In other words, if your Loan Officer does not work for a big retail bank then he or she cannot originate a mortgage loan after June 30th, 2010.

Quick Facts as of June 10th 2010:

• 1200 Loan Originator Licenses have been issued (yep, including mine)
• 200 Loan Originator License Applications have been reviewed and submitted back to the applicants to resolve outstandindg deficiencies AND the applicants have  responded back to the request
• 800 Loan Originator License Applications have been reviewd and submitted back to the applicants to resolve outstanding deficiencies but have not responded back back (yet).
• 1100 Loan Originator License Packages have yet to be reviewd.

Amazingly, that is only a total of 3300 individuals who have sent in an application package to the Arizona Department of Financial Insitituions to get licensed; and 800 of them haven not bothered to respond with the reequest to provide additional information and/or to clear any outstanding deficiencies.

Here is a video of Paul Klimke, Vice President of the Arizona Association of Mortgage Professionals, presenting the latest staticstics about how many loan originators applied; what there license status is; and what and individual with or without a loan originator license can or cannot do.

Finally, we are entering a new era in mortgage lending and this industry has been elevated to higher standards. It is about time…

photo credit: Nicholas_T

“In view of the information we have received today from USDA Rural Development regarding the Agency’s ability to issue loan approvals (Conditional Commitments: RD Form 1980-18) that are subject to Congressional action, standard interest rate lock and lock extension policies have been reinstated effective immediately.”

This means, in plain English, that USDA funding is back and we are able to originate USDA Home Mortgages and operate like the previous year.

Please share the good news, especially if you know anybody who is considering buying an eligible home in one of the designated areas in the Phoenix metro area such as the City of Maricopa, parts of Queen Creek and all of Casa Grande, Arizona.

If you are looking to own a home in these areas, you have good credit; however, you feel you don’t have enough reserves or down payment don’t wait any longer!

100% financing with USDA is back!!!

photo credit: Allie_Caulfield

Times are turbulent in the mortgage business and the latest news about whether  or not the USDA has funds left, and also if the USDA will be able to continue to fund (subject to conditional commitments) is just another example that things are constantly changing.

Just a couple of days ago we got news that USDA will continue to fund loans but as of today I have confirmation that USDA is officially out of money.

At this time the USDA is out of money and will not be issuing funds subject to conditional commitments.

Subsequently there is not a really a viable 100% financing solution out there unless you qualify for a VA loan or you manage to find a $100 down Hud Home without getting outbid.

The USDA home loan has been such a great program for the Phoenix Metro area since not-so-rural areas like the City of Maricopa, Casa Grande and parts of Queen Creek,  Arizona are designated by the Rural Housing Service (RHS) and qualify for USDA loans.

Needless to say that in these areas property inventories remain extremely high and having no access to USDA funds surely won’t help the sales activity.

Until Congress passes legislation (and there are currently three pieces of legislation int he works) the only thing we really can do is to address and share the urgency of  this concern with our congressmen and senators.

photo credit: visualpanic

First the Good News! I just got word that the USDA Home Loan Program will continue.

The not-so-good news however is that the currently available USDA  funds are running very low and perhaps there is one or two more days left for the old allocation.

Once these SFHGLP (502 Guaranteed) funds are exhausted, USDA will be able to issue conditional commitments “subject to the availability of funds and Congressional Authority” to charge a 3.5% guarantee fee for purchase loans and a 2.25% guarantee fee for refinance loans.

This means that any loan that did not get funds allocated on time will be subject to the new USDA Loan Guarantee Fee.

More information to come soon!

Update 5/14/2010

USDA has rescinded their announcement from May 11th, 2010.

USDA is  officially out of funds at this time and are not funding any new loans.

The saga continuous…

photo credit: openDemocracy

Yesterday, USDA funds were already below the one-billion-mark and apparently the money is going fast.  I found out this morning that USDA is expecting to run out of funds next week  (May 7th 2010).

Even though a bill was passed in the House of Representatives to appropriate more funds for loans, it may take some time to go through the red tape in Washington. With the new funding bill comes an increase in the Loan Guarantee Fee to approximately 4%.

There are two versions of the bill:

One is calling for a 4% Loan Guarantee Fee and the other has a 3.5% Loan Guarantee fee with an additional monthly fee of .50%.

