Remember, this month also has Thanksgiving at the end of the month. So figure from Wednesday, November 25 through to Monday, November 30, there will be no closings. Lenders will be closed on Thanksgiving and a lot of title companies will close early on Wednesday and not open again till Monday to Tuesday. The title companies can only close so many loans in one day.

With that being said, Knightlines Mortgage Services, LLC has the ability to close a new home loan purchase in under two weeks. And our title company that we recommend will work past normal business hours to get your loan closed before the deadline.

Call us today at 352.308.7219 to get your loan package moving forward and to be one step closer to putting an extra $8,000 in your pocket.

The topics that are covered under MDIA include:

1. New Fee Restrictions: Mortgage originators cannot collect any fees (other than a reasonable fee for a credit report) until the borrower has RECEIVED the early disclosures, EG Truth-in-Lending (TIL).
2. Expanded Covered Loan: TIL disclosure is required for all loans secured by a dwelling (including non-owner occupied homes) and is not limited to just purchase money transactions.
3. Expanded Timing Requirement: Loan closings must be a minimum of seven (7) business days after the early TIL disclosures have been provided.
4. Re-disclosure Requirement: Should the Annual Percentage Rate (APR) change occur that makes the APR from the early disclosures inaccurate beyond a certain tolerance, then a new disclosure with the revised APR must be provided.  Along with the new disclosure, a loan must wait an additional 3 days from when the disclosure was provided before it can close.
5. New Notice Requirement: There has been new language added in the disclosures for the Fed Box: “You are not required to complete this agreement merely because you have received these disclosures or signed a loan application.”

I will be doing some subsection posts on these topics, as there is more to them than just these short descriptions that have been provided.  If these new laws are not adhered to, then a closing that was to take place on a certain date will have to be postponed causing a seller to have to postpone their plans of what could have been a simultaneous closing.  And you can see the snowball effect that this will cause.

Let’s start with the biggest issue that will affect lenders to greatest degree.  By the end of the year, all loan originators will be required to be licensed by the State of Florida.  This means that going to the bank and sitting down with the account executive to apply for you new mortgage loan (whether it be a purchase or refinance) will be a thing of the past.

Now, you are probably going to have to make an appointment with a mortgage specialist that is licensed by the state to come in apply.  So much for convenience…  And then, add on to the fact that this one person is not only responsible for your mortgage loan application, but everyone else that has applied.  In a few days time, this person will be spending more time on the phone dealing with issues then with applications.  Yes, there will be a support team behind this person, but those that are used to dealing with the bank are also used to the customer service that they get by dealing with their account executive.

When is this non-sense going to end.  Now do not get me wrong, I would love for people to leave their bank to come us Knightlines.  After all, 9 times out of 10 our rates are better.   Our closing costs are comparable.  And we can give the attention to detail customer service.  But I do not want it because the government is forcing people to have to seek alternate means.   Whether it be a direct intention or an indirect one, like this.

If the government is going to interfere, I would rather be for the person that has a 750 credit, 10% debt-to-income ratio, and 20% down payment and cannot get a mortgage loan because of a mortgage late in the past year due to losing his job, which has been replaced with a better, higher paying job.  This is what needs to be fixed and looked, not a matter of licensing when they are already under the license of the lender.

And this one change is not even the worst of it.  Stay tuned for more updates that have or will go into effect by the end of this year.

Over the next couple days to weeks, we will post on what is new with the mortgage industry and what specific items have transpired in the State of Florida.

While you are waiting for these posts to be released, I will give you an update on mortgage rates.  Monday’s rates were a small step up from the 4.875% closing rate on Friday.  Today, the market is in a frenzy.  At 12PM EST, there have already been two rate adjustments.  Both of them have been in the upward direction.  Currently, rates for a 30 year fixed are sitting the in the mid-5% range.  Several lenders have stopped the option to fax in rate locks due to the volatility of the market and are only accepting online locks.

The $30 million is split amongst the counties of Florida.  Each county then distributes the money based on city/area.  In most areas, this will mean that less than 10 first time homebuyers in any given city/area will receive an advance on their $8000 tax credit to use towards the purchase of a new home today.

