Refinance Rules After Modification by Lender

Rules to Refinance AFTER Loan Modification

Mortgage RATES HAVE DIPPED AGAIN!!!!
Often Borrowers forget to tell Loan Officer/ Mortgage Banker that they completed a loan modification. Unfortunately these are handled like other credit dings such as Short Sales. One vital piece of information in determining the wait period is if forgiveness of debt (reduction of the loan amount was granted). This may not show on your credit report, however the information will be hung up with your laundry.

Below is a list of lenders and what their rules or wait periods are:


Refinance after Modification

FHA

3 year wait period if government assistance/principal write-down.
Exceptions to 3 years if substantial documentation of extenuating circumstances
Never less than 1 year.
Must have documented extenuating circumstances.
No lates on the mortgage in question in last 12 months
Must review all modification paperwork from lender.
Borrower must be in compliance with all lender’s requirements, such as occupancy time-frame, resale time-frame, if any.
Reason for short sale must be fully mitigated and supported by documentation.

Fannie requirements

Review all modification documentation and determine if there was principal forgiveness.
Obtain pay history from servicer (outside the credit report)
showing no 60 day lates in last 12 months. (as part of the deal the lender often agrees to waive or remove derogatory ratings.
Fannie wants to know if the borrower has been delinquent.)


CHASE requirements

4 year waiting with max 90 Loan to Value or Combined loan to value - in general HELOC seconds are NOT going to grant any new credit,
but a subordination of existing second may be arranged LTV/ CLTV.
7 year waiting for > 90 LTV/CLTV
3 year waiting if extenuating circumstances,
only on primary or NCO with up to 90 LTV/CLTV.
Must obtain explanation statement from borrower,
third party documentation confirming the events were isolated
and reduced Borrower income
Must review all modification paperwork from lender.
(Chase orders package from
lender not Borrower to avoid secrets)
Must go by more restrictive of these guidelines or AUS

Freddie Requirements

4 years wait
2 years wait with documented extenuating circumstances.
Must obtain explanation statement from borrower,
third party documentation confirming the events were isolated and reduced Borrower income
Must review all modification paperwork from lender.
Underwriter must comment on 1008

Wells Fargo Requirements

4 to 7 years wait
2 years wait if documented extenuating circumstance
Must review all modification paperwork from lender.
Minimum 680 credit score required
At least 10% down payment or greater if required by transaction
Reestablished credit

VA Requirements

Call the appropriate VA office to discuss the specifics of the case
Have lender modification documentation available
Depends on hardship (proof as with all these cases is a box
of paperwork to be verified)

June 2016 Caroline Gerardo copyright
(949) 784- 9699 cell
NMLS 324982
these rules of course can change

Chase Mortgage Cough

This morning I spoke at Laguna Board of Realtors Preview Meeting. A question was raised about if lenders and Underwriters are being harder on files. I answered that it is not Underwriters is is the policy of the given secondary source. Fannie Mae and Freddie Mac are maintaining cautious and careful rules. A few minor conditions have been loosened as we get farther away from the crash but I said one particular broker banker correspondant source has become more picky and more bitter coffee to deal with and that is J P Morgan Chase.

Chase is of the new habit of pricing very cheap and turning down loans after they have been shipped.

Sometimes the reasons are so small minded it appears they are cherry picking after the fact. Today Chase came out with a memo perhaps to make excuses for this recent dump on wholesale providers.

Here's the list of reasons Chase says they are giving back funded loans (these are all Jumbo not conforming not high balance mortgage types). This list you will note does not include some of the cough cough reasons they really dumped back loans to banker / brokers

Note: Information is valid as of 9/14/15 and is subject to change.

Overview Based on loans recently reviewed by our Non-Agency Underwriters, we have developed

these best practices which can help manage your pipeline and drive down suspense rates

when submitting Non-Agency loans to Chase.

Best Practices for Collateral

Initial Collateral Review: Attached your 1st Gen/xml file to Appraisal Data/1st Gen upload in

ChaseLoanManager.

