I am talking to two lenders one is a FHA Endorsed Bank the other is a Lender (Bank). Both have offered FHA

Asked by Sarah Mings, 30350 Thu Jun 19, 2008

Refinacing. The Lender is offering what looks like a better loan and the Endorsed Bank is telling me it is a bait and switch tactic and at the last minute they will change the terms of the loan whereas the Endorsed Bank is being honest upfront. I am very confused. Any advice?

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Will, , Atlanta, GA
Sat Jun 28, 2008
Did you know that lenders determine their own rates on FHA? Perhaps this is why one lender's rates seem better than another's.
0 votes
Other/Just L…, , Fleming Fitch Grant, Holly Hill, FL
Wed Jun 25, 2008
What is your credit score and down payment amount? In two weeks, FHA is making MAJOR changes to the way FHA's Mortgage Insurance Premium (MIP) is calculated.

At present, for all borrowers, you will pay 1.5% of the loan amount as a fee to FHA to pay for the insurance to protect your lender in the event of default. Additionally, you will pay a monthy MIP calculated as 0.5% of the loan amount spread over 12 months.

Beginning with FHA Case Numbers ordered on or after July 14, FHA will take into consideration the borrower's credit score and down payment amount to calculate MIP. Depending upon the credit score and amount of down payment, the MIP closing fee will range from 1.25% or the loan amount to 2.25%. Monthly MIP will go as high as 0.55% of the loan amount per year.

FHA Case Numbers are ordered as part of the processing of your application. It is VERY IMPORTANT that you determine whether it is less costly to apply immediately to secure an FHA Case Number or to wait until July 14th. If you wish to get your Case Number before the chnage, you must be sure the lender will order your Case Number BEFORE July 14th.

Below is a link to HUD's Mortgagee Letter 2008-16 which details the changes. Mortgagee Letters are the way HUD informs banks and lenders or changes to FHA lending guidelines.
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Bee Nguyen, , Atlanta, GA
Wed Jun 25, 2008
Regardless of whether or not you go with the "endorsed" bank versus the other bank, I would go with somebody who is highly recommended through your family or friends. The lending industry is going through a lot of changes regarding restrictions and regulations and fluctuation of rates. I would get a Good Faith Estimate from both, compare them side-by-side, and look out for extra fees. I would also make sure that your lender locks your rate at least through the date of closing so that you do not end up having to extend your rate for any reason. I would also make sure that the lender shows accurate prepaid escrows on the Good Faith Estimate; in the past, I have encountered many lenders who escrow the incorrect amounts on the estimate to reflect a lower amount of cash that the buyer has to bring to closing. This amount then changes after the buyer has committed to the lender. There is a specific formula that must be used when escrowing property taxes, so if you see one lender estimate six months versus 11 months of reserves, take a note and point it out. A lot of lender's can also be flexible so if you have a better relationship with one lender versus another, you can ask them to match rates or fees.

You really have to be cautious with whom you end up choosing because if you exceed your financing period and your lender changes the terms of your loan, you have no choice but to follow through. If you walk away, you will most likely lose your earnest money and the seller could go after you for breach. Bottom line is make sure you trust both your realtor and lender and follow your instincts.
Web Reference:  http://www.leaveittbee.com
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Lee Taylor, Agent, Decatur, GA
Thu Jun 19, 2008
Who is advising you on your real estate purchase?

Get an experienced set of eyes on both of the good faith estimates from the competing financial institutions and make sure that if you sign and agree to the good faith estimate of your choice that there is no bait and switch.

Check references.

Brent has never heard of an "endorsed lender" and neither have I.

FHA might "endorse" a loan - that's called fully-funded approval.
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Brent Bester, , Columbus, OH
Thu Jun 19, 2008
I also have never heard of an "Endorsed Bank", and if that is different terminology for a mortgage broker that would deeply upset me. A mortgage broker cannot call themselves a Bank, they can call themselves a Banc (with a c on the end), but not a actual bank. If you told me the actual name of the Endorsed lender most likey I or any mortgage professional could decipher wiether your dealing with brokers or bankers.
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Brent Bester, , Columbus, OH
Thu Jun 19, 2008

I totally uderstand what your going through, altough I'm not sure if your comparing a mortgage broker with a bank or two different banks. Mortgage brokers do not lend their own money. Usually FHA is relatively the same across the board...Closing costs and rates fluctuate depending on if the bank is servicing the loan or selling it to another nbank at the end of the day. However, they should not be that much different. Now hopefully, you have good faith estimates from both lenders now. Compare those. Watch the closing costs mine are typically 1650-1700 on any FHA loan, if its over 3000, your most likely dealing with a broker. If you would like I can give you a good faith etimate ffrom my bank so you have 3 to look at. FHA loans are everywhere and are becoming more of the norm in this market. It has pretty much been my main focus from the start of the year. If you would like an estimate (GFE), feel free to contact me. If you have any questions that maybe I could answer feel free to contact me, I would answer them with no intentions of trying to get your financing on your home.

Brent Bester
Mortgage Professional
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