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Alexander Taberne's Blog

By Alexander Taberne | Mortgage Broker
or Lender in Voorhees, NJ
  • WHY DOES A MORTGAGE COMPANY NEED THAT!!

    Posted Under: Home Buying in Philadelphia County, Home Selling in Philadelphia County, In My Neighborhood in Philadelphia County  |  December 14, 2013 9:59 AM  |  327 views  |  No comments

    If you had $200,000 to hand outto complete strangers, wouldn't you be cautious who you gave itto?  
    Of course you would!
       
    This is why, at the beginning of your transaction, you will be asked many questions about you, your 
    finances and your credit.  You’ll need to disclose everything.  
    Why?  The mortgage process is a great equalizer; it does not matter if you are rich or poor, every 
    consumer is treated as though they are lying and committing fraud until we prove otherwise. No matter 
    how much documentation we collect up front, you will likely be asked to produce more throughout the 
    process.  This is a painstaking process.  Accepting the multiple requests for redundant documentation 
    necessary for lender approval and making those documents available as soon as possible will make the 
    approval process easier. 

    The Loan Officer is the first set of eyes. The processor is the second set. The underwriter is the third set 
    of eyes. Quality Control and Doc Prep are the fourth and fifth sets of eyes. We try to get everything 
    upfront, but we're not finished until all sets of eyes are satisfied and we are at the closing table. Expect 
    requests from each set of eyes as your file goes through the process. 

    As an underwriter, when a client (or someone they need a document from) doesn't want to provide 
    documentation or refuses repeatedly, the question asked the client is, "What are you (or the person you 
    need that documentation from) trying to hide?"  You really do not want an underwriter asking this 
    question. It’s in your best interest to cooperate.  Remember, in almost every transaction we are bringing 
    the largest check to the closing table. 

    If the lender asks for a specific document, give them EXACTLY what they are asking for, not what you 
    think “should be OK” – because it won’t be. This is where the approval process tends to go off the rails: 
    we ask for specific documentation and you supply something else. If we ask for a bank statement and 
    there are 5 pages for that bank statement, send them all 5 pages and not just the summary. If you don’t 
    comply and send us the summary, don’t complain when we ask again.  

    The reason the mortgage approval process is now so rigorous is because of the recent mortgage crisis.  
    Lenders have to be very careful to make sure borrowers have the ability to pay back the loans. Higher 
    underwriting standards should mean fewer foreclosures in the future. Government data shows that less 
    than 2% of loans originated in 2009 that were resold to Freddie Mac and Fannie Mae went into default 
    after 18 months, down from more than 22% default rates for 2007 loans when far too many people 
    were lying and committing fraud on mortgage loans. 

    I know you may be frustrated at times—especially if we have to ask you for more paperwork.  
    Remember, it could be worse…you won’t be asked to provide a blood or urine test or give up your firstborn child!
  • THE DO'S AND DON'TS OF HOME BUYING

    Posted Under: Home Buying in Philadelphia County, Home Selling in Philadelphia County, In My Neighborhood in Philadelphia County  |  October 6, 2013 5:52 PM  |  367 views  |  No comments

    Do’s

    Don’ts

    STAY CURRENT ON ALL EXISTING ACCOUNTS/BILLS

    Continue to pay rent, car payment, and existing mortgage payments. Late payments that are reported to credit agency’s can cause your credit score to go down.

    USE YOUR CREDIT AS YOU TYPICALLY WOULD

    Changing your spending patterns can actually cause your score to go down. For example, if you are billed for your cable bill every month on the same credit card, continue to do so.

    WHEN RECEIVING GIFT MONEY

    It is extremely important to follow proper procedures when receiving money as a gift. Always speak to your Loan Officer before receiving, depositing, or using gift money.

    CALL YOUR LOAN ORIGINATOR

    If you are contacted from a creditor or collection, give your Loan Originator a call. They can guide you in the right direction to handle the situation


    DON'TS

    DON’T DEPOSIT LARGE SUMS OF CASH

    Do not deposit large amounts of cash into your bank accounts. Only do so if you can provide a paper trail with documentation. Contact your Loan Originator if you make such a deposit.

