2 hours face to face gives answers to important questions

Is that Pre-approval letter you’re holding Valid?One of our loan officers sold their mother’s house a couple of weeks ago and a loan officer wrote a pre-approval letter for the buyers contingent only on an appraisal and acceptable title work. A week into the process, she got a call saying that the parents were being added as co-signers because the co-borrower’s income wasn’t acceptable to the underwriter; less than a year on the job in a commissioned position. This past week, as we were completing loan applications for a number of borrowers, they shared pre-approval letters that they had already received from other lenders. When we asked them if they had actually sat down with the lender and completed all of the disclosures, provided paystubs, bank statements, and tax returns, etc, the answer in ALL cases was no. Each of them had merely had a conversation with someone on the phone or over the Internet. Nothing had been verified. Out of respect for the professionals who put themselves on the line daily and weekly to sell real estate, represent sellers and buyers, it is necessary that we ask a couple of questions to validate a pre-approval. Has the underwriter reviewed the file and issued an approval and what are the stipulations from the underwriter for final approval? In my business model, a pre-approval means that the file has been PROVED and underwritten. There are no shortcuts to reliable information. Do your sellers a favor and insist on full credit underwriting pre-approvals. They only take 24-48 hours with a qualified, prepared buyer and an in-house Underwriter.
Face to Face for 2 hours can save a lot of money and heartache down the road:Family members of clients of ours called in this week to say that they had made application somewhere, usually at a big bank entity, and that they did not understand the documents they were e-mailed, or the type of loan they were being given. No one had taken the time to explain or to sit down with them because they were too busy. They just e-mailed them a package to sign. They had no idea about the fees they were being charged or how an escrow account worked, or whether or not the loan was right for them. In conversation, I discovered that one couple was about to execute short sale documents on their current home, so that they could use their savings for the new one. Oops. This would have tanked their credit for years to come and no purchase would have been possible. In another case, the client said that my Good Faith Estimate of PMI cost was much higher than the online quote they’d gotten from a California Lender. Oops, the lender must not have looked at the National PMI policies that flag MN as a declining market requiring higher MI. This would have led to a big surprise at closing. In yet another case, the borrower was paying fees to refinance when putting the same amount against her current mortgage would have resulted in a $2 difference monthly in payments from her current mortgage. She cancelled her refinance. A client, this week, asked me to text message him with the requirements for pre-approval. I told him I would be happy to set up a face to face meeting and that I would send him a complete checklist via e-mail to prepare for that meeting. Now I understand that texting is a preferred method of communication for a growing number of people, but you simply can’t deliver the scope of information you need to help someone make an informed and wise decision via 144 characters in a Twitter or a text. This is from the desk of my lender, Barb Crea

This story is repeated over and over in the real estate market. I can not tell you how many people I speak with in a year that when asked, "Have you met with a lender to find out how much you can purchase?" respond by saying they have been pre qualified. Once I start asking them details, they either do not know or get defensive. If you know someone who is trying to buy property, please tell them they need to sit down with someone who literally spends over an hour with them on details. When buying property it is important to know options as well as details of the loan. Many people today could have avoided the problems with their loan, had they had details before they closed. Once you close on a blind loan it is to late. The documents you sign repeat it over and over again, I understand and agree to the terms and condition of this loan. Be Safe, Work with a Real Person, Call a professional. If you would like to purchase property anywhere RE/Max is International and we can help you. Start by calling 651-450-2164, Madonna can arrange a face to face with a lender, a buyers consultation and if you plan to sell your property the services I provide exceed expectations.

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New Regualtions and dealing with foriegn workers on short sales

What a week.
A new experience dealing with Ocwen, a debt collector for short sales out of Orlando Florida. They out source all their files to India. Wow, 3 letters from them starting Sept 1, 2009, Sept. 17, and Sept 25 all stating they received the files and will get back to me in 20-30 days. (From what date I wonder?) Classic conversation with one of their reviewers. Goes something like this; The review is not yet done. We have received the paper work. Have you sent us the CMA? Yes, I sent it to you multiple times before the offers and 4 times and 12 emails since the offers. Oh! yes, I see them here. What is the value of the property? I give them the range. Oh, yes I see. Well I can tell you this I don't think the net is enough to Ocwen. What is the commission? I tell him. Oh, No! we don't ever pay that amount. I said, what you need to do is to allow me to do my job. You tell me what your bottom line is, so that I can help you reach that goal and help my seller get through a very bad situation. Give me a bottom line. If the buyer's can not pay the amount needed, we need to move forward and find new buyers. Or you may end up with a property, where you have lost all these buyer's and after a good deal of time you may not get your bottom line either.
I guess that because they are in India and bartering is part of their daily lives they want us to bow down to their business practices.
More bad news for people who have been forced into forclosures; Read the following from my loan officier:
From the desk of Barb Crea,
Recent statistics show that over 25% of the foreclosures taking place today are what are called “strategic” foreclosures. What this means is that these borrowers made a planned decision to walk away from the obligation on their mortgage even though they could afford the payments. They calculated how much they owed versus how much the house was worth and decided to walk away. In most cases, the belief was that it would take longer to regain positive equity than it would to cure the negative impact on their credit.
All personal feelings aside, many people are making ill informed choices with consequences that will outlast this season.
This week, major investors put policies in place which state that borrowers with a short payoff will be ineligible for a new mortgage for a minimum of 7 years and those whose mortgages have been restructured will have to wait a minimum of 2 years. Additionally, deficiency judgments are becoming more commonplace. In one case, the house was sold for $250,000 less than was owed and because the borrowers were able to pay but chose not to, they were hit with a deficiency judgment and had no recourse through personal bankruptcy. They will have to pay it back before they can purchase a home again. It may take them a lifetime. Additional policy changes that came out this week include:Fannie Mae lowered the maximum total debt to income ratio to 45% for any loan they purchase.
FHA lowered the length of time for which an appraisal is valid to 120 days from 180 days.
The minimum credit score for an FHA transaction was raised to 620 and (due to increasing foreclosures) other rule tightening continues. FHA is putting additional restrictions on our ability to order our own appraisals. HVCC-like regulations will kick in on January 1st. FHA Streamline refinances are going to be subject to a host of new rules regarding payment history and income. FHA new condo rules have been delayed in their implementation by one month, to November 2nd. FHA changes some rules relating to transfers of appraisals from one lender to another. Depending on your perspective, some of this tightening could be viewed as punitive. Every day, I talk to fearful people. I counsel them whenever possible to stay the course and I help them find the most affordable path. These policy changes are an attempt to normalize and stabilize the housing market so that all of us can regain some confidence in the value of our homes. There are signs that the season is changing. Values are stabilizing. Consumer confidence is rising. The stock market is gaining. Slogging through to the finish line, the days seem to be dragging on and on. Yet, we will look back on these days at some future point, and it will seem like it went by in a blur. Use the moment to gain a heart of wisdom and share it with others so that all of us can benefit. -Barb Crea
Pretty tough lines for some people who had no choice. Lost their job, transfered and couldn't sell, lost their job's, everyone is put into the same pool. I hope that the regulators will be making some exceptions for people who ended up in a bad situation.
Have an awesome week; keep the faith and keep on track.
Madonna Seelhammer, RE/Max Specialists, Minnesota's finest Realestate Company

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