Mortgage Q&A

[hugoaswho]

I don't pay PMI but want to refi with this program waiting until they move the date mine was 11/30/2009.

This means if you currently have an FHA mortgage, and it was insured by FHA before June 1, 2009.

[ruetzal]

4.000% APR on a 30 year, 3.125% APR on a 15 year and 2.875% APR on a 10 year

just an FYI these are market rates, won't be specific to everyone. But its a great benchmark for you looking.

[ruetzal]

**NEW HARP PROGRAM UPDATE**

Ok so today all lenders can get into this program see below for criteria

So today I am just going to go over some of the guidelines in order to qualify for this long awaited Harp 2.0 program.

Here are five quick guidelines for the Harp 2.0 program:

1. Your current mortgage MUST be owned by Fannie Mae or Freddie Mac and must have been sold to them prior to June 1, 2009. Remember this is not the same as the origination date.

2. You must be current on your mortgage for the last six months with only a 1x30 in the last year. This is not intended to help save you from foreclosure.

3. Your current loan to value MUST be over 80% LTV in order to qualify.

4. Your LTV will be capped at 105% for anyone looking to refinance into a non-fixed loan.

5. Refinancing must be a benefit to you in some way. You must be either reducing your term, payment or be switching from an arm to a fixed loan.

Those are a few of the program guidelines you will need to meet to qualify.
The other great thing about this program is the ability to get an appraisal waiver. No appraisal will save you some money on your closing costs and help prevent some underwriting headaches. However, not all loans will have an appraisal waiver.

It is important to remember that you can refinance this type of loan with anyone participating in the program and not just the person you make your payment to.
It's also important to note that each lender will have different guidelines for this program. You may have to shop around for the lender who has what you need.

[Shawn O]

SO PATHETIC.....

We were really excited to get our 6.375% rate down to 4 or 4.5% and have been working with a great local company to get it done. Get our payment down from $1450 to $1100 or so hopefully so we can rent it out and qualify a year or so down the road on another property with the rental income.

They were all set to start the process Monday.....

Come to find out that the PMI company we have United Guaranty Corp REFUSES to participate in the process. The only mortgage insurer that won't adhere to the process.

What a piece of s*&$ company. Never paid a late payment in 7 years. And United Guaranty is owned by none other than AIG that took billions of dollars from taxpayers for a bailout.

If this doesn't work out we're going to immediately stop paying and let the f*&%king place go....

[hugoaswho]

SO PATHETIC.....

We were really excited to get our 6.375% rate down to 4 or 4.5% and have been working with a great local company to get it done. Get our payment down from $1450 to $1100 or so hopefully so we can rent it out and qualify a year or so down the road on another property with the rental income.

They were all set to start the process Monday.....

Come to find out that the PMI company we have United Guaranty Corp REFUSES to participate in the process. The only mortgage insurer that won't adhere to the process.

What a piece of s*&$ company. Never paid a late payment in 7 years. And United Guaranty is owned by none other than AIG that took billions of dollars from taxpayers for a bailout.

If this doesn't work out we're going to immediately stop paying and let the f*&%king place go....

Write your congressman that's what everyone else is doing...all these companies have special areas that just deal with the congress correspodence...

[hugoaswho]

ARGH why cant they move #1 (stupid date) to 2010 ? What is their reasoning? My loan was originated 11/2009

this would help me to refi from 5.375 on a condo...I owe about 136k

**NEW HARP PROGRAM UPDATE**

Ok so today all lenders can get into this program see below for criteria

So today I am just going to go over some of the guidelines in order to qualify for this long awaited Harp 2.0 program.

Here are five quick guidelines for the Harp 2.0 program:

1. Your current mortgage MUST be owned by Fannie Mae or Freddie Mac and must have been sold to them prior to June 1, 2009. Remember this is not the same as the origination date.

2. You must be current on your mortgage for the last six months with only a 1x30 in the last year. This is not intended to help save you from foreclosure.

3. Your current loan to value MUST be over 80% LTV in order to qualify.

4. Your LTV will be capped at 105% for anyone looking to refinance into a non-fixed loan.

5. Refinancing must be a benefit to you in some way. You must be either reducing your term, payment or be switching from an arm to a fixed loan.

