The HomePath Renovation Buyers Guide eBook

January 19, 2013

by Brian Short

Navigating Renovation Mortgage BCS Cover The HomePath Renovation Buyers Guide with Brian Short – Today’s housing market offers a diverse selection of homes for buyers. One option you have available is a HomePath-eligible home. These Fannie Mae-owned properties are often priced relatively low. Some of them need a little TLC. That’s where the HomePath Renovation mortgage comes into play.

This free 13-page guide will answer several questions including:

  • What is a renovation mortgage?
  • What are the benefits to HomePath financing?
  • What makes a home a renovation mortgage candidate?

This free eBook is just 13 pages, and will take you through the renovation mortgage process, specifically the HomePath Renovation mortgage option.

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Choosing Your Mortgage Professional

June 20, 2009
By Brian Short, CMC, CRMS, GMA
 
“Shopping for a Mortgage Professional is much like shopping for a medical doctor or an attorney. Choosing your medical or legal care based on “who is the cheapest” may not really be the best strategy. You want you choose a professional who is trained, certified, experienced and has a good reputation.” 
 
Often times, this is my response to those asking for me to give them a detailed list of all their closing costs if they select me and my company to provide the financing for their upcoming home purchase or refinance of their current home.
 
I have heard of real estate industry partners telling their customers that choosing a mortgage professional is as simple as getting a “Good Faith Estimate” and comparing the costs contained on those documents.  This sets up the borrower to work with the “best liar”, too early in the 30-60 day process of finding a home, rather than getting the most professional financing help to get the deal closed correctly.
 
How can this be?  Aren’t all “Good Faith Estimates” accurate?  Aren’t all mortgage professionals the same?  Aren’t all mortgage companies the same? 
The truth is: the numbers on the “Good Faith Estimate” given too early in the process are RARELY CORRECT!  You see, the numbers on that document are affected by one or more of the following 13 variables below:

-> Sales pricegood-faith-estimate

-> Appraised value

-> Loan amount

-> Borrower’s employment status and history

-> Credit scores and payment history

-> Amount and source of down-payment

-> Date of closing

-> Immigration or citizenship status of the borrower

-> The housing type and location (Single family dwelling, Duplex, Condo, Townhouse, PUD, suburban, rural, urban, etc.)

-> The county where the home is located

-> Mortgage Interest Rate

-> The Term (length) of the Loan

-> The Title Company being used to close the loan

I have worked for several mortgage companies during my mortgage career and even owned my own company for 5 years. I know that some “loan guys” will “low-ball” the initial estimate, only to pull out the “surprise” at the closing table when your options for making any changes are very limited.  Of the 21 separate line-item fees on the “Good Faith Estimate” I give to my borrowers when they sign their loan application forms and disclosures, only one of those fees is the same for every loan and is not dependent on any of the variables listed above.

Mortgage interest rates change daily (sometime, even more often!). I could simply print off a “Good Faith Estimate” with made up numbers as some customers request (as other “loan guys” may do) but it will not be accurate because of all of these variables I have mentioned.  That process of collecting “Good Faith Estimates” prior to having all of the above variables identified will very time-consuming and wasted effort by the borrower and “loan guys” passing out worthless forms with inaccurate numbers.

My goal is to take the worry and uncertainty out of the process of originating, processing, underwriting and closing the loan.  I help guide my borrowers through their negotiations with their seller by providing honest numbers as they become available rather than simply making up numbers to get “my hook set”.

I have been in the business for over 11 years and nearly 100% of my business comes from referral and repeat business. A businessman can not build that kind of business by being a con-man, cheating others or participating in the bait-and-switch tactics that have riddled this industry for years.

This helps my my borrowers understand how I have built my business and how I provide a level of confidence and professionalism which will make my borrower’s Real Estate purchase a very smooth and cost effective transaction over the next.

