Archives for September 2009

Recap on the new Good Faith Estimate

I've been requested to repost the six part series I wrote about the HUD's new Good Faith Estimate which goes into effect on January 1, 2010.   I like to keep my readers happy…so here it is:

Part 1: Review of HUD's Good Faith Estimate

Part 2:  Summary of Your Loan

Part 3:  Escrow Account Information

Part 4: Your Adjusted Origination Charges

Part 5: Your Charges for all other Settlement Services

Part 6:  Page 3 of the Good Faith Estimate

Please keep in mind that HUD has issued several revisions to their RESPA FAQs and I'm sure we're not done seeing additions and revisions since January 1 is still a couple months away.

I’m in Love with my Livescribe Pulse Pen

I love techy gadgets and it's been a while since I've had one that makes my heart pitter-patter.  Over a year ago, I saw a video of a "smart pen"  that peeked my interest.  Just last week, while I was at the Mortgage Girlfriend Mastermind event, I sat next to a mortgage originator who was using her Pulse smart pen to record the audio from the event while she was taking her notes.  

The beauty of this "smart pen" is that when she clicks back on her notes, what ever was being recorded at that time will be replayed.  Our high school kids are drooling over this seeing the potential this can be for college. 

Your notes are uploaded to a desk top application where you can search specific terms and you can even publish a note as a "live scribe"to be viewable on the internet, shared on apps like Facebook and Twitter or via email.

I'm using this pen to take notes while I'm talking to clients (obviously these notes are not published on the livescribe site) or planning social media events.  It helps me to be more organized so I can easily search a clients last name using the desktop application to quickly refer to my notes instead of flipping through a paper note book.  

The notebooks come in spiral bound college ruled and they also have smaller notepads available (I carry one in my purse).

You must see it to believe it.  I found my pen at the Target in Westwood Village (betweenWest Seattle and Burien).

Don’t Delay Your FHA Streamline Refi

HUD has announced revised guidelines for FHA streamline refinances that will go into


effect with case numbers issued on or after November 18, 2009 (60 days following September 18, 2009 the date of the Mortgagee Letter).   FHA streamline refinances take place when an existing mortgage is insured by FHA and is refinanced to a new FHA insured loan. 

Here are a few of the changes:

  • Employment and income will now be verified.
  • Credit scores will be disclosed.
  • Funds for closing must be verified.
  • The borrower must have made at least six payments on the FHA insured mortgage.
  • There must be a "net tangible benefit".  This can be:
    • a reduction in total mortgage payment of at least 5%;  
    • refinancing from an adjustable rate mortgage to a fixed rate; or
    • reducing the term of the mortgage (from a 30 to a 15 year amortization, for example).
  • Streamline refi's without an appraisal loan amounts will be limited to the outstanding principal balance minus the UFMIP (upfront mortgage insurance premium) refund plus the new UFMIP.  In order to have closing costs rolled into the mortgage, you will need an appraisal.
  • Streamline refi's with an appraisalare still up to a 97.75% loan to value and closing costs can be rolled into the new mortgage except for discount points.  Discount points must be paid for by the borrower's assets (which must be verified) as any closing costs that exceed the 97.75% LTV limit.
  • If there is subordinate financing (second mortgage) the total allowed combined loan to value is 125%.

The underwriting belt keeps getting tighter which is one reason why if you are considering refinancing, you may want to do so sooner rather than later. 

Mortgage Master is a Direct Endorsed HUD lender and I have been helping Washington State home owners with FHA mortgages for over nine years.  PS…rates are also very attractive right now!

Puyallup’s Fall Art & Wine Walk is next Saturday

This is a guest post from Kevin Nehls, friend, client and co-owner of Dog Daze Natural Pet Market located in Puyallup, Washington.

Come on out and stroll around downtown Puyallup for the Fall Art & Wine Walk which will take place on October 3, 2009 from 3:00 – 7:00 pm in downtown Puyallup.

This is a great chance to get out and enjoy a wonderful downtown atmosphere while enjoying some excellent wines and admiring the art scattered around the downtown area.  This season's theme is influenced by the Beatles, "Come Together", is exactly what this event all about. 

The inspiring piece of art for this year's theme is titled "I Am Saved" created by Jack Widmann, Vice Principal at Kalles Jr. High.  This piece of art is comprised of 190 pen and ink drawings, with each drawing representing the artist's impression of a single Beatles' song.  The entire piece, when assembled, is a composition of the Beatles. 

While strolling around to the different shops, sampling fine blended wines, you will be treated to music by the famous Haggis Brothers as well as works of art created by members of Valley Arts United and Arts Downtown.