Those are a few of the program guidelines you will need to meet to qualify.
The other great thing about this program is the ability to get an appraisal waiver. No appraisal will save you some money on your closing costs and help prevent some underwriting headaches. However, not all loans will have an appraisal waiver.

It is important to remember that you can refinance this type of loan with anyone participating in the program and not just the person you make your payment to.
It's also important to note that each lender will have different guidelines for this program. You may have to shop around for the lender who has what you need.

[ruetzal]

Shawn I can definately understand your frustration, its a bunch of sh** that UG won't do this especially being a subsidiary of AIG

I am having our UW email our rep from UG to confirm, Keep in mind with a fresh program like this it takes some time for everyone to get comfortable with it. It would not surprise me if UG opens this up to its customers after a bit of time. In the meantime I would bitch at them as much as possible!

Hugo it doesn't appear this program will open up those dates unfortunately. But hopefully it may change a bit as time goes.

you guys have to keep in mind that no banks like this program and especially MI companies. It takes a bit of time to see how things go. it can change in the future

[Shawn O]

Got call this morning that our application was submitted and approved. Company that we have been working with is same company that did the loan originally in 2005 so that has streamlined things a bit.

They talked to UG yesterday and were told they will only approve re-issue of mortgage insurance if loan was originally underwritten by them or done prior to 2003. Thats it. This has been their stated policy towards HARP 2.0 since last November.

She said they were told to submit documents anyways and they will review it and the above criteria was "not necessarily" absolute. I'm not holding my breath.....

https://www.ugcorp.com/services/harp.html

https://www.ugcorp.com/services/harp.html

[Shawn O]

Why would MI company not like this program? Its only for people who are current on their mortgages, its not costing them anything, the mortgage insurance is still in place, and having better mortgage terms would help to ensure people don't intentionally default on their loans.

Whats their issue? Not like they are the bank itself having to take the interest hit....

[ruetzal]

there is a lot of moving parts to this program, No bank or MI co. ever wants to fund over 95% in reality. Too much risk. Also certain loans effect financial statments more than other. Also risk tolerances.

These MI co. have gotten beat over the last few years. Just as a reference MGIC has a ratio of 180% which means for every $1 taken it they send $1.80 out the door. NOT Good

Mi co. pay the lender to a certain % of loss on a file. So lets say you owe 150k on a 80k valued home. they home gets foreclosed on and sold for 50k, well instead of owing the % on 30k the MI co. now owes the % of 100k. So the risk is substantial for these companies to take on. It also throws off some financial ratios of strength which they don't like either. Now I am not sure the % of risk the gov't takes vs the MI companies on these deals. I think the gov't will cover the amount over 105% LTV and then the MI co. will be responsible up to 105%

[ruetzal]

4.0% APR on a 30 year, 3.375% APR on a 15 year and 3.0% APR on a 10 year

[pappas64]

Ruetzal... maybe you can weigh in on this. My brother is looking at a property held by Wells Fargo. He has approvals from another lender, with money down. They are not allowing him to even OFFER on the property, because it isn't a Wells Fargo approval. They say that it's already rejected so don't bother... I guess as the "owner" of the property, they can decide whatever they would like. Just seems like it should be against some regulation...

I don't even know that there is a question there... more of a frustration. And I just think it's crazy that with all of the bad debt and properties they have, why wouldn't they accept ANY offer? Seems like they want the problems to continue. His offer was 10k more than what it is listed with a realtor for...

[ruetzal]

Thats truely weird. I have no understanding why they wouldn't be taking offers from a non Wells lender. My only suggestion would be for your brother to get take an application with Wells for that deal.

I am guessing they want to soke up some of the loss on the property with a mortgage on the place that Wells services so they can re-coup. Also they shouldn't really come out and say those types of things since as a seller you can accept or decline an offer without any reasoning.

[SilverStoned1.8T]

Ruetzal... maybe you can weigh in on this. My brother is looking at a property held by Wells Fargo. He has approvals from another lender, with money down. They are not allowing him to even OFFER on the property, because it isn't a Wells Fargo approval. They say that it's already rejected so don't bother... I guess as the "owner" of the property, they can decide whatever they would like. Just seems like it should be against some regulation...

