Fort Thomas, KY Mortgage Specialist

TEN COMMANDMENTS WHEN APPLYING FOR A MORTGAGE LOAN

D A Griffin Financial.LLC — Thu, 17 May 2012 11:23:51 -0700

TEN COMMANDMENTS WHEN APPLYING FOR A MORTGAGE LOAN

I came across this in "Origination News" online this morning and since it said I could copy and share, I'm copying and sharing. I have a list I send out to those who apply for a mortgage loan with D A Griffin Financial, this one is a little more direct. It may be a good thing for the consumer, loan originators and real estate agents to share to avoid that OOPS!

1. Thou shall not change jobs or become self-employed.

2. Thou shall not buy a car, truck or van unless you plan to live in it.

3. Thou shall not use your credit cards or let your payments fall behind.

4. Thou shall not spend the money you have saved for your down payment.

5. Thou shall not buy furniture or applicances before you buy your house.

6. Thou shall not originate any new inquiries on your credit report.

7. Thou shall not make any large deposits into your bank account.

8. Thou shall not change bank accounts.

9. Thou shall not co-sign for anyone.

10. Thou shall not purchase anything until after the loan closes.

This is a pretty good summary of some steps that will make the home mortgage process more successful.

Dora Ann Griffin

DA Griffin Financial, LLC

Ft Thomas, KY 41075

859 442 9700

WHO DO YOU TRUST MORTGAGE BROKER OR A BANK?

D A Griffin Financial.LLC — Wed, 16 May 2012 14:17:11 -0700

WHO DO YOU TRUST MORTGAGE BROKER OR A BANK?

When a home buyer or home owner is looking for financing, who do they trust a mortgage broker or a bank? From time to time I read articles written by someone in the financial sector who thinks they know a thing or two.

I came across an article from three years ago that appeared in the N Y Times and was rather derogatory about mortgage brokers, quoting a northern Ohio broker several times. What is fascinating is when I google the broker mentioned here, I can hardly find them, so that makes me wonder even more "how accurate is the information being provided?".

The reason I am writing about this today is that when I googled the subject there is a lot of misinformation out there.

FACTS: Neither a mortgage broker or a bank is more expensive all the time. A mortgage broker does not work mostly with those with lower credit scores.

FACT: It is more difficult than ever to determine where a home buyer or home owner is best served when looking for a mortgage loan. In the vein of making things "easier to understand" the regulatory agencies have made them harder for consumers.

It is difficult to compare the actual offers from a bank and a mortgage broker because the bank is not required to disclose the same information the mortgage broker is. Another difference, mortgage brokers and their loan officers are required to be licensed; bank loan officers are not.

Here are a few things I believe are important when shopping for a home mortgage.

1) Be sure you have a connection with the loan originator you are talking to. It is easy enough to determine how interested they are in your business by their reaction to your queries.

Does the loan originator answer your questions thoroughly giving you detailed explanations, or brush you off? Do you have a good understanding of the loan product you are being offered? Does the loan originator discuss multiple products with you?

2) Do ask for referrals. It is recommended you talk to those who have been down this road already, and by the same token, follow your instincts. I can't tell you how many times I hear people espousing the great rates they got, when in reality they "bought" that rate and simply did not know it.

When I talk to potential borrowers I go into great detail about what the rate is, what the costs are and explain the process thoroughly. Before I was in this business I financed several homes. I am appalled today at the lack of information I was provided. Sadly too many loan originators are continuing to operate in such a manner, and they work everywhere.

3) Interview the loan originator. See where they get their leads for business, is it referred, do they have a lot of repeat customers, which is indicative of their ability to satisfy you. Are you going to be forgotten as soon as the transaction is over?

4) Don't be a rate shopper. That is where most of the pros get you. It is not about the rate; it is more about the cost for the rate. Understand the rate, cost and terms.

My experience has mostly been working at and with retail banks; I've owned my own mortgage brokerage firm for five years. During my retail years if there were 20 loan originators in an office, there were at least a dozen who put themselves first over the customer. For many this is considered successful selling. I more often see mortgage brokers portrayed as greedy, when in reality, even so are banks. After all, the mortgage collapse was in large part due to banks wanting to capitalize on profits from high risk loans.

