Mortgage and Real Estate Blog

Home Buyer Tax Credit Extended - First Time Buyers and Repeat Buyers

Joseph Metzler MMS UMB (Mortgages Unlimited, Inc) — Thu, 05 Nov 2009 15:38:10 -0600

The House of Representatives on Thursday approved an extension of jobless benefits and a tax credit for home buyers, sending the measure to President Barack Obama for signature. The bill, approved unanimously by the Senate late Wednesday, keeps a first-time home buyer tax credit alive until next spring, and expands it to include some people who already own a house.

How the homebuyer tax credit would work:

Tax credit: Ten percent of the purchase price of a primary residence, up to a maximum of $8,000 for first-time homebuyers and $6,500 for repeat buyers. First-time homebuyers are defined as people who have not owned a home in the previous three years. Repeat buyers must have owned their current home at least five years. The credit cannot be used for houses costing more than $800,000.

Deadline for qualifying: Purchase agreements must be signed by April 30, 2010, and closings must be final by June 30.

Military deadline: The deadline is extended by a year for members of the military who have served outside the U.S. for at least 90 days from Jan. 1, 2009, to May 1, 2010.

Income limits: Individuals with annual incomes up to $125,000 and joint filers with incomes up to $225,000 qualify for the full credit. Individuals with incomes up to $145,000 and joint filers with incomes up to $245,000 qualify for reduced credits.

How to apply: Taxpayers can claim the credit on their federal income tax returns. If the credit exceeds their tax bill, the government will issue a payment. Taxpayers who want immediate refunds can amend their tax returns for 2008 to claim the credit.

Joseph Metzler, MMS, UMB
33 Wentworth Ave E #290
West St Paul, MN 55118
Ph: (651) 552-3681
Cell: (651) 592-4460
Fax: (651) 994-6425
www.JoeMetzler.com

We Beat the Banks Everyday

High Offers Offset By Low Appraisals - Fair And Balanced? Or Unfair?

Joseph Metzler MMS UMB (Mortgages Unlimited, Inc) — Wed, 04 Nov 2009 09:40:39 -0600

Via Lisa Udy Realtor Utah Real Estate Specialist (Logan Utah Real Estate Immaculate Homes):

With the amount of offers coming in on REO properties(Bank Owned Properties), there has been a new trend among buyers. The trend is to just offer as high as possible to get the property under contract. After the contract is accepted by the bank, they have to get an appraisal for the loan.

The appraisal comes in quite a bit lower then their original offer price, which means the buyers won't be able to get the financing. These buyers then have the right to withdraw from the contract based on the appraisal contingency. The deal is dead right?

Not so fast. The buyers agent has been planning this all along. The agent and the buyers will submit an addendum to the price to meet the appraisal, and will re-submit to the bank.

Now, the bank wants to get this deal done, and knows the same thing will happen with any other buyer. The appraisal has already been done. So, the bank just accepts the lower price, and the buyers get away with it. They knew the appraisal would not meet the original offering price, and they get a great deal.

With the new appraisal guidelines, this is happening more and more. Appraisals are coming in low, buyers are aware this is what's happening, they are offering high to get the property over the competition, and just wait out the appraisal to get a great deal.

How fair is it to the buyers that put in an offer closer to asking price? Is this fair and balanced? Is it unfair to the other buyers that put in a reasonable offer? Or is it a smart way to get your buyers the house they wanted?

Is a NEW First time home buyer and move up buyer tax credit ABOUT to be approved??

Joseph Metzler MMS UMB (Mortgages Unlimited, Inc) — Wed, 28 Oct 2009 13:07:57 -0500

Looks like the NEW home buyer tax credit is ABOUT to be approved:

Here are the details directly from a contact in DC:

1) Sen Isakson, Dodd, Lieberman have agreed, and Senate Finance [Baucus and tax staff] have agreed to this credit extension and expansion:
2) For first time homebuyers, the income level to qualify is $ 75,000 single / $150,000 married
3) Move up buyers AND first time home buyers qualify
4) For move up buyers the income level to qualify is $125,000 single / $250,000 married
5) For move up buyers, they must have been residing in their primary residence for 5 years
6) The credit is 10% of the sales price, with a maximum of $ 7290.
7) The credit runs from Dec. 1, 2009 to April 30, 2010.
8) For legitimate sales contracts as of April 30, 2010 you have 60 days to close.
9) There is a waiver for military.
10) This will be added to the Unemployment Insurance bill. It will then go to the House.

