Index

accounts, establishing appropriate, 34–35

adjustable-rate mortgage (ARM), 13, 21

vs. fixed, 145–150

vs. hybrid, 148–149

administration fee, 185

AIG, 9, 13

“Alternative A,” 6, 7–8

alternative credit, 32–34

alternative documentation loan programs, 107–108

alternative loans, 6, 7–8

appraisals, 75–79

code of conduct, 113–116

costs, 116–117, 163

management company, 116–117

relationship changes, 117–118

saving costs and, 164–165

approval, from AUS, 91–93

assets of borrowers, 85–86

for down payment money, 190–191

attorney fees, 166

authorized user, 30

automated underwriting system (AUS), 25, 74–101

automated double-check, 90–91

borrowers, 82–86

documentation, 89–90

getting to yes, 91–93

loan application ready for, 87–90

loan officer’s knowledge of approval process, 128–130

property, 74–82

required items from, 93–95

available credit, credit score and, 27

bad loans, original lender repurchase of, 22

bank sales of loans, 3, 17–18

Bankrate.com, 131

banks in mortgage industry, 103–104

regulation, 119

reserve requirements, 176

shopping for best rate, 106–108

best rate, shopping for, 106–108

bond loans, 71–73

bonds, for mortgage investors, 9

borrowers

assets, 85–86

income verification, 82–85

“bulk” sales, 20

cable TV companies, 32

caps for adjustable rate mortgage, 145–146

clean title, 82

closing account, credit score and, 28–30

closing costs, 161–166

fee disclosure, 166–179

gifts for, 188–189

lender payment of, 186–188

money for, 186–193

negotiable, 162–164

nonnegotiable, 165–166

regulations to prevent surprises, 167, 171

retirement accounts for, 189–190

seller payment of, 80

closing fee, 165

negotiating with lender, 183–185

code of conduct, for home valuation, 113–118

commitment fee, for locked-in interest rate, 179

commodity, mortgages as, 19–20

comparable properties, availability, 76

comparative market analysis (CMA), 198–199

condominiums, PMI policies and, 99

conforming loans, 21

contract rate for negative amortization loan, 149

conventional loans, 21–22, 135–142

cosigning for, 145

vs. FHA loans, 136–139

cosigning for conventional loans, 145

credit cards, 32

“credit default swap,” 9

credit guidelines, 14

credit report

costs, 163

impact of foreclosure, 198

credit score

alternative credit and, 32–33

available credit and, 27

changes to underwriting, 25–26

changes to underwriting in regard to, 35–37

closing account and, 28–30

FHA loans minimum requirements, 63

importance of, 41

length of credit history, 30

limiting credit inquiries, 30–32

payment patterns to improve, 26–27

for private mortgage insurance, 98–99

repairing, 37–38, 208–210

short sales impact, 201

types of credit, 32

credit, underwriting requirements, 33

credit unions, 102

debt ratios, 83–84, 93, 100

declining market, 79–80

defaulting on loans, 25

Department of Housing and Urban Development, 3

website, 136

Desktop Originator, 88

Desktop Underwriter, 88

disclosure requirements, for yield spread premiums (YSPs), 120–122, 124

discount point, 163

document preparation fee, 166

documentation, 156–159

from Internal Revenue Service, 158–159

for short sale, 198–199

down payment, 2, 161–162

FHA loan limits on sources, 143

money for, 186–193

and mortgage options, 135

drive-by appraisal, 164

employers, mortgage assistance from, 191–192

Equifax, 25

escrow fee, 165

escrow for tax and insurance payments, 136

Experian, 25

Fair Isaac Corporation (FICO), 25

Fannie Mae (Federal National Mortgage Association; FNMA), 3–4, 8, 88, 130

Federal Emergency Management Agency (FEMA), 165

Federal Home Loan Mortgage Corporation (FHLMC; Freddie Mac), 4, 18, 88

Federal Housing Administration, 3

Federal National Mortgage Association (FNMA; Fannie Mae), 3–4, 18, 88, 130

FHA loans, 3, 58–68, 143–145

closing costs, 62–63

