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 Doug Covill  Monday, December 12th, 2011  Five goals – some specific, some far-reaching – have guided the leaders and staff of SAR this year as we all work to serve you, our Members. As you read through this brief review, you will see that we have accomplished a lot this year.
- Improve Communications
- Develop a Green Program
- Establish a 501 (c) 3 Foundation
- Increase Diversity in Participation and in the Leadership
- Continue Focusing on SAR as a Progressive, Evolving Organization
SAR’s new charitable foundation will be fully up and running in 2012. Kathy Fox led the task force and Charlene Singley now chairs the Foundation board. Kathy continues to serve as vice-chair.
SAR continues to be recognized for its charitable contributions. Allison Couchman and Jenifer Miller led the Community Outreach Committee. With fewer dollars to distribute, committee members shifted their efforts to developing relationships with the charities SAR Members support. Watch this newsletter every month to learn about the charities and how you can volunteer.
The CanTree Committee under Ilah Turner and Bobby Campbell put on the Crab Fest and Sip & Support and has just finished building two Can Trees. Twenty nine years and going strong! Thanks to their efforts, SAR has given more than $2 million to the Salvation Army.
Led by Sandi Burden-Bradley and Ted Williams, the Equal Opportunity Committee organized a highly successful Multi Chamber Mixer, with the numerous ethnic chambers of commerce in the Sacramento area. They also worked on strengthening our relationship with the Asian Real Estate Association of American, Realtists and the National Association of Hispanic Real Estate Professionals.
Continue reading: President’s Perspective – December 2011
Scott Short Thursday, October 13th, 2011
 The subject of investor overlays has been coming up a lot lately. A different angle may clear up some misunderstandings.
REALTORS® and buyers often bring up agency guidelines as if they somehow dictate lending policy.
Most people look at this backwards. They think that the agencies like FHA, VA, Fannie Mae, and Freddie Mac set underwriting guidelines and then lenders layer additional rules on top of this. In reality it’s the opposite. Understanding the reality of this dynamic will go a long way toward understanding “investor overlays”.
None of the agencies listed above dictate lending policy to mortgage lenders. Mortgage lenders develop whatever policies they feel offer the greatest return, while best managing the risk of the loans they make. If a lender wants to do a 100% LTV mortgage for a homebuyer who is being foreclosed on right now and just completed their bankruptcy, they are allowed to do that even if that buyer doesn’t have a job and has federal tax liens. On the other end of the spectrum.If a lender decided that they are only going to do loans with a maximum loan to value of 50% to borrowers with 800 credit scores, they could also choose to do this. Lenders are free to set whatever standards and policies they choose to set, provided that they do not violate any other laws pertaining to things like discrimination.
So let’s look at the actual roles of the agencies. While lenders set their own policies regarding the level of risk in relation to the return they are looking for, they must ensure that they are meeting FHA’s minimum standards if they intend to have the loan insured by FHA. In other words, FHA does not set the underwriting guidelines, but only the minimum standards under which they’re willing to insure those loans. Lenders are free to choose to set a standard that exceeds the FHA minimum.
Continue reading: Maybe This Will Help
Scott Short Wednesday, May 25th, 2011
Automated Underwriting Systems (AUS–when the computer underwrites the loan based on specific lender overlays) are unable to determine the existence of extenuating circumstances that resulted in a bankruptcy, foreclosure, deed-in-lieu, pre-foreclosure or short sale (ie: the computer cannot read written extenuating circumstances). If a client has appropriate documentation that these events occurred, the minimum time period has elapsed, and the program does not require an AUS decision, then the loan may be manually underwritten. (If your client is applying for a conventional loan; good luck finding a lender who will take on the risk of manually underwriting a loan). The loan must meet all manual underwriting requirements, including documentation, minimum credit scores and maximum loan-to-value.
To document the existence of extenuating circumstances, the loan file must include all of the following:
- A signed, written statement from the borrower’s third-party and documentation confirming that this was an isolated occurrence that significantly reduced the borrower’s income and/or increased their expenses
- No evidence that the borrowers had unacceptable credit prior to the problems
- Evidence that the borrowers have reestablished acceptable credit with at least four references for at least two years, including one traditional credit reference (an account that would appear on a credit report), and one housing related reference (e.g. a PG&E, SMUD or Comcast bill).
