An Awkward Time of Year for Closing Refinances: 1st Half Taxes Due

April 11, 2009 by 3 Comments

On April 30th, first half of real estate taxes are due for properties located in Washington State.   For those homeowners who are refinancing with a closing in April to mid-May, this can cause an inconvenience.   Lenders, the title insurance company and the escrow company need evidence from the County that the taxes for the first half of the year have indeed been paid. 

Unless your reserve account is waived, taxes are collected on a monthly basis in your mortgage payment and then paid when they are due: first half is due by April 30th and the second half is due by October 31st.  

The County typically has a lag time before the processed payments appear once they receive the payment from the mortgage servicer.  King County’s website states:

“It may take up to two weeks for your property tax payment to be reflected in our records after receiving your payment”.

For refinances closing before it is reflected in County records that taxes have been paid; they have a few options:

  • Pay six months of taxes at closing towards your payoff.  The mortgage servicer will refund the balance (overage) a few weeks after closing with their existing reserve account balance.
  • Pay six months taxes at closing; the escrow company might hold funds for the 6 months taxes as an escrow hold-back and refund them to you once County records show the taxes are paid.
  • Delay the closing until the taxes show as being paid per County records (this could cause an extension fee).

Folks closing their refi’s in October to mid-November will be in the same boat with their property taxes. 

Filed Under: Refinance Tagged With: , ,

Making Home Affordable Refinance – Can I Help You? Maybe…Maybe Not.

April 4, 2009 by 11 Comments

UPDATE JUNE 19, 2010:  The Home Affordable Refinance Program has become much easier to do since writing this post with both Fannie Mae and Freddie Mac securitized mortgages.  This post is pretty outdated (the hazards of writing about mortgages on a blog!)  If you need help with refinancing your home in Washington, please contact me.

Here is an updated information on Fannie Mae's Home Affordable Refi.

NOTE:  This program is still "evolving". Wholesale lenders/banks and private mortgage insurance companies are still issuing and revising their guidelines.  I'll try to update this post with current information as I receive it.

Fannie Mae will be implementing the Making Home Affordable Refi starting April 4, 2009.  Some home owners will be free to use any mortgage professional (as long as they are Fannie Mae approved) and others will be forced to return to their mortgage servicer.

First of all, I am only licensed to provide residential mortgages for homes located in Washington State.

UPDATE: IF YOUR MORTGAGE IS OWNED BY FREDDIE MAC, I MAY BE ABLE TO HELP YOU.  YOU DO NOT HAVE TO GO TO YOUR MORTGAGE SERVICER (WHO YOU MAKE YOUR PAYMENTS TO).

Currently, for the Home Affordable Refinance, Freddie Mac is requiring that home owners return to their mortgage servicer.  To determine if your mortgage is owned by Freddie Mac, click here. If your mortgage is owned by Freddie Mac, I probably cannot help you with an Making Home Affordable refinance.   However if your current mortgage is owned by Freddie Mac and you have home equity (you're not upside down); I may be able to help you.   Fannie Mae has a larger market-share than Freddie Mac…odds are in your favor, but check Freddie Mac first.  UPDATE:  Since writing this post, one major bank has informed us they will allow us to originate Home Affordable/Freddie Mac mortgages as long as we broker the loan back to them. 

If your mortgage is not owned by Freddie Mac, the next step is to see if it's owned by Fannie Mae. You can determine that by clicking here.   Unlike Freddie Mac, Fannie Mae is allowing home owners to use eligible mortgage brokers, bankers and correspondent lenders of their choice.  If your mortgage is owned by Fannie Mae (and your home is in WA); I may be able to assist you with your Home Affordable refinance.

