FHA Streamline- Lower Interest Rates Spark Refinance Savings

Posted in Credit Notes,Financing- Loss Mitigation,Lender News Reports by Administrator on the October 15th, 2012

FHA Streamline- Lower Interest Rates Spark Refinance Savings

Mortgage rates continue to reach new lows, as FHA streamline refinance is in more demand. Homeowners with higher rate FHA mortgages pre-2009 are beginning to see the savings. Over 3 million FHA borrowers have a 5% or more rate.

You can almost guarantee that refinancing with an FHA streamline will save you money instantly. FHA guarantees it or you won’t be able to close the transaction.  It’s called “Net Tangible Benefit” you either qualify for a benefit by doing the refinance or lenders can’t refinance you. Borrowers with loans that were closed prior to June 1, 2009 would be most likely to see the largest savings – the minimum benefit is 5%. Those Borrower’s also find they are eligible for a reduced upfront mortgage insurance premium of .01%, as compared to the current upfront premium for a new loan which is 1.75%.

FHA’s mortgage insurance premiums also offer a lower premium cost as an added benefit.

FHA does not require an appraisal and therefore doesn’t have a Loan to Value ceiling.  So borrowers with upside down mortgages are more likely to qualify and closing costs are lessened. The only down side is “no cash out.”  It is expected that some Borrower’s could actually lessen their monthly mortgage debts to the point of reducing their loan terms which will eventually lessen the overall interest they pay over time.

FHA intended the streamline refinance program to reward borrowers that have paid their mortgages on time and have maintained their credit standing. It also has the power to help those with lower incomes to refinance due to it’s low documentation requirements.

If you are looking for more information on the FHA streamline refinance, you can email your request to

PMI removal at 80% loan to value-Homeowners Protection Act

Posted in Credit Notes,Financing- Loss Mitigation,Lender News Reports,Real Estate by Administrator on the September 21st, 2012

PMI removal at 80% loan to value-Homeowners Protection Act

PMI removal is only one of the many laws to be aware of when buying a home.  Most of these laws require the Loan Officer or Lender to take action. Rarely are there laws that allow the borrower to take action and get direct benefit. That is what the Homeowners Protection Act, also known as the PMI Cancellation Act, is for.

The Homeowners Protection Act is all about private mortgage insurance( PMI) and when it can, and when it will, be removed. It’s important to remember about PMI removal that the Homeowners Protection Act does not apply to government loans like FHA, VA or USDA
loans or loans with no PMI.

For conventional loans, PMI applies when the LTV is over 80%. The Homeowners Protection Act says that mortgage insurance cannot remain on loans for the duration. Once a borrower’s principal balance reaches 80% of the original value the borrower can request that the PMI be removed. Most of the time lenders will use the original appraised value of the property, however, they can use the current value if it has gone down or if the borrower pays for the appraisal and did improvements to justify an increase in value. When requesting PMI removal at 80% the lender can say no but when the LTV reaches 78% of the original value the PMI is required to have the PMI removal be automatically done.  Lenders are required to notify the borrower of the details of their PMI at closing, when the LTV reaches 80% and if the PMI has not yet been removed, when the LTV reaches 78%. This way the borrower doesn’t “forget” about their PMI and can have their monthly mortgage payment reduced when their loan to value qualifies.

Remember, when you are working with your loans that are required to have PMI, remember what the Homeowners Protection Act does for you. You will be one of the few borrower’s who know the details of the law and how it can help save money later.

Knowing the laws of the mortgage industry is not only required under the NMLS in order to become a licensed Loan Officer, it also helps realtors to provide a better service to our clients. Real Estate professionals who know about the laws and regulations in their industry tend to have more repeat clients and referrals. Therefore, there’s no better time than the present to get more familiar with the laws and regulations that affect our clients most. With our newsletters, we will continue to assist you in becoming an authority on housing so you have confidence based upon competence!

Read the full ACT here courtesy of the federal reserve at

PMI removal-opening the door to more informed home ownership

PMI removal-opening the door to more informed home ownership

Short Sale Outcomes why Loan Modifications don’t solve the problem

Posted in Credit Notes,Financing- Loss Mitigation,Real Estate,Welcome by Administrator on the September 20th, 2012

I have listened to recorded countless videos on how to convert homeowners off of loan modifications and into short sales. The basic reality that needs to be understood by both homeowner and agent is that when ANY paperwork is done on or for a short sale there is a 99% chance that there will either be a short sale or a foreclosure in the future.


