Texas Purchase & Refinance Mortgage Rates …….

 Make your clients happy with these Low Rates & Low Fee Loans, also let your your clients, friends and family know……..that we will beat any deal on rates, fees and service.

 We are from Texas, We are operated in Texas, and We are Texas Strong!

 All Loans close on-time and within 30 Days or less.

Refinance Rates & Purchase Rates could be lower… have your clients call me to discuss.

 Rates Jumped after the Feds quantitative easing announcement.

30 yr Conventional 4.5% – 0 Discount Points – 0 Origination

15 yr Conventional 3.5% – 0 Discount Points – 0 Origination

20 yr Conventional 4.25% – 0 Discount Points – 0 Origination

10 yr Conventional 3.25% – 0 Discount Points – 0 Origination

30 yr FHA 4.0% – 0 Discount Points – 0 Origination

15 yr FHA 3.5% – 0 Discount Points – 0 Origination

30 yr USDA 4.375% – 0 Discount Points – 0 Origination

30 yr VA 4.0% – 0 Discount Points – 0 Origination

15 yr VA 3.5% – 0 Discount Points – 0 Origination

Your Locally Owned and Operated Texas Mortgage Banker……

* These rates are based on a estimated loan amount of $250,000 or above and roughly 4.7% to 5.99% APR depending on loan program. Rates are also subject to change without notice. FHA requires 3.5% down. Conventional requires 5% down. Some rates are based on a 740 credit score or higher. Some loans require lower LTV, call for details.

Once again, our people in Washington D.C. are taking steps to “fix” the mortgage industry.

On June 25, 2013 the Corker-Warner Housing Finance Reform and Taxpayer Protection was introduced with the stated intention of “strengthening America’s housing finance system by replacing government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac with a privately capitalized system that preserves market liquidity and protects taxpayers from future economic downturns.”

According to the Bob Corker Website (http://www.corker.senate.gov), the private mortgage market has all but disappeared as a result of the 2008 Fannie Mae / Freddie Mac bailout (via a $188 bill capital injection from taxpayers). Today, nearly every loan made in America comes with a full government guarantee.

This is a complex piece of legislation, encompassing 154 pages. (You read the summary plus the entire text at the Corker website above.)

Along with other things, it would create a new Federal Mortgage Insurance Corporation (FMIC) while phasing out Freddie, Fannie, and the current Federal Housing Finance Agency.

It will eliminate the “Affordable Housing Goals” that forced Fannie and Freddie into making loans that people couldn’t possibly repay. At the same time it will establish a Market Access Fund focused on making grants to state housing agencies, promoting affordable rental housing, and providing borrower counseling programs. They still want everyone to have housing – but have abandoned the idea that everyone must own a home.

On the scary side, the new FMIC will have the authority to issue regulations.

Another highlight of the Corker-Warner legislation deals specifically with second Trust Deeds – commonly known as home equity loans.

Under the terms of this bill, a first lien holder on a single family home mortgage would be allowed to block the homeowners from taking out a home equity loan. Any time the combined loan to value ratio reaches 80% or more, the homeowner will be required to obtain approval (permission, which may or may not be granted) from the first lien holder. That first lien holder will be allowed to decide the home’s market value through their own in-house appraisal department.

The bill also calls for the creation of a database that will track second liens and notify first lien holders of their existence – and of the homeowner’s payment history on those junior liens.

Going back to the actions that caused the mortgage melt-down in the first place, we see that the unintended consequences of Congressional interference in the housing industry have been dire. Let’s hope this latest “fix” is not more of the same.

Mike Clover
Homewood Mortgage,LLC
Mortgage Banker
www.mikeclover.com

All too often, people are approved for a loan and happily anticipating moving into a new home – only to find out at the last minute that their loan has been denied.

Why? Because they entered into avoidable situations that changed their desirability as borrowers. The bank no longer considers them credit-worthy.

Your loan officer should give you this information when you first apply for a loan. But we’ve found that in the excitement of a new home purchase, some consumers tend to forget the advice.

This “Don’t do list” can’t be repeated too often, because heeding its advice can make the difference between owning your dream home and remaining a tenant.