Note: If the derogatory information involved tradeline credit (an account that appears on your credit report), the reestablished credit must also be for tradeline credit. If the derogatory information involved non-credit payment references, either tradelines or non-credit payment references can be used.
- Evidence on the credit report and other credit documentation that the borrower’s present credit is current
- Evidence that no new public records, no 60-day late payments, no more than two 30-day late payments and no housing lates exist for the most recent 24 months
- If the client is unable to obtain thirdparty documentation confirming the extenuating circumstances or reestablishment of credit, the derogatory or adverse credit information cannot be offset.
For a new FHA loan:
Foreclosure:
A borrower whose previous residence or other real property was foreclosed on, sold through a short sale, or was given a deed-in-lieu of foreclosure within the previous three years is generally not eligible.
If the foreclosure was greater than three years prior to the date of the application, and the risk decision (AUS) received is an accept, the loan does not need manual downgrading (manual underwrite in the eyes of FHA means that your ratios are 31% housing /43% debt-to-income) and foreclosure documentation is not required.
Remember, FHA counts from the day the mortgage insurance claim was paid to the lender, not the trustee sale date – sometimes it can take months before the claim is paid. Have your mortgage professional check with FHA to confirm the date the claim was paid.
Scott Short Friday, March 11th, 2011
On Friday, January 28th, HUD/FHA extended the “Less Than 90-Day” flip rule. Now trying to find a lender who will allow the seller to resell for 20%+ over what they bought it for is becoming more difficult.
Last October HUD/FHA increased the Monthly Mortgage Insurance (MMI) cost from .55% to .90% for a 30-year fixed with a minimum down payment loan. During that time, HUD/FHA also lowered the Up Front Mortgage Insurance Premium (UFMIP) they finance into the loan from 2.25% to 1%.
In a move to increase their capital reserves and encourage private money back into mortgages, HUD/FHA will once again raise the MMI cost. On April 18 MMI goes from .90% to 1.15% for 30- and 15-year fixed loans with minimum down payment. (Since April 18 is a Monday, your loan professional needs to pull the case number on Friday April 15 to avoid this increase.)
One positive outcome for homebuyers from this new change is that the HUD/FHA system will automatically cancel any uninsured case number where there has been no activity for six months since the last action except for:
- Loans where an appraisal update has been entered, and/or
- Loans where the Upfront Mortgage Insurance Premium (UFMIP) has been received
Last action includes:
- Case number assigned
- Appraisal information entered
- Firm commitment issued by FHA
- Insurance application received and subsequent updates and
- Notice of Return and Resubmissions
Continue reading: The Cost of Working with FHA is Going Up Again
Scott Short Thursday, February 10th, 2011
The only good thing about interest rates going up is the “fence sitting” buyers jump in to the market.
Normally December and January are relatively slow months, but not this time. We are experiencing a high volume of borrowers wanting to buy now. Some of the buyers trying to qualify for a home loan are more challenged. Along with the lenders’ tightening standards, we in the lending industry are taking longer to figure out creative solutions to help more of your clients qualify. We are seeing more credit-challenged, budgetchallenged, employment-uncertaintychallenged and house-challenged borrowers. This is the time your mortgage professional needs to know how loans were structured back in the early 1990’s.
Almost every loan will need full documentation of the following: three months of bank statements (underwriters are scrutinizing the bank statements for overdrafts and unusual deposits), explanation letters for credit (especially all inquiries), job status (state employees need a supervisor to write a letter to address the borrowers’ furlough impact now and in the foreseeable future), motivation to buy (they are not just buying a home for a displaced family member who lost their home in foreclosure) plus other scenarios that defy the imagination some days.
At the time of this writing, HUD/FHA had not issued an extension for the “less than 90-day flip rule.” My sources inform me that HUD is working on it (not sure what “it” is going to look like when it comes out). We have seen a majority of the lenders that offer the program retract from offering the program for flips where the seller re-sells for greater than 20% over their purchase price.
