Mortgage Insurance Negotiations
Thought I would bring this to everyones attention. I have a Short Sale with BofA, 100% financed purchase money loan from 2007. Since it's 100% financed there is Mortgage Insurance on the loan. We have had this home listed for over 380 days, have had 4 Bank Approvals (All coming 80+ days after the offer is written, thus the buyer walks) and as of recently the bank is telling us and the seller, he must agree to pay the Mortgage Insurance Company $10,000. Now this $10,000 can come in the form of cash, or promissory note, but can not come from the proceeds of the sale.
BofA would not give us the MI companies contact information for over 9 months, they stated neither the seller nor I had the right to contact the MI company. After several hours on the phone with the LM at BofA we finally got the MI information.
The MI company would not return my calls so I had the seller contact them. After 10 days of calling and leaving voice mails for the representative at the MI company, the seller negotiated a deal.
Upon receipt of this news both the seller and I contacted BofA in hopes of keeping the buyer and finally getting this short sale done. Now, even though we had an approval on the price and we're simply waiting for the MI company to sign off, BofA has closed our file and is requiring us to begin the process all over. According to BofA, this is due to the 10 days it took for the MI company to negotiate with the seller.
Frustrating is the nicest word I can think of. I feel like this is robbery. Doesn't the MI company insure the loan in the event of Foreclosure or Short Sale? Why is this like an act of Congress when we already have an approved price? It's almost as if BofA would rather Foreclose than work out a deal.
Please correct me if I'm wrong, but having the MI company require money from the seller is like crashing your car and your car insurance requiring you to come up with large amounts of money to replace it. What is Insurance for if we have to pay anyway?
Thanks in advance for your time and input!
Kindest Regards,
Troy Sage
“Covering All Angles”
Tuesday, June 9, 2009
Wednesday, July 2, 2008
FNMA (Fannie Mae) New Guidelines
I wanted to give you a heads up on some info that I learned today. FNMA (Fannie Mae) will be rolling out new guidelines effective for applications dated 8/1/08 and after. Some lenders, such as CountryWIde, are implementing this effective 7/1/08 but most are waiting until August.
Here's part of the new ruling that will effect investors and people looking to purchase a second home. If the buyer owns a home and they plan to rent it out and purchase a new home, this new guideline will greatly affect them. FNMA will require the lender to place both PITI (Principle, Interest, Taxes, & Insurance)payments against the borrowers (old house and new house) and they will require 6 months PITI reserves on the old house and 6 months PITI reserves on the new house.
Example:
Current residence PITI: $2,000
New proposed residence PITI $2500
The lender will have to show the borrower has a $4500 per month housing payment, PLUS the borrowers will need to have $27,000 in reserves after the closing of the new home.
The only way to avoid this is that the current residence must have 30% equity. The lender will verify this by doing an appraisal on the existing home.
If you're a buyer in this situation you need to act quickly, or they could be left with no financing.
FHLMC (Freddie Mac) has not announced any changes to their guidelines, but I wouldn't be surprised if they follow suit. Also, this change could affect FHA and VA financing as well, since we use FNMA and FHLMC's automated underwriting engines to underwrite loan files.
The new regulation effects more than just investors and second home buyers. For a full printout of the new regulations please feel free to email me.
Troy Sage
www.teamsagehomes.com
TeamSage@gmail.com
Here's part of the new ruling that will effect investors and people looking to purchase a second home. If the buyer owns a home and they plan to rent it out and purchase a new home, this new guideline will greatly affect them. FNMA will require the lender to place both PITI (Principle, Interest, Taxes, & Insurance)payments against the borrowers (old house and new house) and they will require 6 months PITI reserves on the old house and 6 months PITI reserves on the new house.
Example:
Current residence PITI: $2,000
New proposed residence PITI $2500
The lender will have to show the borrower has a $4500 per month housing payment, PLUS the borrowers will need to have $27,000 in reserves after the closing of the new home.
The only way to avoid this is that the current residence must have 30% equity. The lender will verify this by doing an appraisal on the existing home.
If you're a buyer in this situation you need to act quickly, or they could be left with no financing.
FHLMC (Freddie Mac) has not announced any changes to their guidelines, but I wouldn't be surprised if they follow suit. Also, this change could affect FHA and VA financing as well, since we use FNMA and FHLMC's automated underwriting engines to underwrite loan files.
The new regulation effects more than just investors and second home buyers. For a full printout of the new regulations please feel free to email me.
Troy Sage
www.teamsagehomes.com
TeamSage@gmail.com
Thursday, May 22, 2008
Should Home Buyers Use Multiple Agents and Submit Multiple Offers
Sounds logical right? Mr. and Mrs. Buyer are looking for a home and while they search the net they come across what appears to be several qualified agents. So instead of sticking with just one, why not work with several agents. You know the old saying “Two heads are better than one”, then why wouldn’t “Several agents be better than one”?
