FHFA Delays Price Increases for Mortgages LL

 

Announcement made by the Federal Housing Finance Agency (FHFA) regarding the Loan Level Price Adjustments (LLPA). FHFA was going to immediately increase the pricing on mortgage loans with a bit higher debt to income back end ratios. FHFA assumes that borrowers pushing the maximum income verses their total bills are more risky in this volatile market and will more likely have trouble repaying. March 2023.

The FHFA is the regulator for Fannie Mae and Freddie Mac, which are government-sponsored entities that provide funding for the mortgage market. As part of its role, the FHFA sets guidelines for the loans that Fannie Mae and Freddie Mac can purchase.

In August 2020, the FHFA announced that it would be implementing new Loan Level Price Adjustments (LLPA) for certain borrowers with debt-to-income (DTI) ratios above 45 percent. These adjustments would increase the cost of borrowing for these borrowers.

However, on March 10, 2023, the FHFA announced that it would delay the effective date of the LLPA for certain borrowers with DTI ratios between 40 and 45 percent. The delay would be for 90 days, until June 8, 2023.

The reason for the delay is to give the FHFA time to evaluate the impact of the LLPA on these borrowers and to determine whether any further adjustments need to be made. The FHFA has stated that it remains committed to ensuring that the mortgage market remains stable and that borrowers have access to affordable credit.

Summary:

Get your loan application in and locked before this price increase hits your deal.

Caroline Gerardo, 

NMLS# 324982

 

(949) 784-9699

https://cgbarbeau.blogspot.com/

The FHF

Avoid Real Estate Wire Transfer Hack

Avoid Wire Transfer Hacks

 

Story about how to avoid having your wire transfer stolen when buying real estate. It take hard work to save up thousands of dollars to buy your dream home. Be careful. Take your time. Don't let your account become a ghost town.

Question from a Borrower:

"A hacker got into my real estate agent's account and posed as my title company last year in which, I dumbly, wired money too.  My first heads up should of been that the first wire bounced back, but went ahead and sent another one.  By the time the real title company has alerted me that they had not got the funs, I was about to take off for a trip (literally on the plane)  At the time, my agent was able to call the bank (WellsFargo) and alert them of the fraudulent account of which they then found and closed.  Since then both my outgoing bank (which I used to initiate the transfer and tried to do a recall) and WellsFargo - the receiving bank - have been sort of a dead end.  Wells Fargo refuses to talk to me as they are saying they are 'protecting' their customer" Mike

My answer::: 

Mike the cause of the hack is probably your own actions. There are many things you should not be doing with money to purchase real estate. Privacy and secrecy are vital to holding control of your funds for down payment and closing costs.

Here are some guesses as to where you failed:

When you start the transaction you fail to call escrow/attorney to verify the bank account number and routing to wire. This account number rarely changes. 

Fail examine an incoming email address. If you attempt to reply you note the email is similar but off by a number or dot. Email is suszy.que@fatco.com and the incoming is suszy.que@mfatco.com   Similar but wrong person.

You use same password for accounts and email or simple guessable passwords. I'm not a believer that dual sign in does anything to protect you. The bad guys probably can spoof your phone number as well.  Refuse to allow banks to use voice identification I believe this is not secure. Post notice on large account to not allow wire transfers, no Zelle, no ACH without me personally walking into the bank or brokerage with my identification. 

You text private transactional information. Never text your agent or Realtor instructions. Never text social security number, date of birth, account number. Twenty years ago I told my children they were not allowed to enter their real date of birth in MySpace and Facebook. Those fake DOB show up in credit reporting today. Use a fake DOB for social media and entities that don't need your exact information.

You give your date of birth, social security number freely without caution. Who really needs this information? Your electric company stores all your information waiting to be hacked. Ask them in writing to take it down. 

You have not checked sites that verify what information about you is online. Some of these sites are free, some are also bad guys. In writing ask for them to take it down, using your junk email.

Chance of getting the funds back after ten days .001% Sorry it's a very bad batting average.

You signed the agreement to wire twice. Wire fraud is VERY COMMON.  

Why was the money in Realtor's account? NEVER give authority to someone else to handle the transfer.

