Monday, October 12, 2015

What Is TRID and How Does It Affect Home Owner-Buyers

TRID, or TILA-RESPA Integrated Disclosure, also known as the “Know Before You Owe” rule will change how mortgages are done through altering the loan forms and practices.  The effective date was Oct 3, 2015. All residential loan application taken on or after Oct 3rd 2015 will be under this new rule. The over sight of this new rule is the CFPB or Consumer Financial Protection Bureau.
There will be two new forms under TRID for home buyers — the Loan Estimate and the Closing Disclosure. These two form are said to be easier to understand then the previous GFE = Good Faith Estimate and HUD1 = Closing Statement.  The new forms are more specific with the terms, loan amount and whether the amount can increase after closing for each section of the form. It will also detail features of the loan like a prepayment penalty or balloon payment. TRID being part of TILA-RESPA will affect all 1-4 unit residential purchases and refinances of owner occupied property. Excluding Reverse Mortgages, investment or commercial properties.
The regulation also gives the buyer more time to review the closing costs and all fees associated with the mortgage loan. The first new form received by the buyer is the Loan Estimate due 3 days after applying for the loan. The second new form received by the buyer is the Closing Disclosure and must be presented three days before closing.
Anytime there is a correction or addition to forms they must be sent back to the buyer for another review and be signed. This is going to cause delays in the closing process. It is recommended that at least for a short time until the closing process can be managed properly the Realtors add a couple weeks to new escrows.
The industry has been preparing for TRID for months with new software for the new forms, training of loan officers, closing agents and other effected personnel. The burden is on the lender for compliance and the CFPB has given no shake out period or buffer period for mistakes that may happen. Just last week on Oct 7, 2015 just 4 days after the effective day of TRID the house passes “Homebuyers Assistance Act” H.R. 3192 which will provide a hold harmless period until Feb 1, 2016 for good faith efforts to comply with the TRID rule. The vote was 303 to 121, now the bill is headed to the Senate, however the White House is not supportive of this new bill and has threaten to veto any hold harmless bill.
My personal option is that we have been preparing for this change for several years, we knew the GFE they introduce Jan 1, 2010 that was supposed to be easier to understand for the consumer was just the opposite. The old HUD1 is not hard to understand but it’s normally not seen by the buyer until the day of closing. That doesn’t give the buyer enough time to review the figures. I like the new forms and looking forward to seeing them and the new time line restrictions in play, I see some delays in the beginning but soon will be business as usual for our industry. The lenders are ready and we will all benefit from a well informed buyer.
I think our political representative in the house and senate are wasting valuable time on this issue. Go fight for world peace, clean water and food for every human being on earth. We got this! 
If you have any questions about TRID give me a call or email me.
Thank you for visiting my Blog, your comments and questions are welcome and encouraged. 
Roxy Redenbaugh
ACMC Loan Consultant
Certified Mortgage Coach
Branch Manager
NMLS #269926

Monday, April 27, 2015

Knowing The Difference Between Warrantable vs. Non-Warrantable Condos

If you are interesting in buying a condo then this information is very important to you.
Knowing the difference between the two can save you money in the end. If you are a Realtor and your market area consist of condo projects, you need to educate yourself to better assist your buyers and help them better understand the difference between the two types.

A Warrantable Condo means the condominium project meets the guidelines and can be sold to Fannie Mae and Freddie Mac. Lenders feel that these projects features are protected from future hazards that could threaten the value of the units. These loans are less risky.

A Non-Warrantable Condo means the condominium project does NOT meet the guidelines and cannot be sold to Fannie Mae and Freddie Mac. Therefore many lenders will not lend on these condo projects. They are considered risky, this doesn’t mean there is no financing available for this type of condo but you can plan on paying more in rate/fees and down payment requirements will be higher.

Now you are probably asking ok, what are the guidelines right?
Warrantable guidelines;

Occupancy is important if you are buying as an investor at least 51% of the unit must be owner occupied or be second homes. If you are buying and intend to occupy your unit there is no requirement for owner occupancy.

On an existing or established project at least 90% of the units must be sold, project is complete including all units and common elements, not subject to additional phasing and the control of homeowners association has been turned over to the owners.

On a new or currently converted project 70% of the units must be conveyed or under ratified contract to
Owner occupied and second home owners, non-owner occupied (investor) may not be included towards pre-sale.