1. Don’t quit your current job
Some people think that the lender will not find out if they quit their job. They will. Most banks do a last minute verification of employment and that is when the problems begin. So stay in your current job until AFTER your loan closes.

2. Don’t transfer money between accounts. This just causes more paperwork for everyone involved. When you transfer money between checking and savings we have to show where the money came from. Try to use one account only for your real estate transaction; this avoids the big paper shuffle involved with this type of activity.

3. Don’t make large deposits in your accounts being used for the transaction. This is a huge problem for lenders. Deposits from your employer are fine, but cash deposits or gifts could cause your loan to be denied. Even money from the sale of a car could be an issue. Consult with your loan officer before depositing any money into the account being used to buy your new home.

4. If you do sell a car or other large item…Keep a careful record of the transaction. Write a dated, detailed bill of sale. Along with giving a copy to your buyer, have him or her sign and date a copy for your records. If paid by check, make a copy of the check. Then go talk with your lender before you do anything with it.

5. Don’t be late on any obligations If you are late on a credit card, car note or student loan, this could cause your credit scores to drop. In some cases the lender may re-pull your credit report at the last minute. Being late on obligations can cause your loan to be denied.

6. Don’t buy anything beyond the essentials. Restrict your shopping to groceries, gasoline, and other essentials. This is not the time to run up a credit card balance or deplete a checking account by buying large items, replenishing your wardrobe, etc.

7. Don’t go shopping and allow a sales person access to your Social Security Number. He or she will run a routine credit check in hopes of selling you something on credit. That inquiry could alter your credit score just enough to cause your loan to be denied.

You can buy furniture for that new house after your loan has closed. For now, restrain the impulse.

8. Don’t lease a new car. A lease is a financial obligation – so it will hurt you just as much as if you purchased a new car.

9. Don’t use your credit card as security to book a vacation, reserve a car rental or airline ticket, etc. On your credit report, it will look as if you’ve SPENT that money.

10. Don’t pay off a credit card balance without first checking with your lender.

11. Don’t open or close a credit account. Either activity will lower your credit score. A lower credit score can result in a higher mortgage interest rate or an outright denial of the loan.

12. Don’t co-sign a note or loan for anyone. This is a bad idea under any circumstances, but right now it could cause you to lose your house.

In short – don’t do anything that causes your credit picture to change in the slightest.

You were approved for your mortgage loan based on circumstances as they were on that day. Should any of those circumstances change, the loan could be denied.

Mike Clover
Mortgage Banker
Homewood Mortgage,LLC
www.mikeclover.com

Under the terms of the Dodd-Frank act, as of January 10, 2014 banks will be subject to the Ability-to-Repay Rule – also known as the Qualified Mortgage Rule. One of the provisions of that rule is that a borrower’s total debt liability shall not exceed 43% of their income. Right now the limit is 45%, with exceptions made in some cases.

What does that mean in dollars? If your monthly income is $10,000, your total monthly debt can now be no more than $4,500. After January 10 that number will be reduced to $4,300. In terms of a 30-year Mortgage loan at 4.5% interest, that $200 reduction in available debt reduces your maximum loan amount by about $40,000. That number will fluctuate based on the interest rate, with a higher interest rate dictating a smaller loan amount.

How is your debt to income ratio calculated?

It begins with your income before taxes are withheld.

From that you must deduct:

• All payments that would show up on your credit report. For instance, car loans, credit cards, and payments on any other real estate you own.
• Taxes, insurance, and HOA fees on that other real estate.
• Child support or Alimony
• Any business loss shown on your income tax return
• The new Mortgage payment
• Taxes and insurance
• HOA fees

What should you do?

Before you begin to shop for your new home, call us and get pre-approved for your mortgage loan. Then you’ll know just how much you can spend based on your present debt, your credit scores, and the amount you’re able to furnish as a down payment.

A $200 increase in your debt to income sounds like a small amount, but when it translates into a $40,000 difference in the price you can pay for a new home, it’s significant. So if it looks like the new debt to income ratio rules will put you just out of reach of your dream home, begin now to put aside more money for a down payment and to reduce amounts owing on other consumer debt.

