The customer bill of rights

Mortgage Borrowers' Rights

ATTENTION BORROWER!

This may be the largest and most important loan you get during your lifetime. You should be aware of certain rights before you enter into any loan agreement.

You have the RIGHT to shop for the best loan for you and compare the charges of different mortgage brokers and lenders.
You have the RIGHT to be informed about the total cost of your loan including the interest rate, points and other fees.
You have the RIGHT to ask for a Good Faith Estimate of all loan and settlement charges before you agree to the loan and pay any fees.
You have the RIGHT to know what fees are not refundable if you decide to cancel the loan agreement.
You have the RIGHT to ask your mortgage broker to explain exactly what the mortgage broker will do for you.
You have the RIGHT to know how much the mortgage broker is getting paid by you and the lender for your loan.
You have the RIGHT to ask questions about charges and loan terms that you do not understand.
You have the RIGHT to a credit decision that is not based on your race, color, religion, national origin, sex, marital status, age, or whether any income is from public assistance.
You have the RIGHT to know the reason if your loan was turned down.
You have a RIGHT to ask for the HUD settlement cost booklet “Shopping for Your Home Loan”.

What is a Loan Assumption

A loan assumption means the borrower will qualify to assume the loan.
© Big Stock PhotoLoan assumptions were a popular financing option in the 1970s / 1980s but fell out of favor during the 1990s / 2000s. Appreciation was pretty strong during the latter time period. Lender requirements were more lax, and many buyers took out 80/20 combo loans.

Why Some Buyers Preferred a New Loan Over a Loan Assumption

•Too Much Equity
Part of the reason why loan assumptions were not utilized during '80s / '90s was because during the boom years, sellers had too much equity and buyers didn't have enough cash to bridge the gap between the loan and sales price. Many sellers were unwilling to do owner financing.


•Interest Rates Were Lower
Another reason that loan assumptions fell by the wayside for 20 years was because buyers usually could get a lower interest by taking out a new loan than by assuming the existing loan. It made little financial sense to assume a 7% loan when the bank down the street offered 5%.


•Alienation Clauses
The main reason very few buyers pursued a loan assumption from 1990 through 2009 was because almost every mortgage contained an alienation clause. An alienation clause in the mortgage gave the bank the right of acceleration in the event of title transfer.


Before Considering a Loan Assumption
The climate needs to be right for a loan assumption. There are generally two types of loans that will allow a loan assumption, and they are FHA loans and VA loans. Other loans typically call for payment in full in the event the home is sold to another buyer. Sometimes, buyers take title subject to and do not assume the loan. Buying a home subject to can be risky.


•Compare Interest Rates
When interest rates are higher than the existing loan's interest rate, it could make financial sense to assume the existing loan at a lower interest rate. The difference in a monthly payment on $200,000 at 5% versus 7% is $257 a month. Over 5 years, that's a savings of $15,420.


•Compare Loan Fees
Lenders are required to give borrowers a Good Faith Estimate or GFE. The GFE spells out all the costs associated with obtaining a mortgage. Generally speaking, buyers pay a lot more in loan fees to obtain a new loan than it costs to assume an existing loan. The difference could be several thousand dollars or more. Ask the bank to give you a statement containing its loan assumption fees.


•Obtain a Beneficiary Statement and Copy of Mortgage
Before taking the seller's word for it and spending money on home inspections, get a copy of the beneficiary statement to determine the unpaid balance of loan and whether the loan is truly assumable. In softer real estate markets, the difference between the unpaid balance and the sales price might be low enough that a 10% or 20% down payment will let you pay cash to the loan.


Tip: If the equity in the home is too high, consider consulting a real estate lawyer before engaging in so-called creative financing or owner financing.

The real story behind how money works

Great simple in the know link to how and why we are in the economic situation we are in....

How to think about how to buy a house

Seth Godin wrtoe this article that I wish I had written!

obama asks for public input into mortgage refurm measures

So, here's your chance to let your legislatures know what you think of your recent purchase or refinance mortgage experience -

Is the rural housing bill important to all of us ... yes!!!!

H.R. bill 5003 "The Rural Housing Improvement Act" introduced today to resolve the projected funding shortfall with the Guaranteed program.



Key provisions of the bill:





It is said to be a short bill of approximately 21 sentences in length.

Key to passage of the bill is the fact that it will result in the program being self-funded with no increase to the deficit.

Self-funding will be accomplished by increasing the guarantee fee from 2.0%. Expectations are for an increase to 3.44% or 3.5%. The 3.44% number is said to be the exact figure based upon 2009 performance, but it may be rounded up to 3.5%.