Owners more than 30 days delinquent on HOA dues cannot be more than 15%

No more than 10% of the project can be owned by a single entity.

No more than 20% can be used for commercial or non-residential use.

The HOA budget must have at least 10% designated for replacement reserves

There are insurance requirements and more budget conditions but generally specking these would get you started. To be sure of the condo project you or your client is looking at is warrantable, you will want to see if their condo docs include a Condo Questionnaire or Lender Disclosure form. This document is normally completed by the managing agent for the association and must be dated frequently and must be dated within 90 days of underwriting a loan, many management companies have it on hand and ready. Most will charge a fee for this document. Some lenders will require a custom form be completed also at a cost to the buyer. It’s good to get this done prior to spending money on appraisals and other inspections. 

In order to find out if your condo is warrantable you will need to know what type of condo project you are looking at because there are several different types that require different types of guidelines for review requirements and appraisal requirements; have I lost you yet? Crazy right?

A condominium is defined as a real estate project in which each unit owner has title to a unit in a building, an undivided interest in the common areas of the project, and sometimes the exclusive use of certain limited common areas. A condominium unit is a one (1) unit dwelling located in a condominium project. A low-rise condominium is defined as one-to-four units. Agency guidelines apply. A high-rise condominium is defined as five or more units. Agency guidelines apply and would require a Full Leader Review.

Condo Property Regime (CPR); this means the property is a condo and will have some condo elements, like HOA and condo documents. CPR homes can be single family (detached condo) and some are attached. Condo projects that consist of solely detached dwellings (site condo) may use a Uniform Residential Appraisal report 1004 in lieu of the 1073 condo report. This type is also only subject to a limited review.

There are more types; 2-4 unit condos, attached and detached. 

Now let’s talk about NON-Warrantable Condos and what would cause a project to not be eligible to be sold to Fannie Mae or Freddie Mac.

Developer is still in control of the homeowners association.
Project is still subject to additional phasing or add-ons which have not yet been completed.
All common elements and amenities are not fully installed or completed and in operation
At least 70% of all unit must have been sold or legally obligated to close.

It is also safe to say that just because a condo project is non-warrantable at one point doesn't mean it couldn't become warrantable at a later time.

Non-Warrantable property types;
A condominium hotel (or condotel) is defined as any project that is managed and operated as a hotel, resort, motel, inn, or lodge and, therefore, is not a residential project, even though the units are owned individually.
 A project with any one or more of the following characteristics is considered to be a condotel:
  • Rental pooling agreements, either mandatory or voluntary, that allow or require the unit owners to either rent their units or to give a management firm control over the occupancy of the units.
  • Maid service, 
  • Room service, 
  • Shared revenue, 
  • Units that do not contain full-sized kitchen appliances, 
  • Nightly/daily occupancy units, 
  • The project is marketed as a hotel including, but not limited to, projects with units that are available to be rented on a daily basis or projects with names that include the words “hotel,” “resort,” “motel,” “inn,” or “lodge,” Advertising rental rates, Zoned commercial/residential, Square footage of a unit is less than 600. (See the note below.)
  • Reservation services desk, if not part of commercial space, 
  • Declarant control of the condotel exceeds 10 years, 
  • Central key systems,
  • Franchise agreements, 
  • Units are marketed for sale based on the availability of short-term rental rates, a significant level of hotel-type services,
  • Restrictions on the owner’s ability to occupy the unit.
  • Restrictions on interior decorating, 
  • Non-incidental business operations owned or operated by the owner’s association such as, but not limited to, a restaurant, and an interconnecting phone system.
Note: When square footage of a unit is less than 600, it should be reviewed in detail to ensure that the project is a condominium versus a condotel,
  • Cooperative projects, 
  • Timeshare or segmented ownership projects, 
  • Houseboat projects
  • Multi-dwelling unit condominiums, 
  • Condominium projects that represent a legal, but non-conforming, use of the land, if zoning regulations prohibit rebuilding the improvements to current density in the event of their partial or full destruction, 
  • Any project for which the owner’s association is named as a party to current litigation or, for any project that has not been turned over to the association, for which the project sponsor or developer is named as a party to current litigation that relates to the project, 
  • Note: Projects where the homeowners’ association is named as the plaintiff in a foreclosure action, or as a plaintiff in an action for past due homeowners’ association dues, are not considered ineligible projects. 
  • Condominium projects with residential leases, 
  • Investment securities, 
  • Common interest apartments or community apartment projects, 
  • Projects with non-incidental business operations owned or operated by the owner’s association such as, but not limited to, a restaurant, spa, health club, etc., 
  • New projects where the seller is offering sales/financing structures in excess of Fannie Mae’s eligibility policies. This includes, but is not limited to, special incentives to purchase (i.e. paid HOA fess, Club memberships, automobiles, principal and interest abatements and/or builder/developer contributions not disclosed on the HUD-1 settlement statement.)
I hope this information has helped you to understand some of the complexity of condos lending and how they are looked at by the lenders. I would like to add that financing is available to both Warrantable and Non-Warrantable condo, but it’s very important to know at the get go what a particular condo is and most importantly prior to deciding what type of loan will be needed to satisfy the buyer. Due diligent is highly recommended. Being in the know will save the buyer money, as a Real Estate agent you will want to protect your buyer against unnessesary fees. Also knowing prior to opening escrow will save much valuable time. All condos as you can see are not created equal.