One warning: Don’t make major changes in your financial situation until you’ve talked with your loan officer. It sounds backward, but paying off a credit card could have a negative impact on your credit scores, and that in turn could impact your interest rate and mortgage payment.

And of course, don’t take on any new debt or increase the outstanding balance on any credit lines. That will not only change your debt to income ratios, but can reduce your credit scores and thus raise your interest rate.

We at Homewood Mortgage finance homes anywhere in Texas, and we promise low rates, low fees, and prompt service. So if you’re thinking of becoming a Texas homeowner, call us at 1-800-223-7409 or apply on line at http://www.mikeclover.com/ We’ll be glad to get you pre-approved and ready to submit that winning offer.

There’s no application fee, and no obligation.

Mike Clover
Mortgage Banker
www.mikeclover.com

If senior officials listen to their own economists, the answer will be yes.

At present, the Fed expects to begin raising interest rates when the unemployment rate drops to 6.5% and inflation rises to 2.5%.

Now a half-dozen Fed economists are recommending that the unemployment objective should be lowered to 6% or even 5.5% before any change. They believe the economy will simply perform better if they hold off.

This is in part due to the fact that unemployment numbers don’t mean the same thing they meant a decade ago. We’re now experiencing a 35-year low in labor market participation. This is in large part due to the number of workers who have given up on finding a job and simply dropped out. Those “drop-outs” are not counted in the overall unemployment figures.

Some believed that a decrease in emergency unemployment benefits would get people back to work. However, the decrease took place without doing much to increase employment. It turns out most people weren’t receiving unemployment benefits because they didn’t want to work – it was because they could find no work.

Now the implementation of Obamacare has put thousands more in the “under employed” category, as large employers cut hours to avoid providing insurance. A store clerk gave me an earful about that situation just this week.

Now economists are recommending that the zero-bound interest rates remain in place until at least 2017 and kept below normal into the early 2020’s.

At present, companies are using the low interest rates to raise record levels of debt capital – which could in turn lead to expansion, more jobs, and a stronger economy.

Keeping rates at our near present levels will also continue to benefit the housing market, as lower mortgage interest rates mean more individuals and families can afford a house payment.

The Fed may also be considering an earlier than anticipated reduction of Quantitative Easing – perhaps as soon as March. Right now the central bank is pumping $85 billion per month into bond-buying. Its balance sheet recently stood at more than $3.8 trillion.

While the stock market went into shock in May when a reduction was discussed, economists now believe that the stock market won’t suffer as long as low interest rates remain in place.

Will the economy respond as expected? Are these the right moves?

Only time will tell.

Mike Clover
Mortgage Banker
www.mikeclover.com

Fannie Mae’s official forecast was written during the shut-down, so in a sense is obsolete. However, they based their prediction on the assumption that the shut-down would end as it did.

Based on a lowered estimate of growth in the 4^th quarter, forecasters lowered their estimate of economic growth for 2013 by 0.1% – bringing it to 1.9%.

The Federal Reserve’s decision to maintain the pace of asset purchases for now brought long-term interest rates back down, but momentum is still weakened due to the threat of tapering in 2014. They expect to end the asset purchase program in the second half of 2014, but predict that funds rate hikes won’t happen until third quarter 2015 – when unemployment rates are expected to fall to 6.5%.

Economists have lowered their mortgage rate hike predictions and now think that rates will average 4.4% in the 4^th quarter and rise to 5% a year from now.

The refinancing boom appears to be over, in spite of the dip in interest rates. However, existing home sales in 2013 are, so far, averaging 12% above 2012. Pending home sales did decline In August, but even with a dip, 2013 should finish at 10% above last year. Home sales are now at the highest level in six years.

Did the shutdown have an effect? Yes, but since it lasted less than a month, the impact was limited. The primary problem was delays, as FHA and VA were operating on reduced staff. In addition, government employees who were furloughed had their home purchase loans put on hold – causing problems for both them and sellers who expected to close their home sales in early October.

While they’re back to work, they may still experience delays as the backlog is addressed.

