Kevin Sandridge - Winter Haven Mortgage Broker

Under the new Home Valuation Code of Conduct - drafted under the "supposed" watchful eye of James B. Lockhart (left), director of the Federal Housing Finance Agency, which oversees Fannie and Freddie - Florida lenders and Florida mortgage brokers will be prohibited from communicating directly with appraisers. Instead, appraisals will be ordered via AMCs, who will farm the work out to appraisers they have either contracted or retained on staff.

Is it a Buffer? Or a Sponge?

In theory - at least thus far - I'm fine with AMCs being put in place as a third-party "middle man" type buffer between lenders and brokers and the appraisers working on any given loan. It's warranted, and we need but look at the way Banks (Washington Mutual) and Appraisal Companies (See Cuomo vs. First American Appraisal Group) cajoled and pressured their way through numerous deals in order to get appraisal numbers where they needed to be in order to close deals.

But what really stinks is that there is at least one case where and AMC - Lender's Service, the country's largest AMC - is reported to have passed along statements to appraisers from lenders and borrowers urging for higher valuations in order to close loans. Ex-squeeze me?

AMCs Won't Be Regulated! Where are the Watchmen When We Need Them?

Don't get me wrong - lenders shouldn't be approving or passing along or passing forward bad loans. It just strikes me as odd that Lockhart, the FHFA, and Fannie/Freddie worked to pass the Good Conduct act - will only accept loans that have been duly certified by its measures, yet haven't bothered to set up any sort of formal oversight body to make sure things are done properly on the side of the AMCs.

Forget ongoing oversight! What about the "Driver's License from a Cereal Box" - like approvals they are at least tacitly granting by letting a bunch of "Known Entity Dopes" form and run these AMCs?

Oh yes. As the BusinessWeek article linked below sates - there's nothing to stop former sub-prime mortgage companies and even appraisers who lost their licenses for erroneously reporting home values from... are you ready? RUNNING AMCs THEMSELVES!

Hello Fox? Meet Mrs. Hen and Mr. Rooster. You'll be watching over them for a while.

Related articles

• Housing Appraisals: Still Blowing Bubbles? (businessweek.com)
• Appraisers Continue to Speak out against AMC Loopholes in the HVCC (appraisalnewsonline.typepad.com)
• FHFA Announces New Mortgage Data Requirements - Tracks "Appraisers' Performance, Negligence and Fraud" at the loan level (appraisalnewsonline.typepad.com)
• Fannie Mae Issues "Home Valuation Code of Conduct" Updates and FAQs (appraisalnewsonline.typepad.com)
• Inflated Home Appraisals Come Under Fire (mymortgageinsider.com)

Jason Lee Miller over at WebPro News released a blog post today stating that as far as the United States House of Representatives is concerned, bloggers, freelancers, independents, and nonprofit journalists are not "true journalists."  As such, they should not be protected from having to divulge their news sources if asked to by the government.

Wow.  Really?  Are we really here?

God.  I'm still reeling from this one.  The US Government - or part of it - actually putting into words its desire to deem some Americans free to speak their mind and seek the truth without fear of having to put their sources in jeopardy while all but issuing those not wearing their US Press Pass a gag order (emphasis on the "gag"). I can't really put my disgust and frustration any better than Jason did - so here's his take:

Apparently our “representatives” have a real problem with citizen journalism done for the sake of journalism and for the good of democracy, and believe protecting the “free flow of information” is only reserved for officially approved press. No bloggers, no patriotic radicals, no underground agitator pamphleteers like the ones who actually founded and fought for this country to begin with.

Hate to (once again) school our freaking government about the freaking Constitution they freaking pledge to uphold, but this is Congress making a law abridging the freedom of the press, a violation of the First Amendment. I might be more sympathetic if they missed one further down the list, BUT IT’S THE FIRST FREAKING ONE.

Image of Chuck Welch

I have a good friend, Chuck Welch, who's been in the journalism game for a long time.  He's worked for newspapers in roles that I suppose our good friends in "The House" would sanction as true journalism, but he's also one heck of a crusader when it comes to telling it like ti is - and offering platforms for others to do so - via blogs. The best examples of Chuck's efforts can be found over at LakelandLocal.com and MetroI4News.com. 