USDA stated that they “may” continue to approve loans pending receipt of the funding, as they have in the past 2 years, but I wouldn’t bank on this until we have Senate approval.
As FHA guidelines are tightening, the USDA Home Loans Program is presently the only viable 100% financing solution. The only other option would be to take advantage of VA benefits (if you qualify).  USDA is seeing an upswing in delinquency rates and defaults and we should not be surprised to see higher Loan Guarantee Fees and perhaps required mortgage insurance.

Let’s just hope the bill passes  and the guidelines aren’t  getting too strict to make the American dream possible.  There are plenty of homes available in and around Phoenix that are located in areas designated by the Rural Housing Service (RHS). These eligible properties are located mainly in parts of Queen Creek, all of Casa Grande, and the City of Maricopa, Arizona.

If you are not certain whether or not a property qualifies for USDA check http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do

photo credit: Tracy Available

Back in March the Rural Development’s national office in Washington DC released a notice projecting that the money to issue guarantees for USDA Rural Home Loans will be depleted by the end of April.

It seems like we go through the same phenomena every year…remember, USDA ran out of money in March last year. As history tends to repeat itself, there will be a lot of investors pulling the plug on loan applications for USDA mortgages. From what I hear, some major banks are no longer accepting USDA home loan applications coming in through their broker channels since March.

As of right now, we’re still taking applications for USDA home loans in Arizona, however we are closely monitoring how much is left in the kitty. With available funds (at the moment I am writing this) being less than a billion dollars I would urge any REALTOR® and home buyer to hurry and also to have a contingency plan in the event that the anticipated closing occurs after USDA is out of money.

Even though House Bill HR 5017 (a measure to correct the Section 502 Single Family Housing Guaranteed Loan Program to make it self-funding was introduced to the house) passed April 23rd, it will still need to make it through the Senate. Yes, there is a very good chance that USDA Guaranteed program funds will be extended for 2010 and beyond, however I wouldn’t roll the dice until the Senate approves it.

So don’t procrastinate, get your applications in fast if you need 100% financing, or be prepared to go with an FHA Mortgage Loan and scrape up the 3.5% down payment.

photo credit: James Jordan

In many cases  FHA loans are still more advantageous to the borrower due to lower FICO Score Requirements (620 or better is ideal – this is why keeping your FICO Score is so crucial), lower down payments of 3.5% and allowable seller concessions up to 6% twoards closing costs and prepaid expenses. One of the disadvantages of the FHA loan is that and Upfront Mortgage Insurance Premium of 1.75% is required and is set to increase to 2.25% on April 5th 2010. In the grand scheme of things the increase of the Upfront Mortgage Insurance Premium is not such a big of a deal compared to the proposed increase in down payment requirment for borrowers with credit scores of 580 and reduction in allowable seller contriubtions.

With these impending changes in the FHA guidlines it would not hurt to take a second look at Fannie Mae’s HomePath Program when financing a home in the greater Phoenix Metro area.

The highlights of the HomePath Program are:

• For Owner Occupants the down payment requirment is still only 3% primary residences
• Second Home Buyers are getting away with putting down only 10%
• Investors also can use the HomePath Program to buy investment properties with 10% down
• NO mortgage insurance premiums
• NO appraisals – since Fannie Mae is selling the property there is no appraisal required
• Seller concessions are allowed up to  6% for primary residences, 6% for 2nd homes and 2% for investors.
• Conforming Loan Limits apply

Of course there are a couple of drawbacks:

Borrowers must have a 660 Credit Score, Interest Rates are slightly higher and the loan program can only be applied to Fannie Mae owned properties.

With FHA guidelines tightening and investors already having their own FICO score overlays on FHA products, we are already pretty close to the 660 minimum score required for HomePath. Don’t get me wrong 40 points on a credit report is still a pretty big gap to breach for many borrowers, however if your credit allows, and you find a Fannie Mae owned home then it is sure nice not to having to deal with appraisals. The slightly higher interste rate for HomePath comes pretty close to a wash with the MIP required for FHA Loans.

Foreclosure inventories in Arizona, especially in the Phoenix Metropolitan Area remain extremely high and chances are pretty good that you can find a Fannie Mae owned property, and if it is a diamond in the rough then you can take advantage of the HomePath Renovation Mortgage to fund both your purchase and light renovations.

To give you an idea what is available for sale check out http://www.homepath.com/

As always, if you have any questions please feel free to contact me anytime.

photo credit: Casey Serin

With lenders tightening lending guidelines, banks cutting credit lines and credit card companies reducing credit limits, it is more important than ever to keep an eye on your credit score. For example, it is not unheard-of that credit card companies slash your comforting credit line to nothing if you are only one day late making your minimum payment (and I am not talking about a 30-day late). All of a sudden your “just in case” 50% available credit security blanket just vanished and the new negative high balance to credit limit effects your credit score negatively preventing you getting favorable terms -or worse – no credit at all from a competing credit card company.