Lets start with some simple facts. For the most part, all agents are pulling available homes from the same MLS system designated for the area that the home is located. Why would you want to confuse your purchasing process by asking several agents to pull homes when they’re getting their inventory from the same source? You may be reading this and thinking, “But I’ve done this and some agents send information on different or additional homes that other agents don’t include in their searches”. Then as a buyer you should interview the agents before wasting your time, and theirs, with stacks of emails and listings. You should ask the Realtor how long they have been in the business, how many MLS boards they’re a member of, how many homes do they currently have in Escrow or are currently in the process of Closing, ask the agent the same questions you would ask if you were interviewing to sell your home.
Here’s another insight. While interviewing an agent to represent you in the purchase of a home, make sure the agent knows the area. Ask the following questions: ask about the property tax rate, ask if the home is in the area with HOA Dues, ask about the neighborhood and community parks / pools / etc., ask about the schools, ask about commuting, and ask about shopping. Then after all your questions have been answered, evaluate the answers to see if the agent knows the area and if you feel comfortable working with the agent.
It’s also important to talk with the agent about their work habits. Don’t be shy, set the ground rules. Make sure the agent knows what you expect from them. Here are a few things to ask, or state, in order to establish a good working foundation: Ask the agent how many hours they work a week, ask if there are any specific days they don’t work, ask how long it takes, or when they return phone calls in the event they are not available, ask what forms of technology they are proficient with (text messaging, email, voice mail, virtual tours, etc.). Once you get the answers to these questions you should then have a good idea if the agent is a fit for your needs or not.
Ok, now with all of this being said I would ask you to not work with several agents at the same time. Please remember the 80% - 20% rule. 20% of agents in any given area are producing 80% of the sales. This means that there is a very small circle of agents, and yes they all know each other in one fashion or another. You, the buyer, must remember that the agent’s reputation is on the line every time they write an offer. If you’re the kind of buyer using several agents and presenting several offers on different homes, you will eventually have to walk away from an accepted offer because you’ve chosen a different home that has accepted your offer. This, I promise you, will scar the agents’ reputation.
Equally as important please remember that “Time Is Money”, and the agent doesn’t get paid till the deal closes. So if you’re using several agents, only one is going to get paid. How would you feel if you worked for several days, and maybe even several weeks, and you didn’t get paid? Do you think you would be able to feed your family, pay your bills, or for that fact even have the ability to purchase a home? How would you feel if you worked for free? Well that’s what you’re doing if you use several agents at the same time.
Simply put it’s wrong!
Lets start with some simple facts. For the most part, all agents are pulling available homes from the same MLS system designated for the area that the home is located. Why would you want to confuse your purchasing process by asking several agents to pull homes when they’re getting their inventory from the same source? You may be reading this and thinking, “But I’ve done this and some agents send information on different or additional homes that other agents don’t include in their searches”. Then as a buyer you should interview the agents before wasting your time, and theirs, with stacks of emails and listings. You should ask the Realtor how long they have been in the business, how many MLS boards they’re a member of, how many homes do they currently have in Escrow or are currently in the process of Closing, ask the agent the same questions you would ask if you were interviewing to sell your home.
Here’s another insight. While interviewing an agent to represent you in the purchase of a home, make sure the agent knows the area. Ask the following questions: ask about the property tax rate, ask if the home is in the area with HOA Dues, ask about the neighborhood and community parks / pools / etc., ask about the schools, ask about commuting, and ask about shopping. Then after all your questions have been answered, evaluate the answers to see if the agent knows the area and if you feel comfortable working with the agent.
It’s also important to talk with the agent about their work habits. Don’t be shy, set the ground rules. Make sure the agent knows what you expect from them. Here are a few things to ask, or state, in order to establish a good working foundation: Ask the agent how many hours they work a week, ask if there are any specific days they don’t work, ask how long it takes, or when they return phone calls in the event they are not available, ask what forms of technology they are proficient with (text messaging, email, voice mail, virtual tours, etc.). Once you get the answers to these questions you should then have a good idea if the agent is a fit for your needs or not.
Ok, now with all of this being said I would ask you to not work with several agents at the same time. Please remember the 80% - 20% rule. 20% of agents in any given area are producing 80% of the sales. This means that there is a very small circle of agents, and yes they all know each other in one fashion or another. You, the buyer, must remember that the agent’s reputation is on the line every time they write an offer. If you’re the kind of buyer using several agents and presenting several offers on different homes, you will eventually have to walk away from an accepted offer because you’ve chosen a different home that has accepted your offer. This, I promise you, will scar the agents’ reputation.
Equally as important please remember that “Time Is Money”, and the agent doesn’t get paid till the deal closes. So if you’re using several agents, only one is going to get paid. How would you feel if you worked for several days, and maybe even several weeks, and you didn’t get paid? Do you think you would be able to feed your family, pay your bills, or for that fact even have the ability to purchase a home? How would you feel if you worked for free? Well that’s what you’re doing if you use several agents at the same time.
Simply put it’s wrong!
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