Jeff Rickard

     I have just spent the last few weeks fielding several calls that have started out with the phrase “last year I qualified for $300,000″ or “last year a mortgage guy said I could get a loan for $300,000″.     Well let me tell you, last year was a long time ago. 

     There is no more stated income, there are a lot less “bad” loan officers, there are no more “B” paper lenders and the concept of just saying yes and we will see what sticks is finally over.  

     The key is that these people who I have been talking to who are saying they qualified for $300,000 (a payment of about $2100/month) only made $2500 a month gross.  They NEVER “really” qualified for $300,000 but they are in total shock when I tell them they can only qualify for about $140,000. 

     You may ask how can they be that *&%$#@, but the truth is, the mortgage industry and certain Realtors not only said it was possible but actually closed the clients friends and coworkers, who made exactly what they made, on the $300,000 house.

     So what do we do now?  Start over, get the correct answers and instead of being angry about how much you qualify for be thankful that you did not buy last year!

     This is a great time to be a first time home buyer.  Prices are right, FHA rates are low and down payment assistance from the Colorado Housing and Finance Authority (CHFA) is easier than ever to get.  That is why my business and the business at Universal Lending is BOOMING.  

     So what is the problem?  The mortgage industry.  All the fall out from the past that actually has brought FHA and CHFA back from the dead is now bringing other players into the mortgage decision process.  This time it is the companies that provide mortgage insurance, at one time a mortgage service that was taken for granted is now part of the decision process. 

     If you are doing a 100% conventional CHFA loan in a declining market (almost all of the front range), such as My Community or Home Possible you now need to supply the mortgage insurer the following: the loan application, credit report, income documentation, sales contract and appraisal for their review. 

     What does that mean?  Best case scenario -more time (4-5 days as of today).  Worst case scenario - they say no.

We are all aware of the the changes and hysteria in the mortgage business lately.  There are over 200 mortgage companies / investors out of business in the last twelve months.  B paper is gone, no income is gone, stated income is for the most part gone, 100% financing is seriously hampered or gone in the conventional market, negative amortization is highly regulated or gone and low credit scores, if they can get a loan, will pay dearly for it. 

     The big question is will they stay gone?  In the past we have had many cycles of the market getting tough and the pendulum swinging in the opposite direction.  Then the market improves and the pendulum swings back.  Continue Reading »

 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.   

Thanks for nothing!  Sometimes the government does stuff to help us and sometimes they do stuff so that we think they are helping us.  FHA Secure falls in the latter category.  To date nationally FHA has only done approximately 400 true FHA Secure loans.  Remember this was suppose to help us all out of our loan crisis issue.  A great plan that just does not work in the real world.  To make matters worse the FHA website is telling us all what a great program FHA Secure is and that they have done thousands of loans.  What they have done is thousands of FHA cash out refis.  That is great but nothing new and certainly not FHA Secure.  For more detail on FHA Secure read my post from November 21st. 

     I hate to beat the same horse but I am getting a million calls from clients wanting to lock these new unbelievably low mortgage rates.  Please read the economic notes this week.  It hits the nail on the head.  You can access economic notes by clicking on the tab above. 

I have come across a fun web site.  It is the Street Advisor and it is a place that you can type in your address and see how your street ranks as far as vibe, wired, health, value and essentials.  You can also blog on their site about your neighbors - good or bad.  I have added it to the link section so you can keep up on your street and what the neighbors think of you!  You can see above that my street, Garfield St in Denver, rated an 87.57. 

I was at a meeting for the Builder Realtor Council (BRC) in Denver today and they had a presentation on market data. One of the questions was rating the “trust factor” in the marketplace. The most trusted in order were title people, Realtor, real estate attorney, builder and last - mortgage lender. Not really surprised by that news, the truth is, in Colorado we probably deserved to be on the bottom. Until very recently we were an unregistered, unlicensed group. That has all changed and you can read about that in my post on new mortgage laws.

So, the good news is we are cleaning up our act but where are the bad guys going? Two answers: they are staying and just going to do the business illegally or they are heading into the commercial market. Continue Reading »

     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 »

I have spent the last three months educating Realtors and the public through classes, websites, and this blog on the return of FHA. I have been telling everyone that if you are working with a loan officer or Realtor that has come into the business in the last 5 years, then most likely they’ve never done an FHA loan or had an FHA loan be part of their real estate transaction.

I have warned that if you do not know FHA in this market that you are at a competitive disadvantage. So why am I now warning you against new FHA loan officers? Because of a new FHA Alert that addresses brokers who were not FHA approved giving the impression that they are. They are giving their loans to an FHA approved ‘buddy’ who closes it and then gives a kick back to the broker. Is that the FHA “knowledgeable” lender you want to work with?

Now that is only part of the problem. The other half of this is that many brokers are moving en mass to FHA approved lenders to get jobs. Now if someone wants to move to new employers and better themselves I am more than fine with that.  What I am not fine with is that they come to work on Monday and by Tuesday they are on the street saying that they are FHA experts.

In today’s market, where the smallest hiccup is causing a deal not to close, it is imperative that you use an experienced FHA loan officer who works at a company that has experienced FHA underwriters and processors.