Another example is that it might just get tougher to become a home owner with the proposed changes (not in effect yet) in the FHA guidelines and with most investors implementing (already happening) their own FICO score requirements:

Update to the combination of FICO scores and down payments for new borrowers.

• New borrowers will now be required to have a minimum FICO score of 580 to qualify for FHA’s 3.5% down payment program.

• New borrowers with less than a 580 FICO score will be required to put down at least 10%.

So, if you think you might be buying a house anytime soon or if you want to be able to keep your existing available credit for future rainy days, then you should try your best to do five things in order to improve and/or maintain your credit score:

1. Make your monthly payments on time (this is about 35% of your overall Fico Score)
2. Keep balances on revolving accounts low (this is about 30% of your overall Fico Score)
3. Maintain the length of Credit History (this is about 15% of your overall Fico Score)
4. Don’t apply for new credit unless absolutely necessary (this is about 10% of your overall Fico Score)
5. Keep a good Mix of Credit accounts, e.g Credit Cards, Mortgage, Car Payment, Student Loan etc.. (this is about 10% of your overall FICO Score)

photo credit: me and the sysop

Don’t get complacent about watching and maintaining credit. Trust me, I totally get the picture that for some of us these “Five Credit Factors” cannot be religiously followed in these trying times. It is so easy to let go in the moment of difficult times, but keeping up and trying to keep current can make all the difference down the road.

You’ll never know what challenges these economic times might throw at you where having a better credit score might be the ticket to something better or help change your situation in the future. 10 points can make all the difference in the world, and you won’t get them by saving a bunch of trees.

Time flies and Phoenix RE BarCamp 2010 is approaching fast. If you are in or around the Real Estate Industry and you don’t know what RE BarCamp is, now would be the time to check it out and put April 9th 2010 on your calendar.

• RE Barcamp PHX 2010:
  145 days, 12 hours, 22 minutes, 33 seconds ago

I know everybody is busy, but trust me if you make time in your calendar then this will be a day well spent.

There is a very good reason why RE BarCamp has evolved from its original roots in San Francisco to a  movement with events happening all over the country now.  Not only can you select from many open, participatory workshop-events (referred to as sessions), whose content is provided by participants themselves, but it is also a great way to network, meet new cool people and  reconnect with old friends. This will also a great opportunity to take your existing online relationships offline and and meet your social media connections in real life.

If you are near the Phoenix Metropolitan Area, RE BarCamp PHX 2010 will be kicking off at the Scottsdale Stadium with the sign-in starting 8:30 am, April 9th 2010.  If you check on the who’s coming page there are people registering for RE BarCamp Phoenix from 2094 miles away willing to travel to this event. This fact alone should give you an idea! Take advantage of it and just show up – it won’t cost you anything, other than your time and effort getting to the event.

So what are you waiting for? Clear your calendars and head over to the RSVP page!

Oh, by the way, there is still time to become as Silver or Gold Sponsor to replenish your brownie-points in your good-karma-account.

Sunstreet Mortgage, LLC opens Phoenix/Mesa Office:

There is a new player in town! Today Sunstreet Mortgage, LLC has officially a new branch office to service the Greater Phoenix Metropolitan Area. Yes, while other mortgage companies are folding Sunstreet Mortgage, LLC is carefully and strategically expanding into the Phoenix Market.

Just in case if you are not familiar with the company I work for,  Sunstreet Mortgage, LLC is a Tucson, Arizona based mortgage banking firm founded by John E. Capp, Sarah J. Roads and Patrick W. Sniezek with branch offices in Nogales, Arizona and Albuquerque, New Mexico.

The three principal partners have over 56 years of originating loans and over 20 years of experience in managing all aspects of running a mortgage banking operation and are personally involved in the day-to-day operations. Gary Miljour will be managing the branch together with Kim Chartier.

Not to make this a a sales pitch,  however the most unique aspect of this company and a reason why I chose to work for Sunstreet Mortgage, LLC is that there is one layer of management and decisions are  made fast and locally.

Stay tuned, we will have a grand opening party after we have settled into the new space, but feel free to swing by anytime and come see us. You will find us at the Stapley Corporate Center , 1910 S Stapley Dr., Suite 202, Mesa, Arizona 85204

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