I don't even know that there is a question there... more of a frustration. And I just think it's crazy that with all of the bad debt and properties they have, why wouldn't they accept ANY offer? Seems like they want the problems to continue. His offer was 10k more than what it is listed with a realtor for...

That's weird. I just bought a foreclosure that was held by Wells Fargo, closed a few weeks ago, and I financed it through my local credit union. Maybe it's location specific or something?

[StudiousPete]

Not to get off topic but just came across this thread

Are lender origination fees just a way for them to make more money off of me and if so are they neogotiable?

Currently going through re-fi with the same mortgage company, can't they waive that fee for an existing customer?

[ruetzal]

Pete all fees are negotiable. Origination fees are extra money for the loan officer. If they are a retail employee they can charge upfront and still make yield spread (backend fee) on your loan. If they are a third party, which means they aren't your lender but they are originating your loan they can only make fees 1 of 2 ways, either backen OR upfront so if the loan officer works for the lender tell them you won't pay for that crap, its BS. You should only pay about 1k-2k on the Hud (settlement statement) to close your loan. I would say an average mortgage including all fees (lender, title and appraisal) should only cost you roughly 1500. Generally you pay about 600-800 for title, about 650 for lender fee, and 400 for appraisal. Anything over is rediculous in my opinion. Plus your rate should be around 4% given its a single family home

[StudiousPete]

thank you for your input

[Shawn O]

Have to bump this up for help.

Got our HARP 2.0 in process this time and moving forward. They got approval through the "system" and appraisal waver. Working on getting MI cert transfer from United Guaranty and I just signed loan disclosures today. Numbers aren't set in stone yet but this is what they are giving us....

30 year fixed, 4.5%, estimated loan amount of 175k.

Fees:

$3,105 Origination fee of 1% and processing, underwriting, Lender fee, doc handling
$883 Required Servies (Appraisal of $420, Credit report $30, Flood certification $13, 2nd Appraisal $420). Not sure that these appraisal fees are all about, sent followup email asking.
$1,590 Title Services and title insurance
$92 Gov't fee
$425 transfer taxes
$1,890 initial deposit to escrow
$4640 Prepaid Finance Charge????

Total Estimated Charges $8262.50

[ruetzal]

well the prepaid finance charge is the above figures added together, note not all just some. At a 4.5% rate they are making YSP on the back end as well and then charging you 3k upfront which is pure BS. i would have them take out the 3k origination charge. If they can't we can and you already spoke to our broker so its your choice now. Every other fee was legit except that origination charge.

what company are you going thru? also are they your lender or are they funding your loan thru another company? essentially are they a third party broker?

We are offering about 4.125% with no broker fees. We charge 650 uw fee and then you have the regular fees as you posted above.

Also if your appraisal was waved why are they charging you for one?

one last thing take the escrows out of your calculation that is your money and is not a fee.

[GeoffD]

Have to bump this up for help.

Got our HARP 2.0 in process this time and moving forward. They got approval through the "system" and appraisal waver. Working on getting MI cert transfer from United Guaranty and I just signed loan disclosures today. Numbers aren't set in stone yet but this is what they are giving us....

30 year fixed, 4.5%, estimated loan amount of 175k.

Fees:

$3,105 Origination fee of 1% and processing, underwriting, Lender fee, doc handling
$883 Required Servies (Appraisal of $420, Credit report $30, Flood certification $13, 2nd Appraisal $420). Not sure that these appraisal fees are all about, sent followup email asking.
$1,590 Title Services and title insurance
$92 Gov't fee
$425 transfer taxes
$1,890 initial deposit to escrow
$4640 Prepaid Finance Charge????

Total Estimated Charges $8262.50

$4.,640 is called "points". In this case, you're pre-paying 1 1/2% interest on the note. That goes into the mortgage broker's pocket. A 1% origination fee is also stupid-high.

How crappy is your credit score that you're getting screwed like that? Huge fees and 1 1/2 points for a 4.5% APR/30?

I can walk into my bank today and get a 4.164% APR 30 year mortgage with no points. I can shave 1/8% off that by being one of their "premium" customers. The fees will be about $1,800 including a non-refundable $450 loan application fee.

If the closing were this week, I'd also have to pre-pay about 50 days of interest (and property taxes & insurance if you don't negotiate that away) since the first mortgage payment wouldn't be until June 1. That is "initial deposit to escrow".

