Danny Salas

Archive for the 'Loan Qualification' Category

Appraiser Independence Requirements

Replacing Home Valuation Code of Conduct Code

On or around October 21, 2010  Federal Housing Finance Agency (FHFA), Freddie Mac and Fannie Mae will will have created and executed new appraiser independence requirements to follow the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act).  Until the change is released in the upcoming Selling Guide announcement, existing  provisions of the HVCC will still apply.

The Change

The revised requirements will continue to help us ensure that the highest standard of appraisal reliability and appraiser independence are retained. It will also maintain the spirit and intent of HVCC, and continue to provide important protections for mortgage investors, home buyers, and the housing market.

During this process, Freddie Mac has been recieving information and other valuable input from key industry participants.

For more information, visit the Home Valuation Code of Conduct Web pages on FreddieMac.com.

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Chico, CA Interest Rates Market Report – Economic Influences – May 24, 2010

Spain's Troubles Show Signs Of Euro Weakness

Large Spanish Bank Fails

The continued financial troubles, in Europe, keep pushing Mortgage-Backed Securities to areas that I couldn’t even have dreamed of, one month ago.  CajaSur, one of Spain’s largest banks, has FAILED and has been taken over by The Bank of Spain, Spain’s Central Bank.

Economic Recovery

The National Association for Business Economics (NABE) has pronounced a few existing figures, to the market, today.  They are claiming that the U.S. Economy will grow at an unanticipated rate of 3.2%, compared to the expected 3.1%.  Some good news on the employment front, was that they expect unemployment to drop to 8.5% by the end of 2011.  These numbers aren’t as hopeful as our government’s numbers, however, they are probably more realistic.  They also pin-pointed the economic recovery date to June of 2009.

US Treasury Auction

Starting tomorrow, the U.S. Treasury will auction off $42 Billion of 2-Year Notes.  Wednesday will see $40 Billion of 5-Year Notes, and Thursday will show another $31 Billion of 7-Year Notes.  These auctions can cause wild market reaction, however, with Europe’s troubles on the wing, who knows what can happen!

It Doesn't Get Much Better Than This!

Locking Advice

With a ton of economic information and the auctions, for this week, I would be comfortable Locking!  With the completely unexpected values of Mortgage-Backed Securities, I would take advantage.

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Processing the 4506-T: The NEW Delay In Lending

IRS Form 4506-T: More Potential Delays

What’s IRS Form 4506-T

Now that April 15th has come and gone, lenders are struggling with a new potential delay.  The 4506-T form.

The 4506-T allows the lender to verify, line by line, the actual filings of a client’s 1040 Federal Tax Returns.  If one line is off by $1.00, than your loan may not fund…period!  Lenders are processing these forms on each and every file…or they cannot sell the loan in the secondary market.

What’s The Problem?

Since you need two year’s tax returns on every file, many times clients need 2009 tax returns to qualify for their loan, because 2007’s income may have been too low, or maybe their business didn’t exist until 2008.  Particularly with self-employed borrowers, as lenders will use the “net” income to qualify a borrower for their loan.  When the 4506-T is processed, you must use the two years’ tax returns compared with two years’ line by line result, from the Internal Revenue Service.  However, can take up to ten (10) weeks for the process to transpire.  If you have a client that is unable to provide 2007 tax returns that support income for qualifying, and you have to wait for the 4506-T results, it can get frustrating.

So, What’s The Answer?

There are a couple of things you can do.  One is to take your returns down to your local IRS office and submit them, ask for a copy, ask them to stamp the returns, IRS Received, and provide that to your lender.  NOT ALL LENDERS will accept this, however, we know who does…of course!  The concern, here, however, is that if you have mailed your returns in, and you hand deliver them…you will be assessed a late fee, because the IRS won’t have record that they were actually mailed.  Frustrating!

Another Route

Have your borrower contact the IRS at 800-829-8374 and ask for the assignment of a tax advocate. You may need to assist them in the preparation of documentation, which should also include a Letter of explanation explaining that the borrower will suffer financial hardship, if the processing of the return and availability of the transcript is not expedited. I received a processed 4506-T, directly from the IRS, in two weeks by employing the same method.

If either of these two processes are not viable options…you may be stuck…waiting!

Freddie Mac Event A HUGE Success

Over 100 Real Estate Agents poured into The Big Room, at Sierra Nevada Brewing Company, to listen and learn from one of the nations largest purchaser of real estate loans; Freddie Mac’s, Governing Board Member, Scott St. John.  Sponsored by Access Real Estate Lending, the event lured participants from Red Bluff, Orland, Willows, Chico, Paradise, and as far away as Roseville, California.  Sr. Partner of Access, Daniel C. Salas, said, “It’s a real pleasure to have Scott St. John, here, to educate the real estate agents in our area.  With the exception of the Federal Open Market Committee Members, you don’t get much bigger than this!”

St. John discussed the reason banks are having more difficulty closing loans, these days.  He also talked about reasons why banks are slowly releasing their foreclosure inventory, as opposed to releasing it all at once.  Another key subject he talked about was where the lending and real estate industry is expected to go, through the remainder of 2010 and even into 2011.

Some of the positive points, brought up by St. John, were that even though the United States Government would stop buying Mortgage-Backed Securities, at the end of March, Freddie Mac felt as though there were many investors, sitting on the sideline, waiting to get into the market, and purchase these investments.  Therefore, even though rates are expected to move upwardly, resulting from this buying halt, it shouldn’t be too worrisome; as these investors haven’t been on the sidelines for years, and now we’re seeing them start to sit on the sidelines.  Another positive point was that Mortgage Insurance Companies are starting to become more flexible with their underwriting guidelines, and even have relaxed their loan amounts, compared to real estate prices, in Santa Cruz County.  This could just be a precursor to the rest of California.  ”It’s been difficult to obtain conventional financing with less than 10% Down (excluding FHA loans), until this recent development, in Santa Cruz.  It’s quite promising,” stated Salas.

St. John noted the lending industry saw about $3.5 Billion in loans, in 2009, while the industry expects anywhere from $1.3 – $1.6 Billion for 2010.  Eighty percent of these loans will be first-time home buyers.  ”What’s interesting about the eighty percent figure,” stated Salas, “is that seventy percent, of that eighty percent, is categorized as ‘first-time home buyers,’ because the industry’s definition of ‘first-time’ is somebody who hasn’t owned a home in the last three years.  So, people who owned a home, then lost it during the mortgage credit crisis, will be eligible to purchase another home, with only 3.5% down (FHA).  It’s an interesting situation, as these buyers were of the old-style qualification standards, and they’ll have to be ready to understand that loan qualifications have changed.  But, we’re ready to educate them.”

Scott St. John indicated, “financing a home, using FHA, will become more difficult, unless using a HUD Approved FHA Direct Lender, like Access Real Estate Lending.”  As one of the areas premier mortgage bankers, Access has financed over $665 Million in loans, in just ten short years.  ”We’re excited about the future, about the Chico Market, and that Scott St. John would come to our wonderful community, enjoy Sierra Nevada Brewing Company’s Big Room, and say such wonderful compliments about Access Real Estate Lending.  We’re quite honored.”