continued from Credible Lenders/brokers PART 1


Christine,

i got my fico scores today, mine was 659 and my spouse's score was 687, unfortunately i was told by a mortgage banker that i could not get a loan in the prime market because of the fed tax lien, and have not established new credit since the bk. i thoughed all this was reflected in the fico scores and that was the last word. i am in the process of verifying this. i saw your request about the 1003 form. i have one in word that i modified and enhanced. i will also send you the web site for a word and pdf file version. i have alot more to say later.


analyst/bob

Bob, you should have THREE scores, one for each report, and while 659 is VERY high for no credit after bk and a tax lien, it's low for a mortgage.

Much appreciate any leads on the 1003!

Christine,

my three scores are 636,659,681and my wife's are 683,687,688.
i don't understand your statement about the scores being high, but low for a mortgage. please clarify. the mortgage banker classified me as a C borrower. i don't understand the mismatch between the scores and the C classification. he's talking about a loan of 10.25%+ 1 point and a refi in 2 years. sounds very expensive. i need to verify this with other brokers/lenders. i will send you info about 1003 tonight. i didn't have it on my laptop.


analyst/bob

Bob, your scores are high considering your credit: "the fed tax lien, and have not established new credit since the bk."

I'm thinking there must be SOME good accounts to give you scores of 636,659 and 681.

Unfortunately, lenders usually pick the lowest score to rate.

"i don't understand the mismatch between the scores and the C classification. he's talking about a loan of 10.25%+ 1 point and a refi in 2 years."

That's pretty steep, did you get a decline through automated underwriting? It should give you the specific reasons.

What happened with World Savings?

Something doesn't sound right here. I just did a loan for a couple with a 618 middle score. 80% LTV Cash out refi. FHLMC rates. I think somebody is being lazy and trying to push you into a more profitable loan.

First I question who is the "Mortgage Banker". Just because they call themsleve a "Banker" doesn't really mean anything. Many Mortgage Bankers are really just subprime lenders.

I would want to know if they ran yoru file though DU or LP. If so, they sshould be able to provide you with the findings. I would wage to bet that LP mgiht come back at "A-" or FNMA may come back at Level 1-3. Even worst case, your file could be run through RFC's Asset Wise. With those score's I would think there would be a better solution.

My guess is the program you are being offered is a 2-3 year Fixed that changes to and ARM. The reason they state that you can refi in a couple of years is that is when the pre-pay penalty is up.
Find out if the loan has a PPP. In CA on ARMS the penalty is generally 6 months interest on 80% of the balance. Pretty steep!

If they are brokering you're loan find out who the wholesale lender is. I should be able to get a copy of the rate sheet and could verify what you are being told.

Christine,
The general rule of thumb is to take the middle score of the primary wage earner. However ,there are some lenders that will average the two. For Jumbo Fixed it generally require a middle score >660. Seen Conforming deals under 600 scores and done FHA with no score and down to 525 if score available.

With this high of score something isn't right. Either all info has not been disclosed or a lender may be playing games.

CHRISTINE,

i retained 3 accounts after bk, amex, pennies,and macy's, all are in good standing, no derogs in 24 months. mortgage banker used middle score for automated underwritting. it was kicked out, don't know if that is considered a formal denial. the reasons were, no new credit established after bk. current fed tax lien, and my name is not on title, it wasn't my inheritance. i suggested world savings, he said he does business with them, he said he knows underwritting guidlines very well, he said i would be denied. i told him that i previously discussed credit with world underwritter and underwritter told me they don't use fico scores and they don't care what your credit was like prior to 2 years as long as there are no derogs in past 2 years. i told them about current fed tax lien and complete credit history and ratio's they said they did not think that i would be denied. i asked the mortgage banker to contact the world underwritter for clarity. he did not want to do that. i will contact them tomorrow. my loan is not a jumbo loan. he also expressed surprise that my credit scores were so high, given my credit history. i sent you email with original 1003 word doc, and search page. will send my mod version.


analyst/bob

Bob, thanks for that mail with the 1003s. I've been so busy, haven't been able to try them out. Am basically looking for something that's "idiot proof." I.e. am hoping I'm not going to get a bunch of mail from readers asking how to use it after I link from the loan shopping page.