Continue reading: 2011 Starts off with a Bang
Janelle Fallan Thursday, January 13th, 2011
 Doug Covill, REALTOR® with Coldwell Banker in Sacramento, was installed Tuesday as the 94th President of the Sacramento Association of REALTORS®.
Mr. Covill has been a full-time REALTOR® in Sacramento for over 28 years. He has served on the Masters Club Steering Committee, Government Relations Committee, Legislative Committee, Budget Committee, the Political Action Committee, and a C.A.R. Director.
Barbara Harsch, REALTOR® with Lyon Real Estate Downtown, was honored for her contributions as 2010 President. Mr. Covill said, “You have brought forth much positive change and growth for SAR. We recognize the unyielding commitment, dedication, integrity and professionalism you have brought to your presidency.”
The officers installed for 2011 were: President-elect Patrick Lieuw, RE/MAX Gold Natomas; Secretary/Treasurer Chris Little, Little Real Estate Services; Immediate Past President Barbara Harsch and Past President Charlene Singley, Dunnigan REALTORS®. The 2011 Board of Directors includes: Erin Attardi, Dunnigan REALTORS®; Judy Covington, Keller-Williams Realty Elk Grove; Kathy Fox, Prudential NorCal Realty Carmichael; Ron Greenwood, Coldwell Banker; Jeff Jurach, Lyon Real Estate Sierra Oaks; Michelle Lehman, Century 21-Noel David Realty; Rob McQuade, McMartin Realty; Deniece Ross-Francom, McMartin Realty; Ted Russert, Lyon Real Estate Sierra Oaks; Scott Short, Comstock Mortgage; Paula Swayne, Dunnigan REALTORS®; Dave Tanner, Tanner and Associates; Mary Willett, Lyon Real Estate Sierra Oaks, and Linda Wood, Dunnigan REALTORS®.
Neva Cimaroli of Folsom, the first woman president of SAR in 1979, was given the Lifetime Service Award. She joined the Sacramento Association of REALTORS® in 1955. She was a Regional Vice-president of the California Association of REALTORS® and a past director, National Association of REALTORS®.
Continue reading: Covill Installed; Cimaroli, Fox, Nunn, Kloss and Harsch Honored
Scott Short Thursday, December 9th, 2010
All I can say is WOW! This year has not been boring. Game changing events happened almost every month.
We started out the year with total confusion in the mortgage industry due to the new Good Faith Estimate (aka: GFE 2010). It took most mortgage professionals at least a month or two to understand the new form and the impact it would have on the consumers and themselves.
Consumers received overinflated GFEs to protect the loan officer from underdisclosing everyone’s fees in the transaction. If certain fees were underdisclosed, the loan officer would have to pay for it out of his/her pocket. One of the mysteries with the new GFE 2010 is that there is no place on the GFE 2010 to sign. There is a separate form for signatures. Now where is the consumer benefit from this change?
While struggling with the new GFE 2010, HUD/FHA released a waiver that they will allow “less than 90-day flips” to be financed with FHA loans (another program with a ton of misinterpretation).
Oh, did I forget to mention that HUD/FHA decided January 1, 2010 to adopt HVCC (Home Value Code of Conduct) practices for all their FHA loans. The industry thought HUD would have seen the “train wreck” Fannie and Freddie created with HVCC and steered away. But in the spirit of follow the leader, HUD jumped in with both feet. Can you say complexity, when you have HUD’s version of HVCC and the new appraisal requirements for the “less than 90-day flips?” This is just another reason the industry slowed down even more at the beginning of the year.
Continue reading: Real Estate Finance Forum – The Year in Review
Scott Short Monday, October 11th, 2010
CalHFA just brought back their FHA program as of September 7, 2010
It is a 96.5% of the sales price, 30-year fixed FHA loan not to exceed $417,000 loan amount. The borrower will need a 620 minimum (middle score of the three bureaus) credit score. Purchase money only loan. Requires homebuyer’s education for each borrower. The borrower must be a first-time home buyer (FTHB) or a qualified veteran pursuant to Heroes Earning Assistance & Relief Act of 2008, or located in a federally designated target area. Income and sale price restrictions do apply. Only single family residence, one unit including condo/PUD. Non-owner occupants not allowed. Manufactured homes and non-permitted additions are not allowed on the program. FHA less than 90 day flips where the seller is reselling for greater than 20% of their purchase price also not allowed on the program.
