Palm Beach Real Estate and Loans

Today's post comes from Jason Price of Knightlines Mortgage Services (and he doesn't seem too happy):

"The nation is arguing over health reform and how government should stay out of it. But what about mortgages? Now that the government is involved, there has been a great chasm created between common sense and a thing called DO/DU.

DO/DU is Fannie Mae's automatic underwriting system. When an application is taken, it is run through this pre-determined set of criteria to determine a borrowers eligibility for a new mortgage loan. The problem is that these criteria do not take into consideration other compensating factors.

Why America needs to go back to manually underwritten loans and not a computer generated decision? Here are two examples that have happened in the past week of why America needs to go back to manual underwriting of mortgage loans.

Scenario 1: The borrower has a credit score of 740. Is putting down 10-20% of the purchase price. The debt-to-income (all monthly debts plus PITI) is 20%. Has been on the job for 3 months, but in the same line of work for 20 years. His new job has a higher salary then his previous employer. These are all things that under a common sense, manually underwritten loan would have me saying congratulations.

FNMAs DO/DU denied the loan. Why? Because he had a mortgage credit late of 30 days. Why did he have a mortgage credit late? Because his previous employer laid everyone off. If was not his fault, he did what he could to stay on top of his payments till he could find a new job. In his quest to find a new job, he had to relocate to where the job would hire him. He sold his house without having to do a short sale and moved to the new area. Now, he cannot buy despite that credit mortgage late. It is a pity that the bank will not even take a look at this to argue an exception because FNMA is not allowing exceptions.

Scenario 2: This is very similar to scenario 1, but instead of a mortgage late there was a bankruptcy approximately 3 years ago. This time last year, no problem. Now, it has to be 4 years, no exceptions. Never mind the fact that he has 20% down, or a credit score in the 700s, or a very low debt-to-income ratio, or many years on the job.

A trained underwriter would see that the bankruptcy was actually stemming from a divorce to handle the debt accrued during the marriage. It was not that payments could be made. It was to get him from being responsible for debt that his ex-wife got him into by being on joint accounts.

Going back to manual underwrites opens many doors for many people that are qualified borrowers, but are getting the door slammed in their face because a computer cannot look at the big picture. Plus, if we go back to manual underwrites, lenders would need to hire more underwriters (a boost in employment), they would close more loans, and more money would be back in the economy. By letting a computer decide, there are no jobs, there are no common sense decisions being made, and there is no help to the economy.

Perhaps, we should take the same voice that we all hold for the medical reform and shout it out at reforming the mortgage industry and going back to good old traditional manual underwriting."

Today's post comes from Jason Price of Knightlines Mortgage Services:

The Mortgage Disclosure Improvement Act (MDIA) was signed in July of 2008, but became effective July 30, 2009. MDIA was created as an amendment with the TILA (Truth-in-Lending Act) laws. It is designed to ensure that borrowers receive certain cost disclosures early in the mortgage loan process to give them time to study the disclosures, ask questions, and shop loan terms.

The topics that are covered under MDIA include:

-New Fee Restrictions: Mortgage originators cannot collect any fees (other than a reasonable fee for a credit report) until the borrower has RECEIVED the early disclosures, eg. Truth-in-Lending (TIL).

-Expanded Covered Loan: TIL disclosure is required for all loans secured by a dwelling (including non-owner occupied homes) and is not limited to just purchase money transactions.

-Expanded Timing Requirement: Loan closings must be a minimum of seven (7) business days after the early TIL disclosures have been provided.

-Re-disclosure Requirement: Should the Annual Percentage Rate (APR) change occur that makes the APR from the early disclosures inaccurate beyond a certain tolerance, then a new disclosure with the revised APR must be provided. Along with the new disclosure, a loan must wait an additional 3 days from when the disclosure was provided before it can close.

-New Notice Requirement: There has been new language added in the disclosures for the Fed Box: "You are not required to complete this agreement merely because you have received these disclosures or signed a loan application."

I will be doing some subsection posts on these topics, as there is more to them than just these short descriptions that have been provided. If these new laws are not adhered to, then a closing that was to take place on a certain date will have to be postponed causing a seller to have to postpone their plans of what could have been a simultaneous closing. And you can see the snowball effect that this will cause.

Today's post was written by Jason Price of Knightlines Mortgage Services:

"Just when we all thought the noose could not get any tighter, the executioner threw a bucket of water in our faces to make the ropes that much more constricting. Law makers have added a new set of laws to govern mortgage brokers not just in the State of Florida, but across the nation.

Lets start with the issue that will affect lenders to greatest degree. By the end of the year, all loan originators will be required to be licensed by the State of Florida. This means that going to the bank and sitting down with the account executive to apply for you new mortgage loan (whether it be a purchase or refinance) will be a thing of the past.

