Mortgage Originators should only originate mortgages

January 5, 2011 by 2 Comments

TwophonesmortgageporterI think it's unfortunate that the SAFE Act didn't address having professionals who are helping people with the possible largest transaction in their life be limited to originating mortgages.  I feel quite strongly that it is NOT in a consumers best interest to use the same person to originate their mortgage AND sell them their home.

There is simply too much to keep up with in this climate with both mortgage originating and being a real estate agent.  New laws are constantly being created and underwriting guidelines change in a blink of an eye.  How can someone doing two important jobs do either "one" full time job well if they're split between two?   And I guess I also wonder "why" people who act as mortgage originators and real estate agents feel they must do this.  I consider myself a fairly savvy mortgage professional and I'm sure I could sell a home–but I wouldn't dream of it.  I'm dedicated fully to my profession:  mortgage.  

I cringe at the thought of a buyer disclosing all of their financial information to a real estate agent acting as a mortgage originator…especially if they don't want to buy the "maximum" they potentially qualify for.  I often times work with buyers who could qualify to buy much more than their agent knows and they ask me to not reveal this information.  If you're working with someone who is originating your mortgage and selling  you a home, they can't keep this information separate – they  know how much you can buy. 

If you're considering using a mortgage originator who's also a real estate agent for your refinance, how do you know they won't try to sway you to selling (where they'l earn significantly more income) instead of refinancing?

It's almost a form a "dual agency" where you're having to rely a great deal on trust with the individual you've hired to care for your entire transaction.  For the "professional" who is acting as both your real estate agent and loan originator, this is simply too much commission (what a buyers agent is paid and the mortgage origination compensation at stake) to truly trust they're working in YOUR best interest.

HUD is not a fan of FHA mortgage originators having other employment in real estate related fields either (from HUD Handbook 4060.1 Chapter 2: Section 2-9)

Full, Part-Time and Outside Employment.  A mortgagee may employ staff full time or part time (less than the normal 40 hour work week). They may have other employment including self employment.  However, such outside employment may not be in mortgage lending, real estate, or a related field. Direct endorsement underwriters are included in this provision.

In Washington State, Real Estate Agents acting a Loan Orinators in a transaction are required to provide this written language as a Dual Capacity Disclosure:

This is to give you notice that I or one of my associates have/has acted as a Real Estate Broker or Salesperson representing the Buyer and/or Seller in the sale of this property to you.  I am also a Loan Originator and would like to provide mortgage services to you in connection with your loan to purchase the property.

You are not required to use me as al Loan Originator in connection with this transaction.  You are free to comparison shop and to select any Mortgage Broker or Lender of you choosing.

If you're getting ready to buy a home.  Select your professionals wisely.  You deserve a to work with a team of individuals who are dedicated and focused on their sole career.   This is a case where two heads are better than one.

If you're buying a home in the greater Seattle or Bellevue area, I'm happy to recommend a dedicated real estate agent and help you with your mortgage!

Click here if you would like a rate quote for a home located anywhere in Washington.

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Who Does Your Loan Originator Really Work For?

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Is Your Agent in Bed with a Title Company?

Filed Under: Opinion, Rant

Happy New Year

December 31, 2010 by Leave a Comment

Mortgage Master Service Corporation is closed today in observance of the holiday.  We will reopen for business as usual on Monday, January 3, 2011.

We wish you a healthy, happy and prosperous 2011.

Filed Under: Current Affairs

Adjustments to Conventional Mortgage Pricing Means Higher Rates on January 1, 2011

December 30, 2010 by 1 Comment

UPDATE DEC 19, 2013: New (more expensive) LLPA’s have been released.

UPDATE JAN 3, 2011:  Not all lenders are implementing this fee increase (yet).  This is perfect example of an advantage of working with a correspondent lender since we work with more than one bank or one banks products/rates. 

Conventional mortgages (Fannie Mae and Freddie Mac) are increasing their LLPA, also known as “Loan-Level Price Adjustment” effective on all mortgages with a term greater than 15 years on loans they purchase on April 1, 2011 or later.   Although this doesn’t go into effect until April Fools, wholesale lenders will make these adjustments to their rate sheets well in advance so that they don’t have to take the price hit when the sell the loan to Fannie or Freddie.   I am receiving memos from the lenders we work with stating that these price adjustments will go into effect on loans locked January 3, 2011.