    DON’T APPLY FOR ANY NEW CREDIT

    Applying for new lines of credit will cause your credit report to be pulled and could negatively effect your current credit score. The same goes for store cards to purchase furniture, appliances, etc…

    DON’T CHANGE ANYTHING ABOUT YOUR CURRENT JOB

    Employment is verified on the last day of closing. If you are laid-off, on medical leave, or changing jobs could affect your mortgage. Contact your Loan officer right away if something changes.

    DON’T CLOSE CREDIT CARD ACCOUNTS

    Closing a credit card account can affect your ratio of debt to available credit. It is best to wait until after you close your mortgage to close a credit card account



  • THE DO'S AND DON'TS OF HOME BUYING

    Posted Under: Home Buying in Voorhees, Home Selling in Voorhees, Property Q&A in Voorhees  |  October 6, 2013 5:50 PM  |  343 views  |  No comments

    Do’s

    STAY CURRENT ON ALL EXISTING ACCOUNTS/BILLS

    Continue to pay rent, car payment, and existing mortgage payments. Late payments that are reported to credit agency’s can cause your credit score to go down.

    USE YOUR CREDIT AS YOU TYPICALLY WOULD

    Changing your spending patterns can actually cause your score to go down. For example, if you are billed for your cable bill every month on the same credit card, continue to do so.

    WHEN RECEIVING GIFT MONEY

    It is extremely important to follow proper procedures when receiving money as a gift. Always speak to your Loan Officer before receiving, depositing, or using gift money.

    CALL YOUR LOAN ORIGINATOR

    If you are contacted from a creditor or collection, give your Loan Originator a call. They can guide you in the right direction to handle the situation.

    DON'TS

    DON’T DEPOSIT LARGE SUMS OF CASH

    Do not deposit large amounts of cash into your bank accounts. Only do so if you can provide a paper trail with documentation. Contact your Loan Originator if you make such a deposit.

    DON’T APPLY FOR ANY NEW CREDIT

    Applying for new lines of credit will cause your credit report to be pulled and could negatively effect your current credit score. The same goes for store cards to purchase furniture, appliances, etc…

    DON’T CHANGE ANYTHING ABOUT YOUR CURRENT JOB

    Employment is verified on the last day of closing. If you are laid-off, on medical leave, or changing jobs could affect your mortgage. Contact your Loan officer right away if something changes.

    DON’T CLOSE CREDIT CARD ACCOUNTS

    Closing a credit card account can affect your ratio of debt to available credit. It is best to wait until after you close your mortgage to close a credit card account.











  • Has Fannie changed the way they calculate rental income on a property that has appeared on schedule E of the tax returns?

    Posted Under: Home Buying in Voorhees, Home Selling in Voorhees, Property Q&A in Voorhees  |  September 30, 2013 5:53 PM  |  395 views  |  No comments

    Answer: This was updated in May, 2012.

    Calculating Monthly Qualifying Rental Income (or Loss)

    Federal Income Tax Returns / Schedule E. When Schedule E is used to calculate qualifying rental income, the lender must add back any listed depreciation, interest, taxes, or insurance expenses to the borrower’s cash flow.

    If the property was in service:

    • for the entire tax year, the rental income must be averaged over 12 months; or
    • for less than the full year, the rental income must be averaged over the number of months that the borrower used the property as a rental unit.

    Lease Agreements. When current lease agreements are used, the lender must calculate the rental income by multiplying the gross rent(s) by 75%. The remaining 25% of the gross rent will be absorbed by vacancy losses and ongoing maintenance expenses.

    See Treatment of the Income (or Loss) below for further instructions.

    Treatment of the Income (or Loss)

    The amount of monthly qualifying rental income (or loss) that is considered as part of the borrower's total monthly income (or loss) — and its treatment in the calculation of the borrower's total debt-to-income ratio — varies depending on whether the borrower occupies the rental property as his or her principal residence.