Signs are that they House will accept this proposal. It could go to the President soon.

Stay tuned for details, but remember, as of this posting, IT IS NOT OFFICIAL

HomePath, special home financing from Fannie Mae

Joseph Metzler MMS UMB (Mortgages Unlimited, Inc) — Tue, 27 Oct 2009 08:09:42 -0500

HomePath^® Mortgage Financing
This special financing is available on Fannie Mae homes with the HomePath logo!

Have you seen the HomePath ^® logo and wonder what it is? For a limited time, the HomePath^® program is available to home buyers when purchasing a Fannie Mae foreclosed home.

How Does It Work? Simple. Just qualify for a traditional financing with at least 3% down. Then you MUST select a home to buy from the list of available foreclosed Fannie Mae owned properties
Where can I see the list of available houses? Easy. Simply contact us, and we'll put you in contact with a qualified Realtor Partner who will analyze your needs, and show you a list of qualified HomePath properties. Follow this link to instantly view homes: http://www.homepath.com
What about closing costs? Closing costs can be rolled into the transaction, up to 6% of the loan amount.

EXTRA BENEFITS: The benefits include:

Low down payment and flexible mortgage terms (fixed-rate, adjustable-rate, or interest-only)
You may qualify even if your credit is less than perfect
Available to both owner occupiers and investors
Down payment (at least 3 percent) can be funded by your own savings; a gift; a grant; or a loan from a nonprofit organization, state or local government, or employer
No mortgage insurance
No appraisal fees
Also eligible for HomePath ^®Renovation Mortgage

This is a national program, and there are qualifying homes in every state.

We lend on this program for homes ONLY in Minnesota and Wisconsin, so please do NOT contact us about other states. However, if you are looking for HomePath in MN or WI, it all starts with a no obligation online loan application or a call to (651) 552-3681, where one of our specially trained Loan Officers will assist you.

$8000 Tax Credit EXTENDED for military personal?

Joseph Metzler MMS UMB (Mortgages Unlimited, Inc) — Wed, 14 Oct 2009 11:24:24 -0500

$8000 Tax Credit Possibly Extended For Military Personal

No news yet about the possible extension of the $8,000 Federal Tax Credit beyond November 30, 2009 for all first time home buyers, but the House of Representatives has voted unanimously to extend the first time buyer tax credit to active military personnel, foreign service and intelligence officers. The bill (HR3950) would extend the existing tax credit to this group only until November 30th, 2010. The bill now goes to the Senate, and is expected to pass with the same ease.

The bill was brought up because it was thought that military personal serving oversees this year did not have the same opportunity to take advantage of the tax credit as other future home owners. The extension applies to military personnel who spent at least 90 days of the current calendar year oversees. It also does not require borrowers to payback the tax credit if they are deployed after receiving it. The current tax credit requires borrowers payback the tax credit if they do not occupy the home within three years of receiving the tax credit.

THIS IS NOT LAW as of the time of this posting, but should be soon.

Combining the $8000 federal tax credit with a VA 30-year fixed loan is something I as a loan officer and Mortgages Unlimited are proud to be able to offer all military personal, both active and discharged, for properties located in the Minneapolis St Paul area, and all of Minnesota and Wisconsin.

FHA Streamline Refinace Rules Changed - now HARDER to qualify

Joseph Metzler MMS UMB (Mortgages Unlimited, Inc) — Sat, 19 Sep 2009 10:58:42 -0500

FHA Changes Streamline Refinance Rules - makes it harder!

FHA streamline refinance has always been a great tool for home owners. In the most simple format, a person who currently has an FHA loan could fill out some paperwork, and close a new loan shortly thereafter with a new lower rate (payment), and with no out of pocket closing costs.

As long as the person had made their past 12 FHA loan payments on time, and had a job, you were approved. There was no appraisal, no credit score requirement, and no income or asset documents required. The client still has normal closing costs, but they could be rolled into the new loan.

The new rule revises current procedures for streamline refinance transactions to establish new requirements for loan seasoning, payment history, income verification, and demonstration of net tangible benefit to the borrower. It also provide for collection of credit score information; and to cap maximum loan-to-value at 125 percent.