Do not do the following mistakes:

You announce on a public forum you are doing a transaction, 

You have credit pulls and you use the same email address with lender and settlement/attorney. ANY decent lender knows not to send your correct email to order a mortgage credit report as your information is sold and picked off by other lenders and fraudsters, but yours gave away the keys. Use a trusted lender not an online call center. Verify the Lender's NMLS license in the state where the transaction is in process. Bigger Pockets has many lenders posting who are not licensed and answer questions with questionable information. 

You email through realtor IDX website, 

You don't have a secret personal email that you change the complex password often. Change the passwords during the transaction.

You use your junk email with Realtor and settlement agent, 

When you start the transaction you fail to call escrow/attorney to verify the bank account number and routing to wire. This account number rarely changes. 

What should you be doing?

Check, double check, do not be rushed, things can close tomorrow.

Work with people who know you. 



You give your date of birth, social security number freely without caution.







Good News FHA MIP Cost Goes Down

 

The monthly FHA MIP premium will drop 30 bps for loans funded after 3/20/23. 

The monthly MIP cost will drop by $121 for a $500,000 purchase with 3.5% down.

 

This was a long time coming. Former HUD Secretary Julián Castro 

had scheduled the cut to take effect in 2017, as FHA’s capital reserves

 were above the 2% statutory levels needed. 

The change was rescinded by the incoming administration on January 20, 2017.

 

FHA’s capital reserves today are above 11%,

When do you hear prices go down?

Still wishing eggs and gas prices decreased...

 

Good news for FHA buyers!

 

Venture Capital and Private Equity Chart

 

For Lease Luxury 517 Emerald Bay Laguna Beach

For lease $20000 

517 Emerald Bay Laguna Beach 4450 square feet single family house

Guard gated community

private beach

Lavish gardens topiary roses

Entertaining outdoors overlooking the ocean

(949) 784- 9699

How To Hold Title Vesting for Mortgage or Buying a Home

Congratulations your offer is accepted and you received the statement of information from

your escrow officer, settlement agent or real estate attorney. The purchase contract just has your first and last name. There are several choices how to hold title of the property. Your mortgage company or the bank if you are getting a loan will have something to say about how you hold title.

Here are several choices explained

I want to hold title as Queen Mary Smith. This probably will not work unless you have legal identification to prove this.

Really now, the first thing to consider is are you married?

Single means you never were married

Married means you are currently legally married

Unmarried means you were married and may be divorced or widowed.

• Sole ownership: only one person owns the house
• Community property: two or more persons own the real estate Some states are not community property states
• Community property with right of survivorship: real estate bought during marriage or domestic partnership belongs equally to both partners. Each spouse owns 50%. Community property with right of survivorship may only be used by married couples in community property states (like California). Community property with right of survivorship is better from a capital gain tax standpoint in that the entire property (not just the half belonging to the deceased spouse) receives a step up in basis on the first death. This allows for a double step up if the remaining spouse continues to hold the property until his or her death. The problem with community property with right of survivorship is the same problem as joint tenancy–if all property owners die, the property must go through probate.
• Joint tenants with right of survivorship: the spouse who survives (or domestic partner) automatically assumes full ownership of the property upon the death of the other title holder. There is a so-called “right of survivorship,” which means that when one dies, the property automatically transfers to the survivor without the necessity of probating the estate.
• Tenants in common: 2 or more people the owners do not have a right of survivorship. Each owns a fractional share. They can sell their percentage share. Tenancy in common is a way that multiple related or unrelated people choose to take title to property. Ownership interests do not have to be equal and the interest can be specified in the deed. With tenants in common, upon the death of an owner, that owner’s interest is controlled by his or her will, or in the absence of a will through intestate succession, which means the State probate code tells you who gets the property.
• Living Trust: Revocable sets Trustee(s) who have the power to sell or mortgage and beneficiaries who will inherit. This avoids probate which I believe is very important. There are also Irrevocable Trusts which cannot be changed.

Caroline Gerardo

NMLS 324982

American Financial Network, Inc

NMLS company 236341

(949)  784  -9699

This is my personal opinion not legal advice

If you need legal advice about how to hold title for a property you own or

real estate you are buying feel free to call me and I will provide a referral for free

 

Save $95000.00 on your mortgage Tips and Tricks

What is a Loan Officer?

