FHA Self Employed Guidelines Beg You to Commit Fraud

Yes, it’s 2015 and you read that correctly.

FHA has instituted a guideline for self employed borrowers that require that they give the lender the two years tax returns AND a profit and loss statement that is for YTD (year to date).

That YTD statement on needs to be produced by the borrower from their own records.  It does not have to be reviewed, compiled or audited by the CPA of the company.

FHA also asks for no back up, no QC and the safeguard that this is the correct income.  So, the self employed borrower can go into their accounting software and make sure the numbers match.

Loan officers around the country will be telling these borrowers that the FHA guideline is requiring that their P and L be in line with the previous income.  This is reminiscent of the times when they used to tell borrowers how much they needed to qualify for a stated income loan.

And, what about the people in retail that make it big in the later part of the year?  How do they substantiate first quarter income that is less?

Does the FHA not realize that they are begging for fraud?  The only good news is that the economy is good and incomes should go up.

FHA and the conventional lenders have required self employed people to fully document their income because of Dodd-Frank.  This has brought in a lot of tax income to the federal, state and local income coffers that they did not have before. But, now they are penalizing these people and forcing the fraud on them.

Even after a foreclosure a few years from now, how are they going to get the Quickbooks file unless the Feds prosecute individuals criminally for fraud. Unlikely to happen, so why ask for it.

Mr. Commissioner how about an affidavit that they are making about the same this year.  How about realistic, sensible underwriting?  Let’s give that a try!

How a Refi Can Make a Real Estate Agent Money

Rates are back to being real low. I priced a 30 year fixed at 3.5% and a 15 year under 3!

Also, the FHA has lowered their monthly mortgage insurance premium by 1/2%

How can this help you?  Simple.  It’s now an opportunity to contact your previous buyers with something significant.  

We all get besieged by emails and mailers talking about how to plant tulips or favorite recipes.  They are nice, but it does not get anyone excited.

Saving money, especially a lot of money does.  And, YOU are the hero real estate agent that took the time and had the smarts to tell them what’s going on.  

You want your clients to think that you are the housing world expert and that includes mortgages.

Also, this is a great time to ask them if they know anyone who is buying, selling or an agent that may be interested in moving to another company (like yours).

Or, there may be marital discourse and the home needs to get listed.

Touchpoints, sphere of influence.  Bottom line is that this is the most important way to build your business.

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Why Can’t We be Friends? Insurance versus Mortgage Versus Real Estate Brokers

Insurance companies.  Insurance Brokers.  Love them or hate them….

If you are in the mortgage business, you hate them.

Example?  Today, I am doing a refinance for a customer and need the Association’s insurance policy.

We called the current broker and they said that the current policy expires on Friday and they have not picked a new company to bind coverage yet. Problem?  Yes!  My customer’s rate expires and needs to close.  The lender needs to know that there will be coverage and what that coverage is.

The insurance broker won’t return calls, is out to lunch and doesn’t give a hoot.

Also, the Homeowner’s Association is not aware that this is an issue and they don’t care either.

CAn’t we all just understand who needs what and when?  It’s no skin off anyone’s back to communicate and understand the situation.

Working together is important.  As real estate and mortgage professionals, it’s time to educate Associations and Insurance companies about the fact that they are making people miserable and someone will show up that does great customer service and eventually make them unemployed.

So today, call your favorite insurance and condo association friends and foes and let them know that timing is important, return calls is important and getting us what we need in a timely fashion is imperative.

And, play them this song from our friends from the group #War.



Rates, They Keep on Changin….

Rates, like stock prices, can change during a day. Why?

Markets move because of world events, government reports, supply/demand features and just the whim of the market.  The price of the bonds that mortgages gauge are called Mortgage Backed Securities.

Investors sell mortgage backed securities and buy stocks or visa-versa during the day. This, the price that a lender has to pay to put the loan onto the market goes up and down and they pass the price change on to you.  This way, they make the same amount of money on each loan.

Now comes the consumer delima.  If you talk to lender A in the morning and lender B in the afternoon, they may seem to have different prices but if the market moved, lender A moved with it. Before reading this post, you did not know that is the way it works.

So, now you’ll know to talk to lenders at around the same time to get the best deal.  The Lender from the morning may not have a higher rate than Lender B in the afternoon!

