Is the "No Doc" and "Stated Income" loan DEAD!!!

Like many I can honestly say that the no doc loans and stated income loans were abused. Consumers, Brokers, Banks, Investors and anyone in the R.E. field took advantage of the market. There is no single person to blame but rather a compilation of faults, greed and people being naive. The lending business was taken so out of whack with no guidelines what so ever. Where common sense no longer was relevant were people alike were living in a fantasy world of more more more. Everyone was in the business of making money and the fact of the matter is Mortgage Brokers got the runt of it where in fact most of those who really made money were in fact not even licensed individuals. Any Joe Schmo off the street decided they were going to open a mortgage company. I ask the question as a licensed Real Estate Broker and Licensed Mortgage Originator where was the law then, where were the guidelines where were the laws and boards governing this Industry.

Now at a desperate attempt to bring stabilization to the market we have taken a 360 degree turn. Banks no longer want to lend , guidelines have changed, laws have formed that once again no longer make sense. People are developing this business who are not a part of it. How can one make laws about something when they do not do the steps. How can a dancer teach one to dance if they have no rhythm or have never danced. Although I am happy that the current market has pushed a lot of bad seeds out of the business the fact of the matter is that those of us that are left are professionals this is our career not a fad, not a trade, not a quick money making fix. We are here standing fighting to make the American dream of home ownership still a reality.

We wrote to the senator regarding no doc and stated income loans and were welcomed with the following response.


"Dear Mr. Vaziri: Thank you for contacting me to express your concerns about legislation to reform mortgage underwriting standards. I appreciate the time you took to write and welcome the opportunity to respond.

On July 21, 2010, President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act (P.L. 111-203) into law after many months of deliberation and debate. During the Senate's debate of this legislation, Senators Jeff Merkley (D-OR) and Amy Klobuchar (D-MN) offered an amendment that prohibits mortgage originators from receiving payments based on the terms of a loan. Additionally, it requires lenders to verify a borrower's ability to repay with income and asset documentation. I supported this amendment, which passed the Senate by a vote of 63-36.

I understand that you feel this amendment could limit mortgage options for home buyers and reduce profits for honest mortgage brokers. However, I strongly believe that more must be done to help protect consumers from predatory lending practices that contributed to the subprime mortgage crisis. This legislation accomplishes this objective and works to prevent originators from steering home buyers into more costly loans. More importantly, it prohibits the practice of issuing "no doc" loans, in which home buyers are not required to provide evidence showing that they can actually repay their mortgage.

Once again, thank you for writing. While we may not agree on this particular issue, please know that I will keep your concerns about mortgage underwriting standards in mind should the Senate consider relevant legislation in the future. If you have any additional questions or concerns, please do not hesitate to contact my Washington, D.C. office at (202) 224-3841. Best regards.

Sincerely yours,

Dianne Feinstein
United States Senator"

Although I agree this loan type may have been abused and stricter guidelines must be enforced there are some people who need this type of loan and they deserve to have it. You can't compare a person applying for a no doc loan who is putting more than 20% down, has a 720 fico score, reserves and who is over all an A paper client to someone who in the past said they were a factory worker making 100k plus with a 600 fico score and 100% financing. Like I say we have to find a medium we can't keep bouncing from one extreme to another.

So to answer the question for many yes the "NO DOC" and "STATED INCOME" loan is dead for now.

Please we welcome your responses and opinions.

Leila

Beware of Foreign Buyers Wanting Quick Closings

Recently there has been a flurry of inquiries from people over seas seeking to quickly buy residential property "in your area" priced in the $450,000-$650,000 range.

They request that you send them property information on these type homes for them to review via e-mail which is fine. Within two days they have selected one of the properties, want to pay cash, and want to close by the end of the month! They also provide you their financial planner's name and contact information to handle the funds transfer and request you recommend a local attorney to handle the escrow. This all sounds really good. Too good to be true?

Let the games begin. They will want to get the property under contract and transfer earnest money to the attorney's escrow account. They then decide to cancel and want money back which was really never there, thus basically seeking to rip off the attorneys' escrow account. These have popped up throughout the United States and an over excited agent could get taken in easily.

I was recently approached by these folks, sent them property information, received the "we must buy now" message and a request for an attorney to handle the escrow. Experience told me that this just seemed to be moving way too fast and seemed far too easy. I decided to do some investigating. Upon doing some research into the financial planner's firm, I uncovered the fact that this approach by these same "buyers" was in fact a scam. The financial planner was a fake name and I decided that no more of my time was to be spent with this, but I should take a few minutes to warn other real estate professionals.

Trulia has a lengthy series of comments from real estate professionals and their stories with this scam. Beware, be careful and do not fall for this creative scam. It could be very expensive.