I don't understand the decline for no new credit if you have 3 accounts. I've always recommended more accounts, but obviously the scores give you credit for what you've got.

Strange though that the tax lien doesn't lower the scores more, very odd really. Did you get your 4 reasons for each score explaining why they weren't higher?

Also, I'd check with World directly again.

And thanks Don, appreciate your clarification on the scores! When I quit brokering, lenders would decline anything under 680, apparently a few things changed for the better.

Christine,

do you have don semler's phone/fax no. i tried his web page, it appears to be under construction. i e-mailed him twice, first one could not be delivered, i think there are server problems.

bob/analyst

Try don@aimloans.com, his web host went out of biz, so the site's moving. Sorry, don't have a # for him.

I just took a couple of hours to go through the links Analyst sent me. MOST were for on-line mortgage applications - I do NOT recommend those because you don't get a copy of what you submitted.

AND, before you apply with any lender/broker, you should check your credit and be aware that EVERY application will MOST LIKELY result in another inquiry on all 3 of your credit reports.

DO read the Loan Shopping page.

The best link I found has the downloadable 493kb 1003 program that does all computations for you, and you can email it.

I downloaded and installed it - it worked great in my little test drive. Of course it says "Commercial Mortgage" on the app, but it's perfect to practice and shop:

http://www.commercialmortgageyes.com/1003cmy.exe

Downloadable .pdf Adobe Acrobat file for printing and snail mailing/faxing. I know there are Adobe forms that can be filled in, so I tried, but couldn't get it done:

http://www.net-rich.com/loanapp.pdf

This is probably the same as the Commercial Mortgages software above, but without a mortgage company name. $29.95

http://www.1003.com/

I also looked at FNMA, you'd think they could provide a FREE 1003 program, not so.

Any feedback on the above links or links for other FREE 1003 software are greatly appreciated!

Don or anyone else,

I am planning on purchasing a house early next year. My scores are not great (>620 FICO on all three), but I am paying my revolving balances down, so that should help some in the months ahead. I also have several new accounts opened this year hurting my reports. I have no BKs, chargeoffs, liens, etc.
Is FHA my best bet for a low fixed APR? I have seen some 6.00% rates with 1 or less points. Thanks for the assistance.

MikeB

Mike,

The answer depends on how much you are putting down. 30% down w/ a 620 score goes right through.

3% down, Not conventional, probably FHA.

Also, no FHA deals a 6% 1 pt on 30 yr terms, maybe on 15, however, i'm not a 15 year fan for you first home. You'll most likely only be in the home 4-8 yrs.

Let's get some real #'s, How much do you make per year?
What are the mininum monthly payments on you credit bills?
How much down? What price home? What state and county(need to check FHA limits)?

Also, APR is a total waste to try and compare loans due to the fact the MI or PMI screw these up. There are better ways. Rate, Total cost, term, etc

I saw soem broker posting a 6.5% 30 yr fixed rate with an APR of 5.790%. Impossible!!

Be happy to help.

Don

Don, actually I found those 6-6.5% rates on the rate search page from your site for 30 year FHA loans. Maybe I looked at it wrong. Anyway, I am looking at a 3-5% downpayment.
There are a couple of local banks that offer 5% down mortgages, but I have not checked the rates lately, and I don't know their credit requirements.

My credit scores are low at the moment, but I think I can improve them by early next year. Right now I have 4 credit cards reporting with high utilizations. I BT'ed most of the balances to a card with a high credit limit to balance out the ratios, but I still have a couple to go. Also, I have two new credit cards, and I just closed two credit cards that were 6 months old that I was unhappy with. I will have to wait awhile to see what effect that has on my scores.
As far as deliquiencies go, my worst report is EQX with 4 late accounts (three 60s) from 1 to 4+ years old. I have two 2+ year old lates on EXP and one 5 1/2 year old late on TU. No BKs, chargeoffs, liens, etc.

I am planning on looking for a house early next year, and I will shop around and check back with you at that time. Thanks.

Mike

Don, actually I found those 6-6.5% rates on the rate search page from your site for 30 year FHA loans. Maybe I looked at it wrong. Anyway, I am looking at a 3-5% downpayment

I'm not sure which site you went to but my www.aimloans.com site does not post rates for FHA. Only Conventional.