Loan officers are financial professionals who work for banks, credit unions, and other financial institutions. They are also called mortgage officers, loan agents, and mortgage advisors. They are licensed by the NMLS in individual states. Licensing requires classes, testing, background checks and more. The loan officer's primary role is to evaluate loan applications, collect proper paperwork documentation from borrowers, make the borrower appear the best possible on paper for Underwriters, auditors, and servicers. The loan officer finds the box that the borrower can fit inside, with many mortgage products to choose from the borrower may actually only match with a few. Loan officers are responsible for assessing the creditworthiness of borrowers and determining the amount of money that can be safely loaned. They also provide guidance to borrowers on the various loan products available and help them to understand the terms and conditions of their loans.

Loan officers can play a critical role in helping individuals and businesses to access the credit they need to purchase a home, start a business, or invest in other opportunities. They can help borrowers to find the right loan product that meets their needs, and they are responsible for ensuring that the loan process is completed in a timely and efficient manner.

It is crucial to find a responsible and trustworthy loan officer, who will provide you with the best options, rates, and terms. A loan officer with years of experience can share their knowledge and caring with borrowers.

The loan officer should be able to answer every question a borrower asks, they should be available by telephone to clarify all the details, and one you can trust their answers. A loan officer will have a network of other professionals to help you: referrals for insurance, CPA, attorney, handyman, escrow, title, valuation, and Realtors are a few of contacts you may need during the purchase transaction and for the years that you own a property. Loan officers are considered the brains of the transaction.

Now Is The Time To Invest In Real Estate

 

Investing in real estate during an economic downturn, or when the "knife is falling," can be a challenging and risky proposition. During such times, property values and rental incomes may decrease, making it difficult to turn a profit or even to maintain the value of your investment. We cannot know if we are entering another Global Recession, but I feel we are in recession in America now, January 2023.

However, it's also possible to find good deals on properties during a downturn. Prices may be lower, which can make it possible to purchase properties at a discount. Additionally, rental properties may be in high demand if people are unable to afford to purchase a home. Perhaps this is the perfect moment to get preapproved for a home loan and be shopping for deals.

If you are considering investing in real estate during an economic downturn, it's important to do your research and to be aware of the risks involved. It's also important to have a clear strategy in place, such as focusing on long-term investments or looking for properties in areas that are less affected by the downturn. My best advice is to stay the course on you job. Show up early and become more valuable. Having that W-2 income will make it easier to close on your investment property with a conventional loan. Even though interest rates are high, you will find property that cash flows.

Additionally, it is important to have a good cash reserve, as the market can be more volatile during an economic downturn and it can take longer to find tenants or buyers. Save your nest egg my grandmother always said.

Be prepared to close and immediately fill the rental with an excellent tenant. What is an excellent tenant? One with no evictions, FICO of 680, four times the rent as income that you verify, and who "fits" your location.

Overall, investing in real estate during an economic downturn can be risky but with the right approach and due diligence it can also be an opportunity to find good deals on properties.

$95 K trick

 

$95K 

Trick Here’s

a simple trick that will

save you money on your mortgage.

On a 30-year $400,000 mortgage

with a 5.50% interest rate,

your principal and interest payment is $2,270

a month.

If you round that up to $2,500

 and make that payment over the course of

 the loan,

 you will pay off your loan 5 years and 10 months early..

.            You’ll save $95,000 in interest paid.

Foreclosure Study

 

Customer notice of default filed on them early November.

House value about $1,200,000

Bought for $500000 thirty years ago

Loan amount in

default $110000 filed October 28, 2022

Options to foreclosure:

Here are a couple strategies:

1. Sell and take the money to pay cash for a home in lower price point and save some of the cash.

cons: she will have capital gains, has to move

2. Refinance with a reverse mortgage and only pay property taxes and insurance

cons: costly, need to know exactly what her social security income is if she can qualify

then do things to increase income (roomate, part time gig work). She is old enough. Unsure 

what her income really is... around $2000

3. Get a hard money loan

cons: short term only good for 18 months, VERY expensive, then she needs a 

plan how to exit from this which probably is to sell

4. File bankruptcy

cons: good for 18 months, ruins credit, she won't be able to get a loan. Only option to sell when

the bankruptcy is discharged. Stressful.

5. There are shared equity companies which are 10 years BUT she has to qualify 

with her social security. They check to see she is maintaining house to their standards.

Eventually she sells and they get paid and take the gains.