Going forward, the USDA program administrator will have authority to raise or lower the guaranty fee based upon loan performance from the prior year. For example, 2010 performance is looking better than 2009, so if that pattern were to continue, one could expect to see the guarantee fee reduced next year.





The combination of these provisions is expected to enable USDA to avoid future funding shortfalls.



The bill is in committee now and was introduced by Shelley Moore Capito, the ranking Republican on the committee. Barney Frank is the ranking Democrat on the committee. We are not hearing of opposition to the bill. The House version of the bill has been provided to the Senate so that one consistent version can be approved by both and forwarded to the President for signature.



The goal is for the bill to be passed before current funding is exhausted.



Now is the opportune time to contact your congressmen regarding your support for immediate passage of H.R. bill 5003. It sounds as if there is little doubt about the bill's passage, but the most urgent challenge is to get it to the top of the priority list for approval and Presidential sign-off.

Do you need a credit score improvement?

This site will show you a company that will work with you to see if you score can be increased - for a minimum fee -

Home sellers and buys benefit $$ from seller buy downs

Don't know what that is? It is a financial position that really works, really saves the seller a loss of income, the buyer real money in monthly savings and tens of thousands of dollars over the life of the loan - I can show you the real cost/save benefit ...

As a single woman do you have different financial needs than a single man?

As a single woman - of a certain age - I was under the impression that all people who worked in the financial industry - lending and investing were created equal - and as a newly single woman - I needed to listen to their advice. What I found, with the men I worked with was - they did not understand what I needed to know from them - which was everything! As a single woman - I can tell you that if you are seeking financial advice regarding - anything - but especially mortgage information - you owe it to yourself to make sure the person asks you the following questions - how long to you plan to stay in the property, what is going to happen to your income in the next 2 - 5 years, what is going to happen to your status - are you going to start a family? Are you going to have parents who might need extra care? Why - because if your largest debt - your mortgage is not one that meets all your needs - today and for the next 5 - 30 years - you will lose a great deal of money. How do I know this? Before I was in the industry - I had a mortgage that over an 8 year period cost me about 70,000 more than it should have - because my loan officer took the application information asked me what kind of loan I wanted - and did not take the time to ask me a single question about my future plans - and because I was sure this man was a professional - I took the advice - and the loan. I will do all I can to make sure this does not happen to you!

Why is it taking so long for my mortgage to be approved?

Because your debt will be sold to Freddie and or Fannie - the banks cannot afford to keep your mortgage debt - and the two major purchasers of your debt from Freddie and Fannie told the US government, if you want us to purchase your debt - you will guarantee our rate of return on the debt we purchase from you - no matter what. So if you default on your mortgage, the US government still must pay the people who purchased your mortgage debt. The US government can also require the bank - the originator of your mortgage - to buy back the mortgage debt if you default on it - the goal of the banks is to make a profit and sell their debt. The banks are making absolutely sure that your mortgage application and paperwork is in 100% compliance with the Federal Government Guidelines - so they never have to buy back your mortgage debt. It's not you, your paperwork or your mortgage broker, person - it's the economy!

Short Sale and the tax ramificaitons

Here is a link from the US government regarding loss due to short sales - know that you MUST do some tax planning before the sale is complete - so you are not caught in another financial bind you did not see....

http://homebuying.about.com/gi/o.htm?zi=1/XJ&zTi=1&sdn=homebuying&cdn=homegarden&tm=79&f=00&tt=13&bt=0&bts=0&zu=http%3A//www.irs.gov/individuals/article/0%2C%2Cid%3D179414%2C00.html

How your loan modificaiton might be working

This is a link to a report that I find shocking - and yet is true. If you are as outraged as the rest of us who have viewd this - let your congress and senate representative know!

To Float or Lock

Reports from fellow mortgage professionals indicate lender rate sheet are slightly better but mostly unchanged from yesterday afternoon. The par 30 year conventional rate mortgage remains in the 4.75% to 5.00% range for well qualified consumers. To secure a par rate you must have a FICO credit score of 740 or higher, a loan to value at 80% or less and pay all closing costs including an estimated one point loan origination/discount/broker fee. You may elect to pay less in upfront fees, but you will have to accept a higher interest rate.

When considering the LOCK vs FLOAT decision, I think of it as so: WE ARE PLAYING CHESS, NOT CHECKERS


My lock bias is based on the big picture outlook. Mortgage rates are currently priced near very aggressive levels. Barring a major shift in sentiment that drives benchmark Treasury yields lower, mortgage rates should move higher in months to come. While floating day to day can result in small reductions in borrowing costs, the risk of rates rising is large. This is long term guidance.