Due to revised estimates of total mortgage originations in 2012, predictions for 2013 loan originations were revised downward by 15% – to $1.83 trillion.

Loan originations are expected to drop further in 2014 due to the rising mortgage interest rates and the subsequent decline in refinancing activity. The prediction is $1.36 trillion in 2014.

Although total mortgage debt has been dropping for 5 years, forecasters expected an increase this year. Instead, total outstanding single-family mortgage debt fell by 1.8% in the second quarter, leading them to predict an overall drop again in 2013.

So what’s the effect on you as a consumer?

You can still get a home mortgage loan at a low, low interest rate, compared to the averages over the past 40 years. And when you call on the Mike Clover Group at Homewood Mortgage LLC, you’ll also pay low fees.

Remember, no matter where you are in Texas, we can help.

Mike Clover
Texas Mortgage Banker
www.mikeclover.com

Handling of Collections & Disputed Accounts

In an effort to reduce risk in backing mortgage loans, HUD has once again revised its regulations, effective October 15.

Mortgage Letter 2013-24 deals with credit analysis of collections and judgments, and outlines how lenders must proceed.

As you probably know, the first step in FHA loan approval is use of the TOTAL Mortgage Scorecard.  This scorecard takes into account the presence of collections or judgments via the credit score. Should a borrower be approved through the TOTAL Mortgage Scorecard, no documentation or letters of explanations will be required.

If TOTAL Mortgage Scorecard results in a “Refer,” the lender must manually underwrite the loan – and must determine the cause of the collections or judgments.

• Was it disregard for financial obligations?
• Was it an inability to manage debt?
• Were there extenuating circumstances?

In order to make this determination, the lender must gather supporting documentation, including a letter of explanation from the borrower for each outstanding collection account and/or judgment. It will be up to the lender to determine whether the explanation is consistent with other credit information in the file.

Collections

If the borrower’s combined collection accounts equal $2,000 or more, the lender must perform a “Capacity Analysis.” Medical collections and charge-offs are not included in this aggregate. However, collection accounts of a non-purchasing spouse ARE included here in Texas.

Capacity analysis consists of one of the following:

• Payment in full of the collection account – using a verified acceptable source of funds.
• A payment agreement with the creditor, accompanied by a letter from the creditor verifying the monthly payment. This monthly payment will be included in the borrower’s debt to income ratio.
• In the absence of a payment arrangement, the lender must calculate a monthly payment equal to 5% of the outstanding balance. This payment will be included in the borrower’s debt to income ratio.

Judgments

Until now, borrowers were required to pay off court ordered judgments before being eligible for FHA insurance. Now there is an exception.

Under the new regulations a loan may be approved if the borrower has entered into an agreement with the creditor to make regular monthly payments and has made a minimum of three such payments over a period of 3 or more months. Pre-payments will bring the balance down, but won’t help with loan approval.

The borrower must provide evidence that the payments have been made on time and in accordance with the agreement.

And of course, the payment will be included when calculating the borrower’s debt to income ratio.

As with collections, in Texas and other community property states judgments against a non-purchasing spouse also must be paid off or meet the rules for exception.

Disputed Accounts

Many borrowers have found to their dismay that their credit reports contain inaccurate information. Some of that inaccurate information is the result of poor data entry, some is there because old accounts that should have “fallen off” the report have not been removed, some because the original bill was in dispute, and some are due to identity theft.

Accounts that appear as “in dispute” on a borrower’s credit report are not considered by TOTAL Mortgage Scorecard.  Therefore, they must be addressed in manual underwriting.

Disputed accounts fall into two categories: Derogatory and Non-derogatory.

Non-derogatory disputed accounts

If a borrower is disputing non-derogatory accounts, the lender is not required to downgrade the application to “refer.” However, if the dispute results in the borrower’s monthly debt payments being lower than originally indicated, he or she must provide documentation.

Derogatory Disputed Accounts

If the cumulative outstanding balance of such accounts is less than $1,000, a downgrade is not required.