Cons: need income to qualify, get less when sold, costs, lack of choice in managing home

6. Get the San Francisco HELP loan which is $50000 LOAN

This does not stop the foreclosure, it is not enough to pay off the exiting

$110000 approximate owed. This program takes 3 months to get approved.

She has to qualify with social security now for $160000 loan. Home counselors

have zero ability to negotiate with the servicer and lender.

cons: not enough time and not enough money in the $50000 loan to fix the

problem

7. Do nothing. Bank sells the house for $500000 to insider on the due date and

she might get nothing. The costs of legal and foreclosure are added daily to the

balance. 

cons: stress and homeless

What we need to help her:

Social security award letter (it's pink and black and white and is mailed Feb 1 each year

mortgage bill

contact for fire insurance agent

Then we can help advise if she can qualify for a loan or what to do.

USDA Rural Mortgages Rules

USDA loan updates for Rural Mortgages

Credit, income, appraisal, condominiums, new rules

USDA  Updates

WEDNESDAY, JANUARY 18, 2023 

USDA Updates to Credit Eligibility, Site Requirements, Condo Requirements, 

Income, Tax Returns, and More

USDA release Fourth Quarter new ins and outs

SPECIAL Procedure Notice  updating several chapters of the USDA Rural Development Handbook HB-1-3555. 

Changes as outlined below (including the Handbook Chapter and Paragraph) and apply them to USDA originations as applicable. Unless otherwise indicated, all updates 

are currently in effect/effective immediately.

Some changes are related to trends in real estate today such as the addition of an Accessory Dwelling Unit or Granny Flats, some are related to trends in bankruptcy procedures.

Manual Underwriting for credit scores under 680

10.2 – Credit Eligibility Requirements

• Clarified the list of adverse credit items that render an applicant ineligible for a USDA loan

• Updated the requirement for delinquent court-ordered child support payments subject to collection by administrative offset to implement requirements of the Lender Participation and Financial Requirements Final Rule

Attachment 10-A – Credit Matrix

• Clarification: When the lender becomes aware of potential derogatory or contradictory information that is erroneous or not included in data submitted to GUS, the loan must be manually downgraded

• Credit Score Validation: Clarified what credit history items are considered eligible tradelines when validating credit scores

• Credit Exceptions: Added, for clarification, that the lender may be required to submit credit exception documentation for Agency review along with applicant’s explanation and supporting documentation

• Chapter 11, 12, or 13 Bankruptcy: Added clarification for dismissed Ch. 11, 12, or 13 Bankruptcy (BK) plans to distinguish between completed plans and revised the section on “Plans in Progress” for specifics that apply to GUS Accept or Refer/Manually Underwritten loans

“Discharged” to completed plans to provide further distinction from “Dismissed” plans

o For GUS Refer and Manually Underwritten files, plans completed 12 months or more do not require a credit exception (completed < 12 months require a credit exception)

• Delinquent Court Ordered Child Support: Added “payments are to be brought current, the debt is paid in full, or otherwise satisfied by a documented release of liability” in order to implement requirements of the Lender Participation and Financial Requirements Rule

• Non-Federal Judgment: Added that the borrower may not repay scheduled payments in one lump sum to meet the three timely payments requirement (to be consistent with other repayment plans)

o Added the requirement that evidence of the repayment agreement and payment history must be retained in the loan file

12.4 – Site Requirements

• ADU: Updated Accessory Dwelling Unit (ADU) definition to reflect current HUD definition and added the ADU should not create potential rental income and that those that support household members are acceptable

• Multiple Parcels: Added an improvement that has been built across lot lines is acceptable” and included an example

12.5 – Residential Appraisal Reports

• Updated to state appraisals must be completed within 180 days of closing; and

• Appraisal updates are valid for no greater than one year from the effective date of the original appraisal

12.6 – Water and Wastewater Disposal Systems

• Water Analysis: Updated to state water analysis must be current and not greater than 150 days old at closing

12.9 – Existing and New Dwellings

• Added that lenders must retain evidence of plans and specifications, construction inspections, and thermal standards

• Referenced new “Repair Escrow and Rehabilitation and Repair with Purchase Comparison” (Attachment 12-E)

o Funds that remain in the escrow account after completion of all required repairs must be utilized for an eligible loan purpose or applied to the principal balance of the loan