    If the rental income relates to the borrower’s principal residence:

    • The monthly qualifying rental income (as defined above) must be added to the borrower’s total monthly income. (The income is not netted against the PITIA of the property.)
    • The full amount of the mortgage payment (PITIA) must be included in the borrower’s total monthly obligations when calculating the debt-to-income ratio.

    If the rental income (or loss) relates to a property other than the borrower's principal residence:

    • If the monthly qualifying rental income (as defined above) minus the full PITIA is positive, it must be added to the borrower’s total monthly income.
    • If the monthly qualifying rental income minus PITIA is negative, the monthly net rental loss must be added to the borrower’s total monthly obligations.
    • The full PITIA for the rental property is factored into the amount of the net rental income (or loss); therefore, it should not be counted as a monthly obligation.
    • The full monthly payment for the borrower's principal residence (full PITIA or monthly rent) must be counted as a monthly obligation.

    Note: For DU loan case files, the term “subject net cash flow” applies to net rental income from the security property, and the term “net rental income” applies to rental income from properties other than the security property.

  • New Rules for purchasing a home without your current home being sold!!

    Posted Under: Home Buying in Voorhees, Home Selling in Voorhees, Property Q&A in Voorhees  |  September 2, 2013 11:29 AM  |  485 views  |  No comments

    Rules for Buying a Primary Residence

    Without Selling Current Home! 

     

    Rule:  Home on the market and purchasing new primary residence

    Q: What if the current home is NOT sold before purchasing primary residence?

    • Must qualify with both monthly payments
    • 6 months worth of monthly payments for BOTH homes as a “cushion”
    • Can be reduced 2 months worth of monthly payments if current home is 70% LTV or below

     

    Q: What if current home is sold—but NOT closed before purchasing primary residence?

    • Must present non-contingent sales contract for sold home
    • Must present a lender’s valid loan approval for the new buyer
    • Does not have to qualify for both payments
    • 6 months worth of monthly payments for BOTH homes as a “cushion”
    • Can be reduced 2 months worth of monthly payments if current home is 70% LTV or below
    • If sold to relocation company, copy of executed buyout agreement, client does not need mortgage payment cushion or count current payment in qualifying ratios

     

    Rule:  Converting Primary Home into Second Home and purchasing new primary residence

    Q: What if client wants to convert their current home into a second home and purchase another primary residence?

    • 6 months worth of monthly payments for BOTH homes as a “cushion”
    • Can be reduced 2 months worth of monthly payments if current home is 70% LTV or below
    • Qualify for both monthly payments

     

    Rule:  Converting Primary Home into an Investment Property

    Q:  Can you qualify using rental payments?

    §  70% LTV or less on home being converted to rental home

    §  Fully executed lease agreement and Proof of receipt and deposit (into bank) of security deposit

    §  2 months worth of payments for BOTH homes as a “cushion”

    §  2 yr history of managing investment property

    Q: What if the LTV is more than 70%?

    • Must qualify with both monthly payments
    • 6 months worth of monthly payments for BOTH homes as a “cushion”

    Q: How is the LTV determined?

    • Exterior-only appraisal dated no more than 60 days from the date of closing.

     

    Only certain borrowers will qualify.

    However, for your clients that do qualify – this may be the perfect time to discuss this option.

    Let me know if I can help!

    Thanks,
    Alex Taberne'

  • New Rules for purchasing a home without your current home being sold!

    Posted Under: Home Buying in Philadelphia, Home Selling in Philadelphia, Property Q&A in Philadelphia  |  September 2, 2013 11:28 AM  |  467 views  |  No comments

    Rules for Buying a Primary Residence

    Without Selling Current Home! 

     

    Rule:  Home on the market and purchasing new primary residence

    Q: What if the current home is NOT sold before purchasing primary residence?

    • Must qualify with both monthly payments
    • 6 months worth of monthly payments for BOTH homes as a “cushion”
    • Can be reduced 2 months worth of monthly payments if current home is 70% LTV or below

     

    Q: What if current home is sold—but NOT closed before purchasing primary residence?