In a nutshell a mortgage broker or a bank can satisfy your need for a home mortgage. Do your homework. It is not uncommon for customers to ask me "what would you tell your kid to do?". I like that question because that is exactly how I think of it! I care deeply that every transaction leaves the home buyer or home owner satisfied. That is the person you trust with your home mortgage!

HOW DO MORTGAGE BROKERS GET PAID?

D A Griffin Financial.LLC — Mon, 07 May 2012 14:10:40 -0700

HOW DO MORTGAGE BROKERS GET PAID?

How I get paid comes up early on in a conversation with a home loan applicant.

Mortgage brokers are paid by either a consumer or by a lender, but not by both. Prior to April 2010, mortgage brokers could get paid by a combination, but the loan officer compensation rule that went into effect on April Fools Day put an end to that.

When a lender accepts a loan from a mortgage broker they pay "yield spread premium" or YSP. A mortgage broker is required to disclose to the borrower the gross amount of money (YSP) the firm is making on a transaction. This is done on the good faith estimate and in many cases additionally on other forms. Whereas the disclosure method changed, actual disclosure is not new; mortgage brokers have for decades disclosed their gross income.

Yikes! You are making that much money!!!! No, would be nice, but the company earns that much money. From that we pay operating costs and finally the originator.

While mortgage brokers disclose the gross income on a loan, bankers do not. They are not required to inform the borrower of how they are paid and how much they are paid. They can be paid on interest the loan earns, the origination of the loan and the sale of the loan in the secondary market where they receive service release premium (SRP).

Since the above information is not disclosed, it can be confusing when a consumer is comparing options. As a mortgage broker my firm's income is shown on the good faith estimate as part of the origination cost of the loan. For a banker income is NOT shown anywhere on the good faith estimate.

A common thought would be "why would I pay a mortgage broker $$$$ income and a bank zero income?". In reality the mortgage broker's income portion of the origination cost is shown, then backed out in a subsequent box. An exercise that, in my experience, most consumers find confusing.

Mortgage brokers compete with bankers for business because they can offer competitive interest rates and costs. How do they offer competitive rates?

A mortgage broker is provided wholesale pricing from lenders who want business from the broker. The benefit to the lender is they (a) have a market share they otherwise would not, perhaps due to geography and (b) they have the benefit of the market share without having to spend money for overhead, such as an actual office, personnel, licensing, insurance, supplies, taxes, etc.

How mortgage brokers are paid is simple enough to explain. What is not so simple is why there is a difference in disclosure between the banker and mortgage broker.

I can't help but compare the income question to any purchase a consumer makes. Normally a consumer shops for a product and knows what is a fair price. They don't need to be told how much money the wholesaler made on the product before it hit the retail shelf. It has no bearing on their decision. This is not unlike mortgage loans when a borrower will make a decision based on the criteria that is important to them.

CINCINNATI ZOO BLOOMS

D A Griffin Financial.LLC — Thu, 05 Apr 2012 08:49:43 -0700

CINCINNATI ZOO BLOOMS

CUTEST BABY IN THE WORLD!

Cincinnati Zoo has an awesome display of spring blooms. Everything around here has bloomed early this year, so the usual calendar of taking in the beautiful flowers is a little earlier than we expected.

I'm told there are 100,000 bulbs planted for this exhibition of color. Last Saturday was a bit chilly, more like a spring day should be. We've experienced summer temps here already, and then we slip back into early spring weather from time to time. There were plenty of expert photographers catching some great pics. Me, I am the furthest from expert in that department but love the shots of my grandson.

I highly recommend this outing; the spring blooms at the Cincinnati Zoo take an incredible amount of work from staff and volunteers but the result is phenomenal! Along with the tulips there are plenty of other blooming perennials and annuals. This is a great day trip for the family.

KENTUCKY SENDING TWO TEAMS TO THE FINAL FOUR!

