Archive for March, 2010

New blog feature

March 15, 2010

Introducing Meebo… Meebo is an instant chat application that is now integrated into my blog. Meebo will allow readers to ask me question about mortgages, blog posts, or anything else.

To use Meebo, find the box titled “ask a question” that is located on the upper right side of the blog. If you see “claygj is online“, then I’m logged in and will see your question. All that is left is for you to type and submit your private question.

This will be a quick and easy way for my clients, colleagues, and friends to reach out to me even if they don’t have enough time to call. Oh, and anyone working for a company that employs an office linbacker, don’t worry, it’s so discrete I doubt he will ever notice you sending me questions.

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Refinances available up to 125% LTV

March 12, 2010

Over the past several months, I’ve had the privilege of helping home owners refinance their home using the Making Home Affordable Program. The design of the program allowed home owners to refinance their home even if they were underwater on their mortgage.

Initially lenders only allowed home owners to refinance up to 105% LTV (Loan To Value – determined by the current mortgage balance versus the appraisal value of the home).

Fortunately, we are now able to offer home owners the opportunity to refinance up to the Making Home Affordable Program’s maximum limit – 125% LTV

The question now becomes, “do I qualify?” Let’s find out!

  • The current mortgage cannot have Private Mortgage Insurance. Why? While the program allows up to 125% LTV, private mortgage insurance companies are not currently insuring loans with that high of an LTV. If the current mortgage has PMI, sad to say, I coudn’t help with a refinance.
  • If there is a second mortgage, it may prevent being approved for a refinance. Why? The second mortgage can’t be paid off in the refinance, so the second mortgage would need to be subordinated behind the new first mortgage. If the home is underwater, there is a good chance the second mortgage company will not approve the subordination behind the new mortgage.

For more information on second mortgages and how they can stop a refinance dead in its tracks, see this recent post from one of my colleagues.

If the current mortgage does not have PMI and there is no second mortgage, there is only one thing left to check.

  • The Making Home Affordable Program only applies to mortgages owned by Fannie Mae or Freddie Mac. So, who owns your mortgage? To find out, search for your mortgage using Fannie Mae’s online loan lookup tool. If not found, try Freddie Mac’s online loan lookup tool.

In short, if your mortgage does NOT have PMI, you don’t have a second mortgage, and the first mortgage is owned by Fannie Mae or Freddie Mac, you are eligible and I can help you refinance!

Let’s get started now talking about details, options, qualifying rates, etc. while we are still enjoying these historically low interest rates.

New licensing requirements

March 9, 2010

With the passing and implementation of the SAFE Act (Secure and Fair Enforcement of Mortgage Licensing Act of 2008), I am often asked about the licensing requirements prior to the SAFE Act. The answer is actually kind of frightening…

There was no test (federal or state)… there were no educational requirements… individuals only needed a pulse, pass a background check, and work under a licensed mortgage broker or bank. Anyone could transition from being a cook, mechanic, insurance agent, car sales, etc. and move into the mortgage business the next day! (this is not THE reason for the current real estate and mortgage environment, but it certainly didn’t help)

The SAFE Act is designed to set a minimum standard for the mortgage industry and to reduce fraud by requiring loan originators to be individually licensed by completing 20 hours of pre-licensing education, passing a federal test, passing a state-specific test, and passing a back ground check. Anyone looking to move into the mortgage industry must complete the same requirements.

The deadline to complete and apply for an individual MLO License (Mortgage Loan Originator) is March 31, 2010. NMLS (National Mortgage Licensing System and Registry) will not have the entire process/paperwork complete by that date, but will grant a temporary license to loan originators who have completed all requirements by March 31st. This will allow responsible loan originators to continue helping borrowers buy and refinance homes.

Never one to wait until the last minute, I have completed the 20 hours of pre-licensing educational classes, passed the federal and state specific exams, authorized a back ground check AND officially applied for my individual license! It is a relief to know I will avoid any last minute headaches, but that will not be the case for everyone.

If someone fails the test (and one-third of loan originators are failing), they have to wait 30 days before taking it again. Anyone failing the test in March will not make the March 31st deadline and won’t be granted a temporary license. That doesn’t mean those individuals are permanently banned from the mortgage industry. However, it means they won’t receive a temporary license and will either have to wait until the entire process is complete (possibly several months) OR work for a bank.

No joke. Bank employed loan originators are not currently required to be licensed. That could be an interesting development…

Tax season Q and A

March 2, 2010

It is upon us… one of the two guarantees in life – death and taxes. For this post, we’ll focus solely on taxes as I provide some answers to common questions I receive this time of year.

Let me start this list by stating that I am not a licensed tax professional. For information on how to file tax returns, how to write off the items listed below, etc., please consult a licensed tax professional. If you would like a referral, I know some excellent CPAs, including this one.

  • Is mortgage interest tax deductible? – Yes! Home owners are allowed to deduct interest paid on their mortgage. The IRS requires the mortgage lender to provide the documentation (form 1098) showing the interest paid by the borrower. Bottom line – check your mail and then look at Schedule A on the federal return!
  • Is mortgage insurance* tax deductible? – Possibly. Under the current tax code, mortgage insurance is tax deductible for households with adjusted gross income less than $100,000 ($50,000 for single file). The benefits begin to faze out once crossing the $100,000 ($50,000) threshold, and is entirely gone once adjusted gross income surpases $110,000 ($55,000).
  • How do I file for the home buying tax credit? – Whether a first time OR repeat home buyer (see the IRS website for complete details), anyone claiming one of these tax credits must file a paper (non-electronic) return, include a copy of the HUD-1 settlement statement, and a completed Form 5405. Note that while the form 5405 says “first time home buyer”, it is the form for both tax credits. Filing a paper return may not be as fast as an e-file, but the payoff ($8,000 or $6,500) will definitely be worth it!

While this is by no means an exhaustive list, these are by far the most common questions I’ve received this year. Remember, I’ll be glad to answer any questions and help however I can, but I am not a licensed tax professional. See a tax professional to complete and file your 2009 return.

* – Mortgage insurance is required for borrowers who buy a home with less than a 20% down payment. For conventional loans, mortgage insurance is more commonly referred to as PMI or private mortgage insurance. For FHA loans, it is known as mortgage insurance premium.