Be sure to check out articles by Billy Townsend and newcomer James MacMeekin (you can find Jim's Blog here) to get a feel for the freedom Chuck provides his regular contributors. You'll find no advertisements on Chuck's blogs - despite their higher than average traffic numbers and high PR rankings.  The cash just isn't worth the sock he'd have to consider putting into his mouth should one of his advertisers decide to make bad choices.

Good for you, Chuck.  I'm with you.  And if they ask me who my sources are... I'll take my cue from C-SPAN and the lads from the Peanut Corporation of America and plead the 5th.

Other Articles of Interest

• United States - Another reporter threatened with contempt for refusing to reveal sources (newswire.ca)
• WebProNews: US confidentiality bill overlooks freelancers and blogger-journalists (blogs.journalism.co.uk)

Word on the street is that 100 percent financing is a thing of the past. NOT TRUE!!!

There remains here in Polk County, Florida and in other parts of the nation a true 100 percent financed home loan purchasing program surprisingly few folks are talking about. What's the program? Hey... glad you asked. Why, it's the USDA Rural Development Loan program!

But wait, isn't there a USDA sticker on the pot roast I just picked up from Publix? Yes, yes there is. But the US Department of Agriculture (USDA) does much more than inspect the beef we eat. A quick surf over to Wikipedia tells us that:

On October 13, 1994 The Department of Agriculture was reorganized under the Federal Crop Insurance Reform and Department of Agriculture Reorganization Act. Under that Act, USDA Rural Development was created to administer the former Farmers Home Administration's (FmHA) non-farm financial programs for rural housing, community facilities, water and waste disposal, and rural businesses.

The former Rural Electrification Administration's (REA) utility programs were also consolidated within Rural Development. Rural Development's mission statement is "To increase economic opportunity and improve the quality of life for all rural Americans." Rural Development has an $86 billion dollar loan portfolio, and administers nearly $16 billion in program loans, loan guarantees, and grants through their programs. For various reasons, much of this funding currently goes to urban areas to help develop and redevelop suburbs and resort cities.

As a mortgage broker, it's my job to make sure that my clients are aware of any program that my be of real benefit to them. As such, I wanted to provide some detailed information on the UDSA Rural Development Home Loan Program. As you read through the following information, think about whether this program is right for you.

If so, give me a call at 863-604-3019, and we'll talk a bit about how we might set you and your family up with 100 percent financing today!

1. Why choose a Rural Development Guarantee loan? Simple! USDA Rural Development Guarantee (RDG) loans are the only true 100 percent financing loan you will find. Period. They require zero downpayment and no private mortgage insurance (PMI) - two costs associated even with FHA loans. No smoke and mirror here, folks. The USDA RDG loans are set for 30 years at a fixed rate, and there is no limit on the price you pay for the home. The only qualifying factor for the home itself is that it be situated within an approved USDA eligible area. Florida has very few areas that qualify for this program. However, if you live in Polk County - then you're are in luck, as nearly 80 percent of of Polk County qualifies for the USDA RDG loan program!

2. Can I Save Money by Using the USDA Rural Development Grant Program? Yes. Take, for example, a loan for $100,000.00. By taking out a USDA Rural Development loan, the borrower saves $4,290.00 in the first 10 years over what they'd pay out on an FHA loan. Why? For one reason - USDA RD loans don't have any monthly Mortgage Insurance requirement!

Sure, you pay a USDA Guarantee fee of 2 percent up front when you take out the loan, but that sure beats paying MI each month until you get your Loan to Value ratio down to 80 percent! Remember, it is difficult to drop MI insurance, and lenders will not drop it from your monthly payment unless you ask them to. (I know, big shock.) Plus, the MI premium has to be calculated into the ratios. This is NOT an issue with the RD loan since MI is not required.

3. Is the USDA Providing the Funds for These Loans? No. Much like the FHA, the USDA Rural Development Single Family Housing Program functions as a backstop or safety net for mortgage lenders - in effect guaranteeing that they are protected in the event you default on your loan - up to 90 percent of the original loan amount. For the finance geeks out there - things break out as follows:

• Losses up to but not exceeding 35 percent of the original loan amount are fully reimbursed.
• Any losses exceeding the 35 percent total are reimbursed at 85% of their total.