Here are some important pointers about Fannie Mae's Home Affordable refinance (homes at a higher loan to value):

  • Second mortgages must be subordinated.  They may not be included (paid off) with the home affordable refinance.
  • Borrowers on the existing mortgage must match the new mortgage.  Borrowers may be added but they may not be removed.   UPDATE:  Borrowers can be removed under certain circumstances.
  • If a borrower currently has lender paid mortgage insurance (a slightly higher rate that financed private mortgage insurance) they may have to return to their mortgage servicer (who they make their mortgage payments to) for a Home Affordable refinance.  

What if your existing mortgage is FHA or VA?  You may qualify for a FHA or VA Streamline refinance which may not require an appraisal or income verification (you will need a mid-credit score of 620 or higher).

Lenders are currently inundated with refinance and purchase business due to the current low mortgage rates.   I encourage you to apply early and be very patient.   Washington State home owners can apply using my secure on-line application under "Favorite Links".

The bottom line is, if your home is in Washington I can at the very least help point you in the right direction and at the most, I can help you with your new refinance.

Filed Under: Fannie, Freddie and FHFA, Refinance

The Wild Cards of Refinancing

March 30, 2009 by Leave a Comment

Jokers In years past, refinancing was a fairly simple task.  Homeowners would contact me wanting to restructure their mortgage to either reduce their monthly payments or perhaps to take equity to improve their home or pay off debts.  Back then, a 680 credit score was considered decent (anything over 720 was great) and people had a good idea of what their homes would appraise for and if they didn’t, I could usually determine a value by obtaining sales comps from a title insurance company.  It’s just not so anymore.  Refinancing can be trickier because there are “wild cards” involved that may not be revealed until you are deeper into the transaction.

[Read more…]

Filed Under: Refinance Tagged With: , , ,

Loving Spring

March 29, 2009 by Leave a Comment

I've really enjoyed being out in my garden today doing very preliminary clean up from our winter.  We're not out of the woods with "winter weather" yet with lows tonight in the mid 30's.

DSC_0109 

Hopefully the colder than normal nights don't get the best of my peonies. 

I relish these productive days in the sunshine.  My grandparents were farmers in Minnesota…maybe that's were I get it from?

Filed Under: Just for Fun

FHA Appraisals Tougher starting April 1st – No Foolin’

March 26, 2009 by Leave a Comment

HUD is adopting Fannie and Freddie’s reporting requirements for declining markets.  Per Mortgagee Letter 2009-09, as of April 1, 2009 appraisals for all FHA insured mortgages must include the Market Conditions Addendum.   Be prepared for second appraisals and limits to cash-out refinances if your property is determined to be in a declining market.   From HUD’s letter: [Read more…]

Filed Under: Mortgage Programs Tagged With: ,

New FHA Limits on Cash-Out Refi’s

March 17, 2009 by Leave a Comment

If you’re considering refinancing and you’re interested in taking cash-out to pay off debts, make home improvements or to eliminate a second mortgage that you did not obtain when you purchased your home; you have more reason than ever to start now. [Read more…]

Filed Under: Refinancing & Home Equity

Wacky Weather in Seattle

March 15, 2009 by 1 Comment

This morning at woke up to huge snow flakes coming down pretty heavy in West Snow 004 Seattle.  I'm 99% sure that our pork butts are cursed…let me explain.  Last December, when my husband's co-workers were planning a Christmas pot-luck…he volunteered me to make pulled pork.  You know, the kind that's been smoking for hours and melts in your mouth.  This type of feast takes days to prepare…and we did.  Smoking it for about 10 hours on our Big Green Egg.  We were up in the wee hours in order to have the pork done in time for the festivities only to have that snow storm hit.  Our family had pork butt for breakfast, lunch and dinner!  You can check out the recipe (and my cooking blog) here.

Today, we're planning on having family over to celebrate my birthday.  We're making that same pork butt recipe on the BGE…and what do I wake up to?  SNOW!  I can see it's all ready turning to rain here and I hope elsewhere in King County where my family is driving from, it's safe and dry!  Snow in the middle of March? 