Revised appraisals associated with collateral conditions must be uploaded in ChaseLoanManager > Image

Delivery as:

 UW Conditions for non-delegated

 Funding Conditions for delegated

Non-Delegated Delegated

 Include comparison of PUD common elements

and amenities with competing developments

 Identify and describe common elements

appropriately

 Ensure Appraiser provides appropriate comments

reflecting reasoning for adjustments

 Ensure Appraiser reconciles indicated values of

the comparable sales and explains weighting and

rational to derive the final value conclusion

 Provide a complete 1004D with photos

 Document reasoning when there is a meaningful

discrepancy between public record data and

Appraiser reported information for subject or

comps

 Include all required comp photos

 Use of MLS photos is discouraged unless a

satisfactory explanation is provided

 Appraiser must comment on using any

comparable sale that’s more than 6 months old

 Do not provide comparable sales that are dissimilar

to subject property without detailed

discussion

 Provide a complete 1004D with photos

 Include comparison of PUD common elements

and amenities with competing developments

 Identify and describe common elements

appropriately

 Ensure Appraiser reconciles indicated values of

the comparable sales and explains weighting and

rational to derive the final value conclusion

 Include all Appraisal Data

 Ensure Appraiser provides appropriate comments

reflecting reasoning for adjustments

 Appraiser to comment on using any comparable

sale that’s more than 6 months old

 Document reasoning when there is a meaningful

discrepancy between public record data and

Appraiser reported information

 New PUD/Project: A comparable sale must come

from within the subject’s subdivision or condo

project

Top Underwriting Conditions

When reviewing a loan, Chase Underwriters encounter missing or deficiencies in documentation related to:

 Profit and Loss Statement and Balance

Sheet is missing

 Source of Funds for Large Deposits

 12-month Housing History

 HELOC Closures

 Credit Inquiry LOE

 K-1s / Business Returns

 VOE with Variable Income (bonus,

commission, OT, etc.)

 Current, Legally Enforceable Lease

Agreements

 Bank Statement Debts Not Addressed

 Payroll Loans/Deductions not included in

DTI and evidence fully secured is absent

CORRESPONDENT LENDING

Non-Agency Loans

Note: Information is valid as of 9/14/15 and is subject to change.

Non-Agency Best Practices - Final 100515.docx Page 2 of 2

Best Practices

Top Denial Reasons

The top reasons for a loan being denied by Chase are as follows:

HELOCS (Subject and

REO)

If a HELOC can still be drawn upon (open end), which includes HELOCs that

are frozen (since the freeze could be lifted by the creditor), the payment used in

the DTI calculation is the higher of:

 Payment shown on credit report (or obtained from documentation from the

creditor), or

 1% of the full line amount

Self Employed

Debts Payable < 1 Year

Mortgages, Notes and Bonds payable in less than one year must be deducted

from the self-employed income by the amount of the debt, regardless if the

business has sufficient assets to cover the debt or the debt has a history of

rolling over.

DTI  Bonus income < 2 years

 Ineligible add backs to business income (NOL, amortization, home office)

 Declining income reflected on YTD P&Ls

 Personal debt not included in liabilities due to evidence other party pays or <

10 months remain

 2106 expenses not deducted from income

Self Employed < 2

Years

Self-employed borrowers should exhibit the following stability standards:

 Minimum of two years operating the same business

 Minimum of two years operating each additional business used to qualify

 Potential for maintaining continuous operation of business and income

 Documented ability to meet current and future obligations when income is

fluctuating

 Independent verification, prior to closing, that the borrower is self-employed

 Provide a 24 month history of self-employment, regardless of work history

 Minimum of 12 months self-employment, reflected on tax returns

o If tax returns do not reflect the complete 24 month period (due to

timing), then P&L and balance sheet must be provided covering the

remaining period

Student Loan Payments  All student loans must be included in the debt ratio regardless of deferment

status or number of payments remaining

 If payment amount can be verified by credit report or by student loan lender

documentation supplied by the borrower, then use the greater of 1% of the

outstanding balance or actual payment

 If payment amount cannot be documented, then use payment based on 1%

of the outstanding balance

JUMBO Loans Beat the Big Banks

Caroline Gerardo Senior Loan Officer NMLS #324982 Cell 949-637-8190 Office 949-784-9699 eFax 855-883-4303 CarolineGerardo@eaglehm.com www.eaglehomemortgage.com/carolinegerardo Committed to Seeing You Home. Eagle Home Mortgage 100 Spectrum Center Drive Suite 500 Irvine CA 92618 NMLS #849059 CA #813I609 Universal American Mortgage Company of California, dba Eagle Home Mortgage of California. Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act. RMLA #4130383, NMLS #252392, NV #3244. Certain restrictions apply. This is not a commitment to lend. Applicants must qualify.