Simple, excluding the 1% that hit the lottery and the homeowner gets a full rewrite or recast or even possibly an equity reduction on their existing loan terms, the reality is that they won’t!

It is just basic math.

If 99% of loan modifications do not convert to full new loans, why then do the banks keep pushing for them, why do agents help homeowners and why do homeowners want them?

Banks want information, Agents want to help homeowners and homeowners want to stay in their homes.

Here are the possible outcomes:

2, 5 or 10 year adjustment of terms and rate. This is the best case scenario when requesting a new loan modification. The horrifying reality is this, even if the homeowner makes every single payment they will eventually hit the end of the terms.  99% of these loans will not modify for a second time and all the homeowner has actually done is delay the inevitable sale of their home. To qualify for the longer term adjustment depends on the original loan. Basically the better the original loan the better the offer on the loan modification. A loan modification will always meet an end to its terms. Further it will correct the delinquent payments on their credit and in most cases becomes a short term fix for a long term problem need a very real solution
Trial loan modifications. There is a possibility of a trial loan modification becoming a short term loan modification. However the stats on homeowner not making payments even on trial loan modifications is staggering. The reality is simply this, if a homeowner gets a trial loan modification there is a 90% chance that it will go back in default (missed payment).

So the current market has created the band aid effect to get us through an election period and hopes that the economy and employment will magically all turn around.

Homeowners are trying hail marry passes to get to stay in their home and the banks/government are freezing the sale of REOs in an attempt to inflate home prices.

I still teach, preach and push this basic thought: Write it off, take the loss and move on! It’s a financial decision. Too much debt, too little income. Within 2 years, Short sale owners are able to go right back into the same bank they settled with 2 years ago and make an application for a loan… and get a mortgage approved. (Interest rates and Down Payments might be higher, but not much as you’ve settled to the terms of your previous loan by assisting in the sale of the property). You might find yourself gravitating back to the old neighborhood just in time to buy the neighbors property at current values.

Home Buyers and Sellers Beware! Fraud and more Fraud in Illinois

Posted in Credit Notes,Financing- Loss Mitigation,Legislation by Administrator on the August 23rd, 2012

Home Buyers and Sellers Beware!  Fraud and more Fraud in Illinois

Mortgage fraud not only continues to plague the housing market, it’s on the rise.  Whether you are considering a Loan Modification or Short Sale you need to be counseled by professionals in the business.  However, who can you trust to handle your most precious financial documents and negotiate/close the transaction?

When you sit down to sign on the dotted line for your contract to sell, mortgage to buy or home loan workout you’d better make sure you aren’t a victim – that’s especially true if you are a struggling homeowner.

Federal regulations and a more vigilant mortgage industry are trying to decrease the numbers of loan origination fraud and misrepresentation cases, but fraud that targets distressed homeowners and collusion schemes are on the rise, according to the LexisNexis 14th Annual Mortgage Fraud Report.

With a shift that more often targets vulnerable homeowners, the Federal Bureau of Investigation’s (FBI) mortgage-related Suspicious Activity Reports (SARs) numbered 93,508 in 2011, up from 33 percent in 2010, according to LexisNexis.

Consumers must be particularly vigilant in Florida, Michigan, California, Illinois and New York where industry fraud and application misrepresentation is most common.

Overall, the most common types of fraud in 2011 were application and appraisal fraud/misrepresentation. With  mortgage origination’s, application and verification of deposit fraud/misrepresentation were tops.

Not unlike organized crime; collusion, involving multiple professionals running schemes, is on the rise in foreclosures, short sales and the REO market.

The mortgage industry’s Mortgage Industry Data Exchange (MIDEX), incidents of verified fraud and material misrepresentation in loan originations, reveals 7 percent of the cases involved collusion in 2009, 9.7 percent in 2010 and 6.8 percent for 2011.