Next weekend, we're going to make pulled pork again.  This time it will be for my husband and his co-workers when they finish doing The Big Climb benefiting the Leukemia and Lymphoma Society.  The team from The Talon Group will climb 69 flights of stairs in the Columbia Tower to honor their co-worker, Dawn Appel who is battling leukemia.  To make a tax deductible donation, supporting the efforts of Dawn's Army click here.

Filed Under: Just for Fun, Recipes

Who’s Vilifying Who, Mr. Dimon?

March 12, 2009 by 10 Comments

In a speech to the US Chamber of Commerce, Jamie Dimon, CEO of JP Morgan Chase made a statement that caused my jaw to drop.  From Bloomberg:

"My biggest mistake, probably of my whole career, was not closing down our mortgage broker business sooner." 

He says that mortgage broker business had a loss rate two to three times higher than loans originated directly by the bank.

Here is what you need to know:

  • Mortgage brokers originate mortgages.
  • Banks, like Chase, underwrite and fund these mortgages.  They also create many of mortgage programs that are not performing today.   In fact one program that Chase had "back in the day" allowed 103% loan to value for credit scores above 700.  Chase was also big into second mortgages up to 100% loan to value.  Banks also employ(ed) heavily incentized wholesale reps to call on mortgage brokers–begging for loans to be sent to them. 

So if a mortgage broker takes a loan application and submits the loan to Chase, it is Chase who makes the decision on whether or not the loan is acceptable to approve and fund.   If JPMorgan Chase suffered double or triple the losses on loans provided to them by mortgage brokers, it was Chase's wholesale division (for mortgage brokers) that was the real issue with exception to cases of pure fraud.

Locally we had a classic example that made the front page of the Seattle Times.  The report claims that six immigrants (one is a hot dog vendor) were prequalified to purchase Bellevue high-end condominium units with the developer's preferred lender, JP Morgan Chase Bank.  There's a lawsuit pending over the lost earnest monies of $174,050.

"In one case, the lawsuit says, a Chase broker listed a prospective buyer's income not at the actual $2,147 a month, but at $12,500. Chase's underwriter "red flagged" the document as suspicious, the suit alleges, but the applicant still was prequalified for a $724,000 condo…."

Note: I contacted writer of the Seattle Time's article to ask she correct the term "broker"…the correct term in the above paragraph would be "loan originator" or they often like to call themselves banker/broker or bankers. 

And…

"Other plaintiffs are…Diana Shakhnazaryan…and her mother, Svetlana Kocharyan, both of whom fled Azerbaijan and gained political asylum here about 10 years ago. In 2006, Kocharyan worked on an assembly line and her daughter had a part-time job washing hair in a Kirkland beauty salon. Together, they made $3,659 a month, court documents say.

Chase prequalified them for a 95 percent mortgage for the purchase of a $922,600 condominium, giving them a $7,198 monthly payment, including condo dues."

In the same article, luxurious Bellevue Towers preferred lender, JP Morgan Chase, approved a student with an income of $3,600 a year and says he was told he prequalified for a $634,000 condominium.

Back to Jamie's presentation yesterday…in one breath, Jamie Dimon says:

"When I hear of constant vilification of corporate America, I personally don't understand it…I would ask a lot of our folks in government to stop doing it because I think it's hurting our country."

And then he turns around and vilifies mortgage brokers just a few moments later. 

Fact is, now that Chase has purchased WaMU, they don't need mortgage brokers anymore.  They have plenty of exposure with Washington Mutual's existing locations.  Banks, like Chase, have used mortgage brokers as their sales force and now with their massive market-share, they just don't need them anymore.  But why wrongly tar an industry…I thought we were beyond that…at least I believed Jamie Dimon was. 

I'll wrap this post up with another quote from Jamie yesterday:

"If we act like a dysfunctional family and we don't finish these things and we're forever debating them, I think this will go on for several years."

Well that's one point I can agree with, Mr. Dimon.  Why can't we all just get along?   

Filed Under: Rant
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