Many self employed folks ask this question.  In my opinion, yes. I think stated income loans will once again be a prodcut offered by most banks. Here is why I think this will happen:  Mortgages are bundled up and sold as securities (bonds).  Right now the federal government is buying most of these securities. Hence the reason for such low interest rates and strict underwriting guidelines.

When the Feds stop buying mortgage backed securities and private investors begin buying them it's my belief that they will eventually get tired of a paltry 2%-3% return on their bond investments.  This desire for a higher rate of return I believe will once again spur creative financing options.

Why would banks do this?  Because investors are often willing to take higher risks for a higher rate of return.  If any of you reading this own stock in a company or a mutual fund then you have likely taken risk higher than that of a US Treasury.  It's a matter of demand - if investors want it then banks will produce it.  However I seriously doubt you will ever see underwriting as liberal as it used to be.

Approximately 10.4 million Americans are self employed. During the housing crises many of the stated income loans were available to wage earners (W2 employees).  This loan product was initially created for self employed borrowers with complicated tax returns.  But with a strong demand for higher returns the stated income wage earner and no doc loans were born. The stated income wage earner loan was the main culprit for mortgage defaults on the stated income loan versus those for the self employed borrower.

Bond rating agencies are to blame for our housing crisis.

These were rated as AAA (low risk) mortgages when in fact there were a lot of high risk loans mixed with the low risk loans. Sort of like selling a bag of apples with rotten ones hidden at the bottom but then telling you they are all fresh. Had the bond rating agencies rated the bonds accurately and had investors knew what they were buying the crisis would have unfolded differently.  Less people have an appetite for low rated bonds and a much smaller segment of the mortgages would have defaulted.

As long as regulators carefully screen bond ratings on mortgage backed securities then I don't see more stated income loan issues when they come back.

You have braved the real estate crises, plummeting stock market, waves of foreclosures, dropping property values and distrust from the public.  If you're reading this, you're to close! To close to succeeding! Don't give up, quit or throw in the towel.  We as an industry need you. You must have been doing something right if you're still here. It's not time to walk, it's time to build.

Maybe you've tried building a team in the past with no luck.  Maybe it's because you haven't had formal training on team building or how to properly manage people.  Maybe managing IS the problem rather than the solution.

When you have the time watch this motivational video.  It's suggestions could change the way you view your business.  With the large audience watching this speaker I have to think they paid money for this information.  Luckily this video allows me to share.  Enjoy!

Home loan junk fees.  What an ambiguous term.  So many things can be mistakenly classified as home loan junk fees including fees that are bona fide. Mortgage loan fees nationwide amount to roughly 110 billion annually.  You may wonder why that figure is so high after all it's just a home loan.

With each loan that funds there are multiple people working to complete the loan.  Many of the people involved in the transaction will never meet some of those who assist the loan officer in completing the loan process.  This includes

* a loan processor

* escrow officer

* title insurance company

* appraiser

* underwriter

* underwriting assistant

* lenders account executive

* funder

* doc drawer

* county recorder 

* courier

None of these fees are junk if they are bona fide meaning normal and customary charges for services performed.

A junk fee, essentially is a fee charged for a service that is not performed.

Home loan junk fees can also be a padded fee for a service that is performed. 

Example would be:  If recording your deed cost $85 and the lender or broker charged $125, this would be padding fees. 

With the housing crises into its second year junk fees fall under a term known as Predatory lending.  Lenders are in fear of loan buy backs so they are monitoring these types of charges very carefully.

Yes it is true!

HUD wants to make it clear that they appreciate the sacrifices and commitment to keeping communities strong throughout North Carolina. Law enforcement officers, teachers- pre-kindergarten through 12th grade, firefighters & emergency medical technicians can become homeowners through the Good Neighbor Next Door Sales Program sponsored by HUD while contributing to community revitalization.

A nice break for our police officers!

If you think about it this opportunity is better than buying a foreclosure!

HUD offers a discount of 50% from the list price of the home.

How it works

You can get a 50% discount off the HUD appraised value. For example, if HUD lists a home at $200,000, you can buy it for $100,000 provided, you occupy the home as your personal residence for 36 months. If you qualify for any FHA-insured mortgage program, your down payment is only $100 and you can finance closing costs.

You have to use a real estate broker or agent to buy the home

The purpose of the program is to strengthen communities by encouraging employed, professional law enforcement officers, teachers and firefighters & emergency medical technicians to live in the community. You will have 30, 90 or 180 days to move into the home you purchase, depending on HUD's determination of the condition of the home and the level of repairs that may be required, if any.

A great benefit for our brave fire fighters

You must live in the home as your sole residence for a full 36 months

Beware: HUD views the occupancy obligation seriously and vigorously pursues violators to the fullest extent of the law. 

The 30th, 90th or 180th day is the start date for the occupancy period. You are released from all obligations under this program at the end of the 36th month following the start date.

The homes are located in revitalization areas as defined by HUD

Search here for designated areas

Locate an address using HUD's map

You can use FHA, VA, or conventional mortgages, or even cash

HUD requires you to sign a Second Mortgage and Note on the discounted amount (which is $50,000 in the example above). No interest or payments are required on this "silent second" mortgage if you live in the home for the entire 36 month occupancy period. You may be required to pay a pro-rata portion of the discount to HUD should you fail to fulfill the three year occupancy requirement.

 After living in the home for three years you may sell it and keep the profit!

Other questions?

You know who can help you find one of these HUD homes?

Leesa Finley can!

Click her photo to contact

With all the news lately about the subzero weather and snow that the Midwest and east coast areas are experiencing, we shouldn't forget that Southern California has its share of devastating weather also.

