Anecdotally, guideline changes have led to an increase in the number of home buyers accepting cash gifts from family.

Gifts are allowed in most cases but the problem is, if you don’t accept the gift in a “lender-friendly” way, the mortgage underwriter could reject it, and negate it.

You can’t just deposit a cash gift into your bank account. You have to follow a series of steps and keep records.

1. Provide an acceptable gift letter signed by all parties
2. Provide documentation of the gifter’s withdrawal of funds via teller receipts
3. Provide documentation of the giftee’s deposit of funds via teller receipts

Lenders require these 3 steps for two basic reasons.  First, they want to make sure that the cash gift is “clean” (i.e. not laundered).  Second, they want to make sure the gift is really a gift and not a loan-in-disguise.

It’s why lenders typically require that the loan application be accompanied by a signed, dated letter.

For example:

I am the [relationship to recipient] of [name of recipient] and this letter serves as evidence that I am gifting [name of recipient] [amount of gift] to be used for the purchase of the home at [complete address of property].

This is a gift — not a loan — and there is no expectation of repayment.

Signed,
[Signature of gifter]

As an additional step, home buyers receiving cash gifts should make sure that gifted funds are not commingled at the time of deposit. If the cash gift is for $10,000, therefore, the bank’s deposit slip should indicate that a $10,000 deposit was made — nothing more, nothing less. Don’t add a random $100 deposit to the transaction, in other words. The $100 deposit should be a separate transaction.

It’s also worth noting that gifting funds between family members can create both legal and tax liabilities.  If you’re unsure about how donating or receiving a gift may impact you, call or email me direc

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For consumers, this means beware of anyone who quotes you an interest rate over the phone or the Internet without asking anything about you, your family, your finances or your lifestyle. Besides market conditions, your mortgage rate is based on a long list of criteria that are unique to your individual financial situation.

Look at the list below of 26 different criteria that affect your mortgage rate. How can anyone quote you an interest rate you can trust without a thorough knowledge of your unique financial situation?

1. Loan Amount
2. LTV 3. CLTV
4. Credit Score
5. Credit History
6. Escrow Preference
7. Closing Date
8. Loan Type
9. Property Type
10. Occupancy Type
11. Residency
12. Available Assets
13. Asset Seasoning
14. Co-borrowers
15. Debt Ratio
16. Housing Ratio
17. Improvements Needed
18. Employment Type
19. Employment History
20. Documentation Type
21. Paying Points
2. Length of Loan
23. Relocation
24. Seller Contributions
25. Gifts
26. Cash-out

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(LTB, 2010)

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To: All Mortgage Brokers, Real Estate Agents, Appraisers, Lenders, Home Builders, Title Agents, and Consumers
From: Marc Savitt, President- National Association of Mortgage Brokers

After more than a year of exhaustive negotiations with Fannie Mae, Freddie Mac, James Lockhart, Director of FHFA (GSE Regulator), and NY Attorney General Andrew Cuomo, NAMB believes the time has come for your individual voice to be heard.

In order for this “Call to Action” to be effective, we ask that you fully participate, encourage others to join the action and continue calling and emailing every day, until advised to stop by NAMB.  This will NOT be a one day action!

We have received hundreds of e-mails through the hvcc@namb.org e-mail address outlining specific cases where the HVCC has created delays and additional costs to consumers. NAMB has categorized and compiled a report of the examples received, which was sent to FHFA Director James Lockhart. Please use your own examples in your conversations with legislators, regulators, or their staff. Also, please visit the NAMB HVCC Resource Center for additional information and documents on the HVCC.

Who will you be contacting?

NY Attorney General Andrew Cuomo’s Office: (212) 416-8000, Internet Complaint
Federal Housing Finance Agency (FHFA): (866) 796-5595, director@fhfa.gov
Fannie Mae: (202) 752-7000, headquarters@fanniemae.com
Freddie Mac: (703) 903-2000, Internet Complaint
Senators, Representatives and Governors: Click here for contact information.
Also, please contact your local TV and Newspaper outlets.

Below are talking points and background information to assist in your conversations. Please remember we are all professionals and should conduct ourselves accordingly in any communication with the above parties. For the most successful and influential calls, it is important to concisely quantify how the HVCC is affecting your consumer and your business.