A BIG CHANGE IN THE RULES will be that in order to roll in the closing costs, an appraisal will now be REQUIRED. If the loan-to-value is UNDER 125%, this shouldn't be an issue other than they now have the added cost of an appraisal. If the customer wishes to pay closing costs out-of-pocket with cash at the closing, then an appraisal will NOT be required. This rule alone will effectively kill FHA streamline refinances as we know them today as EVERYONE rolls closing costs into their new loan.

These revisions also bring NEW documentation standards for streamline refinance transactions in line with other FHA loan origination guidelines, ensures the borrower's capacity to repay the new mortgage, and prohibits the dangerous practice of loan churning, where borrowers raise cash through successive cash-out refinancing that put them further in debt.

These new rules are in part due to the increasing level of FHA foreclosures. FHA doesn't actually provide loans, rather, it guarantees loans for lenders in exchange for lenders taking on higher risk, lower credit score, and small down payment home buyers according to FHA guidelines. FHA foreclosures have increased steadily recently as the mortgage industry no longer offers sub-prime and exotic loans, leaving many potential home buyers with no other option BUT FHA.

Worried about the changes? APPLY NOW, and get your FHA streamline refinance done BEFORE the new rules take effect!

Mortgages Unlimited and the Joe Metzler Team provide FHA home loan financing

Minnesota and Wisconsin ONLY.

FHA Plans Lender Net Worth Requirement Increase

Joseph Metzler MMS UMB (Mortgages Unlimited, Inc) — Sat, 19 Sep 2009 09:40:44 -0500

The FHA plans to propose to increase the net worth requirement for approved mortgagees to meet industry standards.

The requirement is currently at $250,000 and has not been increased since 1993. HUD is proposing an initial increase of approximately $1,000,000 that would be in place within one year of the enactment of this rule.

To maintain consistency with industry standards, HUD may propose that the net worth requirements be increased further in future years to a level comparable to those required by GSEs (Fannie Mae and Freddie Mac) and other market institutions.

These changes will help to ensure that FHA lenders are sufficiently capitalized to meet potential needs, thereby permitting HUD to mitigate losses and decrease risks to the FHA insurance fund.

As with anything the government does, this proposed networth requirement is both good and bad.

GOOD: It potentially eliminates many small lenders who lack the proper knowledge, experience, and oversight.

BAD: It eliminated many small lenders who do a great job, and gives more power and control to the BIG BANK lenders. As the big banks continue to gain more control, the consumer options drop, competion drops, and ultimately, the consumer will end up paying more and get less as they deal with the application takers versus knowledgable mortgage professionals.

Investor CASH OUT requirements have changed

Joseph Metzler MMS UMB (Mortgages Unlimited, Inc) — Tue, 30 Jun 2009 10:24:27 -0500

Are you an investor looking to take advantage of today's housing market?

Real estate investing is not a major venture to undertake for the average person, but it can be dangerous without the proper tools, if its success you looking for.

The best of tools which would go along way in assuring your success in real estate investing, other than financial capital is information. The adage,' knowledge is power' holds a lot of truth when it comes to knowing when, what and how to invest in real estate. Having and using the right information will keep you even when the property markets are experiencing tough times. You can even beat the recession and achieve your wildest dreams.

With that said, in recent days, a new wrinkle has come into the market that is catching investors and the Realtors they rely on for information off guard (heck, even many loan officers). MANY INVESTORS BUY PROPERTY with CASH. Shortly thereafter, and usually after repairing the home, they look to get a standard loan to replace the money they spend on down payment and repair costs

75% LOAN-TO-VALUE on INVESTMENT PROPERTY is now pretty much the rule of the land when using standard Fannie Mae and Freddie Mac financing TO TAKE CASH OUT as lenders everywhere continue to tighten, rather that loosen underwriting guidlines.

Thats right, CASH OUT is 75% loan-to-value on investment property.

So, while investment properties can be a great deal, having the correct information in the pre-purchase stages is very important.

So what about purchasing an investment property? 20% down is still king when buying.

Are low mortgage interest rates coming to an end soon?

Joseph Metzler MMS UMB (Mortgages Unlimited, Inc) — Sun, 23 Aug 2009 09:36:31 -0500

MORTGAGE INTEREST RATES ARE GREAT TODAY. BUT WHAT ABOUT TOMORROW?