So, you ask, how should I select the Mortgage Professional to close my loan for me?  I’m glad you asked.  Allow me to give you a few guidelines for starters:

1. Choose a Mortgage Professional who is EXPERIENCED.  Was he selling shoes or washing cars last week and then some buddy of his talked him into “trying out the mortgage business”?  Does he really know what he’s doing?  Has he been originating mortgage for 5-10 years?  Does he do this full-time or this just a hobby or part-time gig? 

NAMBCertified2. Choose a Mortgage Professional who is CERTIFIED.  Has proven to anyone that he knows the laws, the process, the programs and theory and mechanics behind the mortgage industry.  Has he taken courses and exams to measure his competency?  Is his certification a national designation? Is his certification from a professional association who can objectively measure and monitor his expertise or from some mail-order outfit looking to make few bucks?

3. Choose a Mortgage Professional with a GOOD REPUTATION.  Is your selection a true professional who is respected and well-known in his industry.  Who knows him and what kind of work he does?  Who has ever closed a loan with him?  Who can speak for his level of trustworthiness, honesty and attention to detail?  What do you know of his character and personality?

4. Choose a Mortgage Professional who is a PROFESSIONAL.  Does your choice know the market, the industry, the community, the history, the trends and your desires?  Is he a member of his professional association?  Has he been awarded and recognized by his peers and fellow business associates for his contribution to the industry and community?

During the month that your loan is supposed to close it is the most important transaction in your Mortgage Professional’s office.  “Getting it cheap” doesn’t mean much when your “loan guy” drops the ball and makes a mess of the whole deal simply because  he has “never seen anything like this before.”  That stack of bogus “Good Faith Estimates” collected 30-60 days prior to your closing will mean very little when you find out that returning phone calls, diligently following up on underwriting conditions, and working long hours to insure that all of the bases are covered on your deal are not his priority or part of his work ethic.

Paper is cheap, and ink toner to print fictitious loan estimates is even cheaper.  Experience, Certification, a Good Reputation and Professionalism are priceless life-long attributes and qualities you want in your Mortgage Professional.  Leave the spreading of such worthless papers to those lying, low-balling, bait-n-switching, short-termers who do not deserve to work with someone like you who, understandably, expect it to get done right the first time.


New Appraisal Rules Bad for Consumers and Recovery

June 9, 2009

By Brian Short, CMC, CRMS, GMA

Beginning on May 1st of this year (2009) any home buyer or homeowner getting a new mortgage on their house will be up-charged $150-$250 for their appraisal and generally charged an additional $968 to close their new loan!  You mean, you never heard about this?  You thought the government was doing all it could to stimulate the struggling housing industry?  Guess again!

A year ago, one attorney general in New York, with a famous last name,

NY AG Andrew Cuomo

NY AG Andrew Cuomo

Cuomo,  struck a deal with Fannie Mae and Freddie Mac to keep them out of a potentially very ugly and very public law suit because of blind eyes they had been turning to a now bankrupt bank, Washington Mutual. 

You see, WaMu (as they are known in the banking world) had a side business they were operating where they started an Appraisal Management Firm where they required their loans to include an appraisal only from those “independent” appraisers who would join their firm and work for 3/4 of what most professional-level appraisers would work. 

Keep in mind, this did not lower the cost to the consumer.  Their appraisals still cost the same.  It was simply another income stream for the bank and a way to control who did their appraisals.  These appraisers soon learned who “buttered their bread” and were very careful to give the federally chartered bank the value they needed to get their loan closed.  Sounds fishy, huh?  YOU BET IT DOES!

Now enters the young Cuomo, called Andrew, with his eyes on bigger political prizes.  He uncovers this corruption and sues WaMu, Fannie Mae and Freddie Mac – who all seemed to know that WaMu was doing this.  (Countrywide/Bank of America STILL own their Appraisal Management firm – Landsafe!)  To head off this embarrassing high-profile lawsuit they struck an “out-of-court” settlement which goes far beyond the jurisdiction of the state attorney general.

