stop by NAMB. This will NOT be a one day action!

We have received hundreds of e-mails through the hvcc@namb.orge-mail address outlining specific cases where the HVCC has created delays and additional costs to consumers. NAMB has categorized and compiled a report of the examples received, which was sent to FHFA Director James Lockhart. Please use your own examples in your conversations with legislators, regulators, or their staff. Also, please visit the NAMB HVCC Resource Centerfor additional information and documents on the HVCC.

Who will you be contacting?
NY Attorney General Andrew Cuomo's Office: (212) 416-8000, Internet Complaint
Federal Housing Finance Agency (FHFA): (866) 796-5595, director@fhfa.gov
Fannie Mae: (800) 732-6643 Internet Complaint(new HVCC-specific form)
Freddie Mac: (703) 903-2000, Internet Complaint
Senators, Representatives and Governors: Click here for contact information.

Also, please contact your local TV and Newspaper outlets.

Below are talking points and background information to assist in your conversations. Please remember we are all professionals and should conduct ourselves accordingly in any communication with the above parties. For the most successful and influential calls, it is important to concisely quantify how the HVCC is affecting your consumer and your business.

Talking Points:

1) NAMB conservatively estimates (breakdown below) that the HVCC is costing consumers over 2.8 BILLION dollars a year in extra fees, created by long delays (extended lock-in fees) and higher appraisal costs.

2) UnregulatedAppraisal Management Companies (AMCs), who have been the subject of several misconduct investigations, are the centerpiece of the HVCC. The original Cuomo investigation involved a federally chartered bank and an AMC.

3) AMCs are driving honest appraisers and mortgage brokers from business, eliminating competition, increasing costs to consumers and reducing state revenue. The HVCC is causing significant delays in real estate transactions, hurting real estate agents, title companies and other third parties reliant on turnaround time.

4) HVCC does nothing to reduce fraud, as it legitimizes the same failed model, which was the subject of Attorney General Cuomo's investigation.

5) No Portability! Consumers are "trapped" with a specific lender. If a better deal becomes available with a different lender, the consumer is forced to pay for another appraisal.

Background:

I. Lack of Portability
A. Lenders are not allowing borrowers to transfer appraisals, regardless of the reason.
B. Forces the borrower to pay for another appraisal and wait for a new appraiser to be assigned and complete it, increasing the total cost and time needed for obtaining a home. Delays in turnaround times also cause the borrower to miss rate lock deadlines and possibly face penalties charged by the lender.
C. In a poll conducted by NAMB, 75.8% of respondents said that 0% of their appraisals are portable since the enactment of the HVCC.

II. Lack of Quality
A. AMCs are assigning appraisers from a different municipality, county, or even state to appraise the target house, therefore unfamiliar with the neighborhood and unable to produce an accurate appraisal.
i. Because of this, the HVCC is forcing appraisers to be in direct violation of the Uniform Standards of Professional Appraisal Practice (USPAP) for jurisdictional competence.
B. Because AMCs pay appraisers such low fees, those assigned appraisers willing to do the work are often inexperienced and fail to adequately appraise the home.

III. Increased Cost of Appraisals
A. The minimum increase we have seen in direct consumer cost is $150 per appraisal. That, coupled with the drastically increased appraisal turnaround times that impose extended lock periods at an average expense of $561.95 per loan, is now costing consumers an estimated additional $711.95 per transaction.
B. $150.00 - minimum increase per appraisal
$561.95 - average loan amount of $224,778 at .25% for extended lock period
$711.95 - average total increase per transaction
x 3,870,552* - 2007 HMDA report of residential real estate loans originated
$2,755,639,496 - $2.8BILLION in increased fees to consumers!

IV. Articles Illustrating the Effects of the HVCC
A. The Appraisal Bubble - The Center for Public Integrity
B. The Cure is Worse than the Disease - Appraisal Press
C. Appraisals Roil Real Estate Deals - The Wall Street Journal
i. Feel free to forward these articles and/or reference them in your conversations.