presented by welcome. presented by the current economy presented by: lou barnes
TRANSCRIPT
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WELCOME
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THE CURRENT ECONOMY
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LOU BARNES
Source:Fed Z-13/10/11pg 104
Source: DOLA State Demography
Office
Source: DOLA Division of Housing
Source: DOLA Division of Housing
Source: DOLA Division of Housing
Source: DOLA Division of Housing
Source: DOLA Division of Housing
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TAKING BACK CONTROL
OF THE APPRAISAL PROCESS
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SCOTT HAMLING
Overview
• Manage Premier/CCMC appraisal department• Learned appraisal business in college with father• Experience training realtors – Kentwood Co.• Changing landscape of appraisal industry• Today, appraisals are one of most important
elements to the sale of a property• I’m here to help you with appraisal challenges!
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History
• In 2009: Home Valuation Code of Conduct (HVCC)
• HVCC: crime for loan production employees to choose appraisers or contact an appraiser about valuation
• HVCC has been replaced with Dodd/Frank Act
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• Dodd/Frank: Federal crime for loan production employees to contact appraiser about valuation
• Important: Dodd/Frank does cover realtors!
• BUT: Realtors have right to discuss valuation with appraisers
Mistakes To Avoid
#1) Always use local appraisers (national lenders work with national appraisal companies)
#2) Listing agent should always meet appraiser at the property!
Appraised value sticks:
• FHA – 4 months
• VA – 6 months
Appraisal comes in low, now what?
Less than 10% chance of raising value of an appraisal
Appraisers have no incentive to do a great job –you need to be proactive in protecting your transaction!
Selling AgentResponsibilities
• Take control of financing portion of transaction• You MUST work with a local loan officer• That loan officer MUST work for company that
has control of quality of appraisers used.
Premier Mortgage Group:• In-house appraisal management division• Identified best appraisers in the market• Strict guidelines and lending training for appraisers• Our appraisers do great work, are paid well
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Listing AgentResponsibilities
• Seller will be angry with YOU if deal does not close (not buyer, buyer’s agent, or lender)
• Get it right the first time – less than 10% chance of increasing the valuation after appraisal– If considering an offer, find out if buyer’s lender can
control appraisal process or employ an AMC– If they use an AMC, voice concern (loudly) that AMC’s
do not provide good service
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Listing AgentResponsibilities
• Keep schedule flexible to accommodate appraiser• Meet appraiser at the property every single time!
– Bring helpful information for appraiser– If appraiser mentions HVCC or Dodd/Frank and does
not want you there, call lender to request next appraiser in the rotation
• A contract extension is much simpler than raising a low appraisal
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Listing AgentResponsibilities
Appraiser packet suggestions:1. Contract
2. Listing brochure
3. List of all property upgrades, completion dates and costs
4. The sketch if property was measured before listing
5. County assessor records
6. Listing history
7. 1004MC form obtained from MLS listing service
8. Comparables to support sales price (listed, pending, sold)
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Listing AgentResponsibilities
Before looking for comparables:
1. Pull up a 1004MC form
2. This form will dictate the comparables needed
3. Example:– 1004MC shows
values are declining
– Investor requires minimum3 comps that closed in past3 months
– PLUS 2 listing or pending sales
4. All comparables must adjust for at or above appraised value
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1004MC Report:Adding Over 100 Listings
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1) Click the “User” tab at the bottom left of the home page
2) Click on “Preferences” in the left hand column
3) On the field “Number of Listings In Grid”, click the “User Defined” button on the right and type “400”.
4) Very important – at the bottom of that screen hit “Confirm Changes”
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Accessing1004MC Form
Accessing1004MC Form
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Accessing1004MC Form
Accessing1004MC Form
Accessing1004MC Form
Accessing1004MC Form
Comparables Report to Provide Appraiser
Comparables Report to Provide Appraiser
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Comparables Report to Provide Appraiser
Comparables Report to Provide Appraiser
Determining List Price –to- Sale Price Ratio
Listing AgentResponsibilities
Meeting appraiser at the property:
• Setup as for a buyer showing (clean and well-cared for matters)• Offer to help hold measuring tape (maybe time to offer the sketch?)• Meet somewhere you can spread out materials you prepared:
– Review 1004MC form
– Explain why you chose the comps you have
– Show other comps you found, and explain why they are poor comps
– Tell about the property’s special features
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Listing AgentResponsibilities
Meeting appraiser at the property:
• Turn appraiser loose (do not follow from room-to-room)• Before appraiser leaves:
– Ask if able to meet minimum FHA standards
– “Really appreciate if you would contact me if problem with values”
• If there are value issues – don’t panic!– Stay friendly with appraiser
– Offer to do more research on comps
– Consider contract extension
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Next Steps
Too much material? I’m available for follow-ups!