If the cumulative outstanding balance is $1,000 or more (excluding medical accounts) the borrower must provide a letter of explanation and documentation supporting the basis for the dispute. The lender must analyze the documentation to determine whether the account should be considered in the underwriting analysis.

In contrast to collections and judgments, disputes involving a non-purchasing spouse are not included in the $1,000 aggregate balance.

Identity Theft

Disputed accounts resulting from identity theft and credit card theft are not included. However, the borrower must provide documentation verifying the charges as fraudulent. This can include a letter from the creditor and/or a police report.

Mike Clover
Texas Mortgage Banker
www.mikeclover.com

Dual agency is defined as a real estate transaction in which one agent represents both buyer and seller in a real estate purchase.

Years ago, all agents represented the seller in every transaction. The buyer might or might not have a different agent to show them homes and property and to write the offer to purchase, but that agent was a sub-agent of the listing agent. Buyers had no actual representation.

Then buyer agency came along and it became possible for buyers to have an agent whose duty was only to them. That was the beginning of the controversy – and the lawsuits – over representation. Today agency issues outrank all other concerns in terms of legal liability.

The agency issue hinges on two primary areas of concern. One is confidentiality. An agent who knows the buyer or seller’s financial and/or domestic situation can inadvertently (or deliberately) give out information that would harm that client’s negotiating power.

The second issue assumes that the buyer and seller have limited knowledge with regard to real estate. They need an agent to inform and instruct them throughout the transaction.

The fact that those two issues are the basis of concern over agency make HUD’s new ruling ridiculous, as well as counter-productive. After all, the mere fact of a short sale reveals the seller’s financial position, and the bank’s negotiators, who have the final word, are presumed to possess real estate knowledge far beyond that of the average consumer.

And yet… In conflict with state laws that allow dual agency as long as it’s disclosed and accepted by the parties involved, as of October 1, 2013, it will no longer be permissible to use dual agency in a short sale involving a HUD home.

And they’re not just talking about one agent. The new rules specify that no agent in a brokerage may represent a buyer in the purchase of a HUD short sale listed by another agent in that brokerage- even if that brokerage consists of hundreds of agents working from different offices.

The reason, according to HUD’s Inspector General, is that they have detected fraud and abuse in the pre-foreclosure sales process. In addition, HUD short sales aren’t currently meeting “minimum net sales proceeds requirements.”

To date, no evidence has been offered to back up the allegations of fraud, and NAR predicts that those net sales proceeds will now drop as agents are prohibited from showing homes listed by others in their agencies.

In fact, many are predicting that agents will simply begin refusing to list HUD short sales.

Once again, bureaucrats with no real world experience in real estate have come up with a solution bound to have unintended – and negative – consequences.

NAR and agents nationwide are asking HUD to reconsider this unwise course of action.

Mike Clover
Homewood Mortgage,LLC
Texas Mortgage Banker
www.mikeclover.com

When the FHA Loan Guidelines change on October 15, it will be good news for thousands of would-be homeowners who fell into financial difficulties in the recent downturn.

Under the new guidelines set forth in Mortgage Letter 2013–25, it will no longer be necessary to pay off collection accounts prior to receiving a FHA approved mortgage.  If the cumulative outstanding balance of all collections is less than $2,000, the lender is not even required to consider or evaluate those accounts.

If the cumulative outstanding balance is $2,000 or more, the lender must include monthly payments when evaluating the borrower’s debt-to-income ratio for all accounts that will remain open after closing.

In community property states, this guideline applies to collection accounts of both spouses, even if only one will be listed on the purchase and sale documents.

Court-ordered judgments will not disqualify a borrower, but must be paid off prior to eligibility for FHA insurance endorsement. However, there is an exception. If the borrower has made an agreement with the creditor to make regular and timely payments and can show documentation that he or she has been making said payments as agreed, the loan can be approved.

Disputed credit accounts are generally not shown on credit reports (get more information from Credit Check Kansas City), but will be considered in underwriting. If a borrower has derogatory disputed accounts (excluding medical) for a cumulative balance of $1,000 or more, his or her file will be downgraded to a manual underwrite. Total balances of less than $1,000 will not require manual underwriting.

