The value of a seasoned loan officer

What kind of value do you put on experience? I, like many of you, have leads call me and the first thing they ask about is the interest rate.  This is one of the biggest purchases of their life and all they are concerned with is what the rate is at that point in time (9 times out of 10 this isn't what it's going to be when they close because right now they're just shopping, closing can be months away).

Do they ask how many loans you've closed? not usually

Do they ask how many transactions you close on time? nope

Do they ask for references from past clients? no, never had that one

Do they ask about what percentage of your loans close? no

They are shopping strictly by rate which is crazy.  It's one part of the equation but if they are promised a rate that's 1% lower than the rest of the competition, what difference does it make if the loan can't close because of lack of experience on the part of the loan originator.  Here are just a few things that can go wrong and either cause a delay in closing or kill the deal.

• They are in the wrong program for their credit profile. 
• The originator missed the reserve requirements for the program and the customer doesn't have them and now the deal can't close. 
• The loan originator didn't know with private MI the customer must have 3% of their own funds into the transaction. 
• The loan originator didn't know how to read the tax returns and miscalculated income
• The loan originator didnt' know the customer had to liquidate the mutual funds to qualify
• The loan originator didn't know what kind of visa was eligible for the program

These are just a few of the reasons your clients should always be referred to and work with a seasoned loan originator.  Although I agree the interest rate is a huge concideration, it shouldn't be the one driving the transaction

New loan officer compensation rules take effect | Inman News

New loan officer compensation rules take effect | Inman News

Being Active in Your Profession

As part of the Arizona Mortgage Lenders Assoc. (AMLA) leadership group I had the priviledge of participating in a meeting with the Arizona Commissioners of Financial Institutions and Real Estate on Tuesday.

There were many questions and policies discussed.  We covered MARS and how that impacts the realtors participating in short sales, loan officer licensing, real estate and mortgage fraud and the new loan officer compensation rules.  There was a lot of information and clairification of rules and guidelines.

It's very important that whatever industry or profession you have chosen that you allot the time to participate in your local and national professional organizations to help construct solutions to issues rather than react to changes after the fact.

We can finance Manufactured Homes

Peoples Mortgage has Financing Options on Manufactured Housing 

• Manufactured Housing is defined as any dwelling unit built on permanent chassis and attached to a permanent foundation system
• 80% loan to value
• 640 Minimum Credit Score  
• 1 Unit Primary Residence or 2nd Home...NO single width homes allowed and no investment properties
• Fully Amortized 30 or 15 Year Fixed Rate Products  
• Purchase or Rate & Term Refinances...no cash out refinances allowed
• Foundation must be inspected by a licensed professional engineer validating that the foundation meets all the FHA/HUD codes for Manufactured Housing transactions

Mortgage lending requirements for free and clear property

The buyer owns their current home free and clear, not a problem right?  Not so fast red rider.  The banks are now requiring the mortgage company run a Property Profile, a service available from title companies.  This means an additional closing fee of up to $150 to your buyer.

This fee is not considered a title fee, it is a lender fee and will be included in block #1 of the GFE.

The Property Profile will indicate any recorded liens on the property.  This includes private money or seller carrybacks.  With this just going into effect some deals are likely to get kicked back due to non-disclosure by the buyer on the application.  Often times the buyer doesn't consider it a mortgage on the property unless held by a bank.  Private money and seller carrybacks don't show up on credit reports and this is a way for the banks to protect themselves and be sure they have underwritten the file properly with due diligence.

Just one more change in the ever changing landscape of mortgage lending.

What is APR? Should this be used to compare costs of loans?

This is a relatively simple question with a very complicated answer. The true definition of this one even puzzles some very experienced loan officers. There is a generally accepted brief version of the answer that even experts use. The bad news is that, in order to truly understand, let alone be able to explain the calculation for APR, a truly long and complicated answer is the only option.

For those of you not interested in long and complicated, here is a very serviceable and very brief definition: APR is the true cost of money over time.

In other words, your mortgage has a NOTE rate, or the interest rate on your loan, but it also has closing costs, prepaid interest, and other finance charges. The APR is the cost of your normal interest and those finance charges over time expressed as an interest rate relative to the rate you are paying on your mortgage.. got it?  

APR is commonly used to compare the costs of loans.

You can compare two loans by looking at the APR, right? Only if you compare apples to apples – which is a challenge.

Lenders have some wiggle room when they calculate APR for you. They may or may not include some of the costs you’ll pay. For example, the credit report fee, appraisal fees, and inspection fees may not be included in your APR quote. Since different lenders can charge different credit report fees, the APR comparison becomes less valuable.

An honest lender will include more fees that accurately reflect your circumstances, which makes their APR appear higher.  Don't just dismiss what appears at first glance to be the more expensive loan.  It could be you're turning away the lender who was more conservative in their estimates of fees.  Always ask for the breakdown of fees used to calculate the APR before making a decision based on the APR.

Use of Anticipated Tax Refunds for Down Payment/Closing Costs

It's that time of year where questions arise concerning tax refund loans and whether or not they are acceptable funds for use as qualifying assets in the loan transaction. Upon checking into this, following is some information you may find useful.

1. Bank Deposit products.

      a. These are considered the borrower’s funds and can be used for down payment and closing costs etc  
          just like normal borrower funds.

     b. An example of this is the H&R Block Refund Anticipation Check.

2. Unsecured Refund Loan Products

    a. These are unsecured loans which are not eligible for use in our transaction.

    b. An example of this is the Jackson Hewitt/Republic Bankcorp Anticipation loan.


Generally we must have paperwork from the borrower that they received from their preparer to determine if the funds can be used or not. Scenario 1 is acceptable, scenario 2 is not.

There is confusion on this because sometimes option 2, the refund loan, is represented as a secured loan, but it is not always a secured loan.  We make this determination by getting a copy of the paperwork. If the loan documents say “secured loan”, the funds can be used. If they say “signature loan”, “Line of Credit”, “unsecured loan” or anything similar, the funds cannot be used. 


Fannie/Freddie and FHA guidelines do not allow for the use of unsecured funds.