D A Griffin Financial.LLC — Mon, 26 Mar 2012 07:24:48 -0700

KENTUCKY SENDING TWO TEAMS TO THE FINAL FOUR!

KENTUCKY IS A HAPPY PLACE THIS MORNING! Depending upon where you are in the state, which school you went to and the players you may know you are either a UK or Louisville fan. And then, there are bumper stickers that say "A House Divided" - those homes that have BOTH a UK and Louisville fan. One of my account reps lives in just such a home.

I can't think of Kentucky sending two teams to the final four without thinking of my mother. Even in her 90's she knew all about college basketball. My sister used to do very well in the brackets at work, using mom's suggestions. If you wanted to get a conversation kicked up a notch, just mention UK and shew as off!

Mom was the most avid UK fan who ever lived. She had so much UK attire. One never saw her without something UK on during the basketball season especially. When it came to Christmas it was a sure hit to get her something UK, whether it was for her bell collection or something else useful. Then along came Pitino, she loved him when he coached the cats. She is, no doubt, smiling down from heaven with this match.

I, unlike the rest of my family, am not such an avid fan. Sure I watch now, and the bantering on facebook today makes one wonder who comes up with this clever stuff. It is fun that Kentucky is sending two teams to the final four and I'll for sure be watching.

SPRING CAME EARLY TO FT THOMAS THIS YEAR

D A Griffin Financial.LLC — Fri, 23 Mar 2012 11:38:52 -0700

SPRING CAME EARLY TO FT THOMAS THIS YEAR

Spring (some days it feels like Summer!) has arrived early in Ft Thomas, KY, just as it has in many places. It has been a strange year with record setting temperatures in March! This area experienced a bad tornado a couple of weeks ago today, unusual for this time of the year, and since I've heard the lawn mowers working overtime in the neighborhood.

The smell of freshly cut grass this time of the year is nice and the daffodils that bloomed and did not get bitten by frost or snowed upon is a change for us. I can't help but wonder if we are going to pay with a really early summer. Here in the Ohio valley it gets pretty intense with humidity levels in the summer.

Even though this week it felt like we were skipping spring and going right to summer, weather changes constantly here as well. Today is one of those days when the old adage of "if you don't like the weather, wait five minutes" fits perfectly. It is about 2 PM and I've already changed clothes three times today.

I will say a positive of the early spring is home buyers are on the prowl early too. It makes it feel like the market is starting to turn for the better in our area. Now if the home buyers get moving ahead of schedule it will be an even more awesome spring!

ARE MORTGAGE BROKERS GAINING MARKET SHARE?

D A Griffin Financial.LLC — Thu, 15 Mar 2012 11:26:09 -0700

ARE MORTGAGE BROKERS GAINING MARKET SHARE?

As a mortgage broker if the answer to that question is "YES" then that would be more than welcome news. I was reading an article in "Originator News" today and here is an excerpt about mortgage brokers' growing share of the market.

“This appears to be a clear indication consumers are returning to the personalized service and competitive pricing offered by mortgage brokers,” said Marc Savitt, a past president of the National Association of Mortgage Brokers.

Savitt, who manages a small shop in West Virginia and also heads a broker/appraiser trade group, believes mortgage brokers are recapturing market share they lost after being made scapegoats for the housing crisis.

“Being the most highly regulated segment of the origination process, brokers give consumers a high comfort level,” he said. (Brokers and nonbank loan officers face state testing and licensing requirements that bank LOs avoid."

The article goes on to say mortgage brokers captured 11.4% of the market the fourth quarter of 2011, the biggest share since the third quarter of 2010.

Mortgage brokers as a whole took a beating due to the inaccurate portrayal that mortgage brokers had a big hand in the housing collapse. By now, even the general public has a better awareness of the root of the problem. What they have been slow to recognize is that mortgage brokers have more training and are actually licensed to do business whereas bank loan originators are not.

There are many advantages to the banks in that their originators do not need to be licensed or disclose much of the information a mortgage broker does. This does not translate to a big advantage to the borrower. In the end when a borrower shops he will find the mortgage broker offers personalized service and competitive pricing as Marc discusses above. Here in Northern Kentucky I've definitely seen an uptick in business the first quarter of 2012 so it would bear out the fact people are looking at options.

GOOD NEWS FOR FHA STREAMLINE REFINANCES

D A Griffin Financial.LLC — Wed, 07 Mar 2012 10:55:25 -0800

GOOD NEWS FOR FHA STREAMLINE REFINANCES

Some good news for FHA refinances IF the loan was done prior to June 2009.

One of the problems in refinancing FHA loans to lower rates has been FHA has greatly increased MIP fees over the last few years. When trying to do a refinance it was a bit of a challenge for a borrower to justify paying higher up front MIP fees and or substantially higher monthly MIP fees. As a result many FHA refi's fell by the wayside.

With an announcement this week that FHA will offer streamline refinances with a very nominal .01% up front funding fee and the monthly MIP will be .55% some FHA refi's should open up. The monthly MIP fee is more in line with what the old FHA loan holders (prior to 06/09) are paying currently whereas the 1.10% fee on newer loans is prohibitive.

So, some good news for those in FHA loans and I don't see a downside of this program except it won't go into effect until June 2012.

We could use some good news on the FHA front since the latest news has FHA increasing the up front fee from 1% to 1.75% and the monthly fee to 1.25% (depending upon loan size). These fees could deter FHA financing on new loans going forward, but this week's announcement should help those with FHA loans better refinance to lower market rates.

THINK TWICE ABOUT LPMI (LENDER PAID MORTGAGE INSURANCE)

D A Griffin Financial.LLC — Mon, 05 Mar 2012 09:46:02 -0800

THINK TWICE ABOUT LPMI (LENDER PAID MORTGAGE INSURANCE)

I would say this exact same thing about ANY loan product before accepting it!

I've run into several borrowers who want to refinance and now is a great time, but they have LPMI - lender paid mortgage insurance. LPMI was offered to borrowers who wanted to do 100% financing. The interest rate was about .750% higher, but the lender paid the PMI (private mortgage insurance) from the higher rate.

LPMI was touted as a good idea because PMI was not a tax deduction whereas interest was, so many borrowers signed up for it for that reason. I personally did not utilize this product because I had better products for zero down.

Fannie and Freddie bought the LPMI loans in their portfolio and most people are aware that if a loan is owned by Fannie or Freddie, HARP II may be available for refinancing even when borrowers are upside down.

But, wait a minute! LPMI is a special case for these borrowers. Many may be left out in the cold still because of the LPMI. It is not easily transferable it seems.

PMI became a tax deduction in 2007 greatly reducing the need for choosing LPMI. As is the case with all loan programs, know all the facts and compare products. The PMI deduction was not a permanent change but Congress can extend it.

Clearly the pro in a normal market for having LPMI would be if the tax deduction is not available for PMI along with the fact one may not stay in the home very long. The con is that you have it for the life of the loan vs regular PMI when you can drop it when you get at least 20 - 22% equity. Lenders still offer LPMI and in come case it may be a good fit. Sadly, many borrowers have lost so much equity LPMI may be adding to their woes.

FHA MORTGAGE INSURANCE PREMIUM INCREASE COMING IN APRIL

D A Griffin Financial.LLC — Mon, 27 Feb 2012 15:13:33 -0800

FHA MORTGAGE INSURANCE PREMIUM INCREASE COMING IN APRIL

I can remember going years without FHA MI changes. FHA continues to struggle with defaults. Although the loans originated in the last two years have lower default levels, FHA still is not in a good place financially due to foreclosures. They announced the following change today. There was a period of time when the low monthly mortgage insurance made a lot of sense for a borrower to go FHA. It will not be so based on this change.

FHA Mortgage Increase Premium Announcement

FHA has just announced they are raising insurance premiums as follows (effective April 1st):

(We assume it will apply to case numbers assigned on or after April 1st.)

The increases are:

10 basis point increase in Annual Premium for single family forward mortgages (to 1.25% Annual Premium)
25 basis point additional increase for loans above $625,500 ( to 1.5% annual premium)

Increase the Upfront Premium on new originations by 75 basis points to 1.75%
(No changes to reverse mortgages)

As you can see there are rather significant changes.

Streamline refinance change

Expect a reduction in the streamline refinance premium to be announced in the next week or so. It would apply to FHA loans made prior to May 2009. We expect there will be significant reductions in both the upfront and the annual premium for these loans. You can see where trying to refinance FHA loans that are performing and currently have mortgage insurance of .55% is a problem when the rate would go to 1.25%.

Implementation Schedule

The April 1st proposed deadline, if it is not changed, will be problematic for the reprogramming of systems. Hopefully, FHA will provide flexibility if and when lenders voice concerns about the unfeasibility of such a short deadline.

FHA Proposes Changes to Seller Paid Contributions

D A Griffin Financial.LLC — Mon, 27 Feb 2012 11:44:31 -0800

FHA Proposes Changes to Seller Paid Contributions

FHA Proposed Rule on Seller Concessions

Yesterday, HUD published a request for comments (due in 30 days, by March 26) on their revised changes to policies for seller concessions. The new proposal is to limit seller concessions as follows:

Reduces the amount of permitted seller concessions to 3% or $6,000, whichever is greater;
Further limits seller concessions to never exceed the borrower's actual closing costs;
Redefines what can be considered as acceptable closing costs to be paid by seller concessions to: closing costs, prepaid items, discount points, up-front MIP, and any interest rate buydown. No longer permitted are "payment supplements" such as HOA/condo fees, mortgage interest payments, and mortgage payment protection plans.

The notice also mentioned that HUD is getting closer to issuing another notice regarding tighter standards for manual underwriting.

Here is a link to the proposed rule - http://www.gpo.gov/fdsys/pkg/FR-2012-02-23/pdf/2012-3934.pdf

Comments are due March 26, 2012.

My feeling is that the change would not negatively impact the volume of business I could do in my market. Rarely can a borrower use the entire 6% that has been available. Other markets could see it differently.

WHY IS THE CFPB COMPELLED TO CHANGE MORTGAGE FORMS?

D A Griffin Financial.LLC — Tue, 21 Feb 2012 12:07:46 -0800

WHY IS THE CFPB COMPELLED TO CHANGE MORTGAGE FORMS?

Well, the short answer is Dodd Frank. The consumer finance protection agency is charged with rule making based on the 400 rules in Dodd Frank. The CFPB was given the authority to complicate things.

I was looking at one of the latest "changes" they are working on, the goal supposedly to make the process simpler and easier to understand. I've seen different forms ranging from combining a good faith estimate and truth in lending to a revised settlement statement.

What is so amazing to me is that before all the "rules", the good faith estimate was one sheet. It had all the costs broken out line by line and extremely easy to read. Looking at that one sheet told a borrower what the costs were, who was paying for them, what the house payment would be and how much money needed to come to closing. . . . . . Now the good faith estimate is 4 pages, including the disclosure of service providers, 5 pages if you count the fee sheet.

Prior to the "rules" the truth in lending was one page, easy to read and the only thing that was difficult for borrowers to grasp was the term APR. . . . . Now the truth in lending is two pages.

The settlement sheet (HUD1) was two pages before the "rules". . . . .Now it is 3 pages, more fees are combined vs being line by line, and looks like it is growing!

THE CFPB has on their website a "new and improved" HUD1. Less straight forward, more complicated to read and understand. Looks like it is stacking up to be 6 pages. They even have a disclosure on their website about how it may appear to be more complicated. LOL

Apparently coming soon is a standardization of mortgage statements! Really!

What is going on here? Is the CFPB attempting to show the rest of us how intelligent or good with numbers the hundreds of individuals are they have hired. Are they trying to justify the half billion dollars they are spending? What possible logical explanation is there for making it HARDER for a borrower to see what they are signing on to? If forms too difficult to understand were a big contributor to the housing meltdown, then these new forms are not the answer.

Give us back a one page good faith estimate, a one page truth in lending form and the two page HUD1 and we're good.

FHA MORTGAGE INSURANCE RISING AGAIN

D A Griffin Financial.LLC — Tue, 14 Feb 2012 11:13:09 -0800

FHA MORTGAGE INSURANCE RISING AGAIN

I just received a communication from one of my lenders Obama has submitted his budget to Congress. Included in this budge are two rate increases for FHA. They are as follows:

10 basis point increase in annual premium for single family forward mortgages (1.25% annual premium)
25 basis point additional increase for loans above $625,500 (1.5% annual premium)

When will these increases be implemented?

The Budget indicates these changes will be implemented "soon". When the 25 basis point increase in the annual premium was implemented last year (from 90 bps to 115 bps), the Mortgagee Letter (2011-10) was published on February 14, 2011 with an effective date for case numbers assigned on or after April 18th, 2011. Accordingly, based on last years’ experience, we expect the new mortgagee letter to be published in the near future (possibly today) with an effective date in mid-April.

What are the prospects for further increases?

FHA has indicated that further increases are possible to ensure the solvency of the fund. While we hope that will not be necessary to raise premiums beyond the levels noted above, rising defaults are an ongoing problem.

Reportedly FHA is suffering from defaults caused by older loans made. Only 6.5% of the 711,000 delinquent FHA loans were originated in the last two years. Just like conventional loans where borrowers are paying loan level price adjustments because of older delinquencies, FHA will be charging more to the better borrowers to make up for lost ground.

Is AMC Tax Evasion Another Consequence of HVCC?

D A Griffin Financial.LLC — Mon, 13 Feb 2012 11:12:28 -0800

Is AMC Tax Evasion Another Consequence of HVCC?

One has to wonder how our country dove headfirst into the HVCC method of operation with what appears to be no foresight as to the outcome.

Below is a quick read of another potential consequence of HVCC.

Damage to the borrower with higher fees, appraisers who've lost businesses, failed tranactions due to unqualified appraisers, higher interest rates due to longer lead tmes, borrowers paying for multiple appraisals, damage to housing recovery, loss of experienced appraisers. We continue to struggle with these issues with no end in sight and now are AMC's skipping paying taxes?

This article makes one question how something that was supposed to be the cure for appraisal problems continues to be the problem. And, then, I think, well, HVCC was implemented with no foresight for the consequences. It is very clear to me assigning the authority to a third party to engage appraisers from thousands of miles away would be challenging. Why was this not considered before HVCC was instituted?

http://www.thenichereport.com/breaking-news-2/naihp-exposes-amc-tax-evasion-respa-violations/

When we are anxiously awaiting the recovery of housing, appraisals continue to dog it. The results are more than adequate to show HVCC is a complete and utter failure.

Now, we can only hope the AMC's are not avoiding state taxes that are due when states already are struggling with less revenue.

IF HOME BUYERS ARE SO SMART, THEN WHY AREN'T THEY GETTING PRE QUALIFIED?

D A Griffin Financial.LLC — Wed, 08 Feb 2012 14:31:31 -0800

IF HOME BUYERS ARE SO SMART, THEN WHY AREN'T THEY GETTING PRE QUALIFIED?

No doubt most buyers are getting smarter all the time. With listings available on the Internet, most people have access to a computer and it is said most shopping for a home starts online, then it can be assumed home buyers really are getting more savvy.

Having said that, however, it befuddles me that the message to get pre qualified, to research loan programs available, to understand the buying process does not take place before a contract is written. Of my recent inquiries for a home purchase 2/3 wrote contracts before contacting a lender. Further, who are these Realtors writing offers for these people?

It can be costly to not get pre qualified. Along with qualifying home buyers I educate them about selecting a real estate agent to work with, what pitfalls to look for such as what properties can't be financed besides the loan process itself. Doing the prep work up front is so valuable I wish all home buyers would take that step to get pre qualified first. There are times it works out just fine to do things in reverse, but it can sure add some unnecessary angst.

Home buyers need to be smart and get pre qualified. My website has a lot of information for the Kentucky home buyer www.dagriffinfinancial.com. Rather than spend a lot of time there, I am always happy to break it down in a phone conversation and supply a top list of mistakes made by home buyers as well as steps to take before buying a home.