CHASE BANK HACKED

CHASE BANK ATM OPEN FOR HACKERS

Chase Hacked

J P Morgan Chase hacked yesterday.  Eight three million accounts compromised. 

How long ago did Chase know about this and wait until it leaked?

This is the largest failure of security in history.

This is far worse than Target, your email or Facebook hacked, pawned, and compromised. 

What can you do?

·         Chase is advising customers that they do not need to change passwords. I beg to differ.

·         Change your password today and again next week.

·         Check the account balances daily.

·         Check new credit card accounts opened in the next twenty and forty days.

·         Check your mailbox for any new information

·         DO NOT respond to any emails from Chase or anything that appears to be Chase.

Jamie Dimon fails to comment.

JPM Stock price downgraded today.

In the world of internet bad guys this one is frightening.

Qualified Mortgage

 

Dodd Frank implemented 13,789 pages of rules –regulated by more than nine agencies…

More change is down the road. Wall Street still controls the mortgage market. The individual taxpayer receives no benefits from Wall Street. Dodd Frank is going to roll out more rules.

 

The big banks: J P Morgan Chase, Wells Fargo and Bank of America have gotten larger in the past five years. Big banks close small numbers of home loans. Rich bankers aren't out to offer help to consumers. Banks will move further away from the mortgage business as they are forced to buy back bad loans and keep up with regulations.

The big banks charge the largest fees for a bounced check, some are instigating flat annual fees for your account and the highest student loan rates in centuries…

Don't get me started on the student loan industry -- it is a mess.

If you believe Senior bank executives will pass on savings to the small consumer, dream again. Institutional banks will get in compliance with all the reforms and new regulations but Americans will pay for it.

Dodd Frank regulation makes it more costly to run a bank business. The little guys are getting squeezed out. The independent local bank that offered a smorgasbord of financial products will struggle to keep up with all the Federal and State regulations. They will be bought out or closed.

I can name forty things that Dodd Frank made worse for consumers.

1.     Qualified Mortgage for the consumer means:

     IF you are self employed the little wiggle room at the high debt to income ratio loan is gone, the loan calculated on your twelve month’s deposits also gone and niche mortgage is going away. This is being debated as you read this and implemented January 2014.

 

    IF a lender doesn't have enough money to buy back failed loans, they will be shut down.
 

 

 

 

Don't be looking in your mailbox for a check ...

 

Caroline Gerardo

Mortgage Banker NMLS # 324982

(949) 637-8190 cell

 

 

Chase Bank Mortgage Foreclosure Cases to Follow

Stodgy Bankers?

CHASE Bank Recent Court Cases Regarding Mortgage Foreclosures

Bakenie v. JPMorgan Chase, Case No. SACV12-0060 JVS

U.S. District Court, Central District of California (Santa Ana) 1/13/2012
Joseph Arthur Roberts, Newport Beach, CA, attorney for Ernest Bakenie

Plaintiff alleges that J P Morgan Chase is engaged in the business practice of deceiving bankruptcy judges, creditors, debtors, and attorneys as to Chase's status as a secured creditor in thousands of bankruptcy cases filed nationwide.

Through fabricated assignments, endorsements and affidavits that purport to transfer Deeds of Trust, notes and the rights to money due under thousands of non-negotiable promissory notes, Chase is playing "hide-and-seek" with debtors and judges.

Where are the wet signed notes and deeds that are stored in numerous locations? How many were tossed in the trash?

The complaint seeks an order vacating all Bankruptcy orders, claims and awards granted based on Chase's misrepresentations and deceptive business practices. A case to follow, anxious to learn the outcome? Is Jamie Dimon unfairly gaming the courts?