He asked for, and received, assurances that no Fannie Mae or Freddie Mac loans would ever be accepted by federally chartered banks who required that their appraisals were done by their own appraisal management firms?  Right?  Wrong!!  Wrong!!  Wrong!!

This new agreement which went into effect on May 1st exempted ALL FEDERALLY CHARTERED BANKS!  The new agreement, crafted in Albany, NY was never approved by Congress or any state legislature. It was drawn up in some back-room to avoid a trial against a corrupt bank doing corrupt business with a corrupt Appraisal Management firm they owned – most likely known about by both corrupt Government Sponsored Entities (GSE’s) Freddie Mac and Fannie Mae!  And to top it off, ALL FEDERALLY CHARTERED BANKS are exempt!  This new “back-room agreement” only affects mortgage brokers and bankers who are generally supervised or chartered by state banking regulators.

WaMu is NoMoIf that was not enough, it now requires all appraisals to be ordered through APPRAISAL MANAGEMENT FIRMS!!!  This very same corrupt system that WaMu used to artificially inflate their appraisal values to ensure that their loans would close – making sure that no independent third parties were involved in the process of assigning values to the properties under consideration!  What?!?!? 

I thought it was the corrupt Appraisal Management Firm model of business that had proven itself to be untrustworthy in the New York back-room in that courthouse in Albany?  Why is it that Mr. Cuomo would wrongly insist that ALL APPRAISALS now be ordered and up-charged by centralized corporate middle-men who do not know local property values, local building standards, and local business practices.  This new layer of New York mandated bureaucracy is required all across the country without a single vote or hearing from industry insiders on how it would negatively affect the struggling mortgage and Real Estate industries. 

These “middle-men” are unregulated by any federal or state agency but have been given the task of arranging for 70-80% of all mortgages being closed in the country and up-charging the cost of that appraisal by $150-$250 per order and passing that cost on to the unassuming buyer or homeowner.  Those $300 appraisals are now costing $400 – $500 for someone outside the state to assign the work to someone with whom they have a working agreement who may or may not live in the area, ever work in the area, or have ever researched the housing market in the area of where the appraisal needs to be done. 

What is their qualification for getting to do this appraisal for this Appraisal Management Firm?  They have promised to work cheap and fast!  Is that who you want to do your appraisal?  Cheap and fast?!?  Who benefits from this arrangement?  The host of newly formed unregulated and unsupervised Appraisal Management Firms are making out like bandits!  Everyone else in the transaction is supervised by a state or federal agency or governing board – Realtors, Mortgage Professionals, Home Inspectors, Insurance Agents, Surveyors, Builders, Title Agents, Appraisers – they’re all tested, licensed, and regulated.  Who tests, licenses or regulates the Appraisal Management Firms?  Why should they be making any money in this transaction?  What are they professionals at doing?  Looking at the next name on a list of random appraisers who have agreed to work for what they will pay them – even if they are not local professionals themselves.

It is reported that this new layer of middle-men have added another 5-10 days on the already very slow loan underwriting timetable causing delays in loan closings which cost the borrower an additional $500-$1,000 to extend the rate lock so they still receive the rate they agreed to receive at the time of the loan application.  Some have estimated that this new over-reaching agreement will cost Americans $2.8 BILLION EVERY YEAR and cause weeks of delays in closing Real Estate mortgages!

Let me make sure I get this right – the consumer is paying anywhere from $650- $1,250 to get an inferior appraisal done which takes longer to get back simply because a nationally chartered bank had an Appraisal Management Firm in their “back pocket” and they were so corrupt that they are no longer in business.  That was the punishment put on all American borrowers by one attorney general in one state up in the northeast because he had dirt on some crooks at Fannie Mae and Freddie Mac?  This can’t be good! 

