Barney Frank Plays with YOUR Home

Barney's New Play House

copyright Caroline Gerardo

APRIL Fools You thought the Dodd Frank Bill was going to improve the mortgage business, no way.

As of tomorrow new regulations are enacted which have lenders spinning to force employees to sign new employment agreements.

Let me review a few points that will forever harm the consumer further when applying for a home loan.

A. Commission are regulated to not allow any “overage” and pay is capped. Sounds like structurally good ideas but the logic is all foul. Overage was a tool that a private mortgage broker, the individual loan shark used to hedge on several factors. A loan lock is a commodity with a set expiration date. If for some unforeseen reason the loan goes over the date, someone has to pay.

In today’s mountain of paperwork review it is not uncommon= for Underwriters to ask for: a child’s birth certificate, verification of every deposit you made into your accounts in the past three months and standard for lenders to double check everything with the IRS, your employer, and your landlord. If one piece of paper stalls the process, the cost to extend can be huge. If rates



The days of the part time bartender loan guy who can charge you five points hidden in the rate have been gone for two years. Customers can easily walk to the next bank with their pdf files and relock on a better day.

Here is another one of the Dodd Frank Mouse traps: underage. This sneaky tidbit was misunderstood by Senator Dodd. Lenders sometimes price a loan so skinny to beat the competition on minor costs. The savings was passed to a borrower who usually had a clean easy file. This is no longer allowed. Every American is now guaranteed a deal priced the same, even when the bank makes an error –the sales person will not be paid and the chance of your loan closing now declined to .1%

The problem with this theory is each family is not the same. A family with boulders of ghosts in their proverbial closet, cannot be delivered the same piece of cake as a cookie cutter wage earner.

Americans have been holding their fists up at the greedy banks, forgetting that they signed the promissory note and were all too happy to get $ 45000 cash out to buy a boat.

Oh and wait until I tell you about the banks program to charge you for using your DEBIT card, all because of another brilliant Bill by Dodd and Frank.
If you are wondering why your lender is now scrambling to close, call Congressman Barney Frank and complain. His number is (202) 225-5931

http://docs.google.com/viewer?a=v&q=cache:8hVjdnb0x9YJ:www.knowledgeonloan.com/AEfiles/1/Fed%2520LO%2520Comp%2520-%2520In%2520Their%2520Own%2520Words.pdf+dodd+frank+loan+officer+compensation&hl=en&gl=us&pid=bl&srcid=ADGEEShe9-VG4npxLUoGX43YR6kZzFaPA2HpaL6phBawHKlMtbAn-SnSuE03fJ4LB4683CiPhQ21D9-K1bdgct91fqogN5I1hO8OZ8Rs8qXOPRXRo1dRsXcbMf0YZOGadozO-vTDkn1G&sig=AHIEtbS_j1NglY3yqxHmcpgEQLBClma7WQ

Rent or Buy?

Is it time to buy or rent?


Timing is everything.

The choice should be a business decision not an emotional one. If the bank tells you your ratios are too high, take it as a blessing that this is not a sound selection at this time.

Pros:

Buying a house is a tax deduction (assuming you need a deduction).

Owning a house gives you the freedom to stay as long as you like and do what you want.

Cons:

If you are thinking employment promotion or moves upward- you will be stuck with location.

Often you can rent cheaper, but with a limited palette and expect increases.

Solutions:

Buy less than you think you can afford which allows breathing room.

Put as little down payment as you might and let the insurers’ bear the worry.

Shop very carefully for a deal.

Take your time. Do not fall in love with a house it is just a thing.

Enlist expert representation and investigate everything.

Everything in the universe falls apart- have a budget for those older items in the house.

Beware of Short Sale Sharks

Why are short sales attracting all the sharks and crooks? Short Sale Fraud is the Real Estate Industry’s most recent shame. It is number one white collar crime being investigated by the FBI.


Short Sale fraud now occupies the time and energy of fourteen states Attorney General and their staffs to prosecute. The reasons are simple. The owner of record is usually in a dire financial situation after often a year or more of trying different solutions, only to learn that the value of their home has decreased more, they owe more, and the negative equity number is larger.



How can you avoid being ripped off by con artists? Don’t come back crying that you were taken advantage of by a subprime lender who worked part time at your local bar, to find out he now is a short sale negotiator expert. Don’t pay any short sale negotiator up front fees. Check the license and the track record of a real estate agent or attorney. Be in charge of your own destiny and in the loop of all emails and information submitted to your lender or lenders.

Shop the fees and compare before you agree to using an escrow, title or closing attorney. Fees vary greatly and junk surcharges are padded into costs. Don’t pay illegal fees outside of escrow. Read everything you sign. If you do not understand it, do not sign it until you do. Items submitted to your lender are like your permanent record, you do not want to send them anything more than they need and you do not want to lie. This is why it is important to have an agent who is honest, smart, organized and knows about financial institutions

Straw buyers and house flipping are not easy fix solutions. If it seems too good to be true –run. If the buyer of your home is using a standard lender the lender isn’t going to allow flipping. A short sale negotiator who misrepresents the market value of a property to a homeowner's lender by submitting low ball offers on the property from an affiliated straw buyer is a crook. After the home is purchased below market value, the fraudsters immediately flip it and pocket the difference.



A title or a class on the subject does not certify anything. Short sale negotiators and agents use titles including debt negotiator, debt resolution expert, loss mitigation practitioner, foreclosure rescue negotiator, short sale processor, short sale coordinator and short sale expeditor.



