I appreciate the chance to be heard on this subject of appraisers and what we can and can’t do in the near future. I believe that the quality of the loan process will suffer greatly if these proposed changes are made. Those who seek to change this interaction between the appraisers and the loan originators do not realize the increased cost and the greater risk that will be placed on the borrowers shoulders.

When I order an appraisal I need my appraiser to know unless a certain value is there, to not proceed with the appraisal. Very frequently, in fact on almost every loan I ask them to run comps first to make sure the value is there. I don’t want to waste my time or the client’s money if the loan can’t be closed.  Many times, they have both told me that value requested was not available. That’s what an honest appraiser should do. I believe the vast majority do just that.  If the few bad apples aren’t playing by the rules, there are ways to deal with them. What about putting greater responsibility on the lenders who review the appraisals?  If an appraiser does poor work or is using fraud to justify a value, the bank should refuse to accept his work.  This is done all the time now, but needs to be a streamlined process with rights and responsibilities for both sides.  I only use two appraisers that I trust to perform all my appraisals for me.
-
When I closed a loan in Florida for example I used someone that doesn’t know how I work and vice versa.  The last loan I did in Florida, the appraiser was almost a week late getting me the appraisal, had drastically cut the value to an absurd level in my opinion and then cursed me out and threatened not to send the appraisal even though he had already been paid.  A terrible experience from start to finish.  Why was it so bad?  In my opinion it was that bad because I had no idea what the appraiser was like and how he conducted business.  He also did not know what I expected of him. I don’t know of anyone that likes to do business with a person they don’t know. 
-
This happens occasionally now due to geography.  It could happen every single time very soon!!  It will be a new person that you must place your trust in for every single transaction. This can be what happens on VA loans when we don’t interact and order the appraisals.  You are taking the factor of accountability out of the loan originators hands.  The appraiser will not be as likely to put in the time to find the comps that justify the sales price/value.  It’s also true that we have no protections against, lazy, unscrupulous or just plain poor appraisers.  We will have none and certainly our customers will have no protections either.  Once again the rule that is designed to help people will hurt them. They just don’t know it yet. And who do you think they will blame.  Some nameless, faceless appraiser or the person (loan officer) who told them everything would work and that the loan they wanted, the loan they needed, the loan they had to have won’t work?  We won’t even be able to tell them why if these rules are enforced.  We will get into trouble for asking questions and making sure they did their job correctly.
-
When I began this business I used a few appraisers before I selected the two I currently have chosen to use. They didn’t do a good job, they made mistakes and when I asked them to correct their mistakes they took days, sometimes weeks to even return a phone call.  If this lack of contact is encouraged and even mandated; this will occur over and over from coast to coast.  Make no mistake; this will directly affect the borrowers in a negative fashion. Loans will take longer to close, locks will be extended at a cost to the borrower, and many loans that should close simply will not.  All because people in power don’t think through the ramifications of their decisions.  Shouldn’t that be EVERYONE’S first interest?
-
What’s best for the borrower?
more on the new appraisal changes 
-
     Brent Mendelson

FHA announces new limits
Many areas in the Washington, D.C. metro region were raised to the new fha limit of $729,750.  These areas include D.C. itself, and the following counties and areas:

Maryland– Montgomery, Frederick, and Prince George’s
Virginia– Alexandria, Arlington, Clarke, Fairfax, Fauquier, Loudoun, Prince William, Spotsylvania, Stafford, and Warren
West Virginia– Jefferson 
See all counties’ new limits

Choice Finance is FHA approved and we will be happy to assist you with your FHA financing.  Please contact us with any questions and loan scenarios for refinancing or buying a home you’d like us to put together.

*FHA* streamline | purchase with only 3% needed | cash-out to 95% *FHA*

FHA customers with ARMS or a rate higher than 6.25%  
There have been many exciting changes to the FHA program in the past year. If you are currently in an FHA ARM or a fixed rate at 6.25% or higher, contact me right away to see if your situation can be improved with a refinance. Rates and program guidelines are constantly changing and you don’t want to pass up the chance to lower your rate with no closing costs and/or convert your ARM into a fixed rate.  There are many advantages I can offer you when we work together on the FHA streamline refinance process. 