“This means that not only are more incidents involving multiple professionals being noted – but, as incidents submitted to MIDEX, they are being investigated, verified and reported.   According to the FBI’s Financial Crimes Report to the Public for fiscal year 2010 to 2011, ‘Current investigations and widespread reporting indicate a high percentage of mortgage fraud involves collusion by industry insiders, such as bank officers, appraisers, mortgage brokers, attorneys, loan originators and other professionals engaged in the industry.

So, What do you do about avoiding Fraudsters?

Let’s offer the following tips:

Know your team – Given collusion is an up and coming fraud segment, it behooves you to know who is working for you.

Check out your team- A referral from a trusted source, still check references, that licensing  is up to date and see if they are involved in reputable clubs and affiliations with good standing.

Interview several real estate agents (home inspectors, title companies, mortgage brokers, etc.) and check references before you commit to one.  Sometimes the one that tells you the good and the bad is better than someone that only gives you the good side in an attempt to sway you over to them.

Another important team member, that many under rate, is the real estate attorney.  In Illinois, an attorney is a necessary for pulling Title and helps with researching zoning, violations and is your fresh set of eyes overseeing the real estate transaction.  Find the best Real Estate Attorney-he’s worth his weight.  I repeat regularly, “your divorce atty. is not a Real Estate atty”.

An attorney is hired by you to represent your interests and ensure your rights are protected. they will help you understand all the legal documents and exactly what legal liabilities you have accepted.  There’s always the right way to protect yourself and the wrong way to handle issues.  Atty’s. are there to help you stick to what is the acceptable way.  let them keep everybody in check regarding your affairs.
Know your financing representative – Don’t let someone coax you into borrowing more than you know you can afford on a long term basis, just because you can qualify for a higher amount at the moment.  Short term thinking got our economy bloated and it burst.  Long term thinking helps you plan for a rainy day and keep it all in perspective.

Know what you are signing – Don’t sign documents with missing or incorrect information, including your income, debts or length of employment. Don’t sign anything you don’t understand. If you need help, consider reviewing the documents with your real estate agent, a real estate attorney truly anyone that is a 3rd set of eyes remember if it’s too good to believe- it probably is.
Get counseled – Speaking of counselors, taking a homeowner, financial or housing class or counseling session is an investment in your investment.  Classes in investing, rental management and credit building.  There are clubs and meetups, affiliations for everything these days.  Maybe helping at the local housing authority or talking it over with friends over lunch.

Beyond a sit-down-and-listen seminar or workshop, do not keep things a secret from your friends it’s proven to be one of the best things you can do to guard against fraud, protect your homeownership and avoid falling into trouble.  Anyone that asks you “not” to discuss this “great deal” with anyone needs to back off!

Loan Modifications information reference site

Posted in Credit Notes,Financing- Loss Mitigation,REO -Lender Owned Properties,Welcome by Administrator on the December 18th, 2011

One of the best web sites I can refer people to on the subject of Loan Modifications and Short Sales is at  It’s an eye opener and training ground for handling the banks when it comes to settling debts on an upside down mortgage transaction.


If you or someone you know is in the middle of or considering defaulting on their mortgage-they need to read up and this site is guaranteed to have insightful tips on conducting the safest ways of dealing with a mortgage debt collector.  If you should decide to Short Sale after reading the materials provided on this site.  Please give us a call to discuss further what the benefits and outcome in your particular situation could be.

Credit Scams-How do you fight back???

Posted in Credit Notes by Administrator on the November 1st, 2010

Stephen Snyder has great newsletters that I find particularly interesting on Credit- this last one focused on Scoring and why the numbers you buy are not the “real” scores unless they are FICO scores.   They go on to say you can buy real FICO scores at: or to get more info on getting scores,  go to:
I’m suggesting that you pull your credit report FREE at www.AnnualCredit but only to review your tradelines and look for errors.   When you go to get the actual FICO numbers prior to purchasing a car or home, then it’s time to pull the actual FICO scores-the paid FICO ones.

But what about any other scores-if you purchase anything other than FICO scores then you’ve been ripped off as they aren’t used for credit purposes.   In that case Mr. Snyder suggests writing a letter to your atty, congressional leaders or the Federal Trade Commission and letting them know you’ve been ripped off… and I have to agree.    Letting them know it’s not right for agencies to offer scores that aren’t used for credit purposes… to be paid for as if they were actual credit scores should be criminal- and is a total waste of your  money and time.