    • Must present non-contingent sales contract for sold home
    • Must present a lender’s valid loan approval for the new buyer
    • Does not have to qualify for both payments
    • 6 months worth of monthly payments for BOTH homes as a “cushion”
    • Can be reduced 2 months worth of monthly payments if current home is 70% LTV or below
    • If sold to relocation company, copy of executed buyout agreement, client does not need mortgage payment cushion or count current payment in qualifying ratios

     

    Rule:  Converting Primary Home into Second Home and purchasing new primary residence

    Q: What if client wants to convert their current home into a second home and purchase another primary residence?

    • 6 months worth of monthly payments for BOTH homes as a “cushion”
    • Can be reduced 2 months worth of monthly payments if current home is 70% LTV or below
    • Qualify for both monthly payments

     

    Rule:  Converting Primary Home into an Investment Property

    Q:  Can you qualify using rental payments?

    §  70% LTV or less on home being converted to rental home

    §  Fully executed lease agreement and Proof of receipt and deposit (into bank) of security deposit

    §  2 months worth of payments for BOTH homes as a “cushion”

    §  2 yr history of managing investment property

    Q: What if the LTV is more than 70%?

    • Must qualify with both monthly payments
    • 6 months worth of monthly payments for BOTH homes as a “cushion”

    Q: How is the LTV determined?

    • Exterior-only appraisal dated no more than 60 days from the date of closing.

     

    Only certain borrowers will qualify.

    However, for your clients that do qualify – this may be the perfect time to discuss this option.

    Let me know!

    Thanks,
    Alex Taberne'

  • FHA/VA DEROGATORY CHART UPDATED!!

    Posted Under: General Area in Voorhees, Home Buying in Voorhees, Home Selling in Voorhees  |  September 2, 2013 11:20 AM  |  765 views  |  No comments



    FHA/VA Derogatory Credit Chart

    Serious credit problems are happening to a lot of people these days. Here’s a handy reference chart, with the FHA or VA waiting periods, if they mention they have had a bankruptcy or foreclosure, deed-in-lieu or short sale.

    OR if you are listing a home and the seller is considering a short sale or deed-in-lieu, use the chart to advise them how long they may have to wait to buy their next home with you.

    Derogatory

    Event

    FHA VA
    Waiting Period and/or Guideline Waiting Period and/or Guideline

    w/extenuating circumstances*

    Waiting Period and/or Guideline Waiting Period and/or Guideline

    w/extenuating circumstances*

    Bankruptcy Ch 7 or 11

    2 years

    1 year

    2 years

    1 year

    Bankruptcy Ch 13

    1 year with 12 months satisfactory payments to trustee.  Must have court permission (not trustee) to incur new debt.   If not fully discharged for 2 years loan must be manual UW.

    Same

    1 year with 12 months satisfactory payments to trustee and trustee permission to incur new debt.

    Same

    Foreclosure /

    Deed-in-Lieu**

    3 years

    UW discretion

    2 years

    1-year w/current satisfactory credit.

    Short Sale

    Borrower current at

     time of short sale:

    No wait if all mtg and installment debts pd on time for 12 months preceding short sale.

    Borrower delinquent

     at time of short sale:

    3 years from date of sale. 

    If previous mortgage was FHA, 3 years from date CAIVRS claim was paid.

    Same

    No guidance.

    Typically treated as foreclosure but is at UW discretion.

    Same

     

     

    *Examples of circumstances out of the borrower’s control are death of a primary wage earner, serious illness, unemployment, etc.  Generally, divorce is not considered an extenuating circumstance nor is derogatory mortgage history due to job transfer or relocation. 

     

    **If mortgage is included in bankruptcy, waiting period clock still starts when property is transferred/sold back to lender, NOT when bankruptcy is discharged.

     

    Call me with your questions!  I’d love to be of service!

    Thanks,

    Alex Taberne'

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