Today was the first day’s use of the new software for underwriting Fannie Mae loans. Version 7 of the Desktop Underwriting® software was upgraded with lenders over the past weekend.This new version of the underwriting process will take a much longer and more conservative look at borrowers. By longer, I mean that additional documentation will be required in order to get an approval. Fewer approvals will be given as well.

I was reviewing an article on Mortgage News Daily and was shocked to read that lawmakers are planning to legislate that “mortgage companies show that its customers can realistically afford the mortgages they are offered.” WHAT???

Isn’t part of the requirement for lending NOW? Isn’t this part of the job description? We need new laws for THAT? This can and should be done every single time, without exception!

 

As promised, and actually required, by the Economic Stimulus Bill of 2008, FHA/HUD announced their new loan amounts this past week. The new FHA loan limits are based on 125% increases of each county's median price with a minmum of $271,050 and a maximum of $729,750.This one move will make it much easier for many who are burdened with an adjustable rate mortgage to refinance if their property has not appreciate much over the past few years.

On Friday, December 17, 2007, the Senate passed a bill (93-1) to increase the maximum FHA loan amount to $417,000 for a single family residence. The current limit is $362,000. 

This loan amount matches the current conforming loan amount for conventional loans.  This will give some homeowners struggling with a decline in value the opportunity to refinance their current loans into a more stable FHA loan.

 

Homeowners facing foreclosure and any shortfall of funds due to their lender were subject to tax by the Internal Revenue Service. A person could lose their home in foreclosure and the lender could suffer of loss of say, $100,000. According to a tax law enacted in 1986, the lender was required to mail a 1099 to that ex-homeowner for the dollar amount of loss suffered by the lender.

San Diego has been a very exciting and sometimes dangerous place to be in the past four days.

There is smoke and ash in the air, but this is overshadowed by people in San Diego so willing to comfort or thank anyone who crossed their paths.

I am very fortunate that I am not in an evacuation area, but am deeply concerned for my beautiful daughter, my brother, sister, and many friends and clients as well as my "mortgage family" at General Mortgage in Rancho Bernardo.

There are difference aspects of the financial picture that are common in what makes a good mortgage loan. All of these elements have a degree of risk to the lender. Mortgage companies judge these risks and assign a credit grade to them. The higher the risk to the lender results in a higher rate to the borrower.

 

We will review the lenders’ point of view on the property itself:

 

The title to the property must qualify for the loan.

 

One of the largest costs when you buy or refinance a home is the title insurance premium. It is one cost that you won’t ever want to do away with because there are so many ways that title can become “clouded”.

I apologize that this posting is late. I thought it had been uploaded!

There are difference aspects of the financial picture that are common in what makes a good mortgage loan. All of these elements have a degree of risk to the lender. Mortgage companies judge these risks and assign a credit grade to them. The higher the risk to the lender results in a higher rate to the borrower.

We will review the lenders’ point of view on borrower assets:

What assets does the borrower have? Where did they come from?

Just about every single lender will want to see that they borrower has “reserves”. Reserves are additional funds, which can be verified prior to closing.

There are difference aspects of the financial picture that are common in what makes a good mortgage loan. All of these elements have a degree of risk to the lender. Mortgage companies judge these risks and assign a credit grade to them. The higher the risk to the lender results in a higher rate to the borrower.

The discussion below is for mortgage loans that are of the plain, vanilla variety; that type of loan that doesn’t have any special characteristics.

We will review those risks associated with how lenders view income now:

There are different aspects of the financial picture that are common in what makes a good mortgage loan. All of these elements have a degree of risk to the lender. Mortgage companies judge these risks and assign a credit grade to them. The higher the risk to the lender results in a higher rate to the Borrower. This week we will discuss the credit scores and credit profile and how the lender will look at them.

Underwriting & Elements of a Home Loan: Part Two  

There are difference aspects of the financial picture that are common in what makes a good mortgage loan. All of these elements have a degree of risk to the lender. Mortgage companies judge these risks and assign a credit grade to them. The higher the risk to the lender results in a higher rate to the borrower.

We will review those risks associated with investment property now:  

Underwriting & Elements of a Home Loan: Part One

 

There are difference aspects of the financial picture that are common in what makes a good mortgage loan. All of these elements have a degree of risk to the lender. Mortgage companies judge these risks and assign a credit grade to them. The higher the risk to the lender results in a higher rate to the borrower.

This is the first installment in a series of six. They will be released every Monday for six weeks.

 

We will begin with loan programs and discovering what best suits you.

There is a lot of dire news out in the lending industry right now. It is a challenging time to be a loan officer.
It is important to remember that all that bad news doesn't necessarily affect you TODAY.

There are many changes happening in the mortgage markets. Is your loan officer "boots on the ground", full time, and educated? Most loan officers have less than five years of experience so handling all the changes that are occuring on a daily basis may be too much for them.

Are 125% loan to value loans on the horizon?

Oh, the terrible consequences of making your house payment late!

The risks entailed in piggy backing on someone else's good credit.

Pumping Up Your Credit Scores

Get to refinancing while the "gittin's good"!

It is a buyers' market and the current press would scare all but the most seasoned investor or buyer away!

You need to be aware of changes to underwriting guidelines on real estate & mortgage loans. There are big changes in the way lenders look at borrowers. They are looking at them more as rowdy teenagers, instead of straight A students.

This is additional information with regard to my previous post on PMI becoming tax deductible.

You can save yourself thousands of dollars over the life of your mortgage if you spend an hour setting up your goals for the type of mortgage you want. Spend some time to consider the kind of loan you need and how long you will keep the property. "?Listen to your inner voice; what does it tell you about the future of interest rates and home appreciation?

Getting the most from your lender when you need a sub-prime loans.

New Legislation Proposed: No Home Loans For Illegal Immigrants