I welcome all questions and comments, thank you for taking the time to read my blog post. Be sure to follow my blog from Google or Facebook. You can also subscribe to my Newsletter on right side of blog, get weekly updates on the changing markets. Thank you

Roxy Redenbaugh
ACMC Loan Consultant
Certified Mortgage Coach
Branch Manager
NMLS #269926

Monday, March 16, 2015

Are you getting my Newsletter? OR Are you missing out!

Good Monday Morning,
Hope you have had a great weekend and are ready to roll with another awesome and prosperous week! I don't normally post my Newsletter to my blog but I wanted to remind you, to subscribe just send my your email address and I'll add you to my distribution list, your email will not be shared with anyone and kept private and secure with me personally. 

I have some great loan programs for first time home buyers 97% Community Home Loans, Not FHA.
Plus RE investors purchasing homes to rent. Stated income, 75% LTV….
Are you an investor with too many loans, I have a program to consolidate multiple mortgages even if they are in multiple states. 
Give me a call and get the scoop! Here's my Weekly Newsletter. This Newsletter is a great way to keep in tune with our economic and mortgage markets, Hope you enjoy! 

Your comments and questions are welcome and encouraged. 
Thank you for stopping by! 

Roxy Redenbaugh
ACMC Loan Consultant
Certified Mortgage Coach
Branch Manager
NMLS #269926

Wednesday, February 4, 2015

Reality Check Equals Mortgage Check!

You might be surprised that …. some people don’t know their mortgage rate. If that’s you then it’s time for a mortgage analysis to see if you could benefit from changing or refinancing your mortgage. just survey a 1000 people with a mortgage and an astonishing 1/3 didn't know their current mortgage rate.

This rate is a number that controls the most expensive asset you and most Americans will purchase in your lifetime yet there are thousands who don’t know this information. Crazy right?

I have always advised my clients to take a look at their mortgage and do an analysis each and every year to make sure you are not paying too much in interest based on the current market. Or pay attention to the rates, you have an investment to look after so there is good reason to do this.

There is a great disclosure called a Truth and Lending Disclosure or(TIL) and this document can be used by a mortgage professional to calculated both your current mortgage rate and a new one with lower rate based on national averages or your personal pricing. The TIL will provide you with the amount of finance charged over the period of your 30 year mortgage. A side by side comparison will tell you just how much you will save by refinancing. 

I sometimes get a client who doesn't want to recast his loan and start all over at the 30 year mark.
In most cases you will still realize a savings over the term of the total financing period but another way to avoid a full recast to 30 years is to take a look at a 15 or 20 year mortgage term, these also come with even lower rates for more savings.

Your mortgage analysis process takes about 20 minutes for most mortgage professionals, a copy of your current mortgage statement is all that is needed. If you would like me to take a look I’d be happy to do that or answer any questions you may have.

I also publish a Newsletter every Monday with the average national mortgage rates and provide an economic snapshot for that week. If you are interested in receiving this information go ahead and subscribe to it with your email. 

Your comments and questions are welcome and encouraged. 
Thank you for stopping by! 

Roxy Redenbaugh
ACMC Loan Consultant
Certified Mortgage Coach
Branch Manager
NMLS #269926

Monday, January 5, 2015

Dream BIG in 2015 Set Goals Take ACTION!