The new price adjustments are outlined in the red box below.  The changed adjustements are in bold in the red box (click on image to enlarge).  You can view Fannie Mae’s complete LLPA schedule here – there are additional hits that may apply depending on your scenario (such as condos, subordinate financing, etc.).

FannieLLPA

LLPA’s are nothing new.  We’ve had them for the past couple of years and the adjustments are typically factored into your rate.  Remember, typically (but not always) 1% in fee equals 0.25% in rate.   So if your “low-mid” credit score is 700 – 719 and your loan to value is 75.01% or higher, your interest rate is going to be about 0.25% higher in rate than someone with a 740 or higher credit score with a loan to value of 60.01 – 75%.

The hardest hit with this adjustment is borrowers with credit scores of 699 – 640 with loan to values over 80%.   These borrowers should consider FHA insured loans for financing which do not have the same level of price hits as conventional (at this time).

The best pricing is for borrowers with credit scores 700 or higher AND a loan to value of 60% or lower.   Borrowers with a 740 or higher credit score and less than 25% down payment or home equity will now be hit with a 0.25% adjustment.

These price hits impacts loan amounts of $567,500 or lower for homes located in King, Snohomish and Pierce Counties.   For a complete list of Washington state conforming loan limits, click here.

Risk based pricing is one more reason why people who are considering a mortgage, regardless of if it’s to purchase a new home in Seattle or refinance their existing home in Bellevue, should start early with the preapproval process.  Just being one digit off on your low-mid credit score may cost you.  A qualified mortgage professional can help you make the right moves with the goal of improving  your credit score if given enough time.

If you need a mortgage for a home located in Washington State, I’m happy to help you.  I’ve been originating mortgages at Mortgage Master Service Corporation since April 2000 and I’ve been licensed since 2007 (when mortgage originator licensing was first mandated in Washington).

Filed Under: Credit Scores and Reporting, Fannie, Freddie and FHFA, FHA

Can Your Mortgage Originator Legally Take a Loan Application Next Week?

December 28, 2010 by Leave a Comment

You may want to check with your preferred mortgage originator to make sure they have fully renewed their license for 2011.  If they have not, or if they started the process late and are waiting for their 2011 license from DFI, they might not be able to legally take a loan application next week.

Some mortgage originators are not required to be licensed.  Thanks to Congress, the SAFE Act allows mortgage originators who work for credit unions or depository banks (like Wells Fargo, Chase and Bank of America) to only be registered.  It's unfortunate that our elected officials did not create the SAFE Act to have the same standards for any mortgage originator who takes a residential loan application.

Washington State Mortgage Originators who are required to be licensed should check on DFI's website to make sure they have met all the steps required to originate loans in 2011.   If certain steps are missing, including the renewal being approved, DFI has it clearly flagged as "needed".  Some mortgage originators have yet to pay for their renewal fees which will also prevent them from taking a loan application as a licensed mortgage originator as of January 1, 2011.

NMLS 

I am fully licensed to originate mortgages for homes located in Washington State.  I received my 2011 license from DFI in mid-November.  

From DFI:

"As of [Dec. 22, 2010] 59% of Washington MLOs successfully renewed and have been issued their 2011 license.  This percent represents 4,381 individuals who will be working as MLOs come January 1st."

Note:  MLO = Mortgage Loan Originator. 

If you find your mortgage originator has not completed the steps to be NMLS licensed in 2011, it's possible that they may have decided to work for an institution that is not required to be licensed (depository bank or credit union) or perhaps they simply procrastinated.   If you find they're not fully approved to take an application in 2011 per this list, you may want to ask them directly what their plans are for the new year. 

Mortgage Originators (MLOs) who allow their license to expire may have to go through additional steps to renew and may be subject to additional fees. 

If you are a Washington State Mortgage Originator - do double check DFI's list to make sure you have everything set for 2011.

Filed Under: Legislation

Merry Christmas and Happy Holidays

December 24, 2010 by Leave a Comment

I wish you a very happy holiday season and hope you're surrounded with family, friends and loved ones.   Mortgage Master Service Corporation is closed today so that our employees can do just that.  We will reopen for business as usual on Monday, December 27, 2010.

 

Filed Under: Current Affairs

What Determines How Much Home You Qualify For – Part 2: Funds for Closing

December 22, 2010 by 1 Comment

piggybankbeltIn Part 1 of this series, I reveal that home buyers qualify for the mortgage payment first based on their income.  The next major factor is the down payment and funds for closing.  Some may say that the down payment more important than the mortgage payment, however the down payment actually can be a variable; one may be able to obtain gift funds to increase a down payment.  You cannot change your income unless you add more qualified borrowers.