This season the Fall Art & Wine Walk is also supporting Multicare's Grannies Attic through a children's clothing and toy drive.  Please bring any new or gently used clothing and toy items to the participating downtown merchants who will have a sign in their front window or bring items directly to Grannies Attic anytime they are open.

Tickets are $20 per person and you get a commemorative wine glass and 8 drink tickets.  Additional drink tickets are available for $1.  Tickets can be purchased here.

Friday’s Rates to follow because…and an interesting interview with the FHA Commissioner

I'm participating at a mortgage mastermind event today so I will not be posting mortgage rates today.  While you're here, check out this video from Diana Olick and the FHA Commissioner…I think you'll find it interesting.

When Are You Required to Receive a Good Faith Estimate?

Per HUD, a loan originator (mortgage broker or lender) must issue a Good Faith Estimate no later than three business days after an application or enough information is provided to the mortgage originator to complete an application.

An application is basically defined as having the following information (for purposes of providing a GFE):

  • Borrowers full name
  • Borrowers monthly income
  • Borrowers social security number to obtain a credit report
  • Property address
  • Estimate of value of the property
  • Loan Amount
  • Any other information deemed necessary by the loan originator.

Once a borrower decides to lock in their interest rate, if the rate, rate related fees or terms have changed, a new good faith estimate must be provided. (UPDATE FAQs issued on January 28, 2010 addressed this point).

If the loan is declined or the application is withdrawn from the borrower within the three day time period, then the good faith estimate is not required. 

In addition, HUD makes it more difficult for mortgage originators to issue a revised Good Faith Estimate to borrowers.  "Changed circumstances" (which I may have to write about in a future post) does not seem to include changes with underwriting guidelines or if a loan program is terminated from the lender (unless that's considered an Act of God).  If a borrowers situation qualifies as a "changed circumstance" which would impact the terms of the mortgage, then a new good faith estimate would be required to be issued within three business days. 

I prefer to provide a good faith estimate whenever someone is serious about receiving a rate quote–even if I'm missing any of the criteria above.  A Good Faith Estimate is not a commitment to lend or a preapproval–in the preliminary stages, it's just that, an estiamte provided in good faith detailing the cost of the mortgage associated with the rate that is being quoted.  HUD's latest FAQ (issued September 18, 2009) has a line that concerns me…and I'm not totally sure of the (or if there is) potential implication:

"If a loan originator issues a GFE, the loan originator is presumed to have received all six pieces of information…."

I'm not sure why that line was added to the many revisions to HUD's RESPA FAQs…we'll see if HUD sheds some light with more revisions which I'm sure we'll continue to have.

Update January 17, 2010:  Now that the new Good Faith Estimate is requried to be used, most mortgage companies and banks will not allow it to be issued for purposes of rate shopping.  Many are using substite forms for preliminary rate quotes. 

Read this post for more information on Changed Circumstances and when a good faith estimate can be re-issued.

October Recorder’s Office Closures for King County

On October 12, 2009, King County's recorder's office is closed due to the Furlough.  Snohomish and Kitsap Counties are closing early every Friday this month.  You may want to make sure your transactions are scheduled for closing accordingly (and hug your Escrow Officer).

Have You Been Burned by a Bad Appraisal from HVCC? Take Action Today!

NAMB, the National Association of Mortgage Brokers, has a call to action that many people beyond the lending industry may feel strongly about: HVCC.  The Home Value Code of Conduct is a controversial act that was created to not allow mortgage originators to be involved with the selection of an appraiser.  Overall, the results have been a mess.  Instead of punishing the few, the masses are taking the hit with many appraisals being done by those who will take the lowest bid and/or who are not familiar with the neighborhood where the appraisal is being done…while the Appraisal Management Companies, the channel where many appraisals are ordered, are taking about half of the appraiser's fee for placing the order–guess what?  Most of the AMC's are owned by banks and title companies.  AMCs are unregulated!  HVCC is wrong and bad for consumers.

I have no issues with an appraisal that comes in lower than expected as long as it was done properly.

What can you do about HVCC?

Members of Congress are back in session and they need to hear from you–their constituents.  HR 3044 is a bill that would put an 18 month moratorium on HVCC (the Home Valuation Code of Conduct).  Please contact your Congressman today and ask them to co-sponsor HR 3044.  I just sent an email to Congressman Jim McDermott…it took me less than 5 minutes.

And please be sure to sign this petition.

Feel free to share this post with your friends, family and co-workers…especially if they have been impacted by HVCC.