Qualified Mortgage and ATR

Written by Michael A. Foote, CMB on . Posted in Uncategorized

Contract Loan Processing requires an attention to detail. Moreover, it requires a desire to maintain an ongoing education schedule. At CPR we have taken classes to ensure we are  up to date with the requirements our customers will have when QM starts in a few days. We already complete ATR tasks in the normal excellent processing we provide and now we will provide up to date disclosure requirements to help keep our mortgage company clients in compliance.

Our NMLS has been updated for 2014 as well and again we are NMLS approved as a third party service provider. Our approval provides more levels of compliance in your own operation. Stay above the fold and out of CPFB targeting by working with a Contract Processing Company that provides the NMLS approval.



Contract Processing Saves Money

Written by Michael A. Foote, CMB on . Posted in Loan Processing, mortgage broker, mortgage finance, Mortgage Processing, NMLS Approved Processing

In today’s tough lending climate, not only is business tough to get, it’s also tough to keep consistent. Some months are better than others and having salary, office space and support for operation employees isn’t always ideal. To handle increases in business and more so slow downs, it makes sense to use contract mortgage processing.

  • Eliminate payroll taxes,
  • Pay for what you close,
  • Eliminate Human Resource Issues
  • Still have access during work hours
  • Take time off when you need
  • Focus on Sales and Marketing
  • Work with Processors who have more experience

The benefits are countless. Check into outsourcing your mortgage processing today.



HARP Refinance. Many Loan Officers Are Turning Down Good Loans. Don’t Make This Simple Mistake.

Written by Michael A. Foote, CMB on . Posted in Harp

We’ve seen this in action and know first hand how a simple lack of effort can cost you to lose a refinance. National Mortgage News had a great article today outlining the issues and how you can fix it.

Lenders will have a keen interest in trying to salvage as many loans as they can. Yet there seems to be a fairly substantial number of homeowners who might be eligible to refinance under HARP but have been told they’re not because either Fannie Mae or Freddie Mac says they don’t own the loan.

Only that might not be true. It could be that Fannie or Freddie simply has the wrong address on the property. But fixing what’s on the surface is a simple typographical error isn’t as easy as changing an address on a magazine subscription, at least as far as one of the two government-sponsored enterprises is concerned.

I should know. I recently refinanced my seven-year-old mortgage through HARP after several years of being told by Fannie Mae—as well as several lenders, including the one that serviced my loan—that my loan wasn’t eligible.

But if an originator is dogged enough and willing to take the time to find out what’s wrong and get it fixed, the deal can get done.

In order to qualify for HARP, a borrower’s loan must be owned by Fannie Mae or Freddie Mac and have a note date prior to June 1, 2009. Any homeowner can check the eligibility of their loan on Fannie or Freddie’s websites or call their servicer. The lender doing the refi should also be able to find that out.

Unfortunately, if the address on the loan is even the slightest bit different than what the GSEs have, you may be told you’re out of luck.

My servicer told me that Fannie Mae owned my loan—after all, they should know, since they’d been sending monthly principal and interest payments to Fannie for the past seven years. Yet Fannie’s website kept telling me they didn’t, and when I called the agency and spoke to a person, she told me the same thing.

The reason, I later found out, was simple: the address Fannie Mae had for my house didn’t match up with the one my servicer had (in fact, it wasn’t even close). But fixing it wasn’t that easy.

“One of the most important pieces of information is the property address, and it must match the exact address of the loan when it was sold to Fannie/Freddie,” says Patrick Ruffner, branch manager at Guaranteed Rate in Chicago. “Something as simple as a condo being listed as Unit 512 rather than #512 can result in the system identifying this as a loan that is ineligible for HARP.” I happen to live in a condo with a unit number.

While an instance like this should be an easy one to correct, Ruffner says, Fannie Mae doesn’t always address the issue in a timely fashion.