That's just my local bank (Citizens Bank / RBS) without shopping around.

[Shawn O]

Low credit score is 765, high is 790 for the 3 bureaus. We have zero CC debt. Only other debt is 25k of student loan between my wife and me combined.

Tough to negotiate anything when you are trying to refinance on our house that us upside down at at 143% LTV.

This is the email response I got this AM asking about a few things:

"If the rates for a HARP 2 refinance get to 4.00% before we close, I will lock in at that. As of now, I have not seen the rates down near that 4.00% range, simply due to the fact that your Loan To Value is at about 143%, and that we are only allowed to roll in a small amount of your closing costs, which means you have to bring the rest in cash to the closing, or I have to cover them with service premium, which causes the rate to get a little bit higher.

There will be no fee for an appraisal, as we received the waiver on your file; however, not all files receive an appraisal waiver so we have to disclose both appraisals or we cannot charge them. They will be removed and the numbers will be more exact when we lock in your interest rate and re-disclose those forms to you and Joan."

$4.,640 is called "points". In this case, you're pre-paying 1 1/2% interest on the note. That goes into the mortgage broker's pocket. A 1% origination fee is also stupid-high.

How crappy is your credit score that you're getting screwed like that? Huge fees and 1 1/2 points for a 4.5% APR/30?

[ruetzal]

Shawn I completely agree with the post above yours. What he responded to you is BS.

I get that he charged you a higher rate to credit back the YSP to cover your costs but think about this he increased the rate to 4.5 to cover his 3k fee. So your paying a higher interest rate over 30 years to cover that 3k (personally I would take it out of pocket first before financing, and ofcourse on the other hand I would never pay it)

The appraisal fee disclosed is fine, today brokers need to be thorough to cover their bases so it doesn't cause delays with closing. Just ensure it wasn't on the Hud.

I am not sure your situation to bring in cash to close but if you cannot then an alternative since I know you have to refi would be to take a higher rate and then have the broker credit some of the YSP to your closing costs. Just know that its in your rate to be paid over 30 years.

Also and this goes to the whole crowd. Never be needy of a refi, there are a ton of banks out there and each will quote you their rates. If one can approve you for a loan so can someone else. Always shop around unless the fees are within my guidelines! The banks want your deal more than you think and as the consumer you have a choice to go to where the best deal is.

so essentially Always shop around. Today there is no one that can do a special deal. If one can do it so can another bank!!!!! you have the upper hand don't be afraid to speak your mind and walk out if you don't like something.

Also PM replied to you. Get our quote first!! and compare. Lifes about choices

[Shawn O]

LOL at this response....

"Finally, a customer who understands the mortgage lingo (at least I assume that since you used YSP in your message).

YSP doesn’t exist anymore. As a bank, we can get service premium from fannie mae, but I am not allowed to collect that as income, so we pass it on to the customer. The only way I get paid on the loan is through the 1% origination fee. The $3000 up front is actually a collection of fees including all lender fees (called Origination Cost, now) which includes the 1% fee to Waterstone. When we decide to lock in your interest rate we put it as close to PAR as we can, as there is no benefit for us to charge you more. Not sure where the YSP conversation is coming from, but that person is giving you very old information, or they don’t work at a bank and maybe in that broker world YSP does still exist, and they can actually collect it as income, against the Dodd Frank bill and CFPB, of course.

You aren’t getting overcharged for your loan. The 4.500% rate is not locked in at this time. I put it at 4.500%, in the event you wanted us to help pay for your closing costs so you didn’t have to roll them all into your loan, or bring them to the closing table, out of your pocket.

To get these HARP 2 loans approved through AUS with an approval, most of the time we are seeing that we are not able to roll costs into the loan, so we bump the rate up so we can use the service premium (not to be confused with SRP, as they are different) to contribute to your overall cost, as a lender credit to you.

As I explained before, the numbers will be fixed once we get your loan approved and are able to lock in your rate. My guess is that things will look quite a bit different at that time. The example on the forms you signed are probably at the max cost, because we are not able to go back and increase your rate without changing the APR, and also not able to add fees at any time due to the 10% variance that we are bound by with HUD/CFPB/RESPA.