[Read more…]

Filed Under: The Mortgage Process, Underwriting and Qualifying Tagged With: , , ,

VA Loan Limits for 2011

December 21, 2010 by Leave a Comment

UPDATE:  VA loan limits will remain the same through the end of this year!

UPDATE December 6, 2011: VA Loan Limits for 2012 (lower than 2011).

Below are the loan limits for VA loans in Washington State for all loans closed January 1, 2011 through September 30, 2011 December 31, 2011.  

  • King, Snohomish and Pierce Counties:  $500,000
  • San Juan County: $468,750
  • Clallam County:  $417,500
  • All other counties in Washington state: $417,000

If a Veteran elects to purchase a home with a sales price higher than the loan limit, they're down payment is 25% of the difference between the loan amount above and the sales price.

Example:

A veteran purchases a home in Kitsap county with a sales price of $560,000.  

$417,000 (Kitsap county VA loan limit) x 25% = maximum guarantee and possible entitlement = $104,250.

$104,250 / $560,000 = 19%.  Since this is less than the 25% maximum guarantee, a down payment will be required. 

$560,000 x 25% = $140,000.  

$140,000 – $104,250 (maximum guarantee) = $35,750 required down payment.

The base loan amount for this scenario (not including the funding fee) is $524,250.

A Veteran can purchase this home with 6% down payment!

Zero down loans are also available as long as the sales price does not exceed the VA loan limit. 

Lenders have various limits as to how large of a VA loan they'll fund.  This is one reason why it's great to work with a company like Mortgage Master Service Corporation where we have several sources for government loans.   If I can provide you a quote for a VA loan on a home located in Washington state, please contact me.

Attention Sellers: you're really limited the chances of selling your home if you don't consider buyers who are using VA or FHA financing!

Last but not least, THANK YOU to those who serve and have served our country.

Filed Under: VA Mortgage Loans

2011 FHA Loan Limits for Washington

December 17, 2010 by Leave a Comment

UPDATE:  Here are the FHA Loan Limits effective October 1, 2011 through December 31, 2011 for counties in Washington state.

These loan limits are effective through September 30, 2011.  

King, Pierce and Snohomish Counties

1 Unit – $567,500

2 Unit – $726,500

3 Unit – $878,150

4 Unit – $1,091,350

Adam, Asotin, Columbia, Cowlitz, Ferry, Garfield, Grant, Grays Harbor, Klickitat, Lewis, Lincoln,Okanogan, Pacific, Pend Oreille, Spokane, Stevents, Wahkikum, Walla Walla, Whitman and Yakima Counties

1 Unit – $271,050

2 Unit – $347,000

3 Unit – $419,425

4 Unit – $521250

Benton and Franklin Counties

1 Unit – $275,000

2 Unit – $352,050

3 Unit – $425,550

4 Unit – $528,850

Mason County

1 Unit – $310,000

2 Unit – $396,850

3 Unit – $479,700

4 Unit – $596,150

Kittatas County

1 Unit – $328,750

2 Unit – $420,850

3 Unit – $508,700

4 Unit – $632,200

Chelan and Douglas Counties

1 Unit – $342,700

2 Unit – $438,700

3 Unit – $530,300

4 Unit – $659,050

Thurston County

1 Unit – $361,250

2 Unit – $462,450

3 Unit – $559,000

4 Unit – $694,700

Skagit County

1 Unit – $373,750

2 Unit – $478,450

3 Unit – $578,350

4 Unit – $718,750

Whatcom County

1 Unit – $375,000

2 Unit – $480,050

3 Unit – $580,300

4 Unit – $721,150

Island County

1 Unit – $381,250

2 Unit – $488,050

3 Unit – $589,950

4 Unit – $733,150

Clallam County

1 Unit – $384,100

2 Unit – $491,700

3 Unit – $594,350

4 Unit – $738,650

Clark and Skamania Counties

1 Unit – $418,750

2 Unit – $536,050

3 Unit – $648,000

4 Unit – $805,300

Jefferson County

1 Unit – $437,500

2 Unit – $560,050

3 Unit – $677,000

4 Unit – $841,350

Kitsap County

1 Unit – $475,000

2 Unit – $608,100

3 Unit – $735,050

4 Unit – $913,450

San Juan County

1 Unit – $593,750

2 Unit – $760,100

3 Unit – $918,800

4 Unit – $1,141,850

Filed Under: FHA
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