Fannie has a “support team” that meets just once a month at the end of the month to fix issues like this, Ruffner says. But if the support team doesn’t get around to fixing it on that day, it gets pushed into the following month. That leaves the borrower “stuck in limbo” and unable to move forward until it is fixed, potentially costing the borrower a lot of money if, for example, the rate lock on the loan expires in the meantime. Or in my case, paying an above-market interest rate for several years.

“There definitely isn’t a sense of urgency,” says Paul Anastos, president of Mortgage Master Inc. in Walpole, Mass., which did my refi. “They make it much more difficult than they need to. Any time there is something like an apartment number that’s slightly off can wreak havoc in terms of refinancing or purchasing a home.”

I called and emailed Fannie Mae several times for comment but it never responded. For its part, Freddie Mac says it takes about a week to make “post-funded data corrections” like this, and they can be done at any time of the month.

Anastos says lenders don’t always know themselves that a bad address is causing a loan to appear that it’s not eligible for HARP. However, with loan volume scarce, it would appear to behoove originators not to take “no” for an answer and find out what the problem is. It’s also just good customer service.

George Yacik has been covering the residential mortgage business for more than 20 years and writes frequently for industry publications. He can be reached at gyacik@yahoo.com.

Top 5 Steps for a Smooth Mortgage Loan Submission to your Contract Loan Processor

Written by Michael A. Foote, CMB on . Posted in Loan Processing, mortgage banker, mortgage broker, mortgage finance, Mortgage Processing, NMLS Approved Processing, Uncategorized

Hey Everyone,

Here is a quick animated video tutorial that outlines the Top 5 steps to submitting the perfect loan to your processor. Even to your contract loan processor (like California Property Resources).

Please feel free to share and if you’d like to see more videos or have them created for your company, please visit eSimpleSolutions.com they do great digital marketing.

Click the link below to watch the video!
Contract Mortgage Loan Processing

Pacific Union Wholesale Announces Back to Work FHA Extenuating Circumstances

Written by Michael A. Foote, CMB on . Posted in Uncategorized

Hot off the presses. California Property Resources can Contract Process these loans for your company!


September 4, 2013

Contents: FHA “Back to Work – Extenuating Circumstance” GuidelinesCredit Qualifying Streamline Refinance Transactions Credit ScoresShort Refinances/FHA Refinances for Borrowers in Negative Equity Positions


FHA “Back to Work – Extenuating Circumstances” Guidelines


Pacific Union Financial will evaluate loans in accordance with the credit standards as outlined in  Mortgagee Letter 2013-26, effective with case numbers assigned from August 15, 2013 through September 30, 2016.  With the release of this Mortgagee Letter, FHA will accept an Economic Event (defined below) as an extenuating circumstance when evaluating the borrower’s credit history as part of a request for purchase transaction financing.
Under the new “Back to Work – Extenuating Circumstance” guidelines, borrowers with previous bankruptcies, foreclosures, deeds-in-lieu, short-sales, or other adverse credit that results in a TOTAL Scorecard “Refer” recommendation or the manual downgrade of an “Accept/Approve” recommendation may be eligible for FHA purchase transaction financing provided all of the following requirements are met:

  • File must contain specific documentation to evidence the delinquencies were due to the Economic Event;
  • Borrower must have reestablished a satisfactory credit history for at least 12 months;
  • Borrower has fully recovered from the Economic Event;
  • The borrower must have attended an approved housing counseling program at least 30 days but no more than 180 days prior to the initial loan application; and
  • All other HUD requirements are met.

The following is brief overview of the key aspects of the requirements of Mortgage Letter 2013-26.  Be sure to review the entire Mortgagee Letter for a complete understanding of all policies.

Establishing an Economic Event
HUD defines an “Economic Event” as any occurrence beyond the borrower’s control that resulted in a loss of income, loss of employment, or a combination of both.  The “Onset of the Economic Event” is determined by the month that the loss of employment/income occurred.  The “Economic Event” exists if the loss of employment and/or income:

  • Lasted at least 6 months; and
  • Resulted in a 20% or more reduction in the borrower’s household income.

