Fannie Mae's Loan Quality Initiative

Beginning June 1st, lenders will order a second full credit screening immediately before closing. This new ‘double check’ policy is part of a new effort to cut down on fraud by borrowers and shoddy underwriting by lenders.

This loan quality initiative requires lenders to pull two credit reports for each mortgage transaction and additional verifications such as borrower occupancy plans for the property, Social Security numbers, and Individual Taxpayer Identification Numbers.

The last minute credit report will be designed to find out whether you obtained or even shopped for new debt between the date of loan application and closing. If you’ve made applications for credit of any sort – furnishings or appliances, automobiles, landscaping, new credit cards – the closing may be postponed while the lender further investigates if these purchases affect your debt-to-income ratio. The extra debt may deem you ineligible for the mortgage because you may appear unable to handle the payments.

Marc Savitt, president of the National Association of Independent Housing Professionals, claims the situation is quite common. “Most often the new debt involves furniture or other goods for the house. However, we have seen debt for new cars and other major purchases.”

So, in what ways can homebuyers and refinancers prepare for this upcoming credit check procedure? Lenders and credit reporting company executives agree, in unison, that everyone should follow this simple rule: abstinence. In other words, between the time you apply for the mortgage and the date of closing (which can range from 45-60 days or more) don’t apply for new credit unless you discuss it in advance with your lender and they approve.




Read article on Washington Post website

Someone else is thinking what I am thinking!

I hate to simply rely on other people to say what I am thinking, however this article on MSN is the perfect advice for those who are getting greedy and thinking that rates are going to continue their downward trend.

http://articles.moneycentral.msn.com/Banking/HomeFinancing/dont-wait-nows-time-to-refinance.aspx

Just because your neighbor got a certain rate does not mean you will get the same rate either better or worse. The days of a simple rate are long gone. Your FICO, loan amount, amount of equity in your home, type of loan, and many other factors will determine your rate. Take the time now to get a "Mortgage Fitness Checkup" to see what is the best plan for you and your financial future!

An Open Letter to All Referral Sources

Last weekend the Federal Government announced the takeover of Fannie Mae and Freddie Mac. This is the culmination of many months of stress and tremendous losses for these companies and many in the mortgage industry. Prior to this announcement, GMAC Mortgage announced it was closing over 200 retail mortgage offices, putting more loan officers and support people out of work. Many of the very talented people in the mortgage industry have left or are no longer working for companies that could provide them the programs and support that they need to be successful. Throughout all of this Cornerstone has continued to stay strong. In July of 2007 we had 17 loan officers. We now have 25 loan officers. We have added talent and with that talent we have added programs and tools to help you become a success or help your clients achieve their goals.

For the real estate community we are rolling out the Home Buyers Scouting Report. This is a tool to help you establish a relationship with buyers and incubate them until they are ready to purchase. For my professional partners we have one of the only second mortgage programs that goes to 95% combined loan to value. In addition to that we have the Equity Accelerator to help all of our clients save thousands of dollars in interest over the life of their loans.

I want to make sure that you know that I am here to help you and your clients achieve your goals. If you know anyone who has purchased or refinanced in last 3 years, please pass their information along to me so I can schedule a “Mortgage Fitness Checkup.” They may not need to do anything now, but it is beneficial to them that they begin to build a relationship with a trusted mortgage professional that can help them achieve their financial dreams!

Sincerely,



Christopher M. Scheer
Your Residential Lending Expert

Sooner or Later I am Right!

Some of you may recall that 45 days ago I predicted the 30 year note to get to 6%. Then 2 weeks after that I again reiterated the stance. Well after the Fed stepped in and took over Fannie Mae and Freddie Mac, we have now seen the rates drop to 6% on a 30 year fixed. That is the good news, here is the bad news.

By taking over these institutions the government has put there finger in the dam. Now they are stuck there with there “finger” in the problem that is our mortgage industry. It is going to cost the tax payers BILLIONS to rescue these two giants. Compared to what we are spending in Iraq, that is a drop in the bucket, but none the less, it is Billions in dollars that could be better used to lower our debt as opposed to raise it. If the gamble pays off, and the money the government invests in Fannie and Freddie has a return, then they have made money. But when was the last time you wanted to gamble Billions of your hard earned dollars and that of your children?

A more realistic scenario is that these two entities become part of HUD in the next 4 years and lending guidelines for the next 4-8 years are slow to loosen. Regional banks and local banks will become the place creative financing, but only for those people that have excellent credit and significant assets or equity.

For questions or comments on this please contact Chris Scheer at cscheer@cornerstonestl.com or 314.223.9824.

Even before the government takeover, more changes at Fannie Mae

As Fannie Mae and Freddie Mac await the government takeover, they both continue to tighten lending guidelines. The latest from Fannie Mae limit the combined loan to value for those who have an equity line on their home or are using an equity line to purchase a home. In addition, unless you are putting 25% down or more on investment properties the cost to acquire the loan has gone up. For investors there is even more bad news as the number of properties financed continues to shrink. For all of the changes, please go to this link;

https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2008/0822.pdf

For questions or comments on this post, please contact Chris Scheer at cscheer@cornerstonestl.com or 314.223.9824.