Let's face it, mortgage interest rates have been averaging in the low 5% range, and that is great for the real estate market. But do you know where mortgage interest rates come from and why they change?

Lenders don't just make up rates! Long-term interest rates are based on Mortgage Backed Securities, also known as Mortgage Bonds. As money flows in and out of the bond market, the bond "yield" changes and the corresponding interest rate goes up or down.

May people think the 10-year Treasury Note is the correct index to "follow rates" with. While this note usually trends in he same directs as Mortgage Bonds, it is not unusual to see them move in completely opposite diretions. Be careful not to work with a Loan Officer who has their eyes on the wrong indicators.

This is a bit simplistic, but you can look at Fannie Mae and Freddie Mac as a clearing house which "buys" loans from lenders based upon rules they make, then package those loans into Mortgage Bonds, which the public buys on the bond market.

With everything going on in the mortgage world, bond players ramped DOWN the purchase of Mortgage Backed Securities. If no one buys Mortgage Bonds, there is no money for Fannie and Freddie to buy loans from lenders. If lenders can't sell the notes, they run out of money, the supply dries up, and consumers can no longer get a mortgage loan.

With no confidence in the mortgage market, bond players simply stopped buying mortgage back securities, creating a huge liquidity problem in 2007 and 2008.

In order to calm, and ease the strain on the markets, the US Treasury Department started buying up to $1.25 trillion worth of Mortgage Backed Securities which would help keep money flowing to the mortgage markets. By spring 2009, the Treasury Department was buying 2/3rds of all mortgage bonds, which has kept 30-year fixed mortgage rates artificially low.

The overall mortgage bond market has started to improve, and confidence is starting to return because "new loans" are being written to more traditional safer and strictor guidelines. Traditional private sector bond players have started to again purchase mortgage bonds, which is good, as the money pledged by the Treasury to buy bonds in expected to run out over the next few months.

Once the Treasury Department stops buying bonds, all bets are off as to what interest rates will do. If the private market continues to increase their rate of buying bonds, interest rates should continue to stay low, or increase slightly. If the private-sector doesn't carry the load, expect to see mortgage interest rates climb.

While it is too early to know exactly what is going to happen, but if you are on the fence about buying a new home or refinancing an existing home, I'd suggest you take advantage of today's mortgage interest rates RIGHT NOW.

Are you working with the right Loan Officer?

Joseph Metzler MMS UMB (Mortgages Unlimited, Inc) — Mon, 17 Aug 2009 13:04:25 -0500

In this market it takes an extraordinary amount of energy to get a loan closed with new regulations, lenders changing their guidelines and rates shooting up and down.

Are you working with the right Loan Officer?

For most people, a home is the biggest investment they will ever make. However, few people do the research necessary to make a good buying decision. The home-purchase process is extremely confusing for most people. With a little bit of homework, and some advice from family and friends who have been through the process before, you can make this a little easier on yourself. There is no substitute for taking the time to educate yourself before you buy or refinance a house, which typically costs you 25% to 40% of your gross income!

By far, the #1 Mistake is choosing a lender simply because they are recommended by your Realtor, or using the Realtor's affiliated companies. While your real estate agent has basic mortgage knowledge, your Realtor is not a mortgage finance expert! They are trained & licensed to help you buy & sell homes. They are NOT trained in mortgage financing! They may not know what's the best loan for you. The Realtor only gets a commission when your house closes. As a result, the Realtor may refer you to a lender that is sure to close the loan, but not necessarily the lender that has favorable rates or fees. Also, many Realtors refer you to their friends in the loan business––who again may not be able to get the best loan for you. Even if the Realtor is very professional and looking out for your best interest, you should still do homework on your own.

WARNING: Be wary of "affiliated companies" (Example: XYZ Realty Company, XYZ Mortgage, and XYZ Title Company). Usually all in the same building, and all owned by the same people. Although it is very convenient to use the affiliated lender and title company across the hall, you typically PAY for that convenience with higher rates and fees than you could find elsewhere. Sometimes the Realtor makes it sound as if you have to use their affiliated companies. YOU DON'T.

A very large portion of my business comes from Realtors referring clients to us (and we appreciate it!) But if you are already approved with a lender, and your Realtor or Builder is now 'pushing', 'forcing' or speaking negatively about your choice while pushing hard for you to use their lender or title company, it almost always means you pay more!

