by Foreclosure Financing on May 5, 2010
Lately, I have been doing a lot of work around VA Loans and was researching some specific qualification requirements for a recent loan loan scenario. As I was doing this, I confirmed two things: loan requirements are boring and exact. But as I was plodding my way through the pages and pages of VA loan requirements I came across something called “Compensating Factors” which reminded me of something I once heard from an ole mortgage mentor of mine.
He said, “there are ways that things are supposed to be done and then there are the ways that things really get done.” He further explained that as a loan officer if you have a loan applicant that falls outside of “boring and exact” loan requirements, it is up to you to show the underwriter why the loan makes sense - if in fact it makes sense.
I have written a lot of loans for my customers over the years where I have used this coaching, but it has always been up to me to figure out the angle. Now at least as far as Va loans (and as I looked the list - many other mortgage programs) thanks to this section I ran across on Compensating Factors I have some sort of reference point to start from if I need ideas about how to make sense of a loan that falls outside of the “requirement box.”
The “falling outside the requirement box” that I’m talking about is like the Gray Area. I gotta think that most people have heard of the term Gray Area. If you haven’t send me a note and we’ll talk about it. But, for what we’re talking about here - VA Loans - the Gray Area refers to an aspect of a VA loan applicant’s loan application that falls outside of the “boring and exact” mortgage underwriting requirements.
Let’s be real, very few people in life really fit perfectly into a box. Just about everyone I know has something going on - has some story - that makes either their income or credit situation just a little different from the next person. Yet, VA loan underwriting criteria as with all mortgage loan criteria are pretty cut and dry when it comes to what they accept.
Well it seems that the VA is pretty smart as they recognize that people have their “stuff” and have made some allowances for that stuff. Here is a list of the stuff that the VA calls: Compensating Factors which if make sense when presented with a loan application might just lead the applicant to an approval even though they don’t fit perfectly into the loan requirement qualification box.
- excellent credit history
- conservative use of consumer credit
- minimal consumer debt
- long-term employment
- significant liquid assets
- sizable downpayment
- the existence of equity in refinancing loans
- little or no increase in shelter expense
- military benefits
- satisfactory homeownership experience
- high residual income
- low debt to income ratio
- tax credits for child care, and
- tax benefits of home ownership.
So, if you are considering looking to buy a home using a VA loan, or any mortgage for that matter and you think that you have to be perfect and fit into a box, remember this list and this article and apply for your mortgage anyway. If it makes sense - you have a good shot at getting the mortgage and your home. What do you have to lose?
by Foreclosure Financing on February 27, 2010
It isn’t every day that you see a mortgage company opening up a new office in today’s mortgage environment. And it is even more rare that we see a company from Tucson expanding into Phoenix.
But that is just what is happening - and it is a great thing.
Recently, Sunstreet Mortgage announced that they are expanding by opening a Mesa office and one of my friends (and soon to be loan officer extraordinaire) Christoph Schweiger is planning on joining their team.
Christoph will be a great loan officer in my opinion because he has spent so many years in real estate - in fact, he was one of the first Realtors who had a blog here in Arizona. And if you are looking for help with your home financing or to refinance your current home, who better to help you than someone who understands both the financing side as well as the real estate side of the transaction?
In any case, here are a few company highlights that Christoph points out:
- The three principal partners have over 56 years of originating loans and over 20 years of experience in running a mortgage banking operation
- The branch has two managers to help their loan officers
- The company is based in Tucson with branch offices in Nogales, Arizona and Albuquerque, New Mexico
- Was founded by John E. Capp, Sarah J. Roads and Patrick W. Sniezek
They are planning on having a grand opening party, but until they are completely moved in, you can also feel free to stop by for a visit!
by Light Rail Real Estate info on November 24, 2009
Part 1 – Bank Owned (REO)
In this series, I’d like to focus on the differences in the title and escrow process for the two most common transactions in today’s market – Bank Owned (REO) and short sales. In Part 1, we will discuss REO (Real Estate Owned) transactions.