Talking Points:

Background:

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•    Pursuant to 12 U.S.C. 1709(b)(9), the homebuyer’s downpayment required for eligibility for FHA insurance may not consist of any funds (including funds derived from a sale of the homebuyer tax credit) provided by the mortgagee, the seller, or any other person or entity that financially benefits from the transaction (or by any third party or entity that is reimbursed, directly or indirectly, by the financially benefiting person or entity).  Accordingly, the proceeds of the sale of the tax credit to FHA approved mortgagees, the seller, or any other person or entity that financially benefits from the transaction (or any third party or entity that is reimbursed, directly or indirectly, by the financing benefiting person or entity), may not be used to meet the 3.5% minimum downpayment, but may be used as additional downpayment, buying down of interest rate, or other closing costs.  – U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

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Unfortunately, for many, the experience is the exact opposite. Unfulfilled promises to pay bills, the maxing out of credit cards and a total breakdown in communication frequently lead to the annihilation of at least one spouse’s credit. Depending upon how finances are structured, it can sometimes have a negative impact on both parties.

The good news is it doesn’t have to be this way. By taking a proactive approach and creating a specific plan to maintain one’s credit status, anyone can ensure that “starting over” doesn’t have to mean rebuilding credit.

The first step for anyone going through a divorce is to obtain copies of your credit report from the 3 major agencies: Equifax, Experian®, and TransUnion®. It’s impossible to formulate a plan without having a complete understanding of the situation. (Once a year, you may obtain a free credit report by visiting www.AnnualCreditReport.com.)

Once you’ve gathered the facts, you can begin to address what’s most important. Create a spreadsheet, and list all of the accounts that are currently open. For each entry, fill in columns with the following information: creditor name, contact number, the account number, type of account (e.g. credit card, car loan, etc.), account status (e.g. current, past due), account balance, minimum monthly payment amount, and who is vested in the account (joint/individual/authorized signer).

Now that you have this information at your fingertips, it’s time to make a plan.

There are two types of credit accounts, and each is handled differently during a divorce. The first type is a secured account, meaning it’s attached to an asset. The most common secured
accounts are car loans and home mortgages. The second type is an unsecured account. These accounts are typically credit cards and charge cards, and they have no assets attached.

When it comes to a secured account, your best option is to sell the asset. This way the loan is paid off and your name is no longer attached. The next best option is to refinance the loan. In other words, one spouse buys out the other. This only works, however, if the purchasing spouse can qualify for a loan by themselves and can assume payments on their own. Your last option is to keep your name on the loan. This is the most risky option because if you’re not the one making the payment, your credit is truly vulnerable. If you decide to keep your name on the loan, make sure your name is also kept on the title. The worst case scenario is being stuck paying for something that you do not legally own.

In the case of a mortgage, enlisting the aid of a qualified mortgage professional is extremely important. This individual will review your existing home loan along with the equity you’ve built up and help you to determine the best course of action.

When it comes to unsecured accounts, you will need to act quickly. It’s important to know which spouse (if not both) is vested. If you are merely a signer on the account, have your name removed immediately. If you are the vested party and your spouse is a signer, have their name removed. Any joint accounts (both parties vested) that do not carry a balance should be closed immediately.

If there are jointly vested accounts which carry a balance, your best option is to have them frozen. This will ensure that no future charges can be made to the accounts. When an account is frozen, however, it is frozen for both parties. If you do not have any credit cards in your name, it is recommended you obtain one before freezing all of your jointly vested accounts. By having a card in your own name, you now have the option of transferring any joint balances into your account, guaranteeing they’ll get paid.

Ensuring payment on a debt which carries your name is paramount when it comes to preserving credit. Keep in mind that one 30-day late payment can drop your credit score as much as 75 points. It is also important to know that a divorce decree does not override any agreement you have with a creditor. So, regardless of which spouse is ordered to pay by the judge, not doing so will affect the credit score of both parties. The message here is to not only eliminate all joint accounts, but to do it quickly.

Divorce is difficult for everyone involved. By taking these steps, you can ensure that your credit remains intact.

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• NO Appraisal
• NO FICO Score
• NO Income Verification
• NO Asset Verification

After reading that there is little to nothing in order to qualify; you are probably asking what’s the catch, or this can’t be real.
First off FHA Streamlines have been around for years.  To start your current mortgage must be a FHA insured mortgage.  The intent is to lower the monthly principal and interest payments (P&I).  The Streamline must decrease P&I by the lesser of $50 or 10%.

A streamline is considered a Rate and Term refinance, thus paying off debt or taking cash out is not an option ($500 max cash back).

Credit guidelines are what make the FHA Streamline unique. The credit profile is based on mortgage only.  Although many lenders require a minimum 600 mid score.  The benefit of the mortgage only is the fact that liabilities are not calculated into a debt to income (DTI) ratio. Underwriting is only concerned with the performance of the FHA loan.  A delinquent mortgage is generally not eligible for streamline refinancing until the loan is brought current.

