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 appears that we will be able to go to $362,790 on FHA loans without a price hit.  The FHA increased limit for most of the front range is now $406,250.  So, if you are over the $362,790 you will experience increased cost to get that loan.  That cost is still undetermined but best guess is that it will be between 2.5 - 4 points.  WOW! 

Rates are going through the roof and the old standards of forecasting rates are no longer accurate.  What is going on?  The following is an explanation that is given by FNMA to their vendors:

The Capital Markets Sales Desk has fielded a large number of calls from customers simply asking,  “What’s going on?  Why is the mortgage market trading lower every day?”  The following are reasons that could help explain why mortgages are struggling and why current market conditions are so volatile: Continue Reading »

     This is a question that I am asked constantly and with the changes in the mortgage industry “as much as you want” is no longer the answer.  There is a “Credit Crunch” and an “Affordability Crunch” going on today.  In the old days it was banking practice to say you could afford 2 - 3 times your annual income for a home.  In the last few years that “New Normal” was expanded to 5-6 times your annual income, and then we would let you artificially inflate your income.  No wonder we are in a foreclosure nightmare! Continue Reading »

     The 2007 tax change that allowed mortgage insurance to be tax deductible has been extended by the IRS for the next 3 years.  Yippee! 

 What is a declining market?  It seems simple enough to explain, it is when real estate values are dropping in a market place.  Basically all of the front range currently qualifies as a declining market.  In the mortgage industry a declining market has major impact on the loans that we can do and how much you can borrow. 

     For example, if the home you want to buy is in a declining market conventional lenders require an additional 5% down payment.  So a loan program that was 100% financing now requires 5% down or basically changes it to a 5% down loan.  If you were required to put 10% down now it would require 15%.  Remember almost all the front range is considered a declining market by Fanni Mae and Freddie Mac. 

     FHA and VA has not at this time required additional down payment in declining markets but appraisals are now being heavily scrutinized.   

Two announcements this week are going to make it a little harder to get loans done for awhile. 

     The first is that Denver has been slated as a “declining market”.  What does that mean?  That means that because property values are on a decline that lenders are not going to lend to their maximum ability, they will require an extra 5% down payment.  In other words, if their standard program required 5% down, in certain parts of Denver they will require an additional 5% or 10% total.  The hard part of this is they do not give a list of “places”, some parts of Denver are fine and some are not.  You will not know for sure until appraisal.  

     The second new challenge we are facing is that Fannie Mae and Freddie Mac are instituting a “risk based” pricing model.  The lower your credit score the more it will “cost” you to get a loan.  680 FICO score and above will be fine, everything below that will incur more cost in getting a loan.  Less than 620 will require as much as 2 points in cost.  What is the bottom line?  At today’s rates you would be at 6.375% with 1 discount point,  if you had a sub 620 FICO score it would either be 6.375% with 3 discount points or 7.375% with 1 discount.  WOW!   

     You have probably heard the commercials on the radio that say “pay your mortgage off faster, save 10 years”,  “do not change your spending habits and pay your mortgage off in half the time”.  These ads have generated a lot of interest and have caused my clients to call and ask “what is it all about?”  The truth is that I do not know, so I figured I better do some research.  After my research I still do not know!  This post is a new concept for me, it is based on me knowing nothing and still giving an opinion. Continue Reading »

     Yes it does!  I had a past client tell me yesterday that “that’s the American way”.  I do not know if that is the true but I will tell you that this year I have personally pulled over fifty 400 FICO score credit reports.  The scale runs from 300-850.  300 sucks, 850 is awesome.  To give you a point of reference, when we were the preferred lender to Oakwood Homes we would pull credit on 600-700 people per year and in 2001 if we saw one 400 score that was amazing.

     What’s happened??????????    Who cares!!!!!!!!!!!!!!!!! 

     What we do care about is getting your score repaired.  You must improve your credit score if you are going to get a mortgage today.  All the bad credit score programs are gone.  What is the first step? Continue Reading »

     I had one of my Realtor partners call me yesterday and ask why her buyers, who were using another loan officer and closing on Friday were getting all new loan conditions and why they went from approved to not approved three days before closing. 

     We all know the answer to that, programs are being changed or dropped at a moments notice.  That is true and a great excuse but not the real truth on this deal.  The truth is there are still bad loan officers saying yes before they do their job.  In the past they could get away with it more because we had so many funky programs they could usually get them to fit into something.  The rate was way higher or closing costs had to be raised but although the buyer was unhappy with the loan they still closed.  

     Today if you are bad at your job, people will not close no matter what you do with rates or fees.  Many bad lenders are leaving the business but their are some who are desperately trying to hang in there and they are holding their clients hostage until they can land somewhere.  I have interviewed many brokers who say I have 10 deals please hire me so I can take them FHA.  The truth is they do not know FHA and 9 of the 10 deals are not deals, they are dead.  Instead of saying “okay I will call my clients”, they say “I will interview somewhere else”.  Good luck, the deal is still dead and you have never done an FHA deal in your 3 year career but I’m sure you know better. 

The biggest question if you are a borrower or a Realtor out there is; is this your loan officer? 

If you have stories or frustrations let me know.