Good by Michelle

December 12, 2007 by 4 Comments

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Today my dear friend Michelle passed away.  I’ve known Michelle just over seven years and have always adored her.  We shared an office together during my first five years in the mortgage industry, she was my processor and right (and left) hand.

Not only did she teach me almost everything I know about mortgage, she has taught me about life.  During her last three years battling breast cancer, she taught me the most important lessons ever on how to live.   She was determined to win this battle up to her last days.   She laughed in the face of the dispare.  She is dignified, beautiful and brave.  Michelle was selfless and a friend to all.  I miss her.   Michelle Brown, may you rest in peace.   

Michelle is pictured here with her husband, Robert.   Michelle also leaves behind her Mom, Dad, Brother and countless friends.

Filed Under: People

My letter from Congressman Jim McDermott

December 11, 2007 by Leave a Comment

Dear Rhonda:

Thank you for contacting me about mortgage reform and the subprime lending crisis. I appreciate hearing from you on this important matter.

As you know, across the country, hundreds of thousands of borrowers, many of whom were irresponsibly issued subprime, adjustable-rate loans, are facing possible home foreclosure and millions more are struggling to make their home mortgage payments.  This foreclosure crisis, and the failure of various state regulations to prevent the problem, indicates the need for greater federal oversight of the mortgage industry and its practices.

Accordingly, the U.S. House of Representatives recently passed HR 3915, the Mortgage Reform and Anti-Predatory Lending Act of 2007.  I voted for this legislation, which institutes a number of important steps to stop lending abuse, including creating a nationwide licensing registry for mortgage brokers and establishing minimum standards of credit worthiness for home loans.  I believe this bill makes significant progress in protecting consumers, stabilizing mortgage volatility, and preventing predatory home lending. 

I appreciate you sharing with me your thoughts on Title III of HR 3915 , and the need to preserve mortgage financing options for borrowers. As you probably know by now, the anticipat ed amendments by Rep. Gary Miller that you mention ed were not offered. I understand that the National Association of Mortgage Brokers (NAMB) still has concerns with Title III as passed by the House. NAMB endorsed HR 3915 and supports the overall legislation, and has vowed to continue to work with Congress as the bill heads to the Senate and to a possible conference committee. As this process unfolds, I will keep your thoughtful remarks in mind.

As this issue is debated in the U.S. Senate and heads to a possible conference committee, I will keep your comments in mind.  Thank you for writing me. 

Sincerely,

Jim McDermott

Member of Congress

P . S . – I have an e-mail newsletter available to anyone interested in updates on issues and events from the U.S. Congress or the Seattle area.  To subscribe, visit my website at www.house.gov/mcdermott and click on "Newsletter Signup."

Filed Under: Legislation

To Catch a Thief

December 11, 2007 by 5 Comments

I had my first experience of someone re-publishing the articles that I write here on Mortgage Porter as their own on their mortgage blog.   I was incensed to say the least.   I dedicate a significant amount of time and care to my writings on my blogs. 

After I sent a short email to this person he replied:

"Tell me which posts are yours and ill take them down. I didn’t realize blog posts were copyright protected."

Even if posts were not copyright protected, does that make it okay to take someone else’s work and present it as your own without asking?  I think not…in fact, I know not!

From DevTopics.com (notice how I give DevTopics credit and a link for their work.  I also did not copy the entire article and would not do so without their permission):

Copyrights Protect Your Blog

Copyright is an intellectual property law that protects original works of authorship including literary works.  Your blog is protected by copyright the moment you produce it in tangible form on your computer and then publish it on the Web.  In other words, post a blog article, and it’s automatically and immediately copyrighted.

The Digital Millennium Copyright Act (DMCA) extends copyright law to other countries that sign up, makes it illegal to circumvent anti-piracy measures, and increases penalties for copyright infringement on the Web.

Fair Use

The "fair use" rule of copyright law states that an author may make limited use of another author’s work without permission.  The fair use privilege is the most significant limitation on a copyright owner’s exclusive rights.

The following factors affect whether publishing content without permission is considered fair use or infringement:

  • Whether the original work was copied exactly or transformed into a new work
  • Whether the motive to publish was for profit
  • Whether the original author was cited and linked to
  • Quantity of the original work published, both in terms of total words and as a percentage of the original work
  • Quality of the original work published, in other words, whether the most important aspects were published

If you have or want to have a mortgage blog and do not have the time, confidence or skill to write your own articles; there are other options besides copying someone else’s efforts.   Mortgage originators can use tools such as Bring the Blog or Mortgages Undressed.   They pay a fee and the content is provided for them automatically.  It’s actually quite good.   They can also subscribe to services like Loan Tool Box or Strategic Equity where articles are available that you can post as your own.   These items are not for free…and the information you find here at Mortgage Porter is not yours for republishing.   If you really like a post someone has written, you can always link to it and give the author proper credit.   