Realtors and appraisers value differently:• Realtors value properties using PPSF• Appraisers value by making adjustments for differences
I can help you understand this difference and how to find adjustments like an appraiser
Contact your Premier/8Z loan officer to schedulea meeting
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CONDOMINIUMS
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CRAIG NAGEL
MELANIE NYGREN
BARBARA WEADE
FHA Financing
Effective Immediately:• If condo project was approved by FHA after 2000
– Recertification available within 6 months of expiration– Full re-approval required after 6 months of expiration
• If condo project was approved by FHA before 2000– Full re-approval required
Initial Project Approval Dates New Expiration
1972-1985 December 31, 20101986-1990 May 31, 20111991-1995 July 31, 20111996-2000 August 31, 20112001-2005 September 30, 2011
2006-2008 (Sept) March 31, 2011
FHA Financing
FHA Association Re-Certifications
• Premier can do re-certifications / approvals– $900-$1100– 2-3 week turnaround
• Or, HUD/FHA has 4-6 week turnaround
FHA Financing
What you can do to speed the process:
• Have the HOA complete the Certification form• Check with lender for HOA status• Obtain copy of HOA budget• Find out about any special assessments• Check if HOA has fidelity/employee dishonesty
coverage
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FHA Financing
FHA temporary allowances extend to 6/30/11
Maximum FHA Concentrations (current):• Existing construction - 100%• New construction – 50% (after 30% of units have sold)
Maximum FHA Concentrations as of 7/1/2011 (unless extended again):
• Existing construction – 30%• New construction – 30% (after 50% of units have sold)
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FHA Financing
FHA mortgage insurance has changed:
• 1% upfront MI (was 2.25%)• 30yr - 0.85%-0.90% monthly MI (based on LTV)• 15yr – 0.25% monthly MI (LTV > 90%)• Avoid monthly MI with 10% down and 15yr loan
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Conventional Financing
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PrimaryResidence
SecondHome
InvestmentProperty
No owner occupancy requirements with 80% or lower LTV*
70% owner occupancy required with LTV above 80%
No owner occupancy requirements with 75% or lower LTV*
70% owner occupancy required unless CPM (then 51% owner occupancy required
* Only on fully completed projects
Commercial In Project?
• If over 20% of total sqft in complex is commercial– An issue with conventional financing
• If over 25% of total sqft in complex is commercial– An issue with FHA financing
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Condo-tels
Widely expanded definition by Fannie and Freddie:
Water - Sand - Snow
Condo near one?
If so, likely will need a portfolio lender.
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Condo-tels
No nightly rentals are allowed
• May cause to be ineligible for Fannie or Freddie:– VRBO or other vacation rentals (search Google)– Any nightly rentals within Master Association– Central Reservation desk exists (even if not in the
subject property complex)
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Red Flags
• Special assessments• Pending litigation• One entity owns over 10% of project• 2-4 units: all but 1 unit must be owner occupied (or a
second home)• 20+ units: must have fidelity bond coverage:
– (3 months assessments) x (number of units)
• Line item in budget for 10% reserves (full review only)• Owners need to be in control of the HOA (not developers)• Owners need H06 (walls-in) coverage for 20% of
appraised value
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ENJOY A QUICK BREAK
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FORECLOSURES& SHORT SALES
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JONATHAN GOODMAN
TERI EVANS
Post Short SaleDeficiency Claims
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4750 Table Mesa DriveBoulder, Colorado 80305
Facsimile (303) 494-6309 Telephone (303) 494-3000
http://www.frascona.com e-mail: [email protected]
Post Short SaleDeficiency Claims
Excerpt from U.S. Bank letter:
U.S. Bank will agree to a short payoff with a net to U.S. Bank no less than $152,181.88. US Bank will retain the right to collect any deficiency balance. U.S. Bank will release its lien upon said property, provided that any remaining proceeds from the sale other than previously agreed items are forwarded to U.S. Bank.
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Post Short SaleDeficiency Claims
Excerpt from Green Tree letter:
(“Green Tree”) will accept and consider payment in the amount $8,750.00 on the account as sufficient to release the deed of trust/mortgage…Upon receipt and verification of good funds, Green Tree will release the deed of trust/mortgage. However, the remaining obligation due under the Note, or any former subsequent modifications to the Note, shall remain fully due and payable.
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SignificantCredit Events
• Foreclosure
• Deed-in-Lieu
• Short Sale (settled for less than owed)
• Chapter 7 Bankruptcy (liquidation)
• Chapter 13 Bankruptcy (restructure)
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How LongTo Buy Again?
How soon can someone buy again after a foreclosure?
