FHA and Investor Specialist

In Ben Bernanke's recent testimony to Congress, Mr. Bernanke spent quite a bit of time discussing mortgage reform.  Typically, most of Mr. bernanke's testimony is dedicated to price stability, keeping inflation in check, and maintaining low unemployment.  Mr. Bernanke spoke about the repsonsibilty the Federal Reserve has to protect the consumer in a financial services transaction.  He specifically wants Truth in lending Act (TILA) dislosures to be easier to read and to specifically note to consumers the effects of payment shock, rising loan balances, rate adjustments, and hopefully prepayment penalties as well.

Additionally, Mr. Bernanke plans to use The Home Owneship and equity Protection Act(HOEPA) to crack down on unfair and deceptice advertisng practices.  There also is going to be increased compliance reviews of subprime mortgage lenders.  This is a great start, but more importantly, what are we each willing to do individually?  Will we still "push" loans through that probably shouldn't be approved?  Will we advise consumers to make offers on homes 100k out of their initial stated price range? 

     In today's market, it is not uncommon for a buyer meet with several lenders to find the best program available to them.  With first-time homebuyers there are Bond Money Programs, CRA Loans, FHA Loans, VA Loans as well as Fannie Mae's MyCommunity Programs.  I have pre-qualified customers and recommended a program(for examples purposes, let's say an FHA Loan) only to find out a competing lender/broker has strongly discouraged this program.  I have in the past suggested the borrower and I call the other lender/broker together to find out why this program is not the right fit.  I ask the lender/broker directly if they are approved to offer that program.  More often than not, it is because the competing lender/broker is not approved to offer FHA Loans. 

     The needs of borrowers is different for each loan and the merits of various loan programs can be debated endlessly without conclusion.  Just make sure the reason a Loan Officer has soured on a particular loan program isn't just because they don't have it!

With the popularity of some reality based Real Estate programs, I was just thinking off of the top of my head of any Films that have prominently featured people in the Real Estate field.  The one that springs to mind first, Glengarry Glen Ross, is more about con artists than real estate.  As much as I like GGR as a movie, I would not consider it a movie about real estate agents.  American Beauty features two real estate agents in Annette Benning and Peter Gallagher.  I thought the pre-open house routine some of the many things an agent must go through to show a home, with comedic results.  George Costanza on Seinfeld worked in Real Estate in the beginning of the show.

Does anyone else have any interesting portrayals of mortgage folks, real estate agents, or real estated related professions in the movies?  How about any ideas for characters. or shows?  

If you are positioning yourself to purchase a home or refinance, here are some quick tips to increase your credit rating once you have obtained a copy of your credit report:

-If you have any collection accounts within the past 2 years, contact the creditor and make arrangements to pay the debt off.  Paying off collection accounts more than 2 years will not increase your credit rating enough to justify paying off the debt.  It may actually decrease your credit score.

-Do you have any credit cards with balances close to the limit?  If so, you should pay down these debts if you can or transfer part of the balance to another credit card.  Keeping credit card balnces below 50% of their limits shows debt management and will increase your credit score.

-Are there any errors reported in your credit report?  Many times, a "John Smith, Jr." gets the credit of "John Smith Sr.".  You can contact the credit bureaus to remove or correct any misreported information.

Good luck with your credit!

     I recently had a client who, despite having paid his bills on time, had a relatively low credit score.  This was due to his credit cards and other revolving balances being at or near the credit limits.  With credit scores having a huge impact on mortgage rates and terms, I decided to share some of the information on www.myfico.com regarding credit scores and outstanding balances.

     Credit balances make up 30% of your credit score.  This is next highest only to your payment history.  It is a good idea to keep your balances under 50% of your available credit on any given card.  If you can keep your balances even lower(30% or lower), try to do so.  If you are having trouble reducing your credit balance to limit ratio, you can always ask your creditor to increase your credit limit.  Ask in your request that they do so based on your payment history, rather than doing a new credit inquiry.  If you pay off a credit card, do not close it but rather keep a minimal balance to show activity with a low balance.

      It is always a good idea to obtain a free copy of your credit report annually as well in order to check for errors.  Good luck!

A common objection every loan officer encounters is someone who does not want his or her credit checked for a pre-approval or for a loan proposal because they do not want to hurt their credit score.  The mortgage industry is partly to blame for this, as many brokers/lenders have told customers this misinformation in order to "take them out of the market".  Website www.myfico.com has shared some of the information regarding credit scoring models, and I thought I would pull out some of the relevant information regarding inquiries.  They are as follows:

Inquiries have a total impact of just 10% of your total credit score.  Compare this with your payment history having a 35% impact and your outstanding balances having a 30% impact on your credit score.  One is allowed to have as many as 20 inquiries within the auto or mortgage industries within a 14 day period.  All of those inquiries are counted as just 1 inquiry.  In other words, you are not penalized to shop with more than 1 lender.  Furthermore, that maximum number of inquiries that will reduce a credit score is 10.  Any additional credit pulls in a 6 month period will have no further negative impact on your credit score.

I hope this helps clear up any concerns with credit inquiries.