Your Mortgage File

Traffic Dos and Don’ts: A Checklist

We all blog to fulfill the desire to be read and respected. I thought these tips could benefit us all.

WordPress.com News

One of the main reasons bloggers stop blogging is lack of traffic: at some point, they get tired of being the proverbial tree in the forest, making sounds nobody hears.

We’re here to help. No list of advice can guarantee your blog’s success, but it’s important to be aware of the most critical elements at play. Five dos, five don’ts: give them a try.

Dos

  1. Write regularly. Producing fresh content on a regular basis is essential. First, it makes your blog more appealing to search engines, which means new readers are more likely to find you. Just as important, it creates a sense of loyalty among the readers you already have, who know you won’t be stranding them for weeks at a time.
  2. Write well. What makes a post engaging, moving, or entertaining is clearly a matter of opinion. What’s not a matter of opinion? Correct spelling…

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Your Mortgage File

Regulating irrational expectations | REwired

Regulating irrational expectations | REwired.

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Your Mortgage File

A Drive Called Spartan

A Drive Called Spartan

I share information on this blog to create awareness around the mortgage process.  It’s mostly technical.

I feel compelled to write about another aspect of home ownership — neighbors.

The storm that hit the Black Hills of South Dakota on October 4th, 2013  caught everyone off guard, even mother nature.  Heavy fall snow fell early that night.  I slipped off to bed expecting to wake up with 10 to 14 inches.

Instead, I woke at 4 a.m. to deafening silence. Our fan was off.  No lights, no heat.  The electricity was out.

I gazed through the window at a blizzard of white snow.  Even this early, with sunlight hours away, one could see as though there were a full moon.  I felt it would be worse than predicted.

Hours later we stepped outside.

It sounded like open hunting as limbs cracked and popped under the load.   The street became a meeting area as neighbors gathered to survey the situation.

Every few minutes we’d say, “There goes another one.”

The trees, still full of leaves, had boughs bent low.  They hung ominously over roofs, cars, and power lines. It was only a matter of time before electricity ceased for over 25,000 people.

The snow grew deeper into the evening and the temperature dropped — heat became a worry. We sat in the car, my wife and two girls, warming up and charging the cell phones. We called parents and discussed options but the last thing we wanted to do was venture into the blizzard.  We concluded it was time to light some candles, gather blankets and huddle together for the evening.

That’s when our neighbor’s son, who on a visit, marched across the snow and banged on our door.

“Let’s go,” he said. “You’re staying with us tonight.  We have a natural gas fireplace and stove. We have heat.”

I am a proud, independent spirit. But this was no the time for bravery, especially with two small girls.

“Ok,” I said.

“Seriously. You need to come.”

So, we hauled our stuff through the two feet of snow to a warm house and even warmer people.  Their hospitality was storybook. They cooked us a warm meal and engaged us in conversation until we felt as though they were family.

We slept soundly and unconcerned. Let it snow.

And snow it did. Yet another foot and a half.

The following morning it stopped and the work began.  The neighborhood, half still without power, once again met in the street.

There were shovels and snowblowers, adults and children, and a whole lot of child laughter. We had over forty inches of wet, heavy snow to move.

After five hours we had cleared ten driveways. Our motivation: Broncos vs. Cowboys.

The guy on the corner owned a pizza shop that never lost power. With the roads partially clear, he slipped down and baked some pizza.

With the work done we congregated, 20 people strong, into one house where the real warmth radiated from the souls of the people who banded together in a time of need.  How proud I was at that moment to be part of a neighborhood that cared for each other, that offered what service they had for the benefit of those in need.   That was, and is, a drive called Spartan.

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Your Mortgage File

Questioning Cattle Deaths in South Dakota

Pretty Work

I’ve been reading through blog posts about the aftermath of last weeks winter storm in South Dakota.  I came across a couple of news articles on CNN and NBC News sites.  And then I did something I never, ever should have done.  I scrolled down to the comments section.  Word of advice: Do Not Scroll Down to the Comments Section.  Ever.

It’s not a nice place.  People are very nasty there.  It made me sad and mad and dumbfounded.  There were so many accusations  comments from so many people who very clearly of little to no understanding of ranching or livestock.  But boy oh boy, do they have opinions!