So, in effect - lenders are only left with the remaining 15 percent of "true exposure" on these loans, which is why you are able to benefit from such a great program! This guarantee grants lenders a great protection against losses. The quality of this USDA guarantee is what allows lenders to easily sell the loans on the secondary market. As a result, they feel free to lend funds in cases where other non-participating lenders may not.

4. What Type of Credit Do I Need in Order to Qualify? Typically, the good folks over at the USDA financing office like to see minimum credit scores at or very close to 620. Borrowers with credit scores as low as 580 may be approved; however, they may not have any of the following:

• Foreclosure in past 36 months.
• Bankruptcy discharged within 36 months.
• More than one 30 day late on consumer debts in past 12 months.
• Accounts converted to collections within past 12 months.
• Tax liens or delinquent government debts (including student loans).
• Judgments outstanding in past 12 months.
• Outstanding collection accounts.
• Two or more late rent payments in past 12 months.

Note: Lenders are permitted to use a non-traditional credit report or verify your creditworthiness with other sources, such as: utility payment records; rental payments; insurance payments; child care payments; payments to local stores, payments on medical bills, etc.

5. Are there Minimum and Maximum Loan Amounts Associated with USDA Rural Development Loans? There is NO minimum loan amount for the USDA Rural Development loan program. However, maximums do apply. Typically, borrowers are limited to the appraised value of the home plus the 2 percent Guarantee Fee. The great news here is that you may finance 100 percent of the purchase price of your home (102 percent if you are financing in the 2 percent Guarantee Fee). Note: The Guarantee Fee is a fee charged by Rural Development. This fee is equal to 2 percent of the final loan amount and may be financed into the loan itself. Whoo Hoo! Not a necessary out of pocket expense!

6. What Will Be Included in My Monthly Payment? The monthly payment will include principal, interest and the monthly cost of real estate taxes and insurance. Your lender will provide an estimated payment for you.

7. How Are Closing Costs, Fees, etc. paid on the USDA Rural Development Loan? These fees and other eligible costs - including some repair/rehab costs - may be rolled into the loan. Again, 100 percent means NO out of pocket expenses at closing!

8. What areas are considered eligible for the USDA Rural Development Loan Program? Most Florida counties are either totally eligible or mostly eligible. If the property is in one of the following counties, you can check an address or see a map at: http://eligibility.sc.egov.usda.gov/ The site will give a "yes" or "no" upon entering an address.

Counties with some Non-eligible areas are: Alachua; Bay; Brevard; Charlotte; Clay; Dade; Duval; Escambia; Hillsborough; Indian River; Lee; Leon; Manatee; Marion; Orange; Palm Beach; Pasco; Polk; Santa Rosa; Sarasota, St. Johns; St. Lucie; Seminole; and Volusia.

Note: Broward, Monroe and Pinellas Counties are NOT eligible.

9. What are Rural Development's income limits? Borrowers must have adjusted gross income (AGI) that sits under thresholds set by Rural Development. Limits for Florida Counties are provided as follows:

For homes purchased here in Polk County, Florida, borrowers must have an AGI at or below $49,550. If the projected dependable income exceeds the limits, certain adjustments can be made, such as childcare expenses for children age 12 or younger and paid to someone outside the family. You may also deduct one $480 annual deduction for anyone under 18 who is not one of the applicants. Other deductions may be applicable such as the deduction for an elderly household and full time student over age 18. Example: Polk County 4-person family (2 adults, 2 children) has a gross income of $81,710. Child care for the 2 children age 12 or less is $10,000 annually. Is the threshold income at or below the limit?

YES! $81,710 less $10,000 child care less $480 for each child = $70,750.

10. Can I get cash back from closing to pay off other loans or refinance my credit cards? No, the goal here with the USDA Rural Development land is strictly to cover 100 percent of your home purchase expenses, not to provide a means of reducing your other debts.

I hope this provides you with a little more detail than you previously had regarding the USDA Rural Development Loan Program. If you live here in Polk County and are looking to buy a home, please give me a call at 863-604-3019 so we can get your loan application ready. Or, apply for your USDA Rural Development Loan online!

Oh, and just because the house you are looking at over in Davenport, Florida doesn't sit on a cow pasture - don't count it out! I just qualified a home for the USDA program over in Davenport two days ago! And here's a little secret for you: Roughly 80 percent of Polk County, Florida qualifies for USDA Rural Development Loan Program Financing!