This is a paperwork intense process. If you are somewhat good on the computer is can be easy. Get a right fax. Fax to yourself all the documentation and keep in a folder so you can easily email copies to anyone. Many of these items can be download for free and “saved as”- label each one. This is a partial list of what you as a homeowner need to prepare:

1. complete copy of your current credit report.

2. online tax bill from your county recorder

3. copy of your fire insurance policy

4. homeowner association bill

5. Paycheck stubs

6. w-2 and 2009 tax return

7. actual bank statements not just online printout- go to the box for a statement

8. Prepare a detailed hardship letter

9. go online and look at comparable sales for your home- find three houses close by sold in past 100 days with similar square footage

Add up the numbers-

1. I owe : $

2. I can sell for $

3. I make $





Shop for your agent. This is a person you want to talk to regularly and come up with a team strategy to help you move on. Ask friends and family and persons you trust for someone who is: honest, organized, and willing to work hard. Having negative equity is not the end of the world. It is outside your control that the value decreased. If you lost your job, are getting divorced, someone is ill or deceased, or you must relocate for a job these are beyond your planning and good intentions. Planning again for getting back on your feet in the best method for your individual life takes some thinking.



Nothing too good or too bad lasts too long the key is to have grace, honor and a clear head in both.

Top fraud states courtesy FBI: California is number one.

Short Sale Checklist

SHORT SALE Flags

Taking a listing on a short sale is not a simple transaction. To start, make list of the layers of people you will need to work with. A number of the parties in the transaction are under stress. A calm voice and organization is your mantra.
The seller of the house is doing so because they have to. The seller may have time constraints and personal issues, more than what I call the four D’s –(death divorce and disaster). Often the seller may be unemployed or out of work as are so many Americans today. Being in the same boat does not make it any easier. A come to Jesus talk from the start is useful and you will need a yellow note pad and likely tissues.
The Lender or Lenders as there may be a first second and third are often not the same company, and even if they are the loans may have been originated by companies/banks they have acquired by not so smooth transitions. The bank employees in loss mitigation departments have piles of files and are working long hours. The bank itself does not realize any profit from completing the transaction (but a minor $1500- $1000). The Underwriting, processing appraisal, legal and operations review staff may invest a total cost of $ 40000 of labor and paperwork.

The subject property is likely to have deferred maintenance which you need to accurately review. The seller has no money to strap the water heater, provide termite clearance costs or purchase and repair things that may be health and safety hazards, which are impossible to overcome if the offer is a government loan contingency.

Next you will have the Property tax Collector/ Assessor who probably has not been paid. Taxes don't get waived. Most counties have local websites to view what penalties and balance is owed, and the owner should have a recent bill.

Then also consider and uncover the existing Fire Insurance coverage. You need an adequate review in advance as a distressed seller may have multiple claims which increases the cost of insurance on the subject (assumption being repairs may have not been completed). Also in the mix may be the Home Owner Association. In California H.O.A.’s are managed by separate management companies (who also have been unpaid).

Neighbors may also be a negative or positive influence upon the listing. This may have been caused by the Seller lacking financial ability to maintain the property. You should be able to convince the neighbors that a new equity owner in the neighborhood's best interest as they will "fix up" the house.

Upfront you need to be organized. The Seller will need to provide 2 months bank statements (of all assets), paystubs for a month, w-2 forms and tax returns. The Seller will need to write an explanation letter of their hardship circumstance. The seller will have to show some utility bills and proof of occupancy. Mortgage statements, HOA statements, Fire Insurance and Tax bill. Signature on a 4506T form signed and Credit Authorization signed (they are going to check the taxes and every single thing).

The day you have collected your complete pile of papers and have an accurate dollar amount of everything past due you are ready to submit to the lenders. Most lenders loss mitigation departments have forms online ready for you to down load before you fax and paper overnight/ send the package. If I can tell you one vital tip it is this: HAVE EVERY SINGLE PIECE THE LENDER WANTS IN ONE PACKAGE UPFRONT. Make neat and have a contents cover page that reads simple and easy.

I have seen a number of strategies where Realtors/ agents only send for approval of the first lien holder then try to force the second and third to play ball. This can win if the other lien holders are related companies or if the losses are small. I have seen this fail every time the second is a credit union. It also creates additional delays and costs. Some lenders will only speak with the Seller, and you must have the Seller’s written authorization to speak with you on file (which the person on the phone will not locate and you will be ready to email it to them as you speak as an attachment. The glory of folders in email – label each one and be ready I say. Some lenders will accept the short sale package without a willing buyer/offer.

The pitfalls and the things to be aware of that a lender is not going to like:
Seller must be holder of title with no assignees. Also no assignees on purchase contract.
Lender may ask for 24 month chain of title and will review carefully if have been any LLC’, Corporations or any title transfers. These changes or having prior owners as company names are red flags. A family member or any related party can not be the buyer, this includes girlfriend boyfriend. Credit reports will show prior addresses and therefore reveals who knows who, among other cross references. Lenders may require two appraisals. This process takes time, i.e. appraisals become aged and have to be updated (this requires additional costs). It is important you are aware of comparable sales and market trends. Lender may restrict escrow/attorney and title fees. Lender will restrict commissions
Lender will check the relationship between the buyer and seller. Assume they will check everything and the seller and agents sign that items are truthful to the best of their knowledge.

Set up reasonable epectations of long time frames. It is easier to tell everyone a longer amount of time, and beat it.