Once you’ve gotten comfortable with the person you are talking to, ask them if they can lock that rate/points/fees right then and there. Some lenders require you to have certain information provided before they let you lock.

So, the company that gives you a great deal that can’t be locked, is not a great deal.



Get the F*&k Out of My Place

Eviction……every landlord has them.  Tenants don’t pay, they open a meth lab, the property is sold and the new owner wants in…….

It is always been a problem, an expense and a pain the you know where.

I came across this blog post (see below) that talks about nice ways to throw the bums out!



Mortgage Companies Mandating Mortgage Fraud

Forget about the lawyers, Realtors, sellers and buyers have a new enemy in the real estate transaction.  The mortgage guys.

In an effort to deliver “high quality” loans that are (usually) not sold to Fannie Mae, Freddie Mac, FHA or VA, lenders get to set their own guidelines are rules for loans.

The bank can say that you can or can’t do something and if you don’t do it, you don’t get the great rate you were promised and locked in to.

Example?  I just had a lender tell buyer (I was on the Seller side) that the washer and dryer are personal property and it must be REMOVED from the contract. If they did not do that, the loan would not go through.

So now, the buyers have “given up” what they negotiated.  And, if we actually include the washer and dryer, are we committing mortgage fraud?

The lender is boxing everyone in to what they want because he who has the gold, makes the rules.

What will they want next?  The copy of the home inspection and every repair done before closing?

We have all committed mortgage fraud in the past but we did not realize it.  Fannie, Freddie, etc. says that the seller can only give a credit “towards closing costs” even though they are a credit for repairs.  Isn’t it silly that we must label it that way?  Shouldn’t we just be able to have a seller credit and as long as it meets the numerical guidelines, just let it happen?

Silliness, yes but the rules are the rules and the banks are making more of them.


#Refi Now or Forever Hold Your Peace

Those who know me, know I am not a happy all time cheerleader about market.  I am a realist and feeling good about it.

Reality?  Here is todays.  As predicted by me on @CNBC, rates have tanked into a death spiral.  The stock market funny money just could not survive.

Companies does want to hire people when they can automate, the 3D printer will also kill jobs. Add to the oil glut, ebola scares, European economic weakness, VC dudes finally realizing that they can’t give a 15 year old $1,000,000 to do a fart app and bingo, here we are!

I priced a 30 year fixed purchase today and the zero point rate was 3.625%.  Wow…..the low was 3.5% during the recession.

Add those low rates to peaking values, somewhat looser mortgage underwriting rules and you have the recipe for the best refinance market ever…..ever.  We are at the pinnacle of low rates and high values  This just does not happen.

If you don’t refi now, you may never have an opportunity this good ever….ever.

Fill in the form with your basic info and I will get back to you. 


#iPhone 6, #iOS8

To the idiots waiting in line since September 3rd, can I check your voter ID?  What?  You won’t wait in line to vote but you’ll wait to get a cell phone?  A phone that does things only a bit better than the one you have.  Wow, you’re life will really change……NOT!

About 85% of the voters in Scotland stopped by the polls yesterday to vote.  LA county had about a 20% turnout for the last elections.  Hello?!?  OK, off topic.

I downloaded #iOS8 on my phone.  Two suggestions.

First on the flip up screen that you can turn on or off bluetooth, wifi, etc., you can’t control the location option.  Hello?!?


Second, they were nice enough to now show you what is draining your battery  (General-Usage-Battery Usage).  Why couldn’t you have made a swipe to close the item that you want to close to save the battery.


Mr. Cook, “it’s the battery, stupid.” If the battery lasted 5 times longer, we would all be in line for 12 days.

Give the people what they want!


Does brand matter?

That’s a question that real estate brokers that have a big brokerage say yes and small brokers say no.

The bigger discussion is who is going to be the most effective person to handle your transaction and what back up do they have.

If the person you are dealing with has a great grasp of your needs, able to handle negotiating for you where you get most of what you want, knows how to communicate and have positive relationships with others in the industry, the only you and they need is a back office and leader that follows the same path.

Many times, there are great agents that do a super job but have staff that does not understand that time is of the essence. Also, they have a title or mortgage person they involve in the transaction that does not call people back. Not good!

And when there is a real problem, you have to make sure that the broker of record or the office manager is accessible and knowledgeable.

So, don’t just interview an agent, don’t just go to a company, look at the whole picture and the people behind the people.