1. It’s fast and easy and can have low or even no closing costs… I’ll run all scenarios so you may determine what makes the most sense for your situation.  Even a .25% drop can save you almost $15,000 over the life of the loan.
2. You can borrow up to 97% of the value of your home.  This may be possible without an appraisal.  This can be essential to getting you a loan if you are in a tough real estate market where values have declined.
3. Credit scores can be as low as 500 (this will change as several lenders are requiring at least a 550 score) and with streamlines we won’t need a credit report.  We will require a clean 12 month mortgage history.
4. I can help you with your FHA streamline refinance no matter what U.S. state your property is in. <Rules vary slightly from state to state>

FHA programs are perfect for credit challenged purchasers, people currently in a Ch. 13 bankruptcy and anyone needing cash out up to limits of 95%. Higher loan limits are coming very very soon so please consult me so I can get you the most up to date advice.  Again this could be a lifesaver when you have a high rate adjustable mortgage that you wish to close.  Refinance out of that to one fixed rate lower payment government insured loan.---Brent Mendelson, fha mortgage lender
fha interest rates Virginia

Mortgage solutions.. getting a loan in today’s tighter credit market
The idea, virtually an industry maxim not so very long ago, that there is a mortgage for every homebuyer’s circumstance or situation is now just a fond memory.  The reality in the current environment is that some would-be borrowers will be out of luck and for those for whom mortgages are available, the standards are now much tougher.  Understand, there is a still a mortgage solution for most circumstances and situations, but in many cases, fitting within the new boundaries being set by lenders will require more cash, higher incomes and better credit scores than in the recent past.   To give you an idea about where we are in the aftermath of a host of changes in mortgage metrics, here are some blog posts of typical situations and what can be expected in today’s market.

Who gets the increase? Much of California, which has some of the highest cost housing in America should now benefit from limits that are expected to be raised to the new max of $729,750.  Other projected increases are in the Washington, DC area—$600,487; NYC & Northern NJ—$595,125; Boston— $518,375; Seattle— $493,375; and Miami-West Palm Beach —$433,500.  Lenders were poised to implement the new special conforming limits once Fannie Mae and Freddie Mac gives the okay. These increases are presently scheduled to expire on December 31.

Q. I need to raise some cash.  What are my options?

FHA will allow cash-out refis to 95% LTV.  Lenders are scrutinizing cash-outs more closely, requiring that the transaction makes sense, either by getting down your overall debt or using the money for home improvements.  Since last August, rates on both fixed rate seconds and equity lines, have skyrocketed.   Equity lines now typically require a minimum 680 credit score, while fixed 2nd trusts will go as low as 660.

Q. Our credit is not the best, but we’d like to take advantage of this buyer’s market.  Are there any mortgage options left for us?

A. If you fall within what is called “subprime” territory (a FICO score below 620), your options will be limited.  Your best choice is FHA, which does not solely use credit scores.  They’ll want proof that credit problems won’t reappear. You’ll have to write a detailed letter of explanation to show the cause of your credit issues and how these issues will be avoided in the future.   If your credit score is above 620, but below 680, you may be able to work for a better option.   Ask one of our mortgage specialists if he or she can recommend some things to improve it.  Scores below 680 are going to cost you money because Fannie Mae and Freddie Mac are moving to risk-based pricing.  For example, a 660 credit score will require an additional 3/4 of a loan discount point, which roughly translates to a 3/8% higher rate.  A 625 score will require an extra 1.75 points, which raises your rate by 3/4%. 

Money is nothing more than a governmentally issued medium of exchange, and its soundness is no greater than the issuer’s monetary responsibility.

The semantic burden of the term “currency” is passage in time.  Anything “current” belongs only to the time actually passing.  Thus, the weather is current.  A passing fad is current.  A river’s flow is a current.  And an electric charge’s rate of flow is a current.

The English world “currency” stems from the Latin word “currere”, which means “to run”.  Money probably came in English to be termed “currency” because it flows from one person to another.

The rate at which money flows (and, thus, the purchasing energy it possesses) is a factor of monetary inflation–something which all Governments have practiced since the beginning of every monetary means of exchange.

The current Zimbabwean rate of monetary inflation is, for example, 100,000 percent per year (and it’s increasing).  If our money inflated at the current Zimbabwean rate, a loaf of bread which costs us $2.50 now would cost us $1,985,30 twelve months from now.  Actually, a loaf of bread in Zimbabwe today costs 3.2 million Zimbabwean dollars.  A year from today, the same loaf of Zimbabwean bread will cost 3,200 million Zimbabwean dollars (i.e., 3.2 billion Zimbabwean dollars).  In a year from now, there will, in other words, be a thousand times less “energy” in 3.2 million Zimbabwean dollars than there is today.