Published on Monday, September 13, 2010 by Michael Davenport

Up to 3.5% HomePath Buyer Incentive and $1,500 Selling Agent Bonus on HomePath Properties

Fannie Mae is offering buyers up to 3.5% in closing cost assistance and a $1,500 selling agent bonus on HomePath® properties. To be eligible for this incentive:

*Initial offers must be accepted on or after September 23, 2010

*Property sales must close on or before December 31, 2010, and close within 60 days of offer acceptance

*Buyers must be owner-occupants and confirm that the property will be used as their primary residence by completing a certification form (investors are excluded); and

*Selling agents must represent owner-occupant buyers purchasing a HomePath property to receive the $1,500 bonus and offers must be submitted on or after the effective date.

The incentive reinforces Fannie Mae's commitment to stabilizing communities and assisting buyers. For more information about the incentive, visit HomePath.com, read the press release, or contact a Fannie Mae listing broker.

House Bill Would Force Lenders to Decide on Short Sales in 45 Days

Distressed homeowners looking for a way out of their mortgage that doesn’t involve foreclosure may find relief is on the way from a new bill introduced in the U.S. House.

The legislation would impose a deadline on lenders to respond to short sale requests, requiring them to return an answer to the borrower within 45 days.

The bipartisan bill, Prompt Decision for Qualification of Short Sale Act of 2010 (H.R. 6133), is sponsored by Reps. Robert Andrews (D-New Jersey) and Tom Rooney (R-Florida).

Lenders have taken a lot of heat for the elongated timelines it takes to get an approval on a short sale proposal.

“I have heard from many short sellers in Florida whose potential homebuyers have walked away because they couldn’t get a ‘yes’ or ‘no’ from their lenders,” Rep. Rooney said. “This bill would spur growth in the housing market by helping sellers and buyers complete short sales quickly.”

The number of potential short sale properties is rising across the country. According to data from the National Association of Realtors (NAR), in the second quarter of

2010, Nevada, California, Florida, and Arizona are states where significant shares of all properties on the market are potential short sales: 32 percent, 28 percent, 27 percent, and 24 percent, respectively.

NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Arizona, says her organization and Realtors across the country strongly support the Andrews-Rooney bill, and are urging Congress to pass the legislation quickly.

“Unfortunately, homeowners who need to execute a short sale are severely hampered because lenders (loan servicers) are unable to decide whether to approve a short sale within a reasonable amount of time,” Golder said.

“Potential homebuyers are walking away from purchasing short sale property because the lender has taken many months and still not responded. Many consumers have mentioned that the delay in short sale price approval exceeds 90 days, and in many cases never arrives,” Golder said.

According to Rep. Rooney, the lending community has worked to improve the size and training of their workforce that handles short sales, but “progress has been extremely slow,” he says.

Rooney argues that for homeowners who owe more than their home is worth and are in real danger of losing their home, the short sale can help relieve them of the overwhelming financial burden of their mortgage.

Golder agrees. “NAR believes that quicker attention to the short sales process is vital to help homeowners who are underwater and their communities, as well as the nation’s economy,” she said.

Homeowners who are upside down on their mortgage may still be able to refinance

Many homeowners are not aware of the special “Home Affordable Refinance Program (HARP)” offered through the government. HARP provides a refinance option to homeowners who owe more on their mortgage than their home is worth. This is great news for homeowners that are upside down on their mortgage who would like to take advantage of the current record-low mortgage rates.

Eligibility requirements for a refinance through HARP include:

• The loan on your property is owned or guaranteed by Fannie Mae or Freddie Mac.

• The amount you owe on your first mortgage does not exceed 125% of the current market value of your property.
NOTE: Some lenders may require a lower percentage.

• You are the owner-occupant of a one- to four-unit home.

• Your mortgage payments are current, at the time you apply.

• The refinance improves the long term affordability or stability of your loan.

Tax Credit Extension for Service Members

The $8,000 tax credit for first-time home buyers and the $6,500 tax credit for repeat home buyers have expired. However, service members who were on official extended duty outside of the United States for at least 90 days between Jan.1, 2009 and May 1, 2010, may qualify for a one-year extension.

For home purchases where a binding sales contract was signed by April 30, 2010, otherwise qualified buyers now have until September 30, 2010 to complete the purchase. Congress has extended the closing date to provide buyers who had binding sales contracts in place by April 30, 2010, additional time to complete their purchases.

How your credit score is calculated and tips to help keep it in good standing

A recent report by FICO shows more than 25% of Americans have a credit score lower than 599. With a credit score that low, it makes it very difficult to take advantage of the current record-low interest rates. Below are the main factors, and the percentage of importance of each, that are used to determine your credit score.

1. Payment history = 35% – The most important thing is to pay your bills on time.

2. Amounts owed = 30% – This is the amount of money you owe versus the amount of credit you have available to you. A 20% debt-to-credit limit ratio is optimal.

3. Credit history = 15% – It’s better to keep old credit accounts than to close them.

4. New credit = 10% – Don’t apply for new credit without a good reason.

5. Credit mix = 10% – Try having a good mix of credit, such as credit cards, retail accounts, mortgage, installment loans, and consumer finance accounts.