Now, you are probably going to have to make an appointment with a mortgage specialist that is licensed by the state to come in apply. So much for convenience... And then, add on to the fact that this one person is not only responsible for your mortgage loan application, but everyone else that has applied. In a few days time, this person will be spending more time on the phone dealing with issues then with applications. Yes, there will be a support team behind this person, but those that are used to dealing with the bank are also used to the customer service that they get by dealing with their account executive.

When is this nonsense going to end? Now do not get me wrong, I would love for people to leave their bank to come to us at Knightlines. After all, 9 times out of 10 our rates are better. Our closing costs are comparable. And we can give the attention to detail customer service. But I do not want it because the government is forcing people to have to seek alternate means. Whether it be a direct intention or an indirect one, like this.

If the government is going to interfere, I would rather be for the person that has a 750 credit, 10% debt-to-income ratio, and 20% down payment and cannot get a mortgage loan because of a mortgage late in the past year due to losing his job, which has been replaced with a better, higher paying job. This is what needs to be fixed and looked, not a matter of licensing when they are already under the license of the lender.

And this one change is not even the worst of it. Stay tuned for more updates that have or will go into effect by the end of this year."

Today's post has been provided by Jason Price of Knightlines Mortgage Services:

The Mortgage Loan Interest Rates Report for Palm Beach Gardens, FL. Rates as of July 20, 2009.

It looks like rates have pretty much held steady this past week. But how much longer will it hold out?

Apply now to lock in your rate. The application only takes about 5 minutes to complete.

*The rates published on this page are applicable only to requests received from this site or by calling 352-308-7219. Mortgage rates published on this page are the current rates for a single-family, primary residence based on a 30-day lock period and are subject to change without notice. In order to receive a guaranteed rate, you must have applied for an application through Knightlines Mortgage Services, LLC and received a verbal confirmation from a mortgage broker that your desired rate is locked. Your guaranteed mortgage rate will depend on factors such as current market conditions, loan product, occupancy, property type and your credit profile.

Loan Product and APR Information

• Conforming rates are for loan amounts not exceeding $417,000 ($625,500 in AK and HI)

• Jumbo rates are for loan amounts exceeding $417,000 ($625,500 in AK and HI)

• Adjustable-rate loans and rates are subject to change during the loan term. That change can increase or decrease your monthly payment.

• Additional loan products, rates and lock periods are available.

Conforming Fixed, ARM APR calculation assumes a $150,000 loan amount with a 20% down payment, estimated borrower paid finance charges of .75% of the loan amount plus discount and origination if applicable. If the down payment is less than 20%, mortgage insurance may be needed on the loan. This could increase the monthly payment and the APR.

Jumbo Fixed APR calculation assumes a $500,000 loan amount with a 20% down payment, estimated borrower paid finance charges of .75% of the loan amount plus discount and origination if applicable. If the down payment is less than 20%, mortgage insurance may be needed on the loan. This could increase the monthly payment and the APR.

Today's post comes from Jason Price of Knightlines Mortgage Services:

July 1, 2009 marked the new fiscal year for SHIP (State Housing Initiative Program), a state funded down payment assistance program for low-level income home buyers. However, this year the $161 million grant used to fund this program has been cut to $30 million to fund the Florida Homebuyer Opportunity Program (FHOP).

The $30 million is split amongst the counties of Florida. Each county then distributes the money based on city/area. In most areas, this will mean that less than 10 first time homebuyers in any given city/area will receive an advance on their $8000 tax credit to use towards the purchase of a new home today.

If you are one of the lucky few to get the $8000 advance to use towards down payment, mortgage loan closing costs, or pre-pays associated with the purchase, here is what you need to know:

1. First-time home buyers this year are eligible for a federal income tax credit of up to $8,000 if their income generally is $75,000 or less for single taxpayers and $150,000 for married couples.

2. Anyone who hasnt purchased a home in the past three years qualifies as a first-time home buyer.

3. Rather than let home buyers wait until 2009 tax returns are filed next April, Florida legislators decided to advance the $8,000 in an interest-free loan.

4. Buyers have to agree to file for the tax credit and to repay the money within 18 months.

To find out more about FHOP or to stake your claim for the $8000, contact your local SHIP office. Click here to find your local SHIP office. Oh, and one more thing, even though the program officially started on July 1, 2009, the cash is not there yet to make the loans to home buyers.

Should you not get the $8000 tax credit advance loan, do not worry. 100% USDA Guarantee Mortgage Loans are still in place and are still funding. And 97% HomePath is still going strong. Compare these two loans side-by-side.