Naranjo v. SBMC Mortgage, 2012 U.S. Dist. LEXIS 103735, Case No. 11-cv-2229-L(WVG)  July 2012

M. James Lorenz, District Judge, U.S. District Court, Southern District of California
Penelope Bergman, Deborah Gutierrez, Los Angeles, CA, attorneys for Carmen Naranjo

"The allegation in this case is the assignment of the loan into the WAMU Trust was not completed by May 30, 2006 as required by the Trust Agreement. This allegation gives rise to a plausible inference that the subsequent assignment, substitution, and notice of default and election to sell may also be improper. Defendants wholly fail to address that issue. This reason alone is sufficient to deny Defendants' motion with respect to this issue."

Settled on June 21, 2013.

Other legal mortgage issues continue to haunt the banks:

Banks took short cuts to foreclose on owner occupants in cases still pending in California.

 Notice of default did not include a declaration required by Cal. Civil Code §2923.5

 MERS cases still churning in the court system

Time lines increased for lenders to make work outs

Values have increased perhaps getting some homeowners back into the black
Will Orange County's recovery be enough to stop foreclosures? The numbers of notice of defaults in Orange County, California have greatly reduced. This is due to values climbing.

Bank Missed the Boat? Mortgage Rates High?

"Wells didn't lock my loan, the home dream boat is sinking..."

Bank mortgage  lender missed the boat?

Loan Type	Rate	APR
Conv. 5/1 ARM	2.75%	2.882
Conv. 7/1 ARM	3.00%	3.192
Conv. 15 yr. Fixed	3.25%	3.378
Conv. 30 yr. Fixed	4.00%	4.187
FHA/ VA 15 yr. Fixed	3.25%	3.369
FHA/ VA 30 yr. Fixed	3.75%	3.822

    LENDER MISSED THE BOAT?

THE BERNANKE DEAL OF THE DAY

6/21/2013 Rates subject to change. Terms and conditions may apply. Purchase transaction, 80% loan  20% cash down, middle FICO score 760, owner occupied single family rate lock 15  days

Pulling your hair out with Wells Fargo, Chase or some other bank?

 

Full documentation California purchase only application before 6/21/2013 3:00 PM Pacific Time

 Qualify with a real direct lender.

Underwriting is two business days.

From complete application we can close in 11 days.

This is not an offer to lend, nor loan approval. Thank Mr. Bernanke for his knee jerk reaction to President Obama. 

 

 

 

 

Buying a Home To Do List

You are thinking of buying a home and applying for a loan.

Things You Must be Aware of During the Process:

1.       Stay on your same job until the deal is closed

2.       Keep the same bank accounts

3.       Keep paying your bills

4.       Do not transfer money in accounts or deposit more than $300 without keeping every shred of where it came from

5.       Do not shop for a car, furniture or give anyone your social security number to run your credit

6.       Do not give your landlord notice

7.       Do not apply for any other credit

8.       Do not pay collections- pay it at closing if necessary

9.       Do not use overdraft or have insufficient charges on bank statements

10.   Use your own money for anything related to purchase of the home, to avoid appearing as a gift

Mortgage Loan Originator FREE NLMS refresher

labels on bugs

All the Regulations to Memorize for your NMLS Test

For fun I have listed here some more than one hundred questions and the correct answers for you to memorize for your NMLS Test. This is in case the droning voice recording on your online test made you fall asleep, or the teacher was on something. You must memorize the details the way NMLS is testing for nationally, it does not matter what you think or how you practice in your local market. It does not matter about common sense, burn the facts in your head. Mortgage now is run by Barney Frank who once had a boyfriend at Wells Fargo Home Mortgage, so he really knows how to properly regulate a complex business with certain laws that do not help consumers. So here it is, do not question the man behind the curtain, he is the great and powerful Oz. This does not guarantee you will pass. This is not necessarily  any exact list of the questions. This is a free study guide.

NMLS TEST QUESTIONS AND STUDY GUIDE FREE

1.       Prior to closing how long does RESPA require you give the HUD1 to borrower if they ask?

One business day

2.       UNDER ECOA What may NOT be used adversely in Underwriting?

Borrower receives public assistance

Remember ECOA is REG B

3.       Who is not a depository institution?

Mortgage banker because they don’t lend their own dough or work for a bank or S&L

4.       What is difference between a mortgage banker and mortgage broker?

Mortgage broker is middleman intermediary, bankers do that but also raise stock to loan their own money

