Archives for November 2007

Can I get approved for a 400,000 home loan with a 600 credit score?

Yes…quite possibly!   The title of this post is a question that was entered as a search that found Mortgage Porter.  Someone could buy a $400,000 home with a 600 credit score if:

FHA Scenario Possibility

  • No late payments or derogatory credit in the past 12 months.  FHA insured loans do not use credit scores.
  • Base loan amount at FHA loan limit (assuming King, Snohomish or Pierce Counties):  $362,790.
  • Just shy of 10% down or a minimum of 3% down plus closing costs with a 6% seller contribution.

With conforming, if the other qualifying factors (income, assets, employment, down payment) are strong, the borrower may still qualify for a mortgage. 

At the very least, if your credit score is 600 and you’re considering buying a home, I suggest contacting a Mortgage Professional to have your personal scenario reviewed.  The higher your credit score, the better your rate may be for a mortgage and a qualified Mortgage Professional should be able to advise you on how to improve your credit rating.

Today has been declared JP Patches Day


I’m just finding this big news out…today Mayor Nickels has declared that November  5th is JP Patches Day.   I’ve written about JP many times as he is my childhood hero.  I was very saddened to recently learn that JP is battling blood cancer.   I understand that he’s doing well and even appeared at Halloween at the Seattle waterfront much to everyone’s delight.  My husband surprised me with JP Patches for my 40th birthday which was one of the most fun and memorable moments of my life…right up there with the birth of my son and getting hitched to Rob. 

JP is a Pacific Northwest treasure and deserves his day.   Now we just need to complete his statue!   Donations are being accepted and/or you can purchase a Patches Pal Paver (I have two…you can never have enough). 

In honor of JP, I may have to wear a red nose tonight.

Renewing my Loan Originator License

This could be something that very few are interested in…but it’s new to me and many other loan originators who are employed by Mortgage Brokers in Washington State.

I’ve been a good girl and have followed all the steps in order to be licensed.   

  1. Registration and passing the background check.
  2. Attended two clock hour courses:  Ethics (required the first year) and Reverse Mortgages.
  3. Passed the competency exam.

The last step…renewing!  Fellow Licensed Loan Originators; don’t forget that after you do steps 1-3 you must go on line and renew your license.   This must be done by December 31, 2007.   DFI is returning your documentation if you send it to them; it’s required you enter the info at their site.   You will need your Promissor certificate, the two course certificates, a credit/debit card to charge $125 and to answer questions regarding if you’ve committed felonies, have a misdemeanor…etc.  It takes less than 5 minutes to complete the renewal process.    Now I’m good through 2008 and will just need to take two clock hour course to maintain my Loan Originator License.   What are you waiting for? 

Tuesday spells possible trouble for the mortgage industry: HR 3915

You may be saying that the mortgage industry deserves it…but your wrong.  It’s not that simple. A majority of the mortgage industry are good hard people who truly care about helping home owners, continuing their education (without being forced to by regulation)…just doing what’s right (telling someone they should not refi or helping someone work on becoming better prepared to buy in the future instead of now).    Yes, the mortgage industry does have it’s share of bad actors, as does many professions.  The topic of why and who’s to blame has been covered quite a bit. What’s important right now is something that may be happening on Tuesday, November 6, 2007:  HR 3915 is scheduled for a committee vote in the House of Representatives.

Here are some of the points I’m concerned about with HR 3915:

Eliminating YSP (Yield Spread Premium).   YSP is compensation that mortgage brokers receive from lenders and they must disclose the "lender rebate" to borrowers.  Often times, the YSP is used to pay for closing costs or to allow for a mortgage priced at zero origination.  Both of these are benefits to the consumer.   This may provide less options for a consumer working with a mortgage broker.   Mortgage Bankers do not disclose what they’re paid "on the back end".   Even though this portion of the bill may not directly impact me (since I work for a Correspondent Lender; I’m treated more as a banker); I still give this a thumbs down.   Competition is good for consumers; this is what America is built on.  Yes, I welcome a "smaller pool"; however, I only want the bad fish gone. 

National Licensing for ALL Mortgage Originators…YEAH, if this is for ANYONE (broker, banker, or candlestick maker) who originates a mortgage loan for a residential property.  I’ll eat a shoe if banks are not able to lobby their way out of being licensed.  There would also be a national registry of licensed loan originators which would prevent unsavory LOs from crossing state lines.  In addition, loan originators will be required to have a net worth of $100,000 or be bonded.

The "Net Tangible Benefit" Requirements.   This could really squelch home owners being able to refinance.  The LO must show there is a "net tangible benefit" to the home owner in order to refinance.  How do you define that?  This could cause investors to refuse to purchase loans, banks may refuse to issue loans and brokers would not be able to originate mortgages because the consumer could and would come back and say "you shouldn’t have sold me this loan".  The potential for liability to all in the mortgage industry would be too great and many home owners would lose the option to refinance in circumstances that didn’t seem to provide a clear "net tangible benefit".   This will impact mortgage bankers and mortgage brokers alike.   

Bottom line, many in Congress don’t understand what they’re trying to regulate.  Mortgages are complex.   I’ve listened to more testimony from our elected officials and I believe (truly hope) that my clients understand more about mortgages than most of them do.  Here’s a thought: before they can present a bill impacting mortgages, families who depend on a mortgage to purchase a home, livelihoods of mortgage originators; our Congress men and women should have to pass the mortgage competency exam.   Why do we want someone making laws they don’t understand the full impact of? 

I believe if this bill becomes law, it will actually harm consumers.  The cost of mortgages may increase.  There will be fewer mortgage options and fewer lenders willing to provide them.  Competiton is good.   Home owners should have the right to make choices about their financial future.