Your own Federal Reserve System is presently playing the same game with the Federal Reserve Notes in your pocket.  The System has doubled the U.S. monetary supply in less than the last decade–thus, inevitably, decreasing proportionally the “energy” of the Federal Reserve Notes in your pocket at the the beginning of the decade.

If you had been alive in 1913 when the Federal Reserve System was created and had then stuffed $1 million in your mattress, it would today have the purchasing power of only $10,000.  That’s quite a flow of energy.

  Mark Zaidan, Choice Finance®

If you refinanced your FHA mortgage, you may be due a portion of your paid upfront FHA mortgage insurance premium.  This may have been applied to your new upfront premium if you refinanced from an FHA loan to an FHA loan.

 You can go to HUD’s website and see if you are eligible:
http://www.hud.gov/offices/hsg/comp/refunds/

-

     Contact me for more info, Brent Mendelson, Choice Finance®

Mortgage Insurance calculators

-
RMIC mortgage insurance calculator 
MGIC MI calculator
Triad calculator
-

PMI factors, chart
 

Dave, I’ll have your hud-1 (settlement statement) this afternoon with the amount you’ll be getting back at closing for this cash-out refinance.  I assume you made your January payment.  Definitely don’t send your February payment, the interest for February will be collected at the table.  Because you have a 3 day recission period, your loan won’t actually fund until Monday February 4th since you are closing Tuesday January 28th.  It can’t fund on a Saturday so it carries over to Monday.

You have 2 options:
- because you fund February 1^st, the lender will also collect for all of March’s interest and your first payment will be April 1^st.  This means a little less $ at the table for you now, but your first payment has been delayed a month.
-
Or
-
- we can do an “interest credit” where February 1^st is considered January 35th, and this way your first new payment will still be March 1^st.  A little more $ for you at the table now (1 months’ interest).   Please let me know which way you’d like us to work it up, and I’ll shoot you the settlement statement as soon as I get it for your review. 

Buying a new home before you have sold your existing home
Bridge loan or Home Equity loan?
A client of mine was relocating to the Washington, D.C. area and had not yet sold her house in southwestern Virginia.  She found a home in Maryland she wanted to purchase and she said: “To purchase the property, I would have to sell mine.  I want to put a large down payment with the sale of my house and have reasonable payments in the new one (there is not a great difference in the value of the two).  How does this work? Anyone know anything about bridge loans? Should I take out an equity loan to pay for the new one until I sell?” 
-
Bridge loans tend to be more expensive with closing costs and carry a higher interest rate.  Origination points are also a common addition to bridge loans.  Just like a home equity loan, the borrower still secures this bridge loan with the equity on their property.  Home equity lines of credit have become very popular because of their flexibility, convenience and low cost.  I suggested she take advantage of the equity on her current home and get a home equity line of credit large enough to cover her down payment on the new house.  The rate was prime minus 2.5% for the first 9 months (approx. 5.75% at the time) and she was able to pay interest-only, which made her payments even that much lower than a fully amortized bridge loan. The closing costs were paid for by the lender and there were no points involved… and this is typical of the equity lines available.  My client signed the loan docs and we closed the loan in less than 3 weeks, giving her enough money to purchase the new home and eventually sell her home in Virginia. When looking into a bridge loan, consider a home equity line of credit as a great alternative.
-
  Mark Zaidan, Choice Finance®

Subprime ARM borrowers needing to refinance
The fate of homeowners holding subprime adjustable rate mortgages that have or will reset at higher rates will continue to weigh on the housing and mortgage markets in 2008.   While there is no one-size-fits-all solution for ARMs holders facing big resets, many individuals will find they do have options, including a number of refinancing alternatives.  One group of homeowners with subprime mortgages will be eligible for help under a plan that was negotiated by the the Treasury Department with loan servicers and mortgage investors.   The loans that are eligible are ARMs with fixed-rate periods of three years or less (mostly 2/28s or 3/27s), originated between January 1, 2005 and July 31, 2007, that have an initial reset date scheduled for between January 1, 2008 and July 31, 2010.  The program applies just to loans held in securitized pools (which will be most loans).  Loans held in portfolio by a financial institution are not covered by the plan.  An individual institution may choose to adopt the plan’s principals or institute a more or less liberal version for portfolio loans.  Some servicers have already instituted in-house plans. If yours contacts you about one, by all means hear them out.  Under the negotiated plan, homeowners will fall into three categories: 

(1) Those who are able to continue to make their payments as contracted.  These homeowners generally will be expected to keep their current mortgage or refinance.  Many subprime loans were made to people with good credit who fell short of meeting the standards for prime mortgages because they made a smaller downpayment, did not want to document their income or assets, or needed high debt-to-income ratios to buy the home they wanted.  Because many subprime loan borrowers do have good credit, one Federal Reserve official has estimated that more than half of homeowners with subprime ARMs should be able to refinance into a less-costly loan by taking advantage of existing programs.  In fact, many of these borrowers might now qualify for a prime mortgage having successfully met their mortgage obligations for a period of time.  A number of mortgage options should be available for these homeowners.  Because their current servicers may not offer all the available mortgage products, the homeowner may need to look outside their servicer to have access to the greatest number of choices. 