• VA loan – 2 years
• FHA – 3 years
• Conventional – 7 years
• Jumbo – 7-10 years
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How LongTo Buy Again?
How soon can someone buy again after a short sale or deed-in-lieu?
• VA loan – 2 years• FHA – 3 years• Conventional
– 2 years with 20% down– 4 years with 10% down– 7 year with less than 10% down
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How LongTo Buy Again?
How soon can someone buy again after a bankruptcy without foreclosure?
• VA loan – 2 years after Chapter 7– Chapter 13 - after one year of on time payments
• FHA – 2 years after Chapter 7– Chapter 13 – after one year
• Conventional – 4 years after Chapter 7– Chapter 13 – 2 years from discharge date
• Jumbo – 7-10 years after Chapter 7 & 13
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How LongTo Buy Again?
How soon can someone buy again after a bankruptcy with a home included?
• VA loan – 2 years
• FHA – 3 years
• Conventional – 7 years
• Jumbo – 7-10 years
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Tips forRe-Establishing Credit
• Keep a couple of credit cards out of the bankruptcy
• After the event – pay everything spotlessly• Avoid checking account overdrafts • Never charge over 25% of maximum credit limit• Re-establish credit with 2-3 secured credit cards
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KEY LENDING
GUIDELINES
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NANCY TERRY
ARIEL SOLOMON
KATHY STEIN
Gifted Down Payment Conventional Loans
• Fannie Mae released v8.2 in December
• Borrowers with less than 20% down– No longer required to have 5% of own funds
• FHA still allows for 100% gifted funds
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Assets UsedAs Income
• Can now accept employer-controlled assets as income (new with v8.2)
• Rule allows us to calculate income stream
• Assets must be liquid
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Save a Seller to Sell Another Day
• Can refinance with one day off market
• We have refinance options for borrowers that are upside down due to current market value
• Some refinances are non-qualifying
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Departing Residence
• Buyers retaining a primary home currently owned and buying a new primary home– Rental income included if sufficient equity– Need Lease, Deposit and Rent– 6 months reserves– Reported on prior year tax return– Multi-Unit - non-occupied units count
• Primary-to-Investment– Must “make sense” that new home is primary
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Owner Occupancy
For property to be considered “owner occupied”, buyers must be able to take occupancy within 60 days of closing.
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Short Sale or REOPurchases
• Financing is no different• Many banks and HUD:
– Require extra days for review of HUD1 prior to closing
• Appraisals can take longer– Due to required final inspection– Speed up process: utilities “on” during appraisal
• Short sales not “under contract” until bank has approved the purchase
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DTI & Qualifying
• Debt-to-income ratios– FHA– Conventional– ARM’s
• Paying off debt
• PUD purchases
• Heloc on existing home or rental
• Credit scores
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Income Consistency
• Declining income
• Gaps in employment
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Non-OccupantCo-Borrower Qualifying
• Still can blend DTI ratios for conventional
• FHA as well with only 3.5% down
• Change to FHA’s MI as of April 18
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LTV Before 4/18 After 4/18
Loans > 15yrs > 95% 90 bps 115 bps
</= 95% 85 bps 110 bps
Loans </= 15yrs > 90% 25 bps 50 bps
</= 90% None 25 bps
Income FromOther Sources
• Note income for qualifying
• Alimony
• Child support
• Separate maintenance income
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Updates Right Before Closing
• Credit Reports
• Verification of Employment
• Disputed account on credit
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Seller Carry Loans
• Owner carried 2nd loans or private 2nds allowed
• Seller carried financing – eligible for future refinance
• Cash transactions and future refinancing
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Good Time to Buy Investment Property
• Can realize positive cash flow• Good inventory, low prices
• Prices are down, good future appreciation potential
• Potential income tax advantage (consult CPA)
• Rental rates typically higher when housing market is lower
• Can still do 80% LTV – if 75% LTV rates are lower
• 75% of gross income used to qualify
• 2-4 conforming loan limits are higher than $417K offering conforming investor rates
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203KS Sneak Peak
• We now offer in-house FHA 203KS
• “Rehab” loan (nothing structural)
• Up to $35,000
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90% Financing Available on “Kiddie Condos”
• 80 – 10 – 10
• Available for:
– Non-occupant co-borrowers
– Condos with < 50% owner occupancy
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Jumbo Loans Are Back
Jumbo loans are becoming more prevalentin today’s lending environment.
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FHA 90 Day Anti-Flipping Rule is Back
For “fix-n-flip” transactions less than 90 days from original sale date to new contract
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Knowledge Is Power
Credit is available: preparation is thekey to successful closings
Get your Buyers and Sellers to us early!
Let us be your resource!
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