12.11 – Condominiums and Planned Unit Developments

• Condominium Requirements: Updated Condominiums to General Condominium Requirements

o Project may be accepted if it can be or has been approved by HUD/FHA, VA, Fannie Mae or Freddie Mac

o Added condominium documentation requirements

o Removed ineligible condo requirements and stated condo projects with ineligible characteristics listed under HUD/FHA, VA, Fannie Mae or Freddie Mac are ineligible

o Removed site condo eligibility

 New condo project insurance requirements

• Planned Unit Developments (PUDs):

 PUD all homeowners must be a part of the HOA and pay lien supported assessments

o If a condo is within a PUD and has separate HOA dues, both must be included in the DTI

12.13 – Lender Requirements

• Updated Lender Requirements to state that lenders submitting a request for commitment are self-certifying they have staff experienced with construction loans or employ an experienced construction loan management company and the builder’s experience is relevant to the type of loan

• Removed requirement for lender to provide form RD 3555-16

12.14 – Construction Contractor-Builder Requirements

• Removed builder credit examination and criminal background check requirements and acceptable credit history paragraph

 Repair Escrow and Rehabilitation Repair Chart

Procedure Notice PN 573

9.3 – Annual Income

• Clarified that lenders must verify the income of each adult household member for the previous two years

• Clarified under “full income documentation” that W-2s are required in addition to paystubs

• Clarified, for self-employed borrowers, if ownership interest is < 25% neither “business owner” nor “self-employed” options should be selected in GUS

• Restructured guidance on tax transcripts to emphasize a failure to timely file tax returns is not an eligible explanation to forgo obtaining tax transcripts

9.8 – Stable and Dependable Income

• Included additional guidance on gaps in employment, clarifying it is the lender’s responsibility to determine if the income is stable and dependable

• Clarified a business loss from a closed business may be removed from consideration under the same circumstances self-employment income from a closed business can be removed from consideration

Income and Documentation Matrix

• Automobile Allowance: Revised to allow full expense allowance to be included as income if full debt counted in DTI

• Boarder Income: Clarified that boarder income refers to rental income from an individual renting space inside the dwelling

• Bonus and Overtime: Revised bonus and overtime income to reflect a one-year history and must be in the same/similar line of work

• Employee Fringe Benefits: Clarified that employer-provided fringe benefits that are reported as taxable income may be included in repayment income

• Mortgage Credit Certificate: Removed requirement to obtain an IRS W-4 when using MCC income

• Secondary Employment: Clarified that an applicant must have a one-year history of working both jobs concurrently for secondary employment income to be considered for repayment income

• Variable Income: Added category for guidance on variable income

• Assets and Reserves

o Gift Funds:

 Clarified that gift funds applied as earnest money should not be entered on the “Loan and Property Information” GUS application page

 Clarified that gift funds need to be sourced via the donor’s bank statement when funds are sent directly to the settlement agent

o Retirement – 401k, IRA, etc.: Clarified that funds borrowed against retirement accounts are eligible for funds to close, but not reserves

Attachment 9-E – Information for Analyzing Tax Returns for Self-Employed Applicants

• Capital gain or loss (from Schedule D): Revised guidance to reflect a two year history to be consistent with the guidance in Attachment 9-A

15.1 – Introduction

• Updated to state the agency requires lenders to use GUS

15.3 – Loan Application Package

• B. Guaranteed Underwriting System - GUS Accept loans: Revised paragraph to refer to mandatory use of GUS

15.7 – Lender Response to Conditional Commitment

• C. Requesting Changes in Conditions: Clarified that change requests should be made via email

Attachment 15-A – Guaranteed Rural Housing Loan Origination Checklist

• Lender Instructions: Updated instructions to state electronic delivery is the preferred method for submission to Rural Development

• Evidence of qualified alien (Page 1): Removed for Underwriting Recommendation ACCEPT files

• Verification of Rent (Page 2): Clarified VOR is applicable to manually underwritten loans with credit scores below 680

• Underwriting Analysis (Page 3): Clarified documentation of income calculations

Largest Active Real Estate Funds

Blackstone Real Estate Partners 

Brookfield Strategic Real Estate Fund

Starwood Distressed Opportunity Fund

Digital Colony Partners 

Oaktree Real Estate Opportunity Fund 

Carlyle Realty Fund

Lone Star Real Estate Fund

KKR Real Estate Partners

Brookfield

Transaction halted in most cities. Where is the valuation today?