One of the Standout benefits of a Streamline is that Subordinate financing (2nd mortgage) may remain in place, regardless of the total loans against the property, with or without appraisals.  What this means is that for homeowners in declining markets and who are upside down on their mortgage, they can still qualify for today’s historic Mortgage Rates.

Contact Me NOW to get started!

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The Federal Trade Commission regulates credit repair services, and they provide free information to help consumers spot, stop, and avoid businesses with fraudulent, deceptive, or unfair practices.

Be familiar with the Credit Repair Organizations Act as you seek out a genuine ally in this area. Research their background and make sure this company will cast a good reflection on you when you refer your clients to them.

I have a company that I use for this purpose, and they have a proven track record of keeping in touch with my clients and me on a regular basis, while my clients are going through the remediation process. Their work is 100% guaranteed, which means that if they are not able to meet the commitments outlined at the commencement of the process, then there is no charge to the consumer.

I have also developed marketing literature on the topic of credit repair, which I pass out to my clients to help them understand credit scoring. This provides them with information about what they can do to immediately help improve their credit score. Subsequently, in many cases, they are able to obtain the financing for the home they wish to purchase.

From there, I continually keep an eye out for new options as their credit standing improves, and seek to place them in a lower interest loan as time progresses. I feel it is my responsibility to do more than simply quote rates and provide a loan, but rather to help them manage their debt on an ongoing basis to meet their long-term goals.

[where: 98109] {where: 85029]

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2.        Loan Application – It’s crucial that consumers supply the lender with as much information as possible, as accurately as possible. All outstanding debts as well as assets and income should be included.

3.        Documentation - Buyers must submit paperwork supporting the application as well. Information commonly sought includes pay stubs, two years’ tax returns, and account statements verifying the source of the down payment, funds to close and reserves.

4.        Pre-approval – Getting pre-approved for a mortgage allows borrowers to know exactly how much house they can afford. Viewed as “cash buyers”, pre-approved borrowers have greater negotiating power as well. (Apply Online NOW!)

5.        The Hunt – The buyer begins shopping for a house. When the right one is found, the terms of the sale will be negotiated, including the price and potential terms of the loan being sought.

6.        Appraisal - Lenders require an appraisal on all home sales. By knowing the true value of the home, the borrower is protected from overpaying.

7.        Title Search – This is the time when any liens against the property are discovered. A lien may have been placed on a property to ensure payment of outstanding debts by the owner. All liens must be cleared before a transaction can be completed.

8.        Termite Inspection – While most purchase loans do not require a formal inspection for termite and water damage, some loans (especially government loans) allow for the possibility. If problems are found, repairs may be necessary.

9.        Processor’s Review - The mortgage professional packages all pertinent information and sends it to the lending underwriter, including any explanations that may be needed, such as reasons for derogatory credit.

10.        Underwriter’s Review – Based on the information put together by both the loan executive and the processor, the underwriter makes the final decision regarding whether or not a loan is approved.

11.        Mortgage Insurance – Many lenders require private mortgage insurance when borrowers put down less than 20 percent on a loan.

12.        Approval, denial or counter offer – In order to approve a loan, the lender may ask the borrowers to put more money down to improve the debt-to-income ratio. The borrower may also need a bigger down payment if the property appraises for less than the purchase price.

13.        Insurance – Lenders require fire and hazard insurance on the replacement value of the structure. Flood insurance will also be required if the property is located in a flood zone. In California, some lenders require earthquake insurance on condominiums.

14.        Signing - During this step, final loan and closing documents are signed.

15.        Funding - At this point, the lender sends a wire or check for the amount of the loan to the closing company.

16.        Close of Transaction – Documents transferring title will now be recorded with the County Recorder.

17.        Buyer Begins Making Mortgage Payments

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PFC – Prepaid Finance Charges (APR items)
S – Seller Paid
F – FHA Allowable
POC – Paid Outside of Closing

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Credit scoring has an enormous impact on a borrower’s ability to purchase a home. It can mean the difference between getting a good interest rate and the home of their dreams, or whether they even qualify at all. For this reason, it is important for borrowers to understand the credit scoring process, and to know what their credit score is when they look to obtain mortgage financing.

What the credit scoring model seeks to quantify is how likely the consumer is to pay off their debt without being more than 90 days late on a payment at any time in the future. Credit scores can range between a low score of 350 and a high of 850. The higher the client’s score is, the less likely they are to default on their loan. Only a rare one out of approximately 1300 people in the United States have a credit score above 800. These are the slam-dunk clients that walk away with the best interest rates. On the other hand, one out of eight prospective home buyers are faced with the possibility that they may not qualify for the loan they want because they have a score between 500 and 620.

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