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Short Refinance: Is It Possible?

January 12, 2010 1 Comment

I suspect that 2010 is going to be a big year for short sales.

One common question that I have gotten lately is:

Can I just do a short refinance? Meaning, rather than short sell my house to someone else, can I just do a short refinance?

And the answer is: maybe.

But before you pick up the phone and call me, you need to do something first — call your current lender and ask them if  they will accept a short payoff.

Under some circumstances, they will accept a short payoff (the situations are far to numerous to go into detail here) so if you are interested in doing a short refinance, the first step is to get on the phone with your current lender and negotiate a short payoff.

Now, as you can imagine, it is not going to be easy, but did you really expect it to be? Do you think your lender is going to be happy about accepting a short payoff just because?

There are various strategies that you can use to get your lender to accept a short payoff – but it is really in essence going to come down to two things:

  1. Your ability to negotiate
  2. A healthy dose of luck

Although it isn’t easy — if you do manage to get a short payoff from your existing lender, you may be eligible to do a short refinance and fix your “negative equity” problem.

A short refinance isn’t for everyone… but it is possible.

Oh, and don’t call me until you have a short payoff agreement from your lender!

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Ten Day Close: Do Loans Really Get Closed In Ten Days?

January 8, 2010 1 Comment

Every once in a while, I come across something that is out-of-the-ordinary.

Something that is so good I feel compelled to tell my friends about it.

Back in December, I stumbled on one of those things and I waited a while to make sure that what I found was real and not just a bunch of smoke and mirrors.

What did I find?

I found a mortgage bank that can close loans in 10 days.

And they guarantee it.

10 days!

I spent all of 2009 explaining how <insert excuse here> had happened and that when someone was buying a new house they should set a 45 day escrow just to give the lender the time to get it done… and even then I found that I had to file more than one extension every once in a while.

Can you really get your loan closed in ten days?

Yes.

I have seen it with my own two eyes and seen the stats.

The big secret to getting loans closed in ten days?

In no particular order:

  • Have a loan officer who knows what they are doing.
  • Have processing in house.
  • Have underwriting in house.
  • Have doc drawing in house.
  • Have a way to get appraisals done, even with the HVCC guidelines in place.
  • Have a great escrow officer who does her part.

Have senior management that will accept nothing less than excellence and hold each person accountable for achieving the goal of a ten day close each and every time.

Need a loan closed fast by people who are the best in the business?

Now you know who to call.

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Filed Under: The Business of Mortgages Tagged With: ,

Will Main Street Get A Bailout?

December 28, 2009 Leave a Comment

One of the common phrases I have heard over the last couple of years is “how come Main Street doesn’t get a bailout?”

And I have usually just shrugged and said that no one had called me to ask my opinion but as soon as I heard of it happening, I would be sure to keep everyone posted.

I just now caught the first whiff that the federal government *may* be taking action to “bail out Main Street”.

Bailing out main street could take any number of different forms, but the most probable form in my opinion would be some kind of mechanism that deals with the problem of Negative Equity – or where people owe far more than their home is worth.

From Bloomberg:

Dec. 28 (Bloomberg) — The U.S. Treasury Department’s expansion of its capital backstops for Fannie Mae and Freddie Mac may foreshadow a shift in the government’s mortgage- modification tactics, Keefe, Bruyette & Woods analysts said.

The Treasury announced Dec. 24 that the two mortgage- finance companies, which were seized by the U.S. almost 16 months ago, could tap an unlimited amount of capital for three years, up from as much as $200 billion each. The companies’ needs would be unlikely to exceed the prior limits “even in a stress case scenario,” Bose George and Jade Rahmani, the New York-based analysts, wrote in a report today.

“Given this outlook, we believe that the main driver of this significant change is the flexibility it gives the government to take more aggressive action to support the housing market, including potentially going down the road of allowing some form of principal writedown,” the analysts wrote.

Ok, so that doesn’t exactly mean that an announcement is imminent – but it is interesting to see what possible things may happen:

Shifting to principal forgiveness to cure so-called negative equity that makes borrowers more likely to abandon loans whose payments they can afford may prove more costly for Washington-based Fannie Mae and Freddie Mac of McLean, Virginia, by sparking “another wave of delinquencies as people look at it as a rational choice” to default to seek the aid, George said in a telephone interview.