Everyone is entitled to their own opinion and I am not here to try to change anyone’s mind, this is after all, a free country.  All I’m asking is that you try to base your opinions on facts and not assumptions…

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How It Works, Your Mortgage File

Homeowner’s Insurance Claims

Here are some photos of a recent storm that dumped over 40 inches of snow on our communities.

lead-south-dakota, lots of snow, deep snow

Storm

This fall storm caught mother nature off guard.

The trees hadn’t dropped their leaves and the wet, heavy snow wreaked havoc. Only a few hours into the storm and it sounded like hunting season.  Popping echoed everywhere as branches collapsed under the weight.  They landed on the sidewalk, roofs, cars, and across power lines.  Over 25,000 people lost power. Some for days.

Our neighbor’s roof buckled under the weight and a failing roof truss split the sheet rock .

Another noticed a sagging, brown spot on the ceiling.  A few days later contractors punched holes there and drained three gallons of water.

Flat commercial roofs collected thousands of pounds of weight.  This structure wasn’t up to the challenge.

TMone

Only months earlier, hail stones like these punched holes in roofs and shattered glass.  They dinged siding and destroyed gutters.

hailstones

Home damage sickens us.  We’re much happier shoveling snow than working with contractors and insurance companies.  Not to mention  tangling with our mortgage servicer over insurance money.

When you have a lien on your property the lender has a vested interest in making sure your home gets repaired.

Why?

Let’s say your roof caved in and three foot of snow now rests in your kitchen. To top it off, it melts and drips through your sub-floor creating a swimming pool in your basement.

You are uninsured, owe a significant amount on the home, and don’t have savings to cover the damage.

So, you default and walk away from the home leaving the lender with a soggy, worthless piece of collateral.  A lose, lose.

Now, let’s say you are insured.  Your insurance company will foot the bill.  Better news, you’ll be getting a new kitchen!

But, the check is made out to you and your lender which disgusts you.  They need to endorse it in which case they’ll hold the money.

Contact the servicing department right away.  Ask them what steps you need to follow.  They’ll want all kinds of information like a contractor estimate, lien releases for work complete, and inspections.

Be patient with them, especially if they are responsive and good natured.  Like you, they are protecting their collateral.

Do they have a right to hold your money? 

Most mortgages have a clause that allows the lender to control these proceeds.  You are better off learning what their expectations are upfront to avoid frustrations down the road.

In any event, button up and stay warm this winter.

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How It Works, Loan Application

Government Shutdown

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Hello all,

I disappeared for a while, and it shows.  It’s October already!  Work took off and I lost sight of my blog. I’m 12 days late on this post but I thought I would share some of the issues we are seeing with the shutdown:

The IRS is working with only 9% staff. This effects the ability for us to pull tax transcripts. 

Since 2009, Fannie Mae ‘highly recommended’ that lenders pull transcripts from the IRS prior to closing a loan.

What’s a transcript? 

After you file your taxes the IRS turns your income information into an electronic record which can be requested with the borrower-signed form, 4506-T.

Why do we pull a transcript? 

When you complete a loan application, you typically give your loan originator a copy of your tax return by which she calculates your income for qualifying.  It would be possible to give them a fake, unfilled tax return with ’embellished’ income.  To prevent such fraud, we pull the IRS record and compare it with the return you provided.

It’s not required to do this, yet we know Fannie Mae will do it if they audit that loan. To avoid any issues, most lenders have adopted the policy of ordering and reviewing tax transcripts.

http://www.ctne.ws/archives/266

Several days into the shutdown our institution made a business decision to close loans without these transcripts as did a number of other investors.  There are some; however, that refuse to purchase a loan without transcripts and that’s their choice.

USDA is closed. 

The U.S. Department of Agriculture insures loans through their Rural Development program. These loans are currently suspended.

Why?

USDA issues a ‘conditional commitment’ once they receive certain pieces of information.  With no one to issue a conditional commitment, loans are unable to close.

Verification of Employment 

We’ve seen several instances were we have been unable to obtain a verification of employment for government workers. In come cases we can get around it.  There have been instances were getting this information was painfully slow and the closing was delayed.

Business as usual:

For the most part, we have been conducting business as usual with very few delays.  For those of you affected, as frustrating as it is, don’t blame your lender or financial institution.  We are as annoyed as you are with the situation. We are doing our best to work around the issues.

