The FHA Expert

FHA & Mortgages..... when do you throw your hand (cards) in?

             

      

Client : "It's been 5 months and I am still waiting to close my loan."

You think to yourself, who gives a lender that long of a chance to close their loan. Purchase or refinance. I know we all should not be quick to judge, because things can happen. But how many chances do you give someone?  How many broken promises do you hear until you decide to seek other help or advice. In reality, how long do you actually wait?

I work with about 5 to 8 clients per year that go through this same dilemma. They come to me by word of mouth or online after they realize that nothing is happening with their current lender.

I currently have a client that came way of my mortgage blog. They started with this lender back in December of 2006. This loan officer was trying to take them subprime.  Now, many of us now about the subprime meltdown which Matt Heaton talks about. But this didn't start to take place until late February and throughout March of this year. So, this loan officer used that excuse. But what happened from the end of March to the end of May? Just one excuse after another.

After a while, this particular client realized that they couldn't keep their faith in this loan officer's promises. Even though this loan officer helped this client with her two previous transactions in the last 5 years. It started to cost her money because they needed to refinance to cash-out. And the sad thing is that rates have gone up about  1/2 of a percent in the last 3 months. On this particular mortgage, we are talking about $88 a month difference. That's $1,056 a year more.

So, I took the application just a few days ago and we'll be closing at the end of the month. I already have an approval and I am taking it FHA. Something that should have been decided 5 months ago.

I'll be writing a Part 2 blog based on this example and what to look for as a client. What signs to look for as your loan is in processing. I want to bring this up because I want to educate the average consumer and to make them aware of the ins and outs of how the mortgage process works. And actually tell you why subprime is good, not evil.   

HUD/FHA programs dropping or expanding? -- Fact or Fiction

I have heard and read a few perceptions of what is going on in regards to a few HUD - FHA programs from some AR members and others just passing in the streets.  What is being mentioned?

• HUD is looking to stop down-payment assistance programs. These would be such programs as Nehemiah, AmeriDream, and a few others.
• HUD is looking to lift the 3% funds requirement from home buyers. Which would mean that they would allow 100% financing.

Now, I have a problem with a few of these so-called rumors ...or are they rumors? My problem? There are people who are writing about them just from e-mails that they are getting or from others just talking about it on the fly. But nobody does any research or follow up to verify the validity. Not giving any specific information to what is actually being talked about and why.

What I am finding is that people are screaming that it's not fair, because it will hurt some sectors or areas that focus on this type of financing because of low-income housing. Reality? The grass is not greener on the other side. The reality and concern of it is because of the foreclosure rates on these types of programs. Yes, it goes to say that a few bad apples always ruin it for the rest.

Statistics from the NAMB state that the foreclosure rate for these non-profit assistance programs was 6.4% in 2004 versus an overall FHA foreclosure rate of 3%. Just in 2006 alone, HUD reports that 33% of all FHA borrowers used these down-payment gifts from these non-profit organizations. The true meaning behind this is that most of these borrowers are not using any of their own funds to purchase a home.

Sure, there can be arguments made that certain types of people abused this type of financing. Here is a great
story about a particular builder in Charlotte, North Carolina who used the Nehemiah program on the homes that he built. A quarter of the 147 homes built in a specific sub-division went into foreclosure under the Nehemiah program.

The argument that stems from this is that these buyers have no 'skin' in the transaction. They are using none of their own money. It's easier for them to walk away from the deal afterwards. Another issue was that the builder was jacking up the price of the home to compensate for his out of pocket reimbursement to the buyer as a gift. To see how this program works, please read the links below.

Summary: Part of the debate is that many say get rid of these assistance programs because HUD is playing with the idea of 100% financing. My question would be, does it really matter what we call the program? Common sense tells me that it's still zero down, no matter how you look at it. And they still would be able to get 6% seller concession.

Overall, it originally looked positive in regards to HUD's movement for such bills to be passed in regards to new HUD - FHA programs. House introduces FHA reform bill This was being talked about around the end of March 2007. Now HUD looks to ban the non-profit assistance program as of 5/14/07. What se thee?

 

Information on Nehemiah and creative financing.

Do you feel like you have the best job?

My job stinks!!!!!   Okay, some of my previous jobs weren't glamorous, but I always did my best. I always tried to have fun and make others laugh. But what about having a job that you love soooooo much that you wouldn't give it up for any other job in the world. Well, I have that job.

Did I ever grow up and say that I wanted to be a loan officer in the mortgage industry? No, I don't think too many of us ever had a dream like this. I went to college for Landscape Architecture. Look what I am doing now.

I was having a conversation with a few friends last week which made me think how fortunate that I was to have fallen into this job, the mortgage industry. Just listening to how a few of them like their job, but can't wait until they get home, so they can leave their work behind them. One person that I met, owns their own landscaping company. He likes what he does, but doesn't love it. Me? I started August 17th, 1992 and for some years, didn't make much. But that didn't stop me because I just love what I do. I love helping people get into their new home. I love being so creative when someone else couldn't come through with the financing, in which it seemed that I had saved the day. Or when I was able to show someone another way to finance their home that 3 other lenders didn't either know how or take the time to show them. It's called pride and the love for what I do. I guess it shows at times because I can never stop talking about what I do.  I LOVE MY JOB.  What about you?

 

But wait..... my mom always told me to tell the truth. I didn't lie, but maybe I stretched it some. I said I love my job. YES, I do. And I wouldn't give it up. But.....  as I look back, I could have been happy with a few other jobs. One of them would be as a fireman. I always wanted to be one when I was little. I guess because education was always important in my family and because there was never a 2nd or 3rd generation firefighter in my family, ever. There was no legacy to follow. And because of this, it was just a childhood dream that I out grew. I am sure so many of us had these same dreams in which we out grew as we became older.

After thinking again, I could see why I would have picked being a fireman. Helping people. I guess it's in my blood and I am thankful for this. Then I think it's within reason to say why I joined the US Army for a few years. Helping people.

Do you love what you do?  What other job(s) would you have liked to have tried? And if so, why?