vs. conventional loans, 136–139

and cosigners, 145

down payment, 130

limits, 61–62

market share decline, 12

minimum credit score requirements, 63

MIP refunds, 59–60

reverse mortgages, 63–67

first-time homebuyer

defined, 139

mortgage insurance as tax deduction, 100–101, 139

reserve requirements, 86

fixed rate loans, vs. adjustable, 145–150

flood certificate, 165

floor/ceiling cap for adjustable rate mortgage, 146

“flow” selling, 20

for sale by owner options (FSBO), 196–197

foreclosed government loan, 22

foreclosure timeline, 196–198

4506-T IRS form, 158–159

401(k) plans, for closing costs, 189–190

Freddie Mac (Federal Home Loan Mortgage Corporation; FHLMC), 4, 18, 88

fully indexed rate for negative amortization loan, 149

funding fee, for VA loans, 135, 142

GI Bill, 4

gifts

for closing costs, 188–189

for down payments, 144, 188–189

good faith estimate (GFE), 124, 166, 167

interest rates, 175–177

new form, 172–174

new language in, 171, 175

sample, 168–170

government-backed loan programs, 21–22, 71–73, 134–135

appraisals for, 164

government grants, for down payment money, 192–193

Government National Mortgage Association (Ginnie Mae), 17, 18

government-sponsored entity (GSE), 4

Great Depression, 2–3

guarantee fees, for USDA loans, 69–70

GUS (government underwriting system), 88

“hard” credit inquiries, 31

high-cost area, 24

Home Affordable Refinance Program (HARP), 204–206

home loans, organizations issuing, 102

home ownership, federal government push for, 8

home prices

appreciation assumption, 12

deterioration, 13

Home Valuation Code of Conduct (HVCC), 113–118

HUD, 3, 136

HUD foreclosure sale, 22

hybrid mortgage, 13, 147–148

vs. adjustable, 148–149

identity theft, 29

impounds, 136

income verification, 82–85, 157–158

index for adjustable rate mortgage, 146

inflation, Fed Funds rate and, 176–177

inspection fees, 163–164

insurance

escrow account for payments, 136

for mortgage banks, 9

see also mortgage insurance

interest paid, loan terms and, 151

interest rates

comparison, 177–179

fixed vs. adjustable, 145–150

getting quotes, 178

on good faith estimate, 175–177

locks, 180–182

interim cap for adjustable rate mortgage, 146

Internal Revenue Service, documentation from, 158–159

Internet, and locating loan officers, 131

investment properties, 41–42

IRAs, for closing costs, 189–190

IRS form 4506, 90–91

IRS form 4506-T, 91

It’s A Wonderful Life (movie), 17

“jumbo” loans, 5, 21, 24, 153

appraisals for, 164

junk fees, 185–186

“kiddie condo,” 145

late payment, report to credit bureau, 196

lender fees, 162

lenders, communicating with, 207–208

liens, 81–82

lifetime caps for adjustable rate mortgage, 147

liquid assets, 86

list to sales price ratio, 80

listing agreement, for selling house, 198

listings, 79

loan level pricing adjustment (LLPA), 38– 41, 106

Loan Prospector, 88

loan terms, 150–151

loan to value (LTV), 40

locking in interest rate, 179, 180–182

manual underwriting, 87

margin for adjustable rate mortgage, 146

market conditions report, 78

market value, 78

marketability of property, 76

maximum loan limits, 5

changes to, 23

monthly payment schedules, 212–217

mortgage

bank sales of, 3, 17–18

changing terms to gain approval, 92

comparisons, 177–179

documentation, 156–159

loan limits, 153–156

loan modifications, 202–208

loan terms, 150–151

monthly payment schedules, 212–217

as top-tier credit account, 32

see also specific types of mortgages

mortgage banks, 102, 104

advantages of, 126–128

vs. mortgage brokers, 111–113

regulation, 119

mortgage brokers, 10–12, 14, 102–103, 104–113

fees, 107, 164

licensing, 118–119

vs. mortgage banks, 111–113

Mortgage Guaranty Insurance Corporation (MGIC), 96

mortgage insurance, 90, 135

avoiding, 138–139

down payment and, 136

FHA requirement, 137