If your Realtor walked you across the hall to get approved with their in house lender, and you haven't gotten a SECOND OPINION, call me right now! You are entitled to a second opinion, even if you have already been pre-approved for your mortgage with them!

Federal Law Requires Choice of Title Insurers & Lenders
The Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. 2600, requires that all Buyers and Borrowers be given the choice of title insurance providers and lenders. Many people working in the sale, purchase, or construction of real estate have a financial interest in the title and mortgage company and are receiving compensation for settlement and lending services.

I recently took a loan away from a large local Real Estate Company that very aggressively twists their real estate agent's arms to get them to get you to use both their title company and mortgage company. I beat their mortgage company by $1500 in closing costs and 1/2% in interest rate. The title company I suggested using was cheaper by $400. Their purchase agreement VERBIAGE even goes as far as making is sound like your loan won't close if you use someone else.

We recommend shopping for a loan with at least 2 mortgage companies before you make a decision, maybe the one your Realtor suggested, and someone else! Remember to GET A GOOD FAITH ESTIMATE IN WRITING. There are countless stories of consumers who wind up paying higher rates or getting a loan program that was not right for them because they blindly followed their Realtor's mortgage advice.

Choosing a lender just because she/he has the lowest "quoted" rate or cost, or not getting a written good-faith estimate is also another major mistake. While interest rate is important, you have to look at the overall cost of your loan. Your largest financial transaction is too important to place in the hands of a rate quoter, or the high cost in-house lender across the hall.

This includes looking at the APR, the loan fees, as well as the discount and origination points. Some lenders include origination points in their quoted points, while other lenders add an origination point in addition to their quoted points. So when one lenders says 2 points they mean 2 points, whereas another lender means 2 points plus 1% origination. Click HERE for closing cost information.

The cost of the mortgage, however, cannot be your only criteria. There is no substitute for asking family and friends for referrals and for interviewing prospective mortgage companies. Learn how to Pick a Good Lender. You must also feel comfortable that the loan officer you are dealing with is committed to your best interests and will deliver what he/she promises. Often, the company that has the absolute lowest quoted rate (far from everyone else) may not be telling you something. It is hard to compare apples to apples, when someone is slipping you an orange. Your mortgage company is required to provide you with a written good-faith estimate of closing costs within 3 working days of receiving the application. When you do receive one from each lender, CHECK THEM CAREFULLY! All lenders have basically the same fees and costs for doing your loan. If one lender is significantly lower, chances are they are not telling you something up front. Check the other Good Faith Estimates to see what is missing.

Call me at (651) 552-3681. I will be happy to go over a competitors Good Faith Estimate with you. Also, be sure to read our article "Beware of the BAD, Good Faith Estimate.

BUYER MUST BE APPROVED BY XYZ MORTGAGE COMPANY. WHO BENEFITS?

Joseph Metzler MMS UMB (Mortgages Unlimited, Inc) — Wed, 29 Jul 2009 13:29:26 -0500

Not my post - this is re-blogged, but well worth reading as it happens everyday. Unfortuntely, unsuspecting buyers are again being redirected to unscrupulous lenders who clearly do not have the buyers best interest in mind.

While the seller can mandate you get an approval letter from a specific lender - you DO NOT have to use that lender in the end, and in every single transaction I've seen cross my desk, MY DEAL BEAT the other lender hands down!

- Joe

Mortgages Unlimited provides home mortgage loans in Minnesota and Wisconsin only.

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Via Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate:

BUYER MUST BE APPROVED BY XYZ MORTGAGE COMPANY. WHO BENEFITS?

What is behind all of the listings that say "buyers must be approved by "XYZ mortgage company".

These third party lender requirements are included in about 1/3 of the bank owned listings.

EXAMPLES FROM A FEW LISTINGS FOR BANK OWNED PROPERTIES FOR SALE:

"pre qual from Wells Fargo (REQUIRED!!)"

"Pre-qual with Countrywide, free credit report and appraisal if Countrywide is used"

"BANK OF AMERICA PREQUAL REQUIRED"

PRE-APPROVAL, PRE-QUALIFIED, BREATHING. We're used to this requirement in the listing remarks and generally don't object. While our buyers are well qualified and our contracts prepared in great detail with pre-approval letters, financial statements, etc., we understand that many contracts received by listing agents are not. Listing agents receive written offers that are incomplete and accompanied by so called "pre-approvals" where the only thing reviewed by the loan officer is the credit report. Quite often the loan officer has not verified the money to close or income to qualify. Once the listing agent receives our offer, they do not require third party lender pre-approval of our buyers.