While you probably shouldn’t bet on some kind of formal principal reduction program coming out any time soon from Fannie Mae or Freddie Mac, if I have learned one thing in the last two years, it is this:

Anything is possible.

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Filed Under: Loan Modification, The Business of Mortgages Tagged With: ,

Who Do Loan Officers Work For?

December 17, 2009 1 Comment

Original post:
Are Loan Officers Your Friend?

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Case Shiller: Property Prices May Fall Another 45%

November 28, 2009 Leave a Comment

Predictions.

Maybe they will come true, maybe they wont – but here is one from a fairly credible source that says property values still have a ways – a long ways – to fall.

According to the guys at Lender Implode, the 10 major cities in the Standard & Poor’s/Case-Shiller home price index have risen 5% from their April low, but the index is still predicting a massive 45% fall from today’s values.

Case Shiller: Property Prices May Fall Another 45% %spacebasename

One insightful comment came from “John L” who appears to live right here in Phoenix:

The predictions pointed out in the article can be confirm by an analysis of the change from lax credit underwriting for home buyers starting in late 90’s, which created an undue stimulus on the demand for real estate, back to the traditional credit underwriting standards for home buyers.

Incomes have not risen for years. The amount of the mortgage a home purchaser is qualifies for is determined by their “documented” income. Home prices will have to decline to a level to match the buyers purchasing ability.

The more curious fact is the continued government intervention in the market for the benefit of the FED, FNMA, FHLMC, Wall Street firms and banks.

The use of below market interest rates, tax credits, grants to “non-profit” organizations for down payment assistance and in Arizona silent seconds (no interest, no payment, debt forgiven after 15 years) for 22% of the purchase price, have the effect for new home buyers of their overpaying for their homes and artificially increasing the value of real estate.

When the government’s money (our money, our children’s and grandchildren’s money) runs out, the undue stimulus and creative financing will finally be eliminated from the market leading to a sustainable lower value of real estate.

Will property values here in Phoenix rise or fall in 2010? I don’t pretend to know for sure – but if the Case Shiller model holds any weight, I wouldn’t bet the farm on them rising too much from their current levels anytime soon.

That said, the guys at Calculated Risk have an expanded analysis of this – not quite as nerve-wracking.

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Filed Under: Buying a New Home in Arizona, Miscellaneous Fun, The Business of Mortgages Tagged With:

Saving Money Without Refinancing Your Mortgage

October 10, 2009 Leave a Comment

Across Arizona, many people are trying to refinance but are finding out that they can’t because they owe more than their home is worth on their mortgage. Although there are a few programs like the Obama 105/125% refinance, many people still don’t qualify for those and the FHA streamline and VA streamline programs are about to change the rules so it is only going to get tougher.

But if you are in this situation, you can still get creative and save a few bucks on your mortgage payment.

Your mortgage payment is made up of PITI – or Principal, Interest, Taxes and Insurance.  If you are in a situation where you can’t refinance, that means that reducing your Principal and Interest are “out” for now — but what about Taxes and Insurance?

It is time to get focused on saving money on taxes and insurance.

Taxes – Your taxes are set by the government for the community you live in. This number is easily found at the Maricopa County Assessors office and can also be disputed if you think the assessed value of your home is too high.

Insurance – Not only should you shop around for cheap insurance quotes from companies that you know and trust, but there are also several things that you can do to save money on your home insurance like getting a discount for having your home and auto insurance on one policy or putting in one of the best home alarm systems that you can find.

You might be surprised to learn just how much you can save just by shopping around a little bit.

Even though you are currently in a situation where you cannot refinance and save money on your principal and interest, don’t let it deter you from trying to save money on your overall mortgage payment each month — which is really your ultimate goal.

Especially in these tough times.

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Filed Under: Arizona Refinance, The Business of Mortgages

REBlog World Is Coming Up: 10 Great Reasons To Go

October 5, 2009 1 Comment

Whoah.

NOTE: I was planning on going to REBlogWorld before Nik Nik put this up – but what a great ad of why you may want to consider going…

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Filed Under: The Business of Mortgages

Tough Choices: What To Do When You Owe Far More Than Your Home Is Worth

August 17, 2009 Leave a Comment

If you bought a house between 2004 and 2006, chances are you have talked with someone about how far under water you are in your house. If you haven’t lost your job or suffered a decrease in personal income, it isn’t really that big of a deal, you just keep making your house payment and think to yourself “it will come back, I just have to wait out the dip in value.”