The first difference from a traditional escrow is the bank owning the property nearly always directs the transaction to their preferred title company. The banks have negotiated rates and developed relationships with specific companies, and they insist that the escrow be opened with their title company.
Another difference is the contract. More specifically, it’s the addendum that banks add to the purchase contract. A couple of major points addressed are:
- The bank details which fees they will or will not pay
- The bank insists on final approval before the transaction can record
These changes to the contract are significant and buyers need to be aware of them if purchasing a bank owned property.
Much of the time in these escrows, the title commitment and policy are issued through a national provider, not the local title company. Once again, this is because the banks have negotiated deals with title companies on a national level. This can delay receipt of the title commitment, and it also requires another layer of approval before the transaction can record.
As you can see, needing approval to record from the selling bank and an outside title company can create delays that can push back the close of escrow date. With the high volume of these types of transactions, some requests can take up to 72 hours to process. This is an important consideration when purchasing a bank owned property. For many people, however, the slight delay in closing is well worth the deeply discounted prices many are finding in this market.
__________________________________________________
Big thanks to our friend, Bill Risser for writing this “guest post” for us. Bill is a branch manager for Chicago Title in Gilbert and is a great resource for us. Watch for more posts from Bill in the near future.
To search for bank owned homes near light rail in Phoenix, feel free to contact us any time.
by Foreclosure Financing on August 19, 2009
Will the $8000 tax credit be extended?
I don’t know — maybe.
Heck, there is even talk in Washington that the $8000 tax credit will not only be extended as far as timeframe - but also opened up to all people buying a house, not just the people who are buying their first home.
“H.R. 2801 (111th Congress) 2009-2010 Home Ownership Moves the Economy (HOME) Act of 2009, is a bill sponsored by Howard Coble, a U.S. Representative from North Carolina’s 6th District. Representative Coble’s bill’s goal is to extend the tax credit into 2010 as well as allow all home buyers take advantage of the tax credit.”
Even more interesting is the idea in the bill that would not only expand the credit into 2010 and open it up to all home buyers, not just first time home buyers — but it also would expand it to be a maximum of $15,000.
If - and I mean IF - this new bill passes in its current form, I suspect that it would have a huge impact on the market - and if it hadn’t already turned around, this would be the thing to turn it around.
Of course, we might all go broke trying to pay for it in the process, but heck - what is another couple of billion dollars on top of the trillions we are already spending?
Stay tuned.
It will be interesting to watch if it gets extended or not.
by Foreclosure Financing on August 19, 2009
Many times when buying a Foreclosure, the home is in need of a little bit of work before you can live in it. There are a small handful of loan programs that are available for homes that need a little TLC including the FHA 203k, the FHA 203k Streamline and the Fannie Mae HomePath mortgage programs.
Which one is the “best” program?
It depends.
Start by asking these 2 simple questions:
- Is the home currently owned by Fannie Mae? If yes, then the Fannie Mae HomePath mortgage program is probably the best bet.
- Does the home need less than $35,000 of repairs and not owned by Fannie Mae? If yes, then the FHA 203k streamline program is probably the best bet.
The FHA 203k Streamline Program
Since many homes are not owned by Fannie Mae and most need less than $35,000 in repairs, the FHA 203k Streamline program is a popular option. Some of the highlights of the FHA 203k streamline program include:
- It works like a construction loan – you are able to buy a home that wouldn’t qualify for FHA financing and finance the repairs that will bring it up to FHA loan standards
- The total amount of the loan is the purchase price plus the amount needed for repairs
- FHA has limited the Streamline 203K program to a range between $5,000 and $35,000
- The requirements to qualify are the same as a traditional FHA loan
- The construction phase can’t begin until the loan closes. The funds to pay the contractor come from escrowed funds at the closing
- Up Front Mortgage Insurance Premium and Monthly mortgage insurance are paid to FHA just like a regular FHA loan
- Appraisal required
As with everything - the financing packages available when buying a bank-owned home will need to be weighed carefully. Be sure to ask multiple people and do your research… but in the end, you will find that by asking the 2 questions listed above, you will most likely get to the right answer.