The only defense (a weak one at that) is that this person appears to have just started blogging in October of this year.   Even still, how can someone take someone else’s work and post it as their own?  He has posted an apology on his blog; however, as of right now, my 5 posts are still there.

I’m watching his blog and will let you know when and if he stays true to his word and removes MY works from his blog.   I hope to be updating this post soon confirming this to be true.   

This is an eye-opener for me and I will be taking further steps to protect my content.  I enjoy writing for Mortgage Porter and Rain City Guide.  I don’t need nor want to spend a chunk of time going after blog-theives.   If you find someone has used your content as their own, you should take action too.

UPDATE 11:45 AM 12/11/2007:  My post have been removed from the blog site.  Hopefully this was simply a huge lesson for both of us.

Filed Under: Rant

What is required of income documentation for a “full doc” loan

December 10, 2007 by 2 Comments

Last night, someone contacted me with excellent questions regarding buying a home priced over 1,000,000.   His questions are excellent and worthy of answering on a post to share with other readers.   Since the answers may be a bit detailed, I’ll break this up into separate posts.

“I was wondering if you can provide me with some information regarding loans.  We are looking to buy a house in the next 6-12 months with a price range of 1.1 million to 1.3 million.  We plan to put 20% down on a 30 year fixed mortgage and our credit score is between 760-790. 

1)  What type and duration of income documentation is needed for a full doc loan in the current lending environment?
2)  What is the debt to income ratio that most lenders are using for loans of this size?
3)  What is the typical interest rate differential for a loan of this size compared to the jumbo rates that you quote on Rain City Guide?”

The short answer is 2 years of annual income documentation and 30 days of paystubs.  Income requirements for a conforming and non-conforming are essentially the same and depend on what the automated underwriting system’s (AUS) response is.  Underwriters are looking for trends in income and if they spot what they determine to be a downward trend, they will make an issue of it. 

Here are some basic guidelines that you can rely on which vary depending on how one is paid and if they are self employed.  

Annual Salary

Underwriters like to see two years in the same line of work.  College courses in your line of work can be included in your two year history.   Be prepared to back it up with transcripts which may or may not be required. 

If you’re paid an annual salary, plan on providing 1-2 years of your W2s and paystubs documenting 30 days of income showing your year to date earnings.   Often times, just one W2 is required; it all depends on the AUS findings.

Bonuses, overtime and commissions are typically averaged over the past two years.  If you are relying on this type of income to qualify, you may need to provide your last two years complete tax returns.   A Verification of Employment may also be sent to the employer with a request to provide your income information.   If tax returns are provided, the lender may require you to sign a 4506 or 4506T.  If a borrower has not received bonuses, overtime or commission for the past 24 months; it may not be used for qualifying for a mortgage.

Hourly Employees

When you are paid hourly and the hours vary, your hours and income are averaged for the past two years.  Be prepared to provide your last two years W2s and paystubs covering 30 days of income. 

 

Self Employed

Two years complete (all schedules) business and personal tax returns are required for a full doc loan.    This is the “short answer” and I promise I’ll do a follow up post what may be needed to document self employed income.   A key factor is that you must be able to document that you have been self employed for two years and this income is averaged.   Again, underwriters are looking for trends.  If your most recent year shows a less income than the previous, this will be questioned.

Other types of acceptable income may include:

  • Military
  • Income from rental properites (not for renting rooms in your primary residence)
  • Retirement
  • Alimony
  • Child Support
  • Interest income
  • Part time employment/second jobs
  • Disability/Social Security

As long as the income can be documented for the past two years and is likely to continue, it’s likely that it can be used for qualifying purposes. 

During these times in the mortgage industry, guidelines are constantly changing and underwriters may lean towards the more cautious side.  If you’re planning on obtaining a mortgage for a new home purchase or refinance, the earlier you meet with a Mortgage Professional to review your options, the better off you may be…especially if you’re in the non-conforming market (loan amounts over $417,000).

Watch for Part 2 where I answer Questions 2 and 3.

 

 

 

Filed Under: Underwriting and Qualifying Tagged With: , , ,

Have You Seen This Ornament?

December 10, 2007 by Leave a Comment

Our family put up our tree just a few days ago…and to my dismay, one of my ornaments was broken (in the box).   It happens to be one of my favorites (of course) because it reminds me of my Dad.   

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Most of the ornaments we have on our tree have some meaning behind them.  Perhaps we bought one when we’re vacationing somewhere or maybe it’s symbolizes something significant (or even insignificant) that’s happened during the year. 