Photo credit: Nick Papakyriazis via photopin cc

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Your Mortgage File

The Power of Introverts: Susan Cain

Thought this was so true

Webclout

The Power of Introverts: Susan Cain

Published on Mar 2, 2012

http://www.ted.com In a culture where being social and outgoing are prized above all else, it can be difficult, even shameful, to be an introvert. But, as Susan Cain argues in this passionate talk, introverts bring extraordinary talents and abilities to the world, and should be encouraged and celebrated.

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Mortgage Philosophy, Your Mortgage File

Should I Omit Information? Is that Fraud?

Is it Fraud

Is it Fraud

A discussion on ethics grew heated between several staff members a short while ago.

 

Ethics are subject to the scenario in which they apply.  Omitting pertinent information from a loan file is considered fraud, but what if you are omitting information to help make the process smoother for the borrower.

Example: A borrower has a few overdraft charges on his bank statement. It’s clear from other accounts that he has the ability to save money and this appears like a simple mistake.

Overdraft charges, however, are considered a red flag to an underwriter. Questions crop up:

Does this potential borrower have the capacity to budget for a mortgage payment?

Do they mismanage money?

Will this affect their ability to make timely payments?

His loan is otherwise flawless.

Do you omit the bank statement and ask his bank to prepare a verification of deposit (which only shows the current and average balance)?

In this case, you would be omitting any evidence of an overdraft.  You won’t have to bother the borrower and the underwriters won’t ask questions.

Do you address the overdrafts upfront but asking the borrower to explain them?

As intrusive as this is, you are also lending them a lot of money.  Shouldn’t they be asked about the overdraft and required to explain it?

In life, don’t we all judge these situations on the margin?  What are the risks?   Is it to great? Will it be construed as fraud? Is it harmful?

photo credit: JD Hancock via photopin cc

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Quick Tips, Your Mortgage File

Quick Point #1 Co-Signer vs. Co-Borrower

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Mortgage Quick TIp

Co-signer and co-borrower are not synonymous.  There is a difference.

A co-signer is responsible for repayment of the mortgage note but otherwise has no ownership interest in the property.  While a  co-borrower is also responsible for the debt  they do have ownership interest in the property. This means they are on title to the home.

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Disclosures, How It Works, Your Mortgage File

The Right of Rescission

Three weeks ago, one of our borrowers exercised the right to rescind.

Most will never exercise this right but should be aware of the details in the event it is needed

The right of rescission applies to several different types of credit, but for our purpose today, I’m referring to closed end credit “in which the security interest is or will be retained or acquired in a consumer’s principal dwelling” (FIDC§ 226.23). In other words, the refinance of your primary residence.

What is the right or rescission?

The right to rescind allows each “consumer whose ownership interest is or will be subject to the security interest” the right to rescind or cancel the transaction. If, after signing your mortgage documents, you desire to cancel the transaction, you have until midnight of the third business day to do so.

When you sign your loan closing documents, you will receive several copies of the right to cancel. I’ve posted a copy to the right. It outlines your right and how to cancel should it be necessary.

Why would you cancel?

I’m sure there are many reasons although in my ten years I’ve witnessed it only twice.

Why?

First off, the process of refinancing can take several weeks, if not months. This leaves plenty of time to determine whether or not refinancing is the right decision. Most will cancel well before consummation of the loan.

Second, regulations require lenders to disclose early on and then obligates them to those charges –within certain tolerance. The right or rescission was intended to provide an escape when a borrower found themselves in a bait and switch – were the terms in the beginning are different than at the closing table.

What happens now that you have rescinded?

Within 20 calendar days after receipt of a notice of rescission, the creditor shall return any money or property that has been given to anyone in connection with the transaction and shall take any action necessary to reflect the termination of the security interest.

In most cases, your lender will require you to wait the three days before they fund the loan. In other words, they will not payoff your previous lender or record the mortgage. The transaction simply dissolves, no questions asked.

Below is a link to the regulation that outlines this right.

FDIC. Law, Regulations, Related Acts § 226.23 Right of rescission

<http://www.fdic.gov/regulations/laws/rules/6500-1400.html >
photo credit: thinkpanama via photopin cc

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