I think that PAR rate on your loan today is approximately 4.125%"

[ruetzal]

pm replied

we all call it something different these days (service release/yield spread) its all the same no term in incorrect. Technically YSP is made up of 2 categories investor premium + service release premium. Every loan that is sold has both of these figures in it so he is wrong technically but not to get technical

Taking the above into consideration the frank/dodd act still allows for retail LO's (employees of the lender) to charge both back end (ysp) and upfront fees. However on a payroll standpoint they need to take home 1 or the other while the rest of it can be used to pay operating costs.
this is done thru contracts with the lenders.

They may have the policy to get paid no YSP and are obligated to charge their take home pay upfront to you. IMO its bad policy and gives them a competitive dis-advantage with the rest of us. But thats fine with me.

As I said above this is the reason we shop around because some companies are have bad policy.

[ruetzal]

also just because that guys arrogance is killing me

Fannie does not pay service premium or what its really called service release premium because they do not service any mortgages. All servicing for a loan that is sold to fannie is serviced by the company or a sub-servicer that the company hires.

Fannie pays investor premiums, which is the open market price for that mortgage. When selling to fannie a lender only gets this investor premium from fannie and the company collects the service release premium thru the servicing of the loan for Fannie Mae, this is .25% of the interest collected from the borrower. So every month a servicer of loans sold to fannie is allowed to keep .25% of the interest that gets paid to Fannie. So IE on 1 mil of interest collected per month a servicer gets to keep $2500 of that money and has to send the remaining to Fannie.

Send this to him and I am sure you would stump him on his shady terminology.

[dunhamjr]

i have a few numbers i want to see what you think.

chase called me about refi'ing my investment property. apparently they can do harp2 on it, so good for me.

existing loan:
7yr interest only arm currently at 6.375%
about 4.5 years in with 180k balance

new loan:
30yr conventional fixed, 4.625%
getting a discount from wifes dad being retired from qualifying national union.
estimated loan costs $1550
prepaids $300
reserves $1254

Out of pocket to do the refi $11.96... yes Eleven Dollars, Ninety-Sis cents.

apparently my current reserves will get rolled in to lower the loan, then the new reserves are added on... this makes sense and i am fine with that.

prepaids... they are what they are.

loan costs... $1550 not too bad.

BUT do they really have to have Lenders Title Insurance on a refi? its $700 of the $1550 costs.

also. the loan officer talked about being able to buy down the rate, but when it came time to put the buydown in the computer, it wouldnt let him do it. does that make sense?

some other info
refi'd LTV will be right around 105%
the LO said that DTI ratio didnt matter for this program.
and i have excellent credit (777,811,818)

[ruetzal]

i have a few numbers i want to see what you think.

chase called me about refi'ing my investment property. apparently they can do harp2 on it, so good for me.

existing loan:
7yr interest only arm currently at 6.375%
about 4.5 years in with 180k balance

new loan:
30yr conventional fixed, 4.625%
getting a discount from wifes dad being retired from qualifying national union.
estimated loan costs $1550
prepaids $300
reserves $1254

Out of pocket to do the refi $11.96... yes Eleven Dollars, Ninety-Sis cents.

apparently my current reserves will get rolled in to lower the loan, then the new reserves are added on... this makes sense and i am fine with that.

prepaids... they are what they are.

loan costs... $1550 not too bad.

BUT do they really have to have Lenders Title Insurance on a refi? its $700 of the $1550 costs.

also. the loan officer talked about being able to buy down the rate, but when it came time to put the buydown in the computer, it wouldnt let him do it. does that make sense?

some other info
refi'd LTV will be right around 105%
the LO said that DTI ratio didnt matter for this program.
and i have excellent credit (777,811,818)

wow sounds like a good deal to me, Your pmt will probably be right around where the payment is today and your adding principal and reducing interest cost the APR spread is probably around 2-3% lower which is fantastic.

Yes they do need title insurance. They still need to re-issue a title even on a refi unfortunately and thats the premium you have to pay to obtain the title/insurance on the title.

Not sure whats involved with the prepaids, generally those are appraisals and you may have to get one or you may not it depends on the DU findings for the program, if it states you need an appraisal no way around it. I am guessing thats what the prepaids are.

