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Fannie Mae Servicer Ratings For Foreclosure Prevention

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Published: Friday, October 21, 2011

Fannie Mae Servicer Ratings For Foreclosure Prevention

 

 

Government sponsored enterprise Fannie Mae recently announced additional results from its Servicer Total Achievement and Rewards Program (STAR). Fannie's initiative, which helps evaluate servicers seeking to assist homeowners in preventing foreclosure, released more rankings from the second-quarter, highlighting those servicers that achieved at least a 3 STAR measurement for the period.

 

Targeting consistency in customer service and foreclosure avoidance when dealing with borrowers, STAR examines servicers overall performance and rates them on a 5 STAR scale. The latest reports from Fannie Mae looked at the so-called Peer Group Three. Servicers are categorized into three peer groups based on the number of Fannie Mae loans they service. Group Three includes those with smaller servicing volumes. In total, 11 out of 13 servicers in Peer Group Three were named as being on track to receive a 3 STAR or better evaluation for 2011.

 

They include: American Home Mortgage Servicing, Arvest Mortgage Company, Associated Bank, Branch Banking and Trust Co. (BB&T), Capital One, Colonial Savings, Doral Bank, Nationwide Advantage Mortgage, Navy Federal Credit Union, Manufacturers and Traders Trust Co., and Sovereign Bank.

 

Those in Peer Group Three receiving a 3 STAR ranking demonstrated median or better success in servicing distressed borrowers, as compared to their peers. They join financial institutions categorized among two additional peer groupings, and evaluated earlier in the year. Fannie's September survey data noted the companies from Peer Group One and Peer Group Two that are deemed as performing at an above average standard and are producing better results than their peers. GMAC Mortgage (Ally Bank), CitiMortgage, Everhome Mortgage, and Wells Fargo from Peer Group One will likely end 2011 with a minimum 3 STAR rating. Within Peer Group Two, Fannie named Fifth Third Bank, the Huntington National Bank, HSBC Mortgage, Aurora Bank, Regions Bank, and Central Mortgage Company as receiving at least a 3 STAR rating.

 

Fannie Mae's VP of servicer portfolio management, Leslie Peeler, said of the findings, "Fannie Mae's mission is to help stabilize the housing market. By working with servicers to prevent foreclosure whenever possible, we can help bring about stability and recovery to America's neighborhoods. Servicers who achieve the highest rankings in the STAR Program are the market leaders in providing assistance to homeowners who are having difficulty making their mortgage payments."

Peer groupings are subject to a 10-point examination of key performance indicators, and Fannie's STAR program provides monthly snapshots of each company's servicing activities. Fannie is simultaneously conducting operational business process assessments, which impact STAR rankings. Servicers coming in below a median level according to the STAR scale do not gain any type of rating.

 

Bella Esshaki | Realty Executives All Area | 619.820.0607 | www.HomesByBella.com

 


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6 Reasons Mortgage Applications Are Rejected

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Published: Tuesday, October 18, 2011

6 Reasons Mortgage Applications Are Rejected

 

Half of refinance applications are abandoned or rejected, as are 30 percent of purchase mortgage applications, according to the Mortgage Bankers Association. The Federal Financial Institutions Examination Council (FFIEC) says that well over 2 million mortgage applications were rejected last year.

Want to avoid falling into that number? It's tough, especially in light of the fact that mortgage lenders have become increasingly restrictive in terms of their lending guidelines since the housing market crash.

Here, as a cautionary tale and primer on what to expect, are the top six reasons mortgage lenders reject applications.

 

1.      Income issues

Most failed applications falling into this category have income too low for the mortgage amount they are seeking. Often a spouse's credit issues can create this problem, too, as the income the spouse plans to actually chip in toward the mortgage cannot be considered by a lender. But increasingly, the recent vagaries of the job market are also causing this issue, as people who have changed their line of work or have changed from salaried employee to freelancer over the last couple of years can also have their home loan applications rejected based on income.

 

2.      Muddled money matters

If the mortgage for which you're applying plus your monthly payments on credit card, car and student loan debts will comprise more than 45 percent of your total income, you could have problems qualifying for a home loan. You might also run into problems if you rely too heavily on bonuses, overtime, cash wages or rental income -- all of these can be difficult or impossible to get a mortgage bank to consider, and if they do, they might not take all of it into account.

 

3.      Credit issues

Today, the mortgage qualifying FICO score cutoff falls somewhere between 620 and 660, depending on which lender and which loan type you seek. More than one-third of Americans, by some numbers, have credit scores too low to qualify for a home loan. Even if your credit score is high enough to qualify, if you have any late mortgage payments, a short sale, a foreclosure or a bankruptcy in the last two years, loan qualifying could be difficult to impossible.