To determine if an “Economic Event” occurred due to a loss in income, the household income prior to the loss must be verified and analyzed.  Household income is considered the total gross income of the borrower and any co-borrower on the previous mortgage who resided in the borrower’s primary residence at the time of the “Economic Event”.  Household income must be documented as follows:

  • A written VOE for the 2 year period prior to the “Economic Event”; or
  • Signed tax returns or W-2s evidencing income for the two year period prior to the “Economic Event”.

To determine if the “Economic Event” exists due to a loss of employment, a written VOE is required.   If the previous employer is no longer in business, loss of employment should be documented as follows:

  • A written termination notice; or
  • Other public documentation reflecting the business closure; and
  • Documentation of receipt of unemployment income.

In addition to the requirements above, for seasonal employment, a 2 year history in the same field just prior to the loss of income is required.  For part-time employment, a 2 year history of continuous part-time employment just prior to the loss of income is required.

Note: If the household member is not an applicant on the current loan, authorization to verify employment or income loss to document the “Economic Event” is required.

Post “Economic Event” Income
Verification and documentation of the borrower’s household income after the “Onset of the Economic Event” must be completed in accordance with the guidance in the Handbook 4155.1 (Chapter 4, Sections D-E), ML 2012-03, and the Pacific Union FHA Loan Program Guide.

Credit Analysis
All delinquent accounts and indications of derogatory credit, including collections, judgments, bankruptcies, foreclosures, deed-in-lieu, short sales and other credit problems must be analyzed and documented to determine if the occurrence was  the result of the borrowers “Economic Event”, an inability to manage debt, or a general disregard for managing financial obligations.  The borrower’s credit report must be reviewed to determine if the borrower:

  • Exhibited “Satisfactory Credit” prior to the “Economic Event Onset”; and
  • The derogatory credit occurred after the Economic Event Onset; and
  • The borrower has re-established “Satisfactory Credit” for a minimum of twelve months.

Satisfactory Credit
“Satisfactory Credit” is established when the borrower’s credit is:

  • Clear of late housing payments, installment debt payments, and major derogatory revolving account credit issues within the most recent 12 months (excluding medical collections);
  • Current on all open mortgage payments within the most recent 12 month period.   If the mortgage was brought current through a “temporary” or “permanent” loan modification process, the payments must have been documented as being received in accordance with the modification agreement;
  • Meets all the other requirements associated with “Back to Work – Extenuating Circumstance” guidelines.

For borrowers with non-traditional credit, “Satisfactory Credit” includes a 12 month period of:

  • No history of rental payment delinquency; and
  • No more than one 30 day delinquency on payments due to other creditors; and
  • No collection accounts/court records (excluding medical collections and/or derogatory credit due to verified identity theft).

Documentation to support approving a mortgage loan, based on a borrower’s “Economic Event” related  delinquent accounts/derogatory credit must be provided as follows:

Credit Issue If credit issue is the result of a documented Economic Event
Chapter 7 Bankruptcy 12 months must have elapsed since the date of discharge.
Chapter 13 Bankruptcy Must have been discharged prior to the loan application and all required bankruptcy payments made on-time, or a minimum of 12 months of the pay-out period under the bankruptcy has elapsed and all required bankruptcy payments were made on time.

If the Chapter 13 bankruptcy was not discharged prior to the loan application, the borrower must obtain written permission to proceed with a mortgage transaction from the bankruptcy court.

CAIVRS If the CAIVRS screening indicates a claim has been paid within the last 3 years on a loan insured on the borrower’s behalf by FHA, a request for a waiver or resolution of the unresolved issue may be submitted.  The CAIVRS must be cleared prior to closing.
Collection Accounts Must document all collections and judgments were due to economic default.
Foreclosure & Deed-in-Lieu Minimum 12 months must have elapsed from the date of completion.  If the previous loan was an FHA loan, 12 months must have elapsed from the date when FHA paid the initial claim to the lender.
Mortgage History Any open mortgage is 0x30 in last 12 months.
Credit No current late housing payments or installment payment.  No major credit issue on revolving.
Non-traditional No lates on rental payments; max 1×30 on payments due any other creditor, and no collection / court records.
Short Sale/Pre-Foreclosure Twelve months must have elapsed since the date of sale.