In reality your losing 4 years however since you did not reduce principal you can throw this aspect out the window. (I get you may have bought it down over these 4 years)

IMO its a slam dunk for you. Your payment will be roughly the same and you can lock in a hell of a rate with very little out of pocket. The rate is fantastic for an investment property!! Also think about the other side after 3 more years it will start adjusting and rates are going up no doubt about that. Although I don't think they will be going thru the cieling they are definately going to rise to roughly 5-8% during the next 5-10 years. This will save you headaches in the future when you don't have Harp around and you can't refi it.

[ruetzal]

BTW those fees are on the low side of my estimates on this thread I usually say you should be paying 1200-2000 and generally they are right where you are at 1500 (title 500-700, lender costs about 700, appraisal 300-450) so IMO the fees are normal

and the rate is great as well.. GL to you! hope its cash flowing for you.

The general consensus out there today is that housing is starting to turn around. Although home building was bleak in the 1st quarter thats generally expected. Permits were up in march though fairly well, so I expect we are right at the rising point in this industry again. A long road to the top but its definately starting. Usually homebuilders have good reports for the end of Q3 and into Q4. If this is the case this year I would say its a solid bet to get out there and start buying if your in the market.

Rates
3.875% APR on a 30 year, 3.0% APR on a 15 year and 2.875% APR on a 10 year

[dunhamjr]

thanks for the input.
all pretty much what i was thinking.

[90 GT-G60]

Hey Ruetzal,

What can you tell me about 203k hud loans, down payment, rate term wise?

A single family home development that I am interested in, has a foreclosure that is now down to 250K, last year, when it was in the 300's the listing had some pictures of the inside and it looked like it needed the typical carpet, paint etc. Some windows were left open back then so not sure about water damage. Other than that I have no idea on the condition.

I currently live in a town home, with a balance of approx $100k rate in the mid 5's, value between 175k-200K range, with I think 20 years left, doubt we could sell it quickly unless we "fire sale" it. So would like to keep it, and rent it out. Last time credit was pulled, both of our scores were over 800.

Don't have 20% down, unless I cash in an old IRA and take the 10% penalty and the tax hit.

[ruetzal]

you would want to go with a FHA loan which I think you meant by Hud loan. You will need 3-5% down but you get some seller credits that will help with that a bit. We have a guy out by you and if you need some more indepth details about financing he would be willing to help you. I am good friends with him so you would be in good hands.

Unfortunately when purchasing a home you will always be at 100% ltv to the appraisal since they generally come right in at asking price.

I don't suggest ever cashing out retirement funds. I look at it this way in your current situation can you afford it or not.

pm me if you want my guys name out there.

[mzd]

Wow, just found this thread and also see you're in WI.
I'm in a bit of a quandary.
On Friday we got our offer accepted on a new home, contingent on selling current home. Have pre-approval already, no problem there. However, on Wednesday, we got notice of a bump. We have 72 hours to remove the house contingency and provide a letter from a lender saying we can more forward without the sale of our current home.
The pre-approval is based just on my income. I found out yesterday that, with my income alone, the income to debt ratio would be too high. However, we are fine if we include my wife's income.
But, she is currently part-time at the Post Office. For the past 6 years she was a full time teacher but decided on a career change. Our current lender says that they require two years history at a part time job for them to include her income and therefor we don't qualify. Is that a standard requirement across the board?
Our closing date isn't until 7/20 so we still have three months to sell the current home. I have been there for 10 years and have sufficient equity to adjust the price very aggressively at this point in order to get us out there.
Any thoughts, or are we just screwed at this point?
I'm in Madison, btw.
Thanks!

[ruetzal]

mzd
just spoke to our lead UW as long as her part time job is her only job then we would not need a 2 year employment history. Weird thing is if she has a full time job and a part time job we would need 2 years of both. It sounds like the postal service is her only job so we would not need this.

If you want one of our LO's to take a look at your purchase loan let me know.

I am sure you could sell your other property, especially being from the madison area, but not sure how bad your teeth will get kicked in on it.

[mzd]

thanks for your advice and info!

[auburnjosh]

Waiting to refi my underwater BoA mortgage under the new program. Is there anyone else that will refi it? I'm really trying to move all of my accounts away from BoA.