(2) Borrowers who it is determined can continue to make their payments so long as their rate stays the same.  These are homeowners who may be eligible for a “fast-track” loan modification that would keep their existing rate in place for five years following the reset.  Homeowners in category three must not be more than 30 days delinquent currently or have been more than 60 days delinquent in the last 12 months.  Any current loan that has a loan-to value exceeding 97% would be considered ineligible for refinance into any available product and, thus, fall into category 2.   Generally, category three homeowners must not be eligible for an FHA Secure refinance (see below for more on this program).  Homeowners in this category must also meet tests with respect to their FICO credit score (for instance, a FICO score under 660 that is less than 10% higher than the score when the loan was originated qualifies!).  If the FICO test is not met, then an alternate analysis will be employed.  The plan will apply only to first mortgages for borrowers who occupy the property as a primary residence andhave resets that would increase the mortgage payment by more than 10%.  What if you have an equity line or other 2nd mortgage on the home?  The guidelines say that servicers of 2nd  liens “should” agree to subordinate the loan to the new 1st trust, but they are not required to. 

(3) Those who are already behind on their payments even before their first adjustment.  Sadly, at present there is no program available to these homeowners.  Generally, they will be subject to “appropriate loss mitigation.”  They will be on their own to try to work with their servicer to try to get a loan modification, appeal for forbearance, opt for a short sale or simply succumb to foreclosure.  What about homeowners who fall outside the parameters of the plan?  For those who were current on their adjustable rate mortgage before a reset, but have since fallen behind, FHA has a new program called FHASecure that will refinance non-FHA ARMs that ARMs that have reset, even if you are now in default.   Contact a Choice Finance® loan officer for more information.
© 2007, Real Estate Information Services, Capitol Assets, Choice Real Estate, Inc. & Choice Real Estate of VA, Inc., & Choice Finance®
  Alex Echeandia, Choice Finance®

..more Mark Zaidan testimonials
“Mark took very good care of us.”
Alicia Baiocchi & Erik Espinoza– Gaithersburg, MD

“Mark was fantastic to work with. He offered careful and concise explanations for all questions we posed to him. He was very perceptive to our concerns and needs and helped us obtain the right loan package for the purchase of our first home.  We will certainly call Mark for our next loan and we will not hesitate to recommend him to our family and friends!”
Dr. Erin and Dr. Edward Ramos– Rockville, MD

“Mark Zaidan is a professional in every sense of the word.  He is extremely personable, asks the right questions, possesses an expert knowledge of the lending process and not only did he come to our house to process paperwork, but also had the lending institution’s representative come when we executed the loan.

We have not only obtained a loan that meets our financial needs, more importantly, we have made a friend.  We have already referred people to Mark, and will continue to do so.  If we had a need for another loan, we would not hesitate to contact Mark.”
Rich Hoffheins and Katherine Wise– Kensington, MD
  Mark Zaidan of Choice Finance®

Why will I need 4 months taxes for my new escrow account?
The title company will collect what they collect and I have no say nor does any other Loan Officer of what that number will be. They don’t have to be paid until September but they are due in June, so there must be 6 months taxes in the account by June. If you close in January, your first payment is March 1st so that means only 4 months will have been paid into that escrow account by June plus the lender will want at least 2 months’ reserves. So figure at least 4 months will be needed and not 8. Make sense? We can further clarify with the title company once we’re further in the process to make sure we’re as accurate as possible.Once we have your payoff from your current lender I can plug that into the Good faith estimate and then we can be very accurate with what you’ll need at the table.

If you owe 435 and you close on January 25th, you will need to add interest from the 1st through the 15th to your 435 AND you will be bringing interest to PRE PAY your new lender from the 25th to the end of January AND all of February’s interest for the new loan. That’s why your first payment isn’t until March 1st. Also, the title company always collects for about 10 days of interest on top of that as a cushion which you get back if they didn’t need the cushion for some natural catastrophe that occurred and therefore docs couldn’t be delivered.