Housing Counseling
Borrower(s) are required to participate in pre-purchase homeownership counseling or a combination of homeownership education from a HUD approved housing counseling agency, state housing finance agency, approved intermediaries or their sub-grantees, or through an online course.  Counseling must be completed a minimum of thirty (30) days, but no more than six (6) months prior to submitting a loan application and can be conducted in person, via telephone, via internet, or other methods approved by HUD.

The counseling fee may be funded by the borrower or the housing counseling agency, as permitted by  HUD’s counseling program.  All fees must be reasonable, affordable, customary and commensurate with the services that are provided.

Verification of pre-purchase counseling must be documented by a letter of completion on the Housing Counseling Agency letterhead, that includes the agency’s Tax Identification Number (TIN).  The letter must also include the:

  • Borrower’s name
  • Counselor’s name
  • Date counseling was completed
  • Borrower’s signature
  • Signature of an authorized official of the counseling agency

In addition, the following disclosures must be provided to the borrower in writing by the counselor:

  • An explicit description of any financial relationships between the agency and any lender; and
  • A statement that the borrower is not obligated to pursue a loan with a lender; and
  • A statement that “Completion of this housing counseling program and receipt of a letter of completion of counseling does not qualify the borrower for an FHA loan.  A lender will have to determine if the borrower qualifies for a loan.  You understand that you may not be approved for a loan.”


  Credit Qualifying Streamline Refinance Transactions Credit Scores
Correction: The  minimum credit score for FHA Credit Qualifying Streamline Refinances is 580 when the LTV is >90%.  This correction is in alignment with FHA’s policies for this LTV tier.

 Short Refinances/FHA Refinances for Borrowers with Negative Equity
Correction: FHA’s maximum DTI for short refinances/FHA refinances for borrowers with negative equity positions for loans that receive a TOTAL Scorecard “Refer” recommendation is 35%/48%; it was previously 37%/49%. This correction aligns our policies with FHA’s policies.

Three (3) Big Mistakes Lenders and Brokers Make During Loan Processing

Written by Michael A. Foote, CMB on . Posted in Uncategorized

It’s always amazing the amount of errors we see in the mortgage process. Even with the technology we have actively deployed and at our disposal today, it still comes down to competent humans doing a good job. So to aid our mortgage friends here is a couple of common errors we see.

#1 – Double check everything. Just because you typed it, or “saw it in the system” doesn’t mean it saved, or that related systems or documents have been updated. For instance, you updated fees and now you are creating a new GFE for your client. When you created the GFE, did you read it?  I mean really read it. Not double checking documents for errors created from poor data entry can cause many problems. Just today on a closing the borrower signed documents and the docs went back to the lender and the wire shows up at escrow and it’s short? Why, well when the lender issued a COC (Change of Circumstance) they did not carry over the increased broker fees. Sounds like a windfall for the borrower except brokers or lenders are not allowed to lower fees arbitrarily, and now we have a loan that can’t be sold and can’t be disbursed. Now loan documents will need to be redrawn and the whole closing process completed again. time is money and this delay caused a loss for all parties.

#2 – Even with all the training and licensing required today, we still see a lack of knowledge in the sales ranks for lenders and brokers. The disclosure process is technical, its detailed, and if done wrong, can cause a loan to be cancelled. It’s no joke. Leaving a title fee off the initial Good Faith Estimate and going to far in the process will require the lender or broker to “eat” the fee since a compliance violation would be created if the lender or broker tried to raise the fees. Even if they are normal and customary fees and even if the mistake was honest. Try explaining to the judge, “Your honor, it was an honest mistake that we forgot to add the $800 title insurance fee.