If you floated overnight, you have picked up small improvements to your borrowing costs. MBS prices continue to rally today and some lenders may reprice for the better. If they do, I would be locking this afternoon, especially if you are within 30 days of closing. As I said earlier, lenders are not lowering rates under 4.75%. This has held true all month! While it is very tempting to continue floating over the weekend, especially with stocks looking very weak, I think my point regarding a "bottoming out" in mortgage rates will hold true, even if the bond market continues to rally.

We have been here before, we have seen stocks sell off only to rebound shortly thereafter. While there will be opportunities to float in the short run (overnight), until we see proof of a fundamental shift in economic outlooks, we favor locking.

How to Successfully Get a Mortgage in 2010

How to Successfully Get a Mortgage in 2010
Getting a mortgage in 2010 is a little more complicated than it has been in the past due to the challenging economy and increased government regulation of the mortgage industry. In fact, it's like a giant hurricane has swept through the housing and mortgage markets, leaving chunks of
debris and danger in its wake. But never fear; that's why I am here! As your Certified Mortgage Planning Specialist, my role is to walk by your side, be your personal guide, and set you up for success every step of the way. Here are a few of the challenges that we will tackle together as we
navigate the danger zone known as the 2010 mortgage process!

New Good Faith Estimate
The US government has created a new version of the disclosure form known as the Good Faith Estimate (GFE). The old GFE itemized all your closing costs and illustrated your "cash-to-close" - the amount of cash you would need to bring to the closing if you are buying a home, or the net proceeds you would receive at the closing from a cash-out refinance. The new GFE lumps in your closing costs under certain categories instead of itemizing them, and does not illustrate your cash-to-close. Also, if the seller is paying closing costs or points on your behalf, this is not reflected on
the new GFE. In other words, it will look as though you are paying these fees even though the seller is paying them. As your Certified Mortgage Planning Specialist, I go above and beyond the government's minimum requirements for my clients. In fact, I have created special systems and easy-to-understand forms to help illustrate the total costs associated
with the loan options available to you. Please contact me for more details.
New Appraisal Guidelines
Most mortgage loans these days are either insured by the Federal Housing Administration (FHA) or sold to Fannie Mae or Freddie Mac. This means that mortgage banks and brokers need to follow the rules set by Fannie, Feddie, and the FHA. In 2009, Fannie and Freddie adopted new rules surrounding the home appraisal process. In 2010, the FHA followed suit and implemented many of the same guidelines. What this means for you is that the appraisal process is going to be more stringent and inflexible, costly, and time consuming than it has been in the past. Standardizing the mortgage planning process through participation with the CMPS community of experts.
In fact, many appraisals are now conducted by appraisers who may not live in your community, resulting in value estimates that may not agree with your own opinion of what your home may be worth. Also, many appraisals now go through multiple layers of screening and are handled by Appraisal Management Companies, resulting in higher costs and fees. Finally, loan originators are prohibited in most cases from ordering appraisals or communicating with appraisers. Even so, it is important to keep in mind that an appraisal is simply somebody's opinion of what your home
would sell for in today's market. You and I are entitled to disagree with the appraiser and have a different opinion, but the lending guidelines that we need to follow require us to use the appraiser's opinion when calculating your loan amount and strategy.
As your Certified Mortgage Planning Specialist, my commitment to you is that I will help you understand the appraisal report once it is completed. If there are any errors, I will do what I can to get them corrected. Most importantly, I will work hand in hand with you to adjust the mortgage strategy as necessary if the appraiser's opinion of value comes in
below what you or I think your home may be worth.
New Disclosure Rules
The US Congress has enacted some new laws, and the Federal Reserve Board has issued some new guidelines that could delay the loan process. For example, if the APR on your loan changes by more than 0.125% before the closing, the lender needs to issue new disclosure forms and give you time to review the new forms. Here are just a few examples of what could cause the APR to change:
You decide to lock in your interest rate or get a rate lock extension
You decide to reduce your loan amount
You are getting an adjustable rate mortgage and the index value changes
Your credit score changes before closing, resulting in a higher rate or higher fees
You decide to pay more or less points than what you initially requested
As your Certified Mortgage Planning Specialist, my commitment to you is that I will help you avoid costly delays to the best of my ability by planning with you ahead of time and setting you up for success. While I can't control everything that happens during the loan process, I do have the experience to know what pitfalls to look out for and help you plan
accordingly.
Standardizing the mortgage planning process through participation with the CMPS community of experts.