mortgage loan officers

finding good, 128–132

national registry for licensed, 118–120

new licensing rules, 120–125

mortgage market

changes, 1–2, 134–135

history, 2–5

original lender repurchase of bad loans, 22

negative amortization loan, 11, 149–150

Nehemiah Corporation of America, 60

net sheet, 199

nonconforming loans, 21

nonlender fees, 162

nonliquid assets, 86

nonrecurring fees, in closing costs, 162

nonwarrantable condos, 107

notice of default, 196, 206

Office of Housing and Economic Development, 23

origination fee, 107, 163

overtime income, 84

part-time income, 84

payment option arms, 149–150

payment patterns, to improve credit score, 26–27

payment problems, 195

percentages, and best rates, 106–108

piggyback loan, 140–142

to avoid jumbo rates, 153–155

points, 106–107, 121

portfolio loans, 156

prepayment penalties, 152–153

price of property, appraisals and, 76

principal, interest, taxes and insurance (PITI), 98–99

print media, interest rates listed, 179

private agencies, to buy and sell jumbo loans, 24

private mortgage insurance (PMI), 95–101

processing fee, 164, 185

property issues in AUS, 74–82

appraisals, 75–79

declining market, 79–80

seller concessions, 80–81

title report, 81–82

property taxes, fees for monitoring, 164

rapid rescore, 209

rate and term modification, 202

real estate agents, sales commission costs, 196

real estate investors, new rules, 43–44

Real Estate Settlement Procedures Act (RESPA), 122–124

rebates, 122–123

recording fees, 166

recurring charges, in closing costs, 162

refinance mortgage, 7

AUS for, 94

locked rates and, 181–182

qualifying for, 202–203

regular savings account, as alternative credit, 34–35

rental properties, 41–42

reserves underwriting guideline, 86

Residential Funding Corporation (RFC), 5

retail mortgage company, 104

retirement accounts, for closing costs, 189–190

reverse mortgages, 63–67

cost of, 67

qualifying for, 65–66

rotating wheel for appraisals, 116–117

savings and loans, 102

Scorecard, 88

second mortgage lien, 140–142, 192

secondary market for mortgage loans, 3, 17

growth, 5–6

lending guidelines, 19–21

secret ratio, for available credit, 27

securities, for mortgage investors, 9

self-employed, 85

income verification, 158

seller-assisted FHA loans, 144

seller carrybacks, 192

seller concessions, 80–81

closing costs payment, 187

short sales, 198–202

being buyer in, 201–202

impact on credit, 201

reasons for request denial, 200–201

“soft” credit inquiries, 31

stated documentation loan, 159

stated income loans, 15

states, mortgage brokers’ licensing, 118–119

stock market crash, 3

subprime loans, 6–15

super-conforming loans, 23–24

tax deductions, mortgage insurance and, 100–101

tax service, fees, 164

taxes

escrow account for, 136

mortgage insurance and, 100–101, 139

teaser rates, for ARM, 148

temporary withdrawal, from 401(k) plan, 190

terms of loan, 150–151

third-party originators, 100

time of day, for interest rate quotes, 178–179

title insurance, costs, 166

title report, 81–82

TransUnion, 25

underwriting

changes impacting credit scores, 35–37

fees, 164

guidelines, 5

U.S. Department of Agriculture, loan program, 68–71

utility accounts, 32

VA loans, 47–58, 142

eligibility for, 47–51

funding fee, 135, 142

jumbo loans, 55–56

loan limits, 54–55

qualifying for, 51–54

rules removing stigma, 56–58

verbal verification of employment, 157

W-2 form, 83, 157, 158

Wall Street, 9

warrants for loan, 19

website

Department of Housing and Urban Development, 136

for interest rates, 149

wholesale mortgage company, 104–105

income to broker from, 120

rate sheet, 106, 107

workout department of lender, 199–200

yield spread premiums (YSPs), 184–185

disclosure requirements, 120–122, 124

negotiating, 125

zero-down mortgage loans, 4, 68–71, 99