Would you like to join the thousands of housing industry professionals in calling those who forced this on you and your neighbors without a single vote or hearing?  CLICK HERE to see who you can call and make your voice of protest heard.


The “New” Rules of Rapid Refinancing

May 23, 2009

By Brian Short, CMC, CRMS, GMA

Many of us who have “survived” in the mortgage business are very busy these days with folks who desire to refinance their homes.  With rates in the range from low 5% to high 4%  for a 30 year fixed for many borrowers, this is an ideal time to consider refinancing to lock in an historically low long-term interest rate on your house.  Maze

However, the rules have changed for many borrowers.  The days of no documentation, high loan-to-value, cash-out, debt consolidation mortgages have come to an end. 

Does that mean it is impossible to accomplish any of these goals in a relatively painless refinance process – absolutely not!  Just take heed of the new “Rules for Rapid Refinancing”:

1.  Get your documentation organized and copied for your mortgage professional.   Employed workers and self-employed business owners will all need to prove their income and their assets to qualify for a new low interest loan.  I remind my customers that they should keep the following documents for the following length of time – just to be safe.

     a. Pay Stubs – Keep these all year until you receive your W-2 and have completed your tax return for the year.

     b. Bank Statements – Keep these 5 years.  The IRS can audit you for the past 5 years.  It your responsibility to prove your case if you would be audited.

     c. Tax Returns and W-2’s – Keep these until you die.  Let your kids throw these away for you and be amazed at how little (or how much!) you made when they were kids.  You never know when you will be asked to document income, deductions, businesses, rental houses, etc.  File a copy away in a cabinet (and scan a copy to your hard-drive in case you need to e-mail a copy for your kid’s college financial aid application, etc.) each year.

2.  You will not be able to pull cash out of your house for more than 85% of appraised value.  If you owe more than 85% of your current appraised value then you will not be able to get any cash to consolidate debt, pay off other obligations or even make improvements to your house.  Trying to get cash out of your rental house will be nearly impossible unless you owe very little on the rental house.  Getting cash out of Real Estate is not something Fannie Mae and Freddie Mac (or FHA or VA) are too interested in doing in this economy.

Does this mean that you can’t refinance your house?  Absolutely not!  You can still lock in a lower rate, shorter term (go from a 30 yr to a 15 yr), longer term (go from a 15 yr to a 30 yr), switch from an adjustable rate to a fixed rate, or combine your 1st and 2nd mortgages into one mortgage payment with a lower payment or a payment which includes principle reduction.

3.  Use this time to focus on getting out of debt and limiting your purchases of “things” to those items you can pay for with cash.  Running up credit card debt and buying vehicles (cars, boats, motorcycles, RV’s, etc), furniture, appliances or TV’s with credit is generally not the way to get or keep your finances under control. 

4. Pay cash.  Use cash.  Save some cash.  Keep some financial margin in your life buy having some cash in the bank to carry for 3-6 months in case your job, your health, your spouse – fail to meet your expectations.  Having a good payment history on your current obligations will get you in the door if you need or want to refinance your house.

5. Anticipate the future – as much as possible.  One of my Dad’s famous sayings is: “No one will loan money to a poor man!”  Once you lose your job, get sick or hurt or get behind on your payments, you’re stuck.  Especially in this current market – the squeaky clean borrowers are getting good loans.  Don’t wait to lock in on historically low fixed interest rates if you don’t have one and could qualify.  Waiting might put you into one of those categories of people who can’t qualify for one.

Is this a great market for quick and painless refinancing – absolutely!  However, there are some new rules.  Some of you are saying, “these are not NEW rules!”   “These are the rules we all used to live by.”  I agree that these rules may be new to this current generation of borrowers but are really time-tested rules for ensuring financial success – even when much seems to be crashing in on those all around us.  Whether these rules are new or old stand-bys they are in place for now.  Knowing them and playing by them will make you a winner – even in this economy!  Now, let’s play!