5.       According to Truth in Lending Act a borrower on a refinance who was not disclosed the APR can?

Rescind the loan for three years

6.       Lender who doesn’t sell loans to investors is:

Portfolio Lender

7.       Regulation forbids seller to steer to certain Title Company

REG X

8.       If the fed buys government securities the money supply:

Increases

9.       What law defines high cost loans or Section 32 loans?

HOEPA Home Ownership and Equity Protection Act

10.   Fannie or Freddie can force a lender to buy back /repurchase a loan if

Evidence of fraud

11.   What Federal legislation requires information about race?

Home Mortgage Disclosure Act HMDA

12.   A registered State Licensed MLO is identified in NLMS by

Unique identifier

13.   Common name of Title V?

SAFE ACT

14.   TIL does not require:

Name of entity who services but does

requires amount, finance charges, total payments…

15.   What is the fine for violating Do Not Call?

$16000.00

16.   State Licensed MLO lets license expire must retest if :

5 years have past

17.   Federal regulation regarding adverse collection information on credit report?

REG V

18.   Registered MLO hours education?

0 only State has 20

19.   MLO fails test 3^rd time must wait:

180 days

20.   SAFE requires State Licensed x hours continuing education?

8

21.   RESPA requires what disclosure at closing?

HUD-1

22.   Fixed rate fully amortized loans each payment:

Interest portion decreases and principle increases

23.   HMDA does not include:

Land loans

24.   Refinance recission:

3 business days including Saturday not Sunday or Fed holidays

25.   Lender must notify Borrower of decision in:

30 days

26.   RESPA applies to all

Real estate credit 1-4 family dwellings

27.   APR must be disclosed on

TIL

28.   FCRA # days a credit information provider respond to dispute?

30

29.   Mortgage Disclosure Improvement Act fastest # days can close

7^th business day after disclosures delivered

30.   What settlement charge may have 10% tolerance between GFE and closing?

Government recording charges

31.   Estimate for settlement charges on GFE is available for X days

7

32.   What fee may be charged before delivery TIL and GFE?

Credit report fee

33.   Mortgage broker rents discounted space from a Title Co for referrals violates:

RESPA

34.   APR initial TIL 5.99% increases to 6.25% on final how long wait to close?

3 business days after redisclosure

35.   Higher priced loan is

APR is average prime offer rate + 1.5%

36.   GFE lumps together:

Lender and mortgage broker fees

37.   According to SAFE a MLO convicted of felony assault 10 years ago

Can apply

38.   MLO can be paid on:

Fixed percentage of loan amount

39.   Conventional loans are backed by the government?

Not guaranteed

40.   What kind of loan is assumable?

FHA

41.   Down payment for FHA with FICO 580+

3.5%   or 10% for score 500-579

42.   Seller contribution allowed FHA

6% of closing but not down payment

43.   FHA refinance amount UFMIP?

1% loan for both refi and purchase

44.   FHA housing ration and DTI?

31% / 43%

45.   FHA tax free income – disability/child support

Gross up  125%

46.    VA Housing Ratio and DTI

41% / 41%

47.   VA seller maximum buy down rate is

4%

48.   VA funding fee for first time (not National Guard or reserve)

2.15%

49.   Rural Housing Services RHS under

USDA

50.   PMI requires what down?

3%

51.   Cancel PMI under:

Homeowners Protection Act

52.   Homeowners Protection Act requires lender to drop PMI at:

78% of original purchase price

53.   Jumbo loan is

Nonconforming loan

54.   Definition of nontraditional loan is under

SAFE Act

55.   Mortgage second with predetermined maximum loan amount, adjustable, IO minimum, can be reborrowed is

HELOC

56.   Borrower right to change from ARM to Fixed one time

Convertible loan

57.   Conforming loan

Follows Freddie and Fannie criteria

58.   Nontraditional mortgage highest risk in underwriting is

High debt to income ratio

59.   Difference between index and the rate charged is called

Margin

60.   Total payments payoff the entire balance at term is

Fully amortizing

61.   During reverse mortgage what decreases:

Equity

62.   Reverse mortgage must be repaid if unoccupied by owner for:

12 months

63.   HECM not available on:

No cooperatives

64.   HECM does not consider:

Credit of borrower

65.   Lender refuses to make loans in certain neighborhood

Redlining

66.   RESPA kickback who pays fine

All parties who received

67.   TIL in Advertising

Think numbers like: 10% down

68.   Advertising

APR amount down terms repayment

69.   Discouraging minority application

ECOA

70.   Not protected by Fair Housing Act

Sexual orientation

71.   ARM loans address

Recessions

72.   Initial rate ARM 4% lower than fully indexed

Teaser

73.   Recast ARM

Recomputed monthly payments to fully amortize

74.   5/2/6 ARM (6 is the

Payment cap

75.   Lowest teaser rate

Pay option ARM

76.   Option ARM accelerated payment is

Fully amortized over shorter loan term (15 or 20)

