Buying A New Home? Read this first. 4 steps to avoid Mortgage Application Stress

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

logoFor 25 I’ve been watching new home buyers make the same mistakes over and over. If you are going to buy and use financing via a new mortgage there are several items you need to keep in mind and/or complete to ensure a smooth funding. This is not a complete list by any stretch but I can tell you this list will save you somewhere along the line.

1. Get Approved. Not Pre-Qualified. There is a huge difference. It is possible to obtain a full underwriter (human) issued approval,  before you find the home of your dreams. It’s called a TBD as in To Be Determined, as in, you will determine what the address is after you get approved. Your Loan Officer should know this is an option. Getting pre approved merely denotes an application has been reviewed and maybe automated underwriting has issued an approval. Full approval helps you understand what you truly qualify for.

2. When you are shopping for, in escrow for, or getting ready to close.. DO NOT ever, UNDER any circumstance buy anything new on credit, don’t apply for that new stove or refrigerator. don’t finance carpet. If anyone runs your credit or even worse extends you credit, you may find your loan approval has been reversed. And yes, I’ve tight deals get cancelled over very small amounts of new credit.

3. Get your items to your lender as quickly as possible. Turnaround is everything in our business. And turnaround times apply to you buyers as well. When you are asked by your lender, escrow officer, processor etc., make sure you respond with the items they need as quickly as possible. You’ll be doing yourself a favor!

4. Read what is being sent to you. Read your contract carefully and review your loan paperwork in detail. The rules these days dictate that lender and brokers disclose terms much clearer and leave little room for error. This step will avoid last-minute confusion about your loan terms and leave you with a bad taste in your mouth because you didn’t keep yourself informed.

 

 

Loan Processing Made Easy?

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

 

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You’d think with all the technology today processing a loan would be seamless, perfect, and never without a smooth and timely outcome. Well you’d be wrong. While it is fair to say technology has really helped the overall process, it has however become a much more compliant comliant world. When we started processing loans… many many MANY moons ago. There was a few forms in triplicate filled out by hand or a handy selectric II typewriter and underwriters looked at loans on their merits.. There were no credit scores.

Well those days have changed and along with the seemingly never ending amount of compliance, rules and regulations, technology has only offset the added delays.

 

And let’s not forget, while we at CPR are technologically and digitally proficient, the average borrower is still living in an analog world.

It’s not uncommon to get a stack of paperwork from a client which will have to reviewed, organized, compiled, verified, and THEN converted to a digital format. In fact, even with the amount of digital signatures being completed out there, many lenders still want good ole fashioned “wet signatures” on certain documents. And final loan documents are still almost entirely wet signed and witnessed by a Notary as it has always been.

So ever with the technology today, we are still doing the same job in mostly the same way.

 

CalProp is now CPR Processing

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

It’s been awhile since we touched base. But CPR is growing nationally! With the expansion we are changing our name, a bit. California Property Resources, will be CPR Processing very shortly. We are thrilled with our new clients and the opportunity to serve you and your clients needs.

So what’s new? Well we’ve got a new favorite wholesale lender we are working with. Quicken Loan Services has developed an absolutely fantastic online lending platform for mortgage brokers. They real advantage with technology is that is supposed to make things easier, faster, and cheaper. But in many cases in lending technology has been added and developed into a hinderance in getting things done. QLS is providing real value and making things better for the mortgage broker. If you haven’t checked them out we encourage you to do so.

 

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.

 

 

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
PUFWL-2013-031

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.

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