 

4.      Property didn't appraise.

Since the whole industry had its hand smacked for allowing home values to skyrocket in a very short time, appraisal guidelines have tightened up. Some would say even more than overall mortgage guidelines. So, it is increasingly common to have the property appraise for a price lower than the sale price negotiated between the buyer and seller. This is especially common in the refinance realm, as well over a quarter of U.S. homes are now upside-down, meaning the mortgage balance owed is greater than the value of the home.

 

5.      Condition problems.

With all the distressed properties on the market, and with most non-distressed sellers barely breaking even, more home-sale transactions than ever are falling apart due to condition problems with the property. Many lenders will not extend financing on homes where the appraiser points out problems like cracked or broken windows, missing kitchen appliances, electrical problems, or wood rot. And in the world of condos and other units that belong to a homeowners association, if more than 25 percent of units are rented (rather than owner-occupied) or more than 15 percent are delinquent on their HOA dues, new applications for refinance or purchase mortgages on units in the development are likely to be rejected.

 

 

6.      Technical difficulties with application.

The days when lenders just took your word for it are long, long gone. Applications with incomplete or unverifiable information are doomed. If any of these mortgage loan application glitches arise in your home buying or refinancing process, it's critical that you connect with your mortgage professional, be it your banker or mortgage broker, to determine what course of action to take. In some cases, it might be as simple as buying a stove you find at Craigslist and installing it before escrow closes; but with income issues your mortgage pro will need to help you determine whether it makes sense to pay some bills down, get a co-signer, or even wait six months so your income documentation will qualify.

 

Bella Esshaki

REALTY EXECUTIVES ALL AREA

619.820.0607

www.HomesByBella.com

 


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Overpriced Homes

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Published: Friday, October 14, 2011

Overpriced Homes

 

Beautiful homes in desirable locations can sit on the market for months simply because they are priced too high and the sellers won't reduce the price. Sellers often tell their agent to encourage buyers to make offers, but buyers usually don't. Although this may seem counterintuitive to sellers, buyers have good reasons for not making offers on listings that are overpriced for the market. A high price can signal an unrealistic seller.

 

Today's market is challenging. Buyers are nervous, busy and usually not in a rush to buy. There is no sense of urgency to buy now, so buyers are waiting for the right house at the right price. Buyers don't want to waste time trying to convince sellers that they are right about the market value of their home and the sellers aren't. Most buyers prefer to wait until the sellers reduce the price to a reasonable level and then make an offer.

It's not uncommon for a seller to receive an offer almost immediately after the price is lowered, and sometimes more than one offer. Buyers wait until they know their offer won't be made in vain.

 

Buyers who have serious interest in a house that's priced too high often don't make an offer because they're concerned about offending the seller. They fear this might jeopardize their chances later when the sellers reduce their price. In areas where there are plenty of listings to choose from, there's no incentive for buyers to make an offer on an overpriced listing. Why battle with an unrealistic seller when there are several other homes on the market that are equally appealing and priced competitively?

 

Today's buyers are looking for a good deal. A listing that receives no serious interest is usually priced too high and is not a good value at that price. It's easy enough to determine whether a house is priced right for the market. If a listing isn't selling but other similar well-priced listings in the area sell soon after they come on the market, the message is clear. One of the first things buyers want to know when they discover a listing is: How long has it been on the market?

 

Many sellers are in denial about the current market value of their homes. It's difficult to accept that you can't sell for the price you paid, or the price you need to buy another home, or the price you want because you think your home is worth it. We're in a buyer's market. In terms of pricing for the market, the only price that's relevant is what a willing and able buyer will pay, not what the sellers hope they'll receive.

 

Buyers who are interested in making an offer on an overpriced listing should first have their agent check with the listing agent to find out if there is any flexibility in the sellers' price and why the home is on the market. This will help you assess the sellers' motivation.

Do the sellers need to sell because of a job relocation, death or divorce? These are motivated sellers. They need to sell, even though they may not want to. If they don't price right for the market initially, they will probably become realistic about the price at some point.

 

Bella Esshaki

Realty Executives All Area

619.820.0607

www.HomesByBella.com

 


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Is An ARM The Right Choice For You?

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Published: Tuesday, October 11, 2011

Is An ARM The Right Choice For You?

 

 

Mortgage rates continue to be at historic lows, which raises the question: Why would anyone still get an adjustable-rate mortgage? With rates about as low as they could possibly be and with nowhere to go but up, where's the upside and logic to financing property with an ARM?