Will it?

I don’t know, and the truth is no one else knows either.

But for those of you who have had some kind of “hiccup” in your income – meaning you make less money now than you did when you bought the house… you have some tough choices to make. I know, because many of you call me asking me what you should do and my only advice is to “pick” one of the choices that are available to you rather than just “let” one of the choices happen to you.

Tough Choices: What To Do When You Owe Far More Than Your Home Is Worth %spacebasename

But here are your choices (in a nutshell) of what your options are if you are severely under water in your home (you owe more than 125% of the value of the home) and you have had a hiccup in your income:

Tough Choices:

  1. Keep making your payment.
  2. Attempt to get a loan modification by calling your lender.
  3. List your house for a “short sale”.
  4. Negotiate for a deed-in-lieu of Foreclosure with your lender.
  5. Go through the foreclosure process.

Keep Making Your Payment

The simple fact is that if you find some way to keep making your payment, then nothing will change. True, it may be harder to keep making your payment now than it was before your income was reduced – but as long as you keep making your payment, most likely nothing will change. It is possible that you could get a loan modification if you keep making your payment, but not a 100% for sure thing.

Work With Your Lender For A Loan Modification

Most people are aware of what the term “loan modification” means – and the easiest way to get a loan modification (note: they are not easy to get in my opinion) is to simply call your lender and start the process with them. Be prepared for a loan modification to take months. Most of the time, a loan modification will reduce your interest rate and/or extend the term of your loan (usually from 30 to 40 years) but will not reduce the amount of money that you owe.

Short Sell Your Home

List your home for less than you owe your lender and attract a buyer. Once the buyer submits an offer, the lender must approve the offer – because they will most likely be writing off the difference between what you owe and what they will get from the sale of the home.

Deed In Lieu of Foreclosure

Sometimes your lender will allow you to leave the home in good condition and accept a deed-in-lieu of Foreclosure. The Deed in Lieu is better than foreclosure in my opinion only because once you have a deed-in-lieu negotiated out with the bank, you can get on with trying to repair your credit. With a foreclosure, there will still be negative reporting on your credit until the bank has disposed of the property.

Foreclosure

The last resort is foreclosure. The truth is that the best way to prevent foreclosure is to know what your options are and to start at the top of this list and try to get each one done. But in the end, at some point, if you don’t make your payment and you don’t get a loan modification done and you don’t sell your home and if you don’t get a deed-in-lieu of Foreclosure… Foreclosure happens.

And it isn’t the end of the world.

But it is time to start picking up the pieces and start re-building your credit.

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Filed Under: Loan Modification, The Business of Mortgages Tagged With:

Are You Self Employed? Be Ready To Show All Income When Applying For A Mortgage

July 29, 2009 1 Comment

I had a conversation recently with someone who was self employed and thinking about buying a new home. At the end of the conversation, it became pretty clear that he wouldn’t be able to “document” his income – which is not all that uncommon.

About 20 minutes after I had that conversation, I got a memo (man I hate these things, but I can’t ignore them because sometimes they have good information in them) from our corporate compliance department that anyone who is self employed should probably be aware of when applying for a mortgage.

Are You Self Employed? Be Ready To Show All Income When Applying For A Mortgage %spacebasename

ATTN ALL MANAGERS

It is extremely important tha tyou be aware that ALL self-employment MUST be disclosed on teh initial loan application, regardless of whether or not the income is being used for quallification.

If you have an applicant that is self-employed with more than one business, all self-employment from all businesses must be disclosed. You must disclose all income for self employed borrowers, not just the income that you used to qualify for the loan.

Any negative income from self-employment must be considered. For example, if you have a husband and wife applying for a loan. The wife is self-employed, but you think you don’t need to disclose her income because you are not using her income from her self employment to qualify for the loan.  Wrong! The wife must disclose her self-employment and her income. If the income is negative, it will be subtracted from the other positive income being used for qualification purposes.

Translation:

There is a form called the 4506T that states the lender will pull your tax records and compare them to what you declared as income on your application. This is only one of the reasons there is no such thing as a “stated income” loan anymore.

So if you are self employed, be sure to plan on putting all of your self employed income on your loan application — both positive and negative.

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