This is a photo illustrating the excessive damage caused to a home from a west coast storm that passed through the San Diego area a week ago. It really makes you cherish what you have, and reminds us not to take life for granted.

I don't know how they'll get this resin chair back in the upright position!  My prayers go out to this family.

If you want to get the lowest rate and fees on a mortgage then you have to understand how the game is played:

1) Mortgage rates change daily and sometimes several times a day. To learn more click here.

2) Every loan has fees.  Third party vendors want to be paid for their services.  Loan officers and their company want to be paid for their services.  You will always pay for these services so the question is how?  A higher rate = less fees.  A lower rate = higher fees.  You will not get the best rate paying no fees - if you think you have then you have been duped.

Now that you are armed with the facts, this is how to get the lowest rate and fees on a mortgage:

A)  Ask the loan officer how much do you need to make on my loan?  Ask what service will be provided and then both should agree on a figure.

B)  What will the lender charge in fees? (They all have them and I can prove it)

C)  Are you a direct lender, correspondent or a broker?  Brokers must credit all lender rebates back to the   customer.  Direct lenders and correspondent lenders do not have to disclose any lender rebates.  Keep this in mind when choosing a loan officer.

Following these simple directions will make shopping for the lowest rate and fees on a mortgage less stressful.

First Priority Financial is licensed by the California DRE # 654852  Nevin's California DRE license 016552

  The opinions expressed in this blog are not necessarily those of First Priority Financial.

                     3700 Hillborn Rd #700, Fairfield, California 94534.   This is not a guarantee to lend.  * Not a licensed branch.

I can't sell my home, buyers aren't buying or it's the bad economy seem to be the key phrases from home sellers these days when their home doesn't sell.  Truth is those things have little to do with a home sitting on the market. I can't sell my home tells me that the seller did not listen to their agent or that they have not properly prepared their home for sale. 

I have successfully sold a multitude of homes all with a listing time of 45 days or less.  Did I list under the market?  Nope.  I made my properties available for viewing at a moments notice, staged the homes, priced them correctly (listen to your real estate agent-this is why you hired him/her) and always made sure the info on MLS was accurate.  So I think this article hits the nail on the head. It explains in detail precisely why homes don't sell. Get busy selling or get busy yelling!

This series explained the most common types of real estate fraud but I'm sure there are new schemes being thought up all of the time.  I hope this series provided some insight on some of the crazy schemes being perpetrated and how to recognize them.

Below is a copy of a suspicious activity report which is filed by financial institutions when they suspect possible fraud.  Below that are links to the authorities that investigate real estate and mortgage fraud.

http://www.irs.gov/compliance/enforcement/article/0,,id=162992,00.html

 http://www.occ.treas.gov/sar.htm

http://www.fincen.gov/forms/bsa_forms/

http://www.marisolutions.com/

http://www.mortgagebankers.org/FBIMortgageFraudWarning.htm

http://www.interthinx.com/?gclid=CI-Tnrqg1p4CFQO2sgodnhF4rQ

http://www.radian.biz/about/index.aspx

Information for this series was gathered from mortgage fraud blog, the FBI 2008 fraud report and the IRS.

Home loans since 1977

  First Priority Financial is licensed by the California DRE # 654852  Nevin's California DRE license 016552

  The opinions expressed in this blog are not necessarily those of First Priority Financial.

                                 3700 Hillborn Rd #700, Fairfield, California 94534.   This is not a guarantee to lend.

1. Changes are effective for case numbers assigned on or after April 15th, 2010.
2. New upfront mortgage insurance premium (UFMIP) will be 2.25% for all purchase and refinance loans.
   
3. The premium for H4H and HECM is 2.0%. H4H = Hope for Homeowners HECM = Reverse mortgages
4. This change applies to all standard FHA Single Family Programs except the following: Title I, Section 247-Hawaiian Homelands, Section 248-Indian Reservations, Section 223e-Declining Neighborhoods or Section 238c-Military Impact areas in Georgia and New York.

Reverse Mortgage Fraud Schemes

Senior citizens are being defrauded by exploiting reverse mortgages (AKA Home Equity Conversion Mortgages- HECMs).  The perpetrators include unscrupulous real estate agents, loan counselors, loan officers, mortgage companies, investors, builders, appraisers and even developers.

The scheme-

Senior citizens are recruited through television, radio, billboard, and mailer advertisements, to commit the fraud primarily through equity theft, foreclosure rescue, and investment schemes. Equity theft schemes are the most common method used by mortgage fraud perpetrators. 

With the help of straw buyers, the perpetrators withdraw “false equity” from properties.  Using county deed records they identify buyers and foreclosed, distressed, or abandoned properties.  The home is then bought using a straw buyer who falsely states on a loan application that they will occupy the home as their primary residence.

Unsuspecting seniors buy the home from the straw buyer.  After the senior is living in the home for at least 60 days, the criminals arrange for the seniors to get a reverse mortgage.

An appraiser who is part of the scheme will inflate the appraisal by arranging for minor cosmetic repairs, or falsely documenting repairs, that were never performed. 

Once the loan is complete the senior who bought the home is convinced to take a lump sum from the reverse mortgage.  The perpetrators, who are usually in collusion with the settlement agent, take off with all of the equity at closing. 

Fictitious loans and liens are created that enable them to distribute the cash to themselves, the straw buyer, and others at closing. 

You can find out more by visiting The Home Equity Theft Reporter

Information for this series was gathered from mortgage fraud blog, the FBI 2008 fraud report and the IRS.

Home loans since 1977

  First Priority Financial is licensed by the California DRE # 654852  Nevin's California DRE license 016552

  The opinions expressed in this blog are not necessarily those of First Priority Financial.

                                 3700 Hillborn Rd #700, Fairfield, California 94534.   This is not a guarantee to lend.