#3 – Pricing, Borrower Paid or Lender Paid and the Anti Steering Disclosure. No doubt that having new rules every year is causing major pains for the leaders of today’s mortgage companies. What remains to be seen are the plethora of future lawsuits sure to be created from incorrect disclosure. Sure today’s loans are a great risk for the investor and we have certainly cleaned up the messes that created the subprime crisis. But I can assure you there will be a gaggle of attorneys that realize that today’s disclosure process and borrower ignorance will create a entirely new vertical in the legal profession. One primary form I think will be exhibit “A”, will be the Anti Steering disclosure, mainly because the disclosure forms we see from clients are completed incorrectly. The Anti Steering is supposed to display alternative offers for the clients review so they know what they are getting and what other options are available with lower fees and a higher rate or vice versa. But many times this form is left blank. Again, a loan processing system is only as good as the data that comes out from it. It is critical that forms are properly completed or the lawman may come knocking on your door soon!

For more information on compliance and contract loan processing contact Michael Foote at www.CalPropRE.com


Three Reasons to use a NMLS Approved Contract Mortgage Loan Processing Company

Written by Michael A. Foote, CMB on . Posted in Uncategorized

There are many more than three reasons to use a contract processor. But these three reasons are the primary drivers in your quest to find quality support for your sales staff while minimizing fixed expenses.

#1 Contract Loan Processors, are paid on a closed loan basis. Sure its glamorous to have your processor sitting in the office, at your disposal in a moments notice. But let’s be frank,  in a refinance boom that may be critical, but in a purchase driver market, you only need to pay for what you close, not for wages, benefits, sick days, and even the potential harassment or workplace injury lawsuit.

#2 Contract Processors, are already trained. No need to spend weeks getting your new processor up to speed. Our Sr. Processors are already trained, able to work with your investors already, fully versed in creating disclosures, working with all the various lender platforms, and used to closing loans in a commission based environment. Remember they don’t get paid unless you do.

#3 Contract Mortgage Loan Processors save money. In a recent study, it was shown that contracting or outsourcing your third party services saves brokers and bankers money. It’s that simple. Full time employees in a declining production volume environment are expensive. Save the time and energy focusing on sales and marketing, not you operations.  



Contract Mortgage Processing is Now!

Written by Michael A. Foote, CMB on . Posted in Uncategorized

Production is down everywhere. You have a full-time loan processor. You pay W-2 wages and taxes if you fund loans or not. Why bother with managing employees when you can just “rent” processors by paying for loans that close and not for anything else. We are paid on a closed loan basis so you only pay for what you close. Certified Sr. Processors take your loan from application to funding and we can even contact your borrowers!!

Conventional Per Closed loan cost is $650

Government Per Closed loan cost is $750

Commercial Per Closed loan cost is $1495

We also offer most robust services and can even ask as your loan officer assistant. Prices are negotiable.


Purchase 101 – Ten First Steps every home buyer should take.

Written by Michael A. Foote, CMB on . Posted in Uncategorized

When we are preparing to buy a house there is a plethora or things that need to be planned out and executed.