77.   Option ARM recast

Regular normal every 5 years

78.   Conversion right on ARM must requalify if:

Sold to secondary

79.   Graduated Payment mortgage is

Payments increase at regular intervals

80.   Graduated Payment Mortgages

Have neg am

81.   ARM’s

Have Home Equity Conversion Mortgage

82.   HECM is

Reverse Mortgage

83.   HECM

Cannot be second or subordinate loan

84.   Reverse Mortgage

Borrower must maintain, live in and pay taxes

85.   Land Contract

Vendor/seller transfers equitable title to vendee/ buyer

86.   Alienation clause is

Due on sale/ if sold payoff loan

87.   MLO can’t be a modification counselor advertisement under

Truth in Lending Act

88.   3 day rescission Regulation

Reg Z

89.   Flipping analyze past

3 years history of transfers

90.   Civil Rights 1866 prohibits discrimination on

Race

91.   Repeated refinancing

Loan flipping

92.   Fed. Legislation requiring “equal housing lender”

Fair Housing Act

93.   Fair Housing Act does NOT cover

Disability (does cover religion, maritial, sex)

94.   Fed law covers redlining

Community Reinvestment Act

95.   Discount points are:

Paid to reduce rate

96.   Defeasance clause

Lender releases (defeated) when repaid

97.   Deficiency judgment

Lender recovers the losses

98.   Blanket mortgage

On one or more parcels

99.   Partially amortized loan

Has balloon

100.                        Higher rate charged in exchange for lower upfront costs

Yield spread premium

Stuff you must memorize because a couple questions use these assumptions:

Conventional Ratios: 28% / 36%

FHA                              31%/ 43%

VA                                       /41%

more questions and answers to the National Mortgage Registry Test

101.                        Market value

Most probable selling price

102.                        Minimum number comps required

3

103.                        Section 502 loans are

USDA

104.                        Chapter 7 BK shows on credit for

10 years

105.                        VA loan to value

100%

106.                        UFMIP is on

FHA

107.                        Hypothecation

Using collateral without surrendering possession

SAFE 2008

HERA 2008 V-NMLS

RESPA=X=HUD=GFE=HUD-1, 1-4 family properties, kickbacks 1975

TILA=Z=FTC 1968 (Fed) 3 rescission, 3 day disclosure forms:TIL, booklet, CHARM, APR

ECOA=B=Federal Reserve =Discriminate sex age marriage race religion public assistance Cons. P.

HMDA= C =1975 gathers information about discrimination

FACTA=V=FTC=2003=

GrammLeach GLB=P=FTC 1999 privacy

Nat Do not Call $16000 fine

FCRA= V=credit= FTC

HOEPA+ Z=Section 32+ FTC= high cost= rescind 3 years, APR TBill+8%/ 2^nd +10%

USPAP –appraisal HUCC – AIR

Dodd Frank

HPA- PMI 1998 cancel 78% of original sales price or lender at 80%

MLO compensation rule = Z = Fed

CRA 1977 low mod loans

Civil Rights Act 1866 – no racial discrimination in buying selling homes

Fair Housing Act 1968

Fannie Freddie appraisal

Max gross adjustment to comp 25% Robin Hood

Max net 15% of sale price of comp

copyright Caroline Gerardo all this is mine even the photograph and we prosecute stealers. If you would like to print and study, that is fine. If you want to reproduce you will need to buy one of my books and have written (email) permission from me. Do not repost on Pinterest all rights reserved.

Cost Approach

Marshall Swift rebuild minus depreciation + land

Income Approach

Net operating income divided by Capitalization Rate= Value

If I think of more I'll post another homework list.