If you are one of the lucky few to get the $8000 advance to use towards down payment, mortgage loan closing costs, or pre-pays associated with the purchase, here is what you need to know:

1. First-time home buyers this year are eligible for a federal income tax credit of up to $8,000 if their income generally is $75,000 or less for single taxpayers and $150,000 for married couples.
2. Anyone who hasn’t purchased a home in the past three years qualifies as a first-time home buyer.
3. Rather than let home buyers wait until 2009 tax returns are filed next April, Florida legislators decided to advance the $8,000 in an interest-free loan.
4. Buyers have to agree to file for the tax credit and to repay the money within 18 months.

To find out more about FHOP or to stake your claim for the $8000, contact your local SHIP office.  Click here to find your local SHIP office.  Oh, and one more thing, even though the program officially started on July 1, 2009, the cash is not there yet to make the loans to home buyers.

Should you not get the $8000 tax credit advance loan, do not worry.  100% USDA Guarantee Mortgage Loans are still in place and are still funding.  And 97% HomePath is still going strong.  Compare these two loans side-by-side.

What is HVCC? Quite simply it is government intervention that forces a total hands off involvement of the appraisal process in determining a property value for the purpose of financing.

Who is hurt by this? The Appraiser and the borrower.

The Appraiser:

1. Forced to join a management company that will collect up to 40% of the appraisal fee. Yes, that is right.  The appraiser will now lose almost 50% of his/her income by being forced to join in order to keep working.
2. Only targets appraisers.  Other valuation models, such as AVM (Automated Valuation Models) and BPO (Broker Price Opinions) are not affected.  This will lead lenders to accept these values (which are less accurate) due to the less restrictions.
3. No communication between the broker or lender or anyone else that stands to earn money from the deal.  Single handedly destroyed all relationships with these entities literally overnight.

Borrower:

1. If a new lender is needed, a new appraisal is needed.  In the past, the Broker could simply submit their appraisal to the new lender.
2. Increased time to fund loans.  Lenders and Brokers can no longer communicate with Appraisers to expedite orders, which means longer rate locks (IE Higher interest rates).
3. Forced to stick with current Lender even if not what they want because of increase fees to having to obtain a new appraisal.

And there is one big issue that surrounds this whole crazy plan… what is the property worth?  Well, now without the communication from the broker or lender, an appraiser is left to appraise the value of the property.  Sounds good in theory, but let’s look at reality.

Appraiser is given an order to appraiser property 123 Main Street, Anywhere, USA.  Appraiser is not told the loan amount or an estimated value on the property. (PROBLEM 1: IN THE PAST, AS A COURTESY, THE APPRAISER WOULD CONTACT THE BROKER TO SAY YES OR NO ON THE ESTIMATED VALUE BEFORE WASTING ANY ONE’S TIME OR MONEY.)  Appraiser determines value of property, but to keep in good favors with the management group and to avoid future legal actions for why they valued the property at $x.xx shaves several dollars off the top.  (PROBLEM 2: THE ORIGINAL VALUE MAY HAVE BEEN THE RIGHT NUMBER TO DO THE DEAL, BUT TO PROTECT THEMSELVES AGAINST A NOW UNKNOWN, THE DEAL IS DEAD.)

Real life scenario: Borrower wants to refinance house.  Eligible for RefiPlus, so we can go to 105% of the appraised value.  Appraisal was ordered.  Cost $400.  Original appraisal cost before HVCC $350.  (Appraiser needs to charge more because he has to pay someone now.)  We needed at a minimum $x.xx to make the deal fly, but appraiser does not know this.  Appraisal took over one week to obtain, when in the past took only 48 hours.  Appraisal is returned with a value of $10,000 less then $x.xx.  Deal is dead.  Borrower is out $400.  Broker is penalized by lender for fallout of locked loan.

Had this been pre-HVCC. The appraiser could have said it will be a tight deal on the value and let the borrower decide on whether to proceed.  Now, the borrower is out $400 and had no decision.  Pre-HVCC, the appraiser would have looked harder for comps to get the value that was needed just to keep the relationship with the broker/lender. (There is nothing wrong with this provided that the comps are there and justifiable.)  Pre-HVCC would have allowed the borrower to get a 15-21 day rate lock offering a lower interest rate, instead of a 30 day lock or floating the rate in the current volatile market.