Higher Credit Score Guidelines
As stated above, most mortgage loans these days are either insured by the Federal Housing Administration (FHA) or sold to Fannie Mae or Freddie Mac. This means that mortgage banks and brokers need to follow the rules set by
Fannie, Freddie, and the FHA - all of whom have issued stricter credit scoring guidelines. I know it sounds ridiculous, but if your credit score is less than 740 (gasp!) you may get hit with higher fees if your loan is being sold to Fannie or Freddie! Most of my clients are responsible individuals who take pride in paying their bills on time and maintaining a
good credit rating. However, many Americans have recently been hit with unexpected financial difficulties due to the challenging economy.
In fact, many credit card companies have reduced the credit limits on accounts that have never even been late. This is causing credit scores to go down across the board for people who have never been late on any payments in their life! If you fall into this category, or if you have some challenges with your credit score, you may get hit with higher costs when it comes to getting a mortgage. As your Certified Mortgage Planning Specialist, I will work with you to evaluate your options and point out strategies and ideas for increasing your credit score and getting a great deal on your mortgage.
Please contact me for more information on any of these items and how they may impact your situation. As always, I am here for you every step of the way. Together, we will make getting a mortgage in 2010 a very rewarding experience for you and your family!
Standardizing the mortgage planning process through participation with the CMPS community of experts.
Jennifer Buchanan, CMPS ®
57 Green Farm Road
Westport, CT 06880
203-341-6949 direct

First-Time Homebuyers Tax Credit

Tax Credit for Homebuyers
First-Time Homebuyers (FTHBs): First-time homebuyers (that is, people who have not owned a home within the last three years) may be eligible for the tax credit. The credit for FTHBs is 10% of the purchase price of the home, with a maximum available credit of $8,000.
Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.
Current Owners: The tax credit program now gives those who already own a residence some additional reasons to move to a new home. This incentive comes in the form of a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.
Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.
What are the New Deadlines?
In order to qualify for the credit, all contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010.
Tax Credit Versus Tax Deduction
It’s important to remember that the tax credit is just that… a tax credit. The benefit of a tax credit is that it’s a dollar-for-dollar tax reduction, rather than a reduction in a tax liability that would only save you $1,000 to $1,500 when all was said and done. So, if a first-time homebuyer were to owe $8,000 in income taxes and would qualify for a tax credit of $8,000, she would owe nothing.
Better still, the tax credit is refundable, which means the homebuyer can receive a check for the credit if he or she has little income tax liability. For example, if a first-time homebuyer is eligible for a tax credit of $8,000 but is liable for $4,000 in income tax, she can still receive a check for the remaining $4,000!
Higher Income Caps
The amount of income someone can earn and qualify for the full amount of the credit has been increased.
Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers who earn $145,000 and above are ineligible
Joint filers who earn up to $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn $245,000 and above are ineligible.
Jennifer Buchanan
MetLife Home Loans
Jbuchanan@metlife.com
203-341-6949 - phone

Why you need a Mortgage Committment to Lend

If you are in the market to purchase a home, you will want to have either a pre approval or a commitment to lend document from a mortgage bank or broker with your offer to purchase.
A pre approval means - you have spoken with a mortgage lender and have verbally given them your financial information and permission to order a credit report. The mortgage lender will then have your verbal information analyzed by their computer underwriting software - and give you an approval, subject to verification of the verbal information you have provided. So in reality there is no guarantee you will be approved for a mortgage with a pre qualification.

A commitment to lend means, you have submitted an application with a compete document package to a mortgage lender. You have supplied items such as, pay statements, bank statements, W2's, tax returns, photo ID - and any other required documents. Your loan application package has been approved by the bank, and when you find a property the bank will lend you mortgage money after an appraisal determines you are paying fair market value for the property. It is in your best interest to have the mortgage lender approve you for the maximum mortgage you qualify for. It is easier to ask for less money than it is to ask for more, and you will know for sure your home purchase budget. If you find a property that requires less money than you qualify for, the good mortgage lender will issue a letter with no dollar amount, so your ability to negotiate a price will not be compromised by how much mortgage money you actually qualify to borrow.

When you submit your offer to purchase a property, the seller will most likely chose a buyer who has a commitment to lend - Real Estate Agents know the difference between a pre qualification - and a commitment to lend and they will advise the seller accordingly.

The hardest part of the purchase process for a mortgage is the commitment to lend - and it just makes sense if you are a serious buyer to complete the full process before you start to make offers on a property.


A pre approval or a commitment to lend is a no cost, no obligation process for the borrower. If you are serious about a purchase, chose a lender and have yourself, at no cost and no obligation - approved for a commitment to lend.