Jeff Rickard

When it comes to your credit score, don’t be caught by surprise!

April showers may bring May flowers but those storms may not be over yet.  The key is to protect you from the possible damage that may come from an unexpected storm.  Protecting your credit is somewhat the same.

Up until now lenders have always considered a 680 credit score as “A” paper.  If you had a score above 720 you were practically gold.  This is all about to change.  Fannie Mae and Freddie Mac have recently announced some major changes.

Imagine having to pay 2.75% in points and you’ve never had a late payment on anything!  As of June 1st on loans with LTV’s about 70% Fannie Mae will penalize borrowers by 50 basis points for a score below 720.  And Freddie Mac will penalize borrowers 30 basis points for a score below 740.  This is on top of the loan level pricing they have both implemented for borrowers with scores below 680.

What does this mean?  It means borrowers could pay hundreds of dollars more each month or thousands more at closing.  For example – on a $250000 loan, if a borrower has a score below 620 they would pay a 2.75% delivery fee at a cost of $6875.  More then ever it is important for borrowers to get their scores as high as possible. Continue Reading »

It has come to our attention that some sellers who are in trouble on their mortgages and are in pre-foreclosure or foreclosure are being advised to set up a “Land Trust” to avoid having other creditors attach liens to the property.  After reviewing the documents with our attorneys, we have determined this will be unacceptable and will in fact trigger the FHA 90 day flipping rule among other things.

In the example provided, the seller transfers the title to the property from him/her personally to this Land Trust which may or may not be in the Seller’s name.  Many times, this is put not only into the seller’s name but into the name of another individual or entity as well which is what will trigger the FHA flipping rule.

Please make sure when you are reviewing the contracts or title work that there is no reference to a Land Trust being the seller of the property.  If you find an instance of this then the 90 day rule must be applied. 

Remember you can not use FHA financing to buy the house unless the seller has been in title for at least 90 days.  There is an exception to this on bank owned properties and some non profit organizations.