Here is a link to sign an online petition against HR 3915.  If you’re a mortgage originator, real estate agent, appraiser or home owner; I encourage you to contact the House Committee of Financial Services to tell them about your positive experiences with your mortgage before Tuesday. 

Upcoming Mortgage Broker Commission Meeting

I’m torn between attending a seminar that I sign up for this morning, or…attending a Mortgage Broker Commission Meeting.  I received notice of this event a few moments ago.

Here is the tenative agenda:

  • Loan Originator Update and Renewals
  • Mortgage Broker Examination Findings
  • Enforcement Unit Update (should be interesting)
  • Rule Making Update
  • and much, much more!

This will take place on Wednesday, November 14, 2007 from 9:00 a.m. – 11:00 a.m. (the exact same time as the seminar) at the Renton City Hall in the Council Chambers on the seventh floor.

If you are planning on attending, Beth Craig, Administrative Assistant 5 with DFI would like to know by November 9, 2007.   You can call her at 360-902-8793.

I think this is such a crucial time for mortgage brokers.  It’s time for us to take action and support each other.  Putting our heads in the sand won’t save our industry.

Don’t Forget to Fall Back

The long run of sunshine is over. That’s right, time to ‘Fall’ back! In case you hadn’t noticed, Daylight Saving Time (DST) was actually extended this year by an entire month–it began earlier last spring and ran longer into this fall. But, alas, all good things must come to an end…and this year Daylight Saving Time ends Sunday, November 4th.

The extra month that we enjoyed was actually the result of the Energy Policy Act, which was enacted by Congress back in 2005. Originally, the bill was written to extend Daylight Saving by two months, but some very verbal opponents fought the change. Farmers say that DST has a negative impact on their livestock in general–as it is tough for them to adapt to the time change, and they consequently produce less milk, eggs, etc. Because DST is not followed uniformly around the world, airlines claim that it might mean many missed international flight connections. Additionally, TV and Cable stations argued that they would lose viewers and advertising revenue, simply due to less time spent in front of the television because of more time spent outdoors in daylight.

So a compromise of one additional month of DST was reached. However, Congress did retain the right to revert back to the old dates if the change proves to be widely unpopular, or if the energy savings aren’t significant.

Why the change?

After making the adjustment to getting up an hour early, Americans overwhelmingly like Daylight Saving Time. There is simply more sunlight in the evenings to enjoy the outdoors and get things done. Additionally, there may be emotional benefits, as we typically feel better with more daylight. Plus, additional hours of daylight can help save energy on a national scale. Less electricity is needed, as fewer lights are turned on as early in the evening…and with energy costs so high, even a small amount of savings is very welcome.

And brighter is safer–studies have shown that the DST shift reduces traffic accidents. An increase in accidents in the dark mornings is more than offset by the evening decrease in accidents, due to the increased visibility gained with more sunlight. Halloween is also arguably safer. Child pedestrian deaths are four times higher on Halloween than any other night of the year. This year, however, trick-or-treaters were able to spend an extra hour gathering treats while it was still light out. Candy manufacturers are happy too, as they’ve lobbied for years to have DST extended through Halloween.

A study by the US Law Enforcement Admin also determined that crime is consistently lower during DST, with violent crimes down as much as 10% to 13%. For many crimes, like mugging, darkness is a factor–so more light in the evening hours reduces these types of crimes.

And throughout its long history, Daylight Saving Time has had a remarkable and sometimes unexpected impact.

A man was actually able to avoid the draft for the Vietnam War using a Daylight Saving Time loophole. When he was born, it was just after midnight, DST. When he was drafted, he successfully argued that in his home state of Delaware, standard time–not DST–was the official time for recording births. So he was technically born on the previous date–which had a much higher draft lottery number – and he was able to avoid being drafted.

In September 1999, the West Bank was on Daylight Saving Time, while Israel had switched back to standard time. A group of West Bank terrorists prepared some timed bombs–but misunderstood the time change–and the bombs exploded early, killing the terrorists themselves, rather than the intended victims–two busloads of innocent citizens.

In the 1950s and 60s, each state and locality was permitted to choose start and end DST dates as they desired. During 1965, Minneapolis and St. Paul–which are considered one metropolitan area–didn’t agree on start dates, and for a period of time, these Twin Cities had a one hour time change between them. And on one Ohio to Virginia bus route, passengers technically had to change their watches seven times in 35 miles!

To keep to their published timetables, Amtrak trains cannot leave a station before the scheduled time. So when the clocks "fall back" in the fall, all trains that are running on time actually stop at 2:00 a.m.–the official time of DST change–and wait one hour before resuming their routes. In the spring, the routes instantaneously become one hour behind schedule, but they just keep going and do their best to make up the time.

So Daylight Saving Time sure can have some unexpected impact–and we’ll all have to be ready early this year.

In particular, be sure to double-check all of your electronic devices and confirm that the time is correct. Although you may be accustomed to your computer and maybe even your digital clock in your car automatically updating, the recent change of dates for Daylight Saving Time may require that these devices be manually changed, as they now may NOT be ready to update to the correct time on the correct date!

A little Java Jitter for your Friday afternoon

This is the perfect afternoon pick me up!

Hat tip, or should I say Double Tall Latte to Dustin Luther.

Mortgage Master’s phone lines are down

Apparently this is a Qwest issue and this will hopefully be resolved soon.  If you’re trying to reach someone at Mortgage Master, please call their cell phone or send an email.    My contact info is under my big mug on the upper left of this blog.

Update:  Our phone lines are up!