A NEW TWIST ON AN OLD REQUIREMENT. In consultation with a Maryland broker in my network yesterday, the broker related a situation that was very revealing. While we're aware of this requirement stated in the AGENT REMARKS in many REO/bank owned property listings, this particular situation was very revealing.

ENOUGH IS ENOUGH. We understand the need for the seller to feel comfortable with the buyer's ability to close. However, this situation appeared to involve more than just verifying the borrowers ability to obtain a mortgage loan. After contacting the loan officer named by the listing agent as the person to review the buyer's financial information, the buyer called and related the conversation. There's something fishy in. . .

HOW FAR DOES A QUALIFYING LENDER GO?? The loan officer took the buyer's credit information and shortly, after reviewing the credit report told him that his credit was fine, however, to make sure that he got the contract, he should change his offer to include:

a price of $xxx,xxx

remove the home inspection

etc., etc.

This, mind you, for a very, very well qualified home buyer with excellent credit scores, money to close and making a 106% offer with only a customary split of transfer and recordation taxes which is pre-printed in our contract of sale. The buyer did, however, want a home inspection.

WHAT'S UP, DOC? This loan officer is NOT the bank/seller. It is the loan officer identified by the listing agent to pre-approve the buyer. Seems to me that this lender, and the listing agent/seller, went beyond the normal pre-approval by a third party lender requirement.

The Maryland Association of Realtors Residential Contract of Sale includes a clause that states:

36. NOTICE OF BUYER'S RIGHT TO SELECT SETTLEMENT SERVICE PROVIDERS: Buyer has the right to select Buyer's own title insurance company, title lawyer, settlement company, escrow company, mortgage lender or financial institution as defined in the Financial Institutions Article, Annotated Code of Maryland.

WHAT PART OF "BUYER'S RIGHT" DO THEY NOT UNDERSTAND? The loan officer clearly gave the home buyer the impression that, if his suggestions were followed, that the buyer would be more likely to be accepted by the seller. What the buyer also got from the conversation was that this loan officer was not an objective third party lender.

WHAT'S GOING ON? Inquiring minds want to know.

* Is the listing agent using their property listings to STEER buyers to a loan officer?

* Is the loan officer giving the listing agent some benefit for these referrals?

Fortunately, the home buyer, an attorney, believed that the loan officer was going too far, broke off the conversation and immediately contracted his buyer's agent.

QUESTION: What action, if any, would you take or recommend that the agent take? I'm a pro-active practioner and prefer to take advantage of any opportunity to enhance our buyer's position rather than sitting by an doing nothing. I know what I would do.

I value the experience and opinions of my ActiveRain friends, therefore:

Would you relate the conversation to the listing agent?

Would you notice the agent's broker of this conversation?

Would you do nothing?

WHAT WOULD YOU DO???

Goodbye Timely Closings. Truth-in Lending rules change - MDIA Info

Joseph Metzler MMS UMB (Mortgages Unlimited, Inc) — Fri, 24 Jul 2009 10:54:30 -0500

The new "Mortgage Disclosure Improvement Act" (MDIA) starts next week (July 30 2009) and will likely seriously delay closings - especially over the next few months as unprepared lenders everywhere drop the ball until they all get comfortable and familiar with the new APR (Truth-in-Lending) disclosures.

Learn what you need to know by watching this quick video at http://www.thinkbigworksmall.com/mypage/player/tbws/12733/1110605

The Federal Reserve Board changes to consumer protection regulations for APR disclosure, while mandated with good intention, will certainly cause delays right at the last moment as FINAL numbers used to prepare the ACTUAL APR are not always known until the last moment. The new rules have such a tight tolerance that lenders will almost ALWAYS have to be redisclosed, and DELAY THE CLOSING while everyone waits for the 3 day waiting period to pass.

The Federal Reserve Board approved final rules that revise the disclosure requirements for mortgage loans under Regulation Z (Truth in Lending) . Regulation Z is a consumer protection regulation that requires lender disclosure of the cost of financing a home, and has been revised to provide greater consumer protection. The revisions are an amendment to the Truth in Lending Act (TILA) called the Mortgage Disclosure Improvement Act (MDIA) . The MDIA covers primary residences and second home applications made on or after July 30, 2009, and requires that lenders provide disclosures earlier in the mortgage process. The MDIA requires the following waiting periods:

Lenders must give good faith estimates of mortgage loan costs ("early disclosures") within three business days after receiving an application for a mortgage loan (unchanged from current rules). The only fee that can be collected within this three day period is a nominal credit report fee.
Lenders must wait seven business days after they provide these early disclosures before closing the loan (usually not a problem, as it takes longer than that to get every done anyway).
If there are any changes during processing to the terms or cost of the mortgage, lenders are required to give a new disclosure with a revised annual percentage rate (APR), and wait an additional three business days before closing the loan. A change that results in an increase to the APR of 0.125% requires re-disclosure. Closing can occur no sooner than three business days after re-disclosure. "Business days" include Monday - Saturday (excluding holidays).

The burden of proof is on the lender to deliver disclosures and most will not want to make exceptions in fear of closing a loan that is out of compliance. Responsible lenders have already been doing this disclosure/re-disclosure all along. On most transactions, the actual increased time required to process loans due to MDIA may be three to seven days.

Plan on additional delays in closing your next real estate transaction as lenders adhere to the new law.

We are ready and fully prepared for the changes. Remember the lender choice reflects heavily on your future referrals. Once a deal is on the table, time becomes a critical factor. Any delay or hiccup could mean that the deal doesn't get done. There's nothing more frustrating than having a deal on the table that falls apart because it doesn't seem to be a priority to the lender who is too busy for your deal while he works on some refinances, or hasn't figured out the new laws.

That's why I make it a habit to make your problems, my problems; your obstacles become my obstacles. And I work tirelessly to get your deals funded. For properties in Minnesota or Wisconsin Only, 7 days a week, call (651) 552-3681, or E-mail me your questions.

- Joe Metzler, MMS

What do you mean "why is it taking so long?" You're lucky it's closing!

Joseph Metzler MMS UMB (Mortgages Unlimited, Inc) — Fri, 24 Jul 2009 08:46:11 -0500

Great post - and one worth Re-Blogging. This is NOT written by me, but it sure could have been!

Via Novation Mortgage:

(Warning: Not for babies or whiners :) [Unless you read it as it was written: the vent, the whole vent and nothing but the vent] If you plant your tongue firmly in your cheek while you are reading and go ahead and hit a great big old Cheshire Cat smile right now you will probably make it through this ... erm ... post.

Last week I closed an FHA purchase in 8 days from application to the closing table. It was a miracle. It happens. Last month I closed an FHA streamline refinance in 5 days. No joke. 5 days. It happens. Yesterday I had a call from a client wanting to know if we could close a Fannie Mae purchase by the end of this month - it's the 22nd. Uhm, no.

First of all it's the end of the month and the 11,000 people who had their application, appraisal and documents in underwriting last week also want to close "by the end of this month". So the agent called me. Why? No idea - boy did he ever tell me a few things about my business and what a tool I am if I can't get a loan closed in 7 business days because HIS lender certainly could do it.

Why, then were they wasting time on the phone with me?

Ah, the buyer is self employed, has two other streams of income, owns 16 homes, is moving from a bigger house to a smaller one and the old one isn't sold and it's just down the street. Hmmmm ....

Let me state this for the record: Loan officers ocassionally lie. One of the things they lie about is their turn times. They like to say, "Our turn times are 48 hours". That may well be true - with absolutely no hiccups and a perfectly clean file submitted and an acceptable HVCC appraisal which will take a MINIMUM of 10 days to get back. Then there's the issue of middle lenders are sitting on files for days AFTER the approval because the secondary market won't purchase loans fast enough BECAUSE THERE IS A MONEY SHORTAGE. There, I said it.

There is a money shortage even with all the TARP money that went mostly to big banks. Guess what they did with it? THEY SAT ON IT AND GAVE EACH OTHER BONE BONE BONUSES. Okay, I know, I'm typing a lot in caps. You'll get that with people who have a long fuse when it gets down to the nib. And if I hear that snivelling weenie Barney Frank say one more time this is not his fault I'll fax him a picture of my bootie. No wait, better not.

One problem is with people, like Bozo the Barfly agent who obviously called me from the local watering hole, thinking they know how to qualify a borrower. "Man, Ken, I've known this guy for umpteen-eleven years. He took my baby sister to the prom back in 1988. He's a big time developer with a bazigillion jillion dollars. In 2006 he sent my whole family to Hawaii for a week. He owns a 36' SeaRay up on the lake. What's the problem?"

Pretty much everything you have told me is the problem. At best this is going to take 30 days because, believe it or not, people who can fog a mirror and have nothing more than a good story can no longer borrower money BECAUSE THEY DON'T PAY IT BACK! As I have written at least once before during the last 4 years just here on AR - the stupid loans for stupid people are going, going, GONE! Now it is an across the board requirement to PROVE everything. Regardless of what "your lender" says. (Especially that lender - rhymes with GunRust.)

Then there's this little thing called "buy and bail". Haven't heard of it? It's where people buy a smaller house they can afford, move out of their bigger house they cannot afford and let the bigger house go or file bankruptcy! Then there is the very high likelhood that Mr. Country Club the mega-developer took about the same amount of a paycut over the last 24 months as yours truly - making us both suitable for the soup line.

So STOP GIVING ME CRAP about how long it takes to close a loan and for PETE'S SAKE SHUTUP ABOUT "YOUR LENDER"!!!! I know you called me last even though I can do things that make Countrywide, Ditech, Wells Fargo and Chase spit burning nails. I even do it faster and less costly - always could, still do.

If you have any issues with my comment please see my manager, Lenn Harley. Thanks, bye.

Zero Down Payment in Zip Code 55106

Joseph Metzler MMS UMB (Mortgages Unlimited, Inc) — Mon, 20 Jul 2009 07:28:34 -0500

First time homebuyer grant and assistance program allows you to get
ZERO Down Payment in ZIP code 55106 to buy your first home!

It is the dream of everyone to own their own home. Many potential home buyers have the income and credit to qualify for a mortgage. However, many lack the one essential ingredient to make homeownership a reality; the up-front money needed for down payment and closing costs.

If you want to buy a home in area code 55106 (East Side of St Paul, Minnesota - Ramsey County), we have access to a special program that will GIVE YOU YOUR DOWN PAYMENT. This down payment and closing cost assistance program is a bona fide gift to homebuyers. There is no obligation to the homebuyer to ever pay it back as long as they live in the home 7-years.

PLUS, you still qualify for up to $8,000 in first-time homebuyer tax credits if they buy BEFORE 12/1/2009.

Call (651) 552-3681 right now to get started.

White House widening mortgage refinance relief program to 125% LTV

Joseph Metzler MMS UMB (Mortgages Unlimited, Inc) — Thu, 02 Jul 2009 08:00:20 -0500

WHITE HOUSE WIDENING MORTGAGE REFINANCE RELIEF PROGRAM

The Obama administration has made changes recently to the current homeowner bailout program available to homeowners who are underwater on their home mortgage loans in an effort to stem the foreclosure problem.

The program is designed to allow homeowners to refinance to today's lower interest rates when under normal and traditional underwriting guidelines, they would not be able to do so.

The current program would allow strapped borrowers with mortgages up to 105% of their homes value as long as they were not behind on their mortgages. The changes just made allow borrowers to now have up to 125% loan-to-value and still be able to refiance.

BUT HOLD ON. While this sounds great on the surface, and while there has been a lot of consumer interest, the program has not come even close to expectations, helping significantly fewer people than Washington anticipated. It is because of these failures that they have expanded the loan-to-value limits.

This programs failures comes on the heals of two previously highly announced homeowner bailout programs called FHASecure and Hope For Homeowners, which both failed miserably in helping consumers.

Why do they fail? A huge issue on the current program has been that so many people owe more than 105% of the current value of their home. So this change should help qualify more people.

With this and the other programs, there is no lender mandate forcing lenders to participate. Many lenders understand giving people 100% (or higher) loans were part of the original problem, and simply refuse to offer the loans.

Underlying guidelines, shall we say "the small print" is also preventing many people from taking advantage of these programs.

In the end, while this announcement should help many more people, I also see this program being labeled a failure.

NOTE: If you previously tried refinancing, and you were OVER 105%, but UNDER 125%, please contact us to APPLY AGAIN! (we lend in MN, and WI only)

For more information on the "Making Homes Affordable Program", simply follow this link:

http://joemetzler.com/making_home_affordable_program.htm