My Dad’s father passed away when he was 19 years old.  With his inheritance, he did what most indulgent teens would do with a lump of cash; bought a 1960 red corvette.   I’m told the vette lasted until he started dating my Mom (there are different versions of the story).   Anyhow, I have always loved older Corvettes and this ornament may be the closest I get to one!

I’ve searched the internet and cannot find this ornament anywhere.   I purchased this Polonaise ornament about 5-7 years ago.   If you happen to see one for sale when you’re out and about this holiday season, please let me know.

Filed Under: People

Argosy Christmas Ships at Alki

December 9, 2007 by Leave a Comment

Last night, on our way home from a very enjoyable Christmas party in Lakeland featuring Santa; we were lucky enough to catch the Argosy ships on their way back from Alki.   

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There was a bon-fire on the beach…I think that may be Santa to the right of the fire.    Christmas carolers sang at the Alki Boathouse.

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These photos were taken by my Treo.

Filed Under: Current Affairs

Holiday Schedule…are you closing a transaction this month?

December 8, 2007 by Leave a Comment

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If you’re closing on a home or refinance during the month of December, you may want  to keep in mind that many in the real estate and mortgage industry may be on vacation.   Offices will be lighter staffed than usual and this is a shorter month with the Christmas holiday.   I have not heard an official word from Mortgage Master yet…how ever, it would not surprise me if our office (and many others) closed early on Friday, December 21st and on Monday, December 24th assuming our closings are all taken care of.    Offices will be closed for Christmas.

I suggest making sure your Mortgage Professional has everything they need for your loan approval and be as flexible as possible with your signing appointments for the escrow company.   

This will help keep you on Santa’s good list!

Filed Under: Current Affairs

Do You Qualify for the Bush-Paulson Five Year Fix?

December 6, 2007 by Leave a Comment

Today both President Bush and Treasury Secretary Paulson announced a very controversial plan to help home owners "avoid foreclosures that are preventable".  Who qualifies to be saved?  According to President Bush:

"We should not bail out lenders, real estate speculators or those who made the reckless decision to buy a home they knew they could not afford…" 

To me, this sounds like if you did a stated income loan and your reported income to the IRS is out of line with what you submitted and signed your name to on the loan application, you may be excluded from this program.   The allowed debt-to-income ratios for many of the sub prime mortgage programs a few years back was 55%; I wonder if this plan will consider those with a 55% DTI "reckless"?   Note: a 55% debt to income ratio is taking the borrowers monthly gross income and allowing them to have a mortgage payment up to 55% of that gross income. 

Watch President Bush’s speech from this afternoon by clicking here.

Read President Bush’s call to Congress here.

In addition to FHA Secure and Hope Now, Bush and Paulson announced a 5 year freeze on mortgage interest rates for qualified subprime borrowers:

According to Bloomberg, you will need the following to qualify for the five year fix:

"The freeze may apply to mortgages issued between January 2005 and July 2007 that are scheduled to reset between January 2008 and July 2010, said a person familiar with the plan. Borrowers whose credit scores are below 660 out of a possible 850 and haven’t risen by 10 percent since the loan was sold will be given priority.

Those with scores above 660 will be more closely scrutinized to determine whether they are eligible or must continue making payments under existing terms…"

This follows Paulson’s plan which he unveiled earlier on Monday.   Paulson states there are four categories of subprime borrowers from Paulson’s press release on December 3, 2007:

  1. There are those who can afford their adjusted interest rate; these homeowners need no assistance.
  2. There are also a substantial number of homeowners who haven’t been making payments at the starter rate on their subprime loan and may not have the financial wherewithal to sustain home ownership; some of these homeowners will become renters again.
  3. Homeowners who might choose to refinance their mortgage – putting them in a sustainable mortgage while keeping investors whole.
  4. Those with steady incomes and relatively clean payment histories who could afford the lower introductory mortgage rate but cannot afford the higher adjusted rate.

Those borrowers in Group 4 are the ones currently being focused on by the Government.   So if you are able to afford your higher monthly payment (Group 1) you will not receive any benefit.  If you’ve never been able to afford your mortgage (Group 2); you will not receive any benefit.  If you chose to refinance now and take your home finances into your own hands (Group 3) you will not receive help from the Government.   Under Paulson’s Plan, Group 4 will receive help.

I recommend meeting with your Mortgage Professional if you have an adjustable rate mortgage that is scheduled to adjust in 24 months or sooner.  Don’t wait for someone to bail you out.  Even if you feel your credit is great and you have a handle on your mortgage; an Annual Mortgage Review is more important than ever.

Much still remains to be seen on how this plan will work out.

Filed Under: Subprime Lending
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