As a mortgage coach I am always trying to get people to set goals and work with them to help them reach them. However it’s easy to dream and set goals but if you never take that all important step of ACTION you will never reach your dream.
The ACTION part of setting goals is not rocket science if your goal is home ownership. But you need a plan of action just like any other plan you set into motion. I think the hardest part is just getting started and knowing where to start. I hope this post clears it up for you.

Here are a few things you will want to know before you get started down that road to home ownership.  

Learning the Pros and Cons of renting vs. buying… see my blog post from 2/26/2014 on the subject.

Starting out by getting educated about the process is the best thing you can do. I take special pride and time in educating my clients. Understanding the loan products, guidelines and process will reduce your stress level and you will be better able to choose what is best for you and your family.

Mortgage Coaching is key (it’s all about educating you) and I happen to offer coaching FREE to all my clients, first time buyers or even experienced buyers, things have changed when it comes to all the new loan guidelines and it’s important you know how they will affect getting loan approval.
Everyone is unique and has their own situation, lenders do make exceptions to the rules if you have a good explanation or reason for them to do so. Knowing how to ask for those exceptions is key. That’s why you have me, working for you!

Know how much of a home you can qualify to buy. Why now is the time to start, if you are self-employed it’s critical you know prior to completing your tax return how much money you will need to claim to qualify for a home.  Your net income on your SCH-C is what the lender will use as your income. If you have rental properties you’re SCH-E will also be calculated into the equation so any losses will go against any income. If you receive a salary and get W-2’s it’s important to know if your income is enough to qualify. OR you may need to take on more hours or increase your income by making some changes to reach your goal. Knowing what you can afford before you go out shopping for a home is important... you don’t want to get your heart set on a home you can’t afford. Know your price range and stay in it, to avoid going over your budget.

If you have credit issues, remember 80% of American’s have errors on their credit report, checking your credit and running a tri-merge mortgage credit report will tell you exactly what you need to know and if any work needs to be done to clear anything up, that can sometimes take a few months. Get past being embarrassed just about everyone has had issues at some point in their life. 
It's doing something about your situation and making changes that is important.  YOU can do this! 

How much money will you need to pay for your portion of the closing cost, down payment etc.?
Saving money is hard for all of us. Lenders will require you to have some money left over after the close of escrow, in most cases 2 to 3 month of reserves is required. Retirement accounts can be used for this requirement, normally a lender will allow 70% of that type of account to be used as reserves. But getting all this squared away now will help you prepare for what is needed.

Knowing about your options, type of loan, terms and down payment and where you can go for down payment assistance is key. Each state, county and some cities have down payment assistance programs. You will learn from me what is available in your area and how you go about applying for this assistance. In some cases you can get as much as 20% up to a certain purchase price. This allows you to get a regular conventional loan without mortgage insurance (MI) and that will save you a lot of money in the long and short of it, avoiding MI is important if you can. Learning what the best loan is for you and your family will better prepare you for success in your new home. Failure is not an option so getting the right loan is critical.

Getting the year off to a great start can also start with a rock solid budget plan. If you don’t currently work within a budget or even have a plan for a budget, I can help you get started and give you the tools you need that will include a savings plan. I know you are probably saying “right we barely get by now how can we save” BUT if you put a planned budget into play and STICK TO IT, I promise you can and will learn to save. If you never start you will find yourself in the same place this time next year.

ACTION is the most important part of your plan, you have to pick up the phone and call me. If not me then someone else in my industry. Most loan officers will work with you to reach your goals, not all of them have the time, patience and know how to get you from DENIAL to getting that all important status of ELIGIBLE/APPROVED. That status will sound like a song bird singing to you if you had to take the long road to home ownership, but even if you are lucky enough to get a fast APPROVAL it’s a welcome status and one you worked hard to accomplish.

I have a great feeling about 2015, I hope you have great plans for this year too! I look forward to hearing from you. My goal is to put as many families into homes as possible, especially those who didn't think they could do it. That is what makes me happy and warms my heart.

I welcome all inquiries, phone calls and questions. It’s what I do and love! Take a minute to leave a comment and let me know if this blog post or any of my blog posts have helped you. I would really appreciate your input.

Working towards making it an ECO friendly world, have a wonderful and prosperous 2015

Roxy Redenbaugh
ACMC Loan Consultant
Certified Mortgage Coach
Branch Manager
NMLS #269926