All Forum Posts by: Dana Anghel

@Brendan O. You can be a co-signer on two FHA loans, as long as you can show enough income to help them out.

Whatever you co-sign on, that payment will show up as your responsibility as well, and it will be considered into your debt to income ratio.

You will be liable for re-paying the obligation, so chose wisely who you co-sign for - if anything happens, your credit will be equally affected.

@Ed Wood Provident Funding is far from being the lender of choice, unless a loan is a cookie-cutter. I have not personally worked with them, but various loan officers have told me how they will knit-pick your loan to death (thou the pricing is very good).

It would not come as a surprise if they don't make any exceptions to their tight guidelines, but that has little to do with new regulation.

@Brianna S. Your interest rate you mean? Interest rates are chosen base on price and are affected by the origination cost (which is not necessarily disclosed)

For example, let's say:

4.375% would cost you 3,500

4.5% would cost you $500 in adjusted origination charges

4.625% would give you a small credit of $1,500 to go towards your other costs.

A lot of times what you will be offered is 4.5%, but this doesn't mean you don't have access to higher or lower rates, it will just cost differently.

With a lender that charges significantly less origination, 4.375% might only cost $500, and therefore be offered to you.

The new QM rule now imposes a cap on fees and points that can be charged for the borrower. This mostly affects brokers, as they have to disclose the origination amount (direct lenders don't have to), which will be included in the 3% calculation, along with title fees and everything else.

It does help protect borrowers from high charges, but not as much as you'd think. Many brokers have gone correspondent because of this, which will allow them not to disclose origination, and therefore still charge more.

A correspondent lender basically has a line of credit from a direct lender, it uses it to fund the loan, and them it sells the loan to the direct lender.

Make sense? Pretty much, for every new rule, there will be a way around it

And when shopping for a mortgage, the interest rate is not what really matters, it is the cost associated with it.

@Brianna S. From what I understood, it has something to do with the involvement of the government in the way Fannie Mae and Freddie Mac operate (the Federal Takeover of 2008)

As I was explained, the new DTI requirement will apply to private portfolio loans, but not to loans that will be sold to Fannie Mae and Freddie Mac (Conventional loans). I believe all the other government loans are also exempt, but don't take my word for granted. I'm basing my opinions on the fact that my lender could care less when the new rule came out, and I have not been notified of any major changes.

Nobody panic.

Neither Freddie or Fannie have changed DTI requirements in LP or DU, and both underwriting engines accept some loans with DTIs greater than 43%.

Both agencies have been granted an exemption from "pure" QM requirements for seven years or until they come out from under conservatorship.

You can always refinance the FHA loan to conventional. I suggest you do it while still owning the home as a primary residence, as investment properties can be more expensive to refinance.

You will need to show 75% loan to value on your home (25% equity) before refinancing to a conventional loan (this is a current requirement for 3-4 units).

You can have more than one FHA loan at the time, but there will be certain restrictions. For example, you will still have to prove something like having 75% loan to value on your first FHA loan, and have a letter of explanation on why you want to move (such as upgrading or relocating closer to work etc). You might also need to show 6-12 months of cash reserves on your first property. If you have a renter in stand by for your unit, that will also help prove to the FHA that you will change primary residences.

@Jimmy P. Is she trying to get cash-out from an investment property?

You can only obtain Conventional financing (Fannie Mae) when it comes to investment properties, and when it comes to foreclosures, they're pretty strict. 7 year wait for Financial Mismanagement and 3 year wait for Extenuating Circumstances (the second one can vary from lender to lender).

A deed in Lieu of Foreclosure/Pre-foreclosure Short Sale will have a shorter waiting period (like 3 or 4 years)

Another issue would be if she has also filled bankruptcy at the same time of the foreclosure - this would have further delayed the bank from repossessing the home. Either way, foreclosures are complicated legal processes and will sometimes take up to 3 years until the Deed is recorded into the bank's name.

Your friend should do a County Records property search to see when the bank actually took the home from under her name - this will be the date that the lenders will consider. If the home that was foreclosed on was an FHA home, it is possible to use the date when FHA actually paid the insurance claim.

Example: Just had a borrower that had bankruptcy exactly 3 years ago. His foreclosed home stop reporting on his credit report 3 years ago. But on a county property search, the bank actually took possession the end of September 2013! Lenders will make him wait he required amount of time from this date on.

You're saying that your friend has had a long term successful job for 7 years.. yet she has had a foreclosure in 2010. That for a lender, is not a sign of financial stability. Unfortunately, she will not be able to use her properties owned free and clear as collateral.

It is not so much the lenders that refuse to take the risk, it is Fannie Mae that will not purchase the loan unless it meets certain guidelines. And most lenders sell their loans to Fannie Mae, or want to have the option to sell them to Fannie Mae.

A private money lender seems to be the best solution for this problem.

Note that a government loan (must be a primary residence) would settle for a 3year waiting period (after the Deed to the home went into the bank's name..)

Lenders will have small variations, but for the most part, they have certain limits. For example, my lender would have allowed an LTV of 80% max. on an investment property purchase, but stops at 75% on refinance.

If your property is an investment property(1 unit), a cash-out will be limited to 75%LTV. If it is a primary residence, you are looking at 80%LTV.

It's hard to say about origination costs because they depend on a lot of factors, the most important being: type of occupancy, loan to value, credit score and type of refinance (cash-out is riskier and therefore more expensive).

What you need to compare from lenders is the adjusted origination cost (page 2 of the Good Faith Estimate, at the top, line A). Everything else is pretty much the same (title fees, daily interest etc).

If your credit score isn't 740+, aim for that, it will help a lot. But you want to have at least a 680.

Trevor, you are basically advising that the hard money loan be taken for purchase + cost of rehab?

For a rate and term refinance, the lender will pay off everything owned on the hard money loan (and other liens), as long as it doesn't exceed the allowed loan to value maximum, and as long as the borrower doesn't personally want cash-back.

Rate and term has better pricing than cash-out, so if the goal is to recover the cost of the rehab only, this is a good way to go about it.

Good advice to consider.

That makes sense. 3.5% downpayment vs 25% for a 4 unit.

Good luck with everything.

When you find a lender, see if they will put your loan through underwriting when pre-approving you. This will make your loan go a lot faster and eliminate a lot of the "surprise" document requirements ;)