I think you might be overly concerned about your credit. Particullary if you are going FHA. You don't get a better rate if you have a higher score. Based on what you mentioned, i don't see any problems.

Also, you might consider making your move earlier if possible.

Today was a very ugly day in the the mortgag market. One of the worst in several years. As an example, if a rate was at 0 pts at the begining of the day, it was at a cost of .75 by the end of the day. This translates to .25-.375 higher on the rate!!

This is on top of other moves all week, all higher. On a relative baiss rates are still great, just not as great as a couple of weeks ago.

Don, I clicked a link from metloan.net. I guess this is your old website? Anyway, the URL is http://www.amo-mortgage.com/texas/r...13&ptrange=-2.5

There were some 6.00% low points 30 Yr fixed FHA loans just a few days ago. Now, it appears they have went up since then...figures. That's my luck :-(

One question for the expert. What does negative points mean? You get money back at closing for accepting a higher APR with negative points or something? Just wondering. Thanks.

Houses are expensive in my area (to me anyway), so unfortunately, we have not found one that we like in our price range yet. Maybe I should just find a better paying job....

Thanks.

Christine,

i am glad you had more time than i did to check out all the forms on the link. i checked out the commercial mortgage form and it appears to be better than the word form that i used. i have been busy lately, don semler is working on my FHA loan. i will update you on the progress. i have learned a lot since i originally started this process. guttentag does a good job of educating, but in my opinion the upfront mortgage list of brokers was a disaster, most did not even respond. i found don on your web site, this in itself makes a very important point. you have probably considered this already. bayhouse could provide a very important service of qualifying and listing upfront mortgage brokers for a small fee. your qualification criteria would represent the borrowers interest, your checks and balances would insure that borrowers would be able to shop for the best rate and terms and service available, and you could incorporate some of your other services into the package. you already have the credibility. anyone who reads your site knows this and you deserve to be compensated. you and i both know that no one represents the borrower. there is a divide between the lender/broker and borrower and you could bridge that gap. i was at the point of dealing directly with the lenders. i did not see any benefit in paying a broker a fee when we did not agree on the fundamentals. why pay for someone who would not do battle for your benefit. borrowers are looking for someone who will find a way to go around ridiculos rules. they don't want to hear, well thats the rule. some of us already know the rules. we want to be treated by the broker like a good friend or relative is treated. i have a friend at work who is getting this treatment from a long time family friend and broker. i am not amazed at the strategies or solutions that he has developed. i expect the same.


bob/analyst

Bob, thanks for the update.

I couple of things I want to clarify. You actually do NOT pay a broker a fee resulting in a higher cost than if you go to a direct lender. At least that's the case if your broker is honest and doesn't overcharge you.

The LENDER pays the broker, or offers a lower rate to the broker than to the general public.

That's because the broker does a lot of the work that the lender would have to pay the loan agents and processors for. I think there should be extra compensation to a broker who goes the extra mile to make a difficult deal work.

And I actually did list brokers at BayHouse once, around 96 or so. The problem was that the brokers were very new to the net and also very cheap.

I was trying to get them to sponsor up to date info on MCC/CFHA and other first-time buyer and low income programs. The constantly changing rules/limits/available funds were a challenge to keep up with.

And of course the government employees at the various counties were a pain in the ass to deal with. There were a few exceptions, but for the most part NO cooperation. I gave up after a while. And I've never seen another site that has comprehensive info - if anyone knows of one please post the link.

Another question is, how do ** I ** know who'll do a good job?

All I say is "Bill Bauer."

Qualifying really isn't easy, often it takes quite an effort to get through the BS. The forum works really good -- anyone looking for biz here knows that if they don't do a good job it'll most likely be posted.

There have been several brokers who posted a couple of times and left. It's a lot of work to post and of course they also get e-mails with questions.

If I made any money, I can think of LOTS of things to improve in the forum and at the BayHouse site in general.

The other forum/credit sites just add those annoying blinking banner ads - often to companies I've complained about with the OCC or FTC - and I'd rather shut the site down than do that.

Occasionally I do think about making money - just can't figure out how.