Jacqueline Racz, a loan originator with Pennsylvania-based PrimeLending, has been in mortgage banking since 1993 and has seen shifts in which consumers gravitate to various products.

"Even back in the '90s when fixed rates jumped up into the nines, the ARMs were always very low in comparison," she says. "Right now they just seem so close to each other because fixed rates haven't been this low for a very long time. But ARMs are always popular for certain individuals in certain situations. Everyone is quick to jump on that 30-year fixed, but there are many scenarios to consider."

 

Where ARMs were once frequently sought out by those scraping by to make a home purchase-- pitting the money saved with a lower rate against the hope that their future income would keep pace with future payment increases -- those seeking out this type of loan these days are more likely to be either wealthier or more strategic. Racz sees three key areas where homebuyers might gravitate toward an ARM:

 

To lower payments further, especially on jumbo loans.

 

If they have a job that moves them around every few years.

 

If they know that they will be downsizing or moving - after their children finish school, for example - or no longer need the home they are in and that paying the loan off in full over 30 years is not a goal.

 

On a large loan amount, the difference between 4.5% on a 30-year fixed-rate mortgage and 3.25% on a 3/1 ARM can be hundreds of dollars a month. In addition to lower payments, a lot of them will allow interest only payments, which can be a significant savings a month. When you are looking at something in the $700,000 range, going from even a point spread between the fixed and adjustable can save you about $1,500 a month.

 

 

Bella Esshaki

619.820.0607 | REALTY EXECUTIVES ALL AREA | www.HomesByBella.com

 


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“E-Closings”

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Published: Friday, October 07, 2011

"E-Closings"

 

When Charles Schaffner of West Haven, Utah, closed on a home recently, he didn't leave with a giant stack of paperwork. Instead, he left with a CD containing electronic versions of all closing documents. The closing took less than 20 minutes, and yet Schaffner knew exactly what he was signing; he'd reviewed all of the documents at home the night before. Schaffner got his loan through Mountain America Credit Union, which is one of the first banks in the country to roll out an electronic-closing option. Encompassing home contracts, closings and loans, electronic processes are saving time and money. Schaffner says his experience with electronic closing was a far cry from previous closings. "In the five closings that I've been involved in the past, people are just telling you the short version of what the documents are, you sign off, and you go on to the next one and you don't have any knowledge or recollection of what it was about," Schaffner says. This time, Schaffner didn't sign a single piece of paper. He signed his name once on a signature pad, then applied that signature electronically in every place it was needed. No hand cramping or shoddy, hurried signatures. "This was a very pleasant change," he says. "It was interesting using new technology."

 

MACU's e-closing product is called QuickClose, and it uses eClosingRoom technology from PropertyInfo, a division of Stewart Title Co. Stewart's business-development director, Nancy Pratt, says e-closing is being embraced by consumers, who are already comfortable with signing a signature pad when they make purchases at stores. She also says older buyers aren't intimidated by the technology. In fact, they appreciate being able to sign once and be done. "So many people say they are uncomfortable with the way their signature looks after signing it 80 times," she says.

 

Benefits of e-closings


Of course, a good looking signature isn't the only perk of an e-closing. The process saves time, money - and reams of paper. According to data from Stewart, 460 pieces of paper are used in the typical pen-and-ink closing. Lenders save money because they save time. In the paper world, an escrow company employee is responsible for shipping loan documents in a specific order to the lender and investor. The documents usually number between 70 and 100. The "shipper" may be busy, and the loan may sit for days before documents are sent. With e-closing, the file is shipped within minutes of closing. The lender may eventually pass savings on to you.

 

Paul Anselmo, CEO of SigniaDocs, another provider of technology that allows for a paperless mortgage process, says the method ensures compliance with new mortgage regulations. An electronic, tamper-proof seal means there is never a question of who signed what when.

"The electronic version can track what was disclosed, use a date and time stamp and authenticate the IP address used," he says. "It would eliminate the finger-pointing you have going on now. The paper files are such a mess." Pratt says it's also easy to misplace a piece of paper, which could delay any step of the process. "Many times, a title company has to go back to a borrower and ask (the borrower) to re-execute a document after the fact," she says. "That goes away in the electronic world."

 

BELLA ESSHAKI

Realty Executives All Area

619.820.0607

www.HomesByBella.com

 


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Bella Esshaki

3773 Willow Glen Dr. Ste 100
El Cajon, CA 92019
Contact Me at 1-619-820-0607
DRE#: 01808550

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