This new CalHFA FHA loan will allow the buyer to utilize the CHDAP (CalHFA Down Payment Assistance) program in conjunction. The buyer can borrow up to 3% of the sales price or appraised value, whichever is less. If you add 96.5% (FHA 1st mortgage) + 3% (CHDAP) = 99.5% loan, the buyer’s down payment would be ½%.
The program requires a minimum investment into the purchase of 1% of the buyer’s own funds. For more in depth details contact your authorized CalHFA mortgage professional. CRHMFA Homebuyers Fund (aka: National Homebuyers Fund) also announced a new loan program called the “CHF Platinum program”. The new CHF Platinum loan program provides downpayment for low-to-moderate income individuals and families purchasing a home in California as their primary residence. The downpayment assistance is currently in the form of a grant, sized at 3% of the first loan amount and can be used for downpayment and/or closing costs. This is not a bond program and not limited to first time home buyers. Eligible first mortgages include 30-year fixed term FHA, VA and USDA.
Continue reading: Change is Still in the Air
Scott Short Friday, May 21st, 2010
It appears the black cloud over California is being lifted by the PMI (Private Mortgage Insurance) companies. When the housing market started to decline, the PMI companies retreated from the “sand” states (California, Florida, Arizona, and Nevada), or at least pulled back on the maximum loan-tovalue (LTV) they would guarantee. They still have a lot of areas they are avoiding (flips, non-owner occupied and condos – just to name a few).
April was the first month mortgage rates were not artificially stimulated by the Fed. (The Federal government bought $1.25 trillion of mortgagebacked securities (MBS) over the past 15 months.) Rates initially jumped up mainly due to the long Easter weekend after a shortened trading day on Good Friday.
Rates settled down the following week mainly attributed to the safer mortgages being produced now than were before. (Meaning that the quality is better and the risk of default is less.) Hopefully the appetite will continue. The Mortgage Bankers Association believes the 30 year mortgage rate will increase to 5.5% by mid-to-late summer and then possibly 6% by year end.
Kudos to the SAR Housing Opportunities Committee for hosting the “Show Me the Money” seminar held on April 29. There is an amazing amount of money being allotted to energy upgrades in the form of rebates, tax breaks and incentives. The REALTOR® community needs to stay current with this information in order to effectively educate clients on how to utilize the available programs.
On April 15, Congress reauthorized and the President signed into law an act that includes reauthorization of the National Flood Insurance Program (NFIP) through May 31, 2010. This temporary measure is retroactive to March 28, 2010, the date the NFIP’s authority expired, and provides the NFIP the ability to issue new and renewal flood insurance policies and increased coverage on existing policies.
Continue reading: More Changes, It’s the Name of the Game
Janelle Fallan Thursday, January 14th, 2010
 Chris Little Sacramento REALTOR® Chris Little, Little Real Estate Services, received the President’s Award for 2009 from Charlene Singley, outgoing president, at the Installation and Awards Luncheon on January 5.
The President’s award is not selected by the Awards Selection Committee, but by the Association President. It may be awarded annually to a person that the President determines has made outstanding contributions to SAR during the period of the President’s term of office.
In her presentation, Charlene noted that Chris has been around the real estate business for a long time, but has been a member of SAR only since 2004.
During that time, however, he has accumulated quite a few designations: CRS, GRI, GREEN, Eco-Broker, ABR, SRES, and e-PRO. His additional NAR certifications: At Home with Diversity and the Transnational Referral Certification. He also graduated from SAR’s first Broker Training Institute.
Chris is a life-long Sacramentan, although he did leave Sacramento to attend the University of Oregon, where he earned a B.S. degree in Political Science.
Continue reading: Chris Little Receives SAR President’s Award
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