Winter Haven First-Time Homebuyers interested in receiving their $8,000 from the US Government should be on the lookout for form 5405, better known as the First-Time Homebuyer Credit Form.

As is often the case with tax-related paperwork, this tax credit form contains a mere 10 fields yet is accompanied by 3 pages of instructions.

In truth, these pages are not a total waste of tree-matter, as Form 5405 does provide some good basic information about the tax credit and how to claim your $8,000.

For example, the form helps you understand the difference between tax consequences for homes bought in 2008 versus 2009, and clearly defines the term "first-time homebuyer." Another useful feature is found in Form 5405's explanation of the math behind the tax credit. In general, the First-Time Homebuyer Credit is equal to the lesser of:

• $8,000 for homes bought in 2009
• 10 percent of the home's purchase price

Nota Bene: Married couples who file separately will receive half of the expected credit. Also, if you sell your home before the stated 3 year holding period is up, you will be required to repay the credit. Look for language dealing with your home as references as your "main home" for clarification on this.

Form 5405 is a comprehensive reference. However, please be sure to check with your local tax and mortgage professionals to be sure you do in fact qualify for this credit and that you understand how the First-Time Homebuyer Credit may impact your finances. When you're dealing with your money, folks - there is no substitute for professional, paid advice.

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I want to say right off the bat that I am not a Florida foreclosure attorney, and that this article is meant to be used for informational purposes only. Please be sure to consult a legal professional who understands the finer points of Florida foreclosure law before making any final decisions or determinations. Now, on with my post...

Foreclosure is something no one wants to face, but it's all too common a situation for many Florida families today. As such, I wanted to provide a little bit of information about Florida foreclosures, how they're structured, and where you might want to look in the unfortunate case you and your family may be facing one.

The Initial Foreclosure Process

Florida foreclosures begin when lenders record a notice with the court, known as a Lis Pendens - stating that they plan to begin the process against a borrower. At this point, your lender will contact you - usually via mail - to let you know that they have initiated the foreclosure process.

If you, as the borrower, do not respond to this notification/court action, by the specified deadline, the county clerk may find you in default. Should this happen, your lender may then ask the court to make a final ruling in the case. If the court rules against you, the ruling will include the total amount owed to the lender and will let you know exactly when the foreclosure will take place.

It should be mentioned here that the last thing your lender wants is to take on your property. What they want is your payment. In most cases - especially in today's housing and economic environment - your lender will contact you by phone prior to initiating the foreclosure process to inquire as to why you haven't made your payment(s). This is assuming that you haven't already contacted them - which you should... immediately!

I say this because there is no law that requires your lender to contact you before the begin the foreclosure process on your Florida home.

Remember, in all things relationship/financial:

Open communication = GOOD... Ostrich head in the sand approach... BAD.

Notification of Sale and Foreclosure Auction

There is usually some lag time between the time your are first notified about the pending foreclosure and the actual court ruling. Many factors can extend this time period, and I encourage you to contact a Florida foreclosure attorney to determine exactly what steps you should take once you are initially notified.

Should the court rule that your foreclosure move forward, the actual foreclosure sale date will be set for sometime between 20 to 35 days after the ruling date. You should be notified by the clerk of the court as to the time, date, and location of the sale, and this notice will also be published once per week for a period of about two weeks - followed by a second notice 5 days before the actual sale.

Typically, the sale (auction) of your Florida home via foreclosure will be overseen by the clerk of the court and will take place sometime around 11: 00 on the sale date. If a winning bidder is established, they must pay a 5-percent deposit and agree to pay off the remaining balance by the end of the day. If that bidder fails to follow through, a new sale is scheduled a minimum of 20 days later.

The Florida foreclosure process may be swift, or it may linger on for a while - depending on the number of foreclosures in the pipeline. Here in central Florida, multiple auctions are not uncommon. Once a bidder successfully pays for the property, they receive a certificate of sale from the clerk of the court, and the deal is done.

Note: As recently as February 26, 2009 - the Huffington Post announced that a chief judge for the ninth circuit in Orange County, Florida -- an epicenter of the foreclosure crisis -- ruled Wednesday that mortgage providers must negotiate with borrowers before foreclosing on their homes. While this may not mean that you will necessarily be able to avert foreclosure, it does offer up some hope that the light at the end of the tunnel is still at least flickering.

Now, go call your Lender!

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