OK, so you want to buy a house? Now what? Well the first question you should ask is, Can you afford a house? So here are 10 steps every home buyer should take.
Step 1. Pull all your income documentation (2 Years Taxes Federal only, pay stubs, W-2’s, 1099’s, K-1, any 1120’s or 1065’s you may have) and plop it down in your home office, kitchen table or foot stool. Income for a mortgage loan is calculated by using gross income. Or your wages before taxes if you are a wage earners. If you are self employed, then we typically use tax returns to calculate your two year average earnings. We don’t use Gross Income for this, but there are “add backs” to your income, or deductions we add back to your income calculation. That is why it is important to provide your mortgage professional with complete and accurate information at all times. Curious what an underwriter has to review? 
Step 2. At this point, you should be investigating who you will contact to start your application process with. You will then send all the items collected in Step 1. to that person by fax, email, overnight, or pigeon if you are so inclined.
Step 3. Once your mortgage professional determines how much house you can afford you should begin your shopping. There are a million good sites both by Realtors and sites like www.Realtor.com and www.Zillow.com and search for houses in the price range you are looking for, in the neighborhoods and cities you’d like to live in. Your mortgage professional will give you and your Realtor (To be named later) a Pre-Approval, Pre-Qualification Letter or something similar to that. This letter will outline your approval amounts, terms, and your overall strength as a buyer. This letter will be shared with the Seller and Listing Agent when they consider your offer to purchase. There is never anything confidential on these letters.
Step 4. Once you determine if there are homes in your price range, in the areas you want to be in, you should begin interviewing Realtors. Find someone knowledgeable about the home buying process and someone that really knows the home buying process. Like choosing a mortgage lender, choosing a Realtor, should always include a large consideration of experience. There is just no replacing real world experience.
And let’s not forget this is what may amount to the largest financial decision of your life.
Step 5. OK, We’ve got a Realtor and a Lender. Now you are going to get even more professionals involved. From home inspectors, to title and escrow, to home warranty to hazard insurance. You are going to need A LOT of other people involved in this home buying process. This is where your lender and realtor can provide a bunch of help. If experienced, they will have referral partners for just about every product you need and their prices are going to be competitive. If you are trusting them with finding and financing your home. You will most likely be able to trust their referrals. But with everything – get on the internet and double check stuff. It can’t hurt. Be educated about the things you know and Be educated on the things you don’t. If there is ever ANYTHING that you don’t understand… Call a time-out and make someone explain it to you.
Step 6. You’re Approved! So at this point, you are really only Pre-Approved. You’ve got a Realtor, You’ve got a Lender— Well go find a house already!!
Step 7. You’ve Found It!!  The house of your dreams. It’s got everything…. Well you better believe that everyone else wants it then too! Time to get your offer in quick. Your Lender prepares a specific pre approval letter geared to the house you want and the offer price your Realtor will make. This is critical time. Do you offer high or lower than list?  Do you offer a higher down payment to look stronger? These are items your experienced Realtor will help guide you though.
Step 8. The Offer. You did it! The offer is in. You went list, you feel good. Your Realtor is getting good feedback – and sure enough they accepted. You are in escrow. You’ve written your deposit check already. It better be from an account where the money was seasoned for a couple months. Now your lender will have  another list of items they will need from you. Remember Lending is paper intensive. The best way to deal with this amount of paper to BE ORGANIZED. Have a file. Have it organized. Gather and keep all documents together at all times. Take them to work with you. Remember a smart phone takes pictures. A great way to get pictures of drivers licenses and social security cards to your lender.
Step 9. In Escrow = In Hell – Lean on your Realtor and Lender when you are in escrow. They will be a guiding beacon of light in a time that will feel very dark at times. There is always a lot of back and forth and few fees you will usually have to advance. Typically the escrow deposit, appraisal fee, home inspection fee, homeowners association certifications, then of course the remainder of your down payment and fees. Although you can usually covers all your closing costs with the price of the new mortgage – just ask a seasoned vet how to do that 
Step 10. Closing you are there. There is usually a lots of hustle around your closing date. There could be a rate lock set to expire, a credit report that will need to be run again. Always an updated pay stub and bank statement condition it seems….But if you stay on top of everything and respond to requests quickly, you should get your loan documents to the table in a timely manner. Make sure your drivers license or ID is updated and current for your notary and relax your hand for a lot of signatures. You’ll feel like a rockstar by the time we are through. Once done your docs get sent to a bunch of different places (county recorder, lender funding department, title, etc.) and your loan is prepared to fund. Once funding occurs you are aren’t the actual owned until “we record” a term basically noting the deed transferring title has been recorded with the county…At that point you are a homeowner. A good Realtor and Lender can help even after closing. You may have questions about payments, home owner repairs, moving, what have you. Chances are your professionals will have the answers to the questions you have. We’ve seen it all as experienced real estate and mortgage professionals.
And congratulations you now own a house!