Before obtaining a FHA insured mortgage, a borrower must generally wait 3 years after a foreclosure or deed-in-lieu transfer. However, the lender may grant an exception to the three-year requirement under certain documented extenuating circumstances such as a serious illness or the death of a wage earner.

Divorce is not usually considered to be an extenuating circumstance, but here too is the possibility of an exception. If the previous loan was current at the time of the divorce and the borrower’s spouse received the property and later let it fall into foreclosure, the 3 year rule can be waived.

Bankruptcy is not a disqualifying factor…

Neither Chapter 7 nor Chapter 13 bankruptcy is an automatic disqualification. A borrow may obtain a new FHA loan 2 years after a discharge of a Chapter 7 bankruptcy, provided the borrower has re-established good credit and has not incurred new credit obligations.  The time period may be shortened to 12 months if the borrower can prove that extenuating circumstances led to the bankruptcy.

A Chapter 13 bankruptcy does not disqualify a borrower from obtaining a FHA-insured mortgage, provided that the lender is able to document that:

• at least one year of the pay-out period under the bankruptcy has elapsed
• the borrower has made all required payments on time
• the bankruptcy court has issued written permission for the borrower to enter into the mortgage transaction

If you’ve run into trouble and have been thinking you can never again own a home, call us at Homewood Mortgage, LLC, the Mike Clover Group: 1-800-223-7409. We’ll help you evaluate your situation and let you know where you stand – and how soon you can apply for that new mortgage loan.

We’re always glad to talk with you – with no obligation, of course.

Mike Clover
Texas Mortgage Banker
www.mikeclover.com

We all know what borrowers want – a lender who will get them the loan they want quickly – and at the lowest possible rate with the lowest possible fees. We’re pleased to say we meet that want for home buyers all over the great state of Texas.

But what do Texas REALTORS® want?

That question was posed on a forum recently, and we at Homewood Mortgage, LLC – the Mike Clover Group were gratified to know that we’re providing exactly what Texas REALTORS® want: Timely communication.

Many agents today want a pre-approval letter before they begin showing homes.  Whether they have asked for this letter in advance or shown a few homes first, if they’ve referred a Texas homebuyer to us they want to be notified when that buyer keeps an appointment and becomes pre-approved – or not.

If more documents are required, agents want to know whether or not their buyers are acting responsively – providing everything we ask for.

Next, if a borrower is approved for only a specific type of loan, agents want to know in order to show only homes that can be financed with that loan.

Once the loan process is underway, agents want to be kept advised of progress. They want to know when the appraisal has been ordered, when it will occur, and the name of the appraiser. Of course they want to know the results.

When underwriters come back with additional requests, agents want to know. If there’s a problem with title or any kind of unforeseen glitch, they want us to get in touch. Perhaps they can help speed the solution, but they can’t help unless they know the problem.

If it appears that there will be a delay in closing that Texas home loan, they want to know immediately, so both the sellers and the buyers can be informed and take steps to deal with it. After all, some of those sellers are waiting for this loan to close so they can close on a new home. And often both buyers and sellers have arranged for movers from a reputable company like Rentco to transport their furnishings on specific days. If there’s a change, they need to know as far in advance as possible.

Not surprisingly, most agents would like a weekly progress report, even if we have no new news to report. They want assurance that we haven’t forgotten them or their clients.

And finally – when they call us, they want us to either answer the phone or return the call in a timely manner. They don’t want to call repeatedly and get no response. They don’t want to email or text and get no response.

In short, agents want their buyers’ lenders to be responsive to both them and the borrowers and to communicate freely and well. When things are going well, they want to know so that they can reassure nervous buyers and sellers that all is progressing normally. When things aren’t going well, they want to know as soon as possible so they can take steps to mitigate any damage caused by the delay – and so they can assist in solving the problems.

All of that seems simple and straight forward… We at Homewood Mortgage, LLC – the Mike Clover Group do it as a matter of routine.

Unfortunately, not all lenders believe in communication. If they did, these items would not be on agents’ “wish lists.”

Mike Clover
Mortgage Banker
www.mikeclover.com