HVCC is a big deal when it comes to financing your home.  It costs you, the borrower, more money.  It eliminates your options to shop with multiple lenders when using a broker, which means you might not be getting the best deal.  It is just all around bad news.

Help us help you in getting your rights back when financing your mortgage loan.  A moratorium is being requested for 18 months.  Should this happen or even if it does not, contact your state legislature to voice your opinion on the issue.  Or take the time to sign a petition against HVCC.

Here is what you need to know about that statement: some lenders have a waiting list of borrowers ready to close on these USDA guarantee loans.  Just like anything else in life, it is first come first serve.  Just like USDA’s normal annual budget, these funds that are being granted to these mortgage programs will go fast.

Remember, USDA offers 100% financing and it is not just for first-time home buyers.  It is limited to primary residences only, though.  It even allows for up to 6% concessions towards closing costs.  And even better, there is no mortgage insurance with these mortgage loans.

But do not fret.  If you are still shopping for a new home and have not been able to find that prefect one, Knightlines can still get you funded even if USDA itself runs out of money again.  Our resources offer portfolio financing that allows us to continue this product and fund on it even when USDA cannot no longer buy the loan.  The loan will still be backed and guarnateed by USDA; they just have not purchased the loan from our lending source.

So, no pressure on finding the house today.  But you better find it tomorrow because interet rates are a whole other story. 

Home Affordable Refinance is the second part of this plan, which is not to be confused with the modification program.  While there is much information out there on these programs, most of the information is very limited to the specific details to the programs.  The reason for this is because no one really knows until the programs are officially rolled out in April.

Here is what we do know at this time:

• Additional Flexibilities: Most borrowers refinancing an existing Fannie Mae loan will not be required to buy new or additional mortgage insurance if the loan at the time of the refinance is more than 80 percent of a home’s value. Any existing mortgage insurance may be carried forward to the new loan. In addition, Fannie Mae can refinance loans up to 105 percent of a home’s value with this new flexibility, so even borrowers who are “underwater” — who owe more than their home is worth — may be able to refinance. This will expand the number of borrowers able to take advantage of lower interest rates that reduce monthly payments, or refinance into a more sustainable mortgage.
• Streamlined Processing: Beginning in Knightlines Mortgage Services, LLC will be able to process an application to refinance any existing Fannie Mae loan, allowing for greater lender origination capacity and easier refinancing for borrowers.

To qualify:

• Your mortgage loan must be owned by Fannie Mae.
• You must have a solid payment history on your existing mortgage.

This program is for a limited time, as the expanded fexibility ends June of 2010.

If you want to take advantage this program, call us today to get your application ready for submission when April arrives.

Homeowners that are currently struggling to make their payments, but are not yet behind now have relief.  They can refinance their home through FNMA’s Home Affordable Modification set to roll out in April.  Foreclosures will be temporarily suspended while this and other options are looked into; however, if these are not viable solutions, then the foreclosure will continue.

Lenders are encourage to lower interest rates to where a homeowners monthly mortgage payment (principal, interest, taxes, and insurance) are less than 38% but greater than 31% of their monthly gross income.  If a drop in interest rate is not enough to get to this limit, then a the loan term shall be increased to 40 years.  If this is still not doable, then the lender can forbear principal.  And should a lender choose, it can forgive principal.

Any rate changes are valid for a period of five years.  After the fifth year, the rate shall increase up to 1% per year until the interest rate cap is reached.  There is a whole detailed explanation on the rate cap that I will not get into at this time, but the cap is fair.

Mortgage insurance may not be required for these transactions that may now exceed 80% loan-to-value.  The decision is based on the overall strength of the loan being refinanced/modified.  Home values will be based on either a Automated Valuation Model (AVM) or a Broker Price Opinion (BPO).  In other words, no appraisal.

Over the course of the next couple days, I will be putting more information up about this plan and program, as there is many variable surrounding it.  In the meantime, feel free to click here and download the program guidelines for your own reading.

Here is a quick video to help explain those posts: