Monday, September 24, 2007

What Do We Do Now?

Last month’s article wasn’t meant to frighten anyone. It was simply my way of letting you know what the heck is going on in the mortgage industry and what got the market in the situation we’re in these days.

Let me set the tone for this article by mentioning a few things from last month’s: “The market is correcting itself.” “It’s just in a slump.” “Guidelines are changing.” “The industry will always find ways to make home buying affordable.”

Many of you probably ask how can there be options. I personally think things will get back to normal sooner than most think because my idea of normal goes back much farther than anyone who has been in the housing market within the past 5 years as a homeowner, realtor, investor or mortgage loan officer. When I got into this business in 1982, 30 year fixed rate mortgage interest rates were commonly in the double digits (something we won’t see). You had to put 10–20 percent down, and pulling equity out of your home was taboo

what we see today is a result of the industry being too creative and too greedy. In order for things to get back to some sense of normalcy, the industry will return to a conservative and responsible position. Since last month’s article, we’ve seen several more mortgage companies go out of business, many of which you don’t read or hear about because their roles in the business were to pass loans through the system directly to the bigger companies. These companies had very little history in the industry; therefore they won’t be missed because they only made it easier for the bigger banks and lenders to put closed loans on the books a lot faster. I think banks and lenders will go back to doing more business with companies like 1st Commitment Mortgage Services because we keep a pulse on what’s going on  in our communities.


more broker business from fewer brokers
Basically, this means mortgage brokers will be relied on to originate more business for realtors, lenders, and banks because the experienced mortgage broker knows its markets. We are an extension of lenders’ sales staff and our overhead is much less than those Pass-Through-Lenders.

More basic loan programs (i.e. fixed rate)
The subprime business first hit the market in the mid-1990’s and it was downhill ever since
We will fix this problem by going back to the basicsfixed rate programs because they are the safest program. Interest Only, Option ARM loans and other Exotic loan programs were never meant for first-time homebuyers and many homeowners with these programs are wishing they had a standard fixed rate loan.

Improved credit and credit score requirement
Credit will become the most important factor in extending credit like it used to be People will have to show their creditworthiness by having a history of good credit. An option to improve one’s credit will be the use of credit score improvement programs such as the “Rapid Rescore.” This system will improve scores immediately after satisfying derogatory credit. There’s normally a cost of a couple hundred dollars for this service.

FHA and VA will recapture more of the market share
FHA and VA will definitely re-capture most of its market share during these times because they have withstood almost every storm. FHA released an initiative last week that will refinance subprime ARM mortgages. The homeowner’s mortgage history must show on time mortgages payments before their mortgage rates went up.  Contact your Century 21 Atlanta, GA to speak to an FHA certified loan officer.

More down payment required on Conventional Loans
I remember when everyone had to put money down when buying their home This requirement will return because history shows that homes purchased with down payment have a lower default and foreclosure rate The belief is when an investment is made by the homeowner they tend to respect their investment.

More documentation
The No Doc, Stated Income, Stated Asset and Bank Statement type loans are gone or severely modified many of these programs created a wave of misuse and abuse in the mortgage industry because people found ways of pushing the envelope. These programs were created for self-employed persons who made the income but wrote a lot off of their taxes. Therefore, we will go back to having almost everyone document their income and assets when buying or refinancing their home.

More use of Automated Underwriting Systems for approval
Automation to the rescue. Many of my clients have been rewarded with the use of our automated underwriting system that will basically look at their complete profile and determine their creditworthiness.

Percy Blackshear, III President 1st Commitment Mortgage Services, Inc.
1st Commitment Mortgage Services, Inc. is a Georgia Residential Mortgage Licensee, License Number 19155.

To find your dream home in Atlanta visit Century 21 Atlanta,GA 

Friday, September 14, 2007

How to Buy HUD Homes

HUD sells properties at reduced prices that you might want to buy!

What is a "HUD Home"?
When someone with a HUD insured mortgage can't meet the payments, the lender forecloses on the home; HUD pays the lender what is owed; and HUD takes ownership of the home। Then sell it at market value as quickly as possible

Frequently Asked Questions About HUD Homes

Who can buy a HUD home?
Answer: Anyone! If you have the cash or can qualify for a mortgage, you can purchase a HUD home.

Are HUD Homes meant for people with low incomes?

Answer: HUD homes range in price, but most are affordable for low-and moderate-income Americans.

Is it true I can get a HUD Home for a dollar?Answer: No. HUD sells homes at market value - that means that the price is set based on the price of similar homes sold in the area.

If the HUD Home needs repairs, will HUD make them?
Answer: HUD Homes are sold "as-is," without warranty. That means that HUD will not pay to correct any problems. But even if a HUD Home needs fixing up - and not all of them do - it can be a real bargain! For example, HUD's asking price on the home will reflect the fact that the buyer will have to invest money to make improvements. HUD might offer special incentives such as an allowance to upgrade the property, a moving expense allowance, or a bonus for closing the sale early. And keep in mind that on most sales, the buyer can request HUD to pay all or a portion of the financing and closing costs. Your real estate agent will have details. HUD encourage you to get the home professionally inspected before you make an offer so you will know what repairs you may have to make BEFORE you submit your bid.

How do I buy a HUD home?
Answer: Start by finding a participating real estate agent. Your real estate agent must submit your bid for you. Normally, HUD Homes are sold in an "Offer Period." At the end of the Offer Period, all offers are opened and, basically, the highest bid is accepted. If the home isn't sold in the initial Offer Period, you can submit a bid any business day. If your bid is acceptable to HUD, your real estate agent will be notified, usually within 48 hours.

If my bid is accepted, then what happens?

Answer: Your real estate agent will help you through the paperwork process. You'll be given a settlement date, normally within 30-60 days, where the transaction will occur. HUD has an excellent booklet to help you understand the settlement process: "Buying Your Home - Settlement Costs and Helpful Information." Or contact to have a copy e-mailed to you.
When you buy a HUD Home, the selling agent's commissions are usually paid by HUD. HUD will pay a total sales commission of up to 6%.

How can I find out what HUD Homes are for sale?

Answer: Visit HUD Homes for sale or email every day। If you see one that interests you, contact one of the real estate agents in your area who show HUD homes. They can help you from there.

How can I get a loan to buy a HUD Home?
Answer: HUD doesn't make loans directly. HUD have a number of mortgage insurance programs that could help you buy a home. You can read about those programs here. Then contact a HUD approved lender, who will take you through the steps and actually make the loan.

Can I buy a HUD Home as an investment?
Answer: Most HUD Homes are initially offered on a priority basis to owner occupant purchasers (people who are buying the home as their primary residence). Following the priority period, unsold properties are then available to all buyers, including investors.

Is there anything else I should know about HUD Homes?

Answer: Every homebuyer and homeowner is encouraged to be a wise consumer, so be sure to read Consumer Information. Houses built before 1977 may have lead based paint, which can cause harm to your family; so be sure to read about this hazard and about what you would need to do to correct it.

Attention: Nonprofits and Government Agencies! HUD has a special sales program under which approved nonprofit organizations and government agencies may purchase properties at discounted prices for use in local housing or homeless programs। Contact the local HUD office Or for details.


Saturday, September 8, 2007


In an instance where the real estate transaction is a cash deal (cash closing)। The transaction can be consummated by executing a handful of documents such as a Settlement Statement, Seller’s and Purchaser’s Affidavits, and Transfer Tax Form। However: a transaction which the buyer takes out a mortgage can require execution of many more documents. These documents will be prepared by the closing attorney’s office and Lender. The documents furnished by the Lender will include Federal, State, and a host of others ranging forms including various affidavits to taxes. The following is a list of typical documents found in a loan package at the closing. Keep in mind that that this list is not conclusive. Each loan is unique. So, documents may vary somewhat according to the type of loan a buyer is getting.
Pertain to buyer(s)
HUD-1 Settlement Statement:Developed by the U.S. Department of Housing and Urban Development, this document itemizes the services provided, fees, and charges associated with closing the loan. A buyer should request a copy the HUD-1 Settlement statement at least 24 hours prior to closing. The copy of the HUD1 a buyer received prior to closing is will call a good faith estimate and may be chanced slightly at closing

GRMA Disclosure
Required by the State of Georgia as a disclosure to the Borrower(s) that failure to comply with terms and conditions of the loan could result in foreclosure against the subject property

Representation Disclosure
Informs the Borrower(s) that the Closing Attorney’s Office represents the Lender/Investor and not the Purchaser(s) or Seller(s)

Corrections/Errors and Omissions/Compliance Agreement
Agreement by Borrower to cooperate with Lender and Settlement Agent in correcting typographical or clerical errors in any mortgage documents.

Truth-In-Lending Disclosure
Discloses the “annual percentage rate” (APR) reflecting the cost of the mortgage loan as a yearly rate. This rate will probably be higher than the rate stated on the Note because the APR includes, in addition to interest, loan discount points, fees, and other credit costs. Additional information is also provided, such as finance charges, schedule of payments, late payment penalties, and whether or not there is any penalty for early payoff of the loan.

Escrow Account Statement
Federal law required disclosure on every residential mortgage loan with escrow accounts for payment of future taxes and insurance reflects anticipated receipt and disbursement of escrow funds over the next (12) twelve months from the loan origination date.

Borrower’s Certification and Authorization
Borrower’s certification that all information he/she provided to the Lender in association with the mortgage loan was true and correct and authorizing Lender to re-verify credit information.

Promissory Note
An instrument the Borrower(s) sign which contains an unconditional promise to pay, on demand or at a fixed or determined future time, a particular sum of money to the Lender, a specified person, or the bearer of the Promissory Note. This document will outline the basic terms of the loan including names of Borrower and Lender, Interest Rate, Loan Amount, and period of repayment.
First Payment/Coupon LetterLenders must provide a temporary coupon for the Borrower(s) to make their initial mortgage payment in case the coupon payment booklet is not received in time for such payment.

Waiver of Borrower’s Right
Acknowledges the Borrower’s signed with the understanding that failure to meet the terms and conditions of the mortgage loan could result in foreclosure upon the collateral property and that this procedure is non-judicial in Georgia. (Check to see if your state is non-judicial or not.)
Security DeedUsually signed the same time the Promissory Note is created. The Security Deed gives the Lender a "security interest" in property or real estate, providing the Lender the opportunity to seize the property in the event of default by the Borrower.RidersAttached to the Security Deed and in certain circumstances: For example, A Planned Unit Development Rider where the subject property is located in an area with covenants providing for mandatory assessments (e.g. Homeowner Association fees) or an Adjustable Rate Rider for Adjustable Rate mortgage loans.Survey/Termite Waivers or Hold Harmless FormsThese are included based on the requirements of the given transaction. In some instances, mostly Refinances and Second Mortgages, Surveys and Termite Inspections are not required and thereby “waived.” In cases where Surveys and Termite Inspections are required, the closing package will include a “hold harmless” agreement which serves as notice to the Borrower(s) that such services were provided by an independent contractor.IRS Form W-9Used by the Lenders as verification of Borrower’s Social Security Number and for reporting interest deduction by the Lender to the IRS.

IRS Forms 4506/8821
Forms Authorizes the Lender to request a copy of Borrower(s) income tax return directly from the IRS.

Occupancy/Employment Affidavits
Certify that the Borrower(s) intend to occupy the subject property as a principal residence and that his/her employment status has not changed since loan application.
Flood InsuranceThe Flood Protection Act of 1973 (Public Law 93-234) requires the purchase of flood insurance in certain flood-prone areas as designated by the Department of Housing and Urban Development. Therefore, Borrower(s) must purchase such insurance if the property is located in an area where flood insurance is required.

Notice of Right of RescissionIs used in case of Refinance and Second Mortgages, but not when the property is subject to a sale. The notice of Right of Rescission gives the Borrower(s) the right under Federal Law to cancel the transaction, without cost, within three business days.

Pertain to Seller
Seller’s Affidavit of Seller’s Affidavit of Residence
Verifies the Seller(s) is not subject to State of Georgia Capital Gains Tax withholding requirements.

Seller’s Certificate of Exemption
Used in conjunction with the affidavit if Seller is not a resident of the State of Georgia, Verifies Seller’s exemption from State of Georgia Capital Gains Tax withholding.
Owner’s AffidavitAffidavit of Seller(s) certifying that the property is conveyed “free and clear” of any liens, claims or judgments.

Warranty Deed
The Instrument that conveying title to real property from Seller(s) to Purchaser(s)


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