MortgagesUndressed

The last 6 months we have sure put up with a lot of negative speak. It tired me, so I went on the warpath against the bubble talk.

We heard and read about the gloom and doom of the adjustable mortgages moving up in rates and how that would be the end of civilization. The adjustment hurt, ours went up a few hundred. I don’t feel bad, as the rate we had for the last 3 years was so low I felt like Jesse James.

I reference one way I knew people would handle the adjustment, capturing some of their equity. This is what is going on with several I have spoken to. (Yesterday I would have said spooken to.)

In support of this point I send you to an article by M & C news, referencing some Fannie Mae announcements. Here is a clip:

MCLEAN, VA, United States (UPI) — Freddie Mac, a big U.S. mortgage firm, said the number of refinancing loans that are higher than the original loans is increasing.

The lender said that in the third quarter, 89 percent …

Now this is not great for homeowners, but it sure ain’t foreclosure.

and then:. Click here and breath a sigh of relief.

This Web site provides information about the States� January 2006 settlement with Ameriquest Mortgage Company (the �Settlement�) Click Here. On this Web site you will find detailed information about the Settlement and who may be eligible to receive restitution payments, as well as answers to frequently asked questions.

The Settlement resolves an investigation by the Attorneys General and/or banking and finance regulators of every state (except Virginia) and the District of Columbia into claims that Ameriquest and other affiliated companies had engaged in various unlawful mortgage lending practices

How High will you go?

Conventional = best rate

Alt A = A little higher rate

Exotic such as stated = higher rate

Sub Prime = A lot higher rate

Jiffy Lube gets caught scamming. click here and watch your air filter…

Found by cub reporter “Young pup Ruth Cragun”

If you are securing a conventional fixed rate loan, the shopping is pretty simple. However, when you get into the “nontraditional” loans your neck is sticking out a mile.

Don’t misunderstand my point. There are good reasons for these other products, that is why they exist. You just may not need or want one.

The most flagrant example I have seen came from a manager I once had. He was also a loan officer. By the way, I quit a few days after learning this was what he was like. He would use any excuse to move someone to a higher rate, claiming he had to go to a special program. The most sinister example was a credit blemish. The unsuspecting borrower would be told their credit caused them to have to go to a subprime loan. Credit blemishes don’t always result in denial. Your total loan package is reviewed by automated underwriting. It amazed me at times, at just how lenient it could be.

I could go on and on about this topic, To make it easy for you, any time you are told you have to go to an exotic loan, be suspect. Ask for a copy of the automated underwriting denial. It may even be innocent, the input to the system could have had an error in it. For example, I once an underwriter from a major mortgage bank deny a loan I had submitted. I new it was to be approved, I had done my own LP or DO, the initials they use for automated underwriting. I asked her to go through her computer input an item at a time. She had left out a 0 in the asset colulmn. My borrowers had $100,000 in liquid assets, not 10,000. It was the difference.

Always be willing to second guess when you are told you don;t qualify, or that you must go exotic.

Larry Cragun

I wish they could make money without leading out with this product.

It is a monster if you don’t understand with what you are getting into.

Click here to see a recent businees week that touches on this product.

With that said, it is too late to lock today, the interest rate climate has been bright and sunny 7 of the last 8 weeks. This article seems to indicate a belief in stable rates, so lock and refi tomorrow might be a good thing to do. LarrY Cragun

1- You generally need a 2 year work history doing what you do. Recently graduating from college counts if you go into the field you studied.

2- If you are on commission you must use an average of two years. However if your trend is downward you may have to use the recent numbers, and too far downward could disqualify you.

3- Recently changing careers may or may not be problem. If you change from being a Computer analyst and are becoming a life insurance sales person, go back to number 2.

4- It is a very bad idea to change your employment during the loan ap process. Lenders check with your employer the day the loan is funded. You must still be working there. Gads, I had that happen with a client, and trust me, it is a problem, the loan may not close.

5- Even if you graduate as a dentist and will have no problems getting going, have several practices to join,, your job must be documented. A pay check does that not a letter from the Dentist.

6- Don’t count on a liars loan, aply named stated income. You cannot be a school teacher and state you make 399,999 per year. Underwriters are obviously smarter than you if you try this.

7- Consider it fraudulant in the eyes of those that can put you in jail if you quit your job the day after you close and do something scary like starting a .com, and obtained the loan documenting a stable job like government worker.

8- Again consider it fraudulant if you have a significant change at work, during the loan process, and don’t disclose it.

9- It is ok to persuade your employer to give you the raise you deserve and have been hesitant to ask for, so you qualify for more home. Just know, your pay stub is the documentation of it.

10- If you have good credit, all of this is out the window. You can pay a higher rate and get a loan based on that good credit.

This code is in many state laws now, and should be a matter of good business if it isn’t a law.

A mortgage broker or loan originator on behalf of a mortgage broker shall not charge any fee that inures to the benefit of the mortgage broker if it exceeds the fee disclosed on the written disclosure pursuant to this section, unless (a) the need to charge the fee was not reasonably foreseeable at the time the written disclosure was provided and (b) the mortgage broker or loan originator on behalf of a mortgage broker has provided to the borrower, no less than three business days prior to the signing of the loan closing documents, a clear written explanation of the fee and the reason for charging a fee exceeding that which was previously disclosed.

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The typical mortgage scam this refers to is quoting a standard program, then at the last minute coming up with a reason you have to go with a higher rate, exotic program.

I wish all transactions went great for borrowers, unfortunately they don’t. I have found that to back down those who are about to clean up on a borrower, like make 10,000 on one loan, you have to get real mean. That isn’t my nature but I am willing when put into ethical combat.

If you missed the article, here it is.

If you feel you are about to be ripped off in the mortgage business, you can email me, I will try and help you. Note, often people came to me as a lender, wanting me to take over a loan. I found this was not usually the best approach. Because of closing deadlines, the best approach is to fix the problem where it is. In the case cited, I threatened that the borrower would pull the file, but the problem was fixed and the loan closed on time.

LarrY Cragun