The Reality To Real Estate Lending Workshop 9:am
1-Intro-----Pinnacle Financial Corp –presents
Credit score and credit reporting
Troy's opening DVD
2-What is a credit score
A credit score is a number that reflects your credit worthiness at a given point in time
Reflects credit history condensed into one number by a complex algorithm.
Looking into the black box of Credit
A- What is FICO?
credit scores developed by Fair Isaac Corporation for each of the 3 national credit reporting bureaus:
• Beacon for Equifax EF
Equifax Credit Information Services, Inc.
P.O. Box 740241
Atlanta, GA 30374
To order a report:(800)685-1111
To report fraud: (800)525-6285
• Fair Isaac risk Model/FICO for Esperian XP
National consumer Assistance Center
P.O. Box 2002
Allen, TX 75013
To order a report: (888)397-3742
To report fraud: (888)397-3742
www.esperian.com
• Empirica for Trans Union TU
Consumer Disclosure Center
P.O. Box 1000
Chester, PA 19022
To order a report: (800) 888-4213
To report fraud: (800) 916-8800
www.transunion.com
9:20 am
B how was credit started
-late 1800s merchants kept records of who did and did not pay for purchases bought on credit
-Equifax started in 1899 in Atlanta, GA with "Merchant's guide" sold to local grocers for $25/ year
-1906 first National Association of Retail Credit Agencies
-credit reporting agencies became popular in 1955 when Fannie Mae and
Freddie Mac used them for mortgage lenders to show credit risk
-then used in underwriting
C what makes up credit and what is it
Positive and negative info regarding bill payment history and current status
D as soon as you get SS number your credit history starts
E maintaining credit history
-no "deceased" marker on file
-at least 1 undisputed trade line updated in previous 6 months
-1 tradeline open at least 6 months
Note: paying cash for everything means no credit history
F how is your fico score figured -
NOTE: Remember the score is calculated by analyzing the {whole
Of credit information} in the report and the various factors that make up the whole report
No single piece of information or factor by itself determines your credit score
Credit pie (chart here)
-Proprietary secret algorithms, use these factors:
• Payment history 35%
-Track record with various lenders--paying on time is key
Good overall picture can outweigh a few late payments plus late payments have less impact over time
-length of positive credit history--the longer the better
-length of time passed since most recent negative item
-severe unpaid debt--public record-court actions
bankruptcy, foreclosure, court judgments, wage attachments, tax liens, collection suits
-severity and quantity of delinquencies
30 days, 90 days or over; accounts sent to collection agencies
• Amount owed-Extent of indebtedness 30%
-quantity of credit accounts (not too many, not too few--and vary types)
-ratio of credit balance to credit limit
-amount owed on all accounts--even if you pay off the cards in full ach
month, what is on balance at the moment credit is requested is what
shows
-amount owed on each type of account-NOTE: sometimes a very small
balance that you pay off "as agreed" is better than zero balances
-amount of mortgage or other installment loans are paid off
• Length of Credit History 15%
-the longer the better, broken down as follows:
o overall length of credit history--how many accounts, how long
o how long have specific accounts been established
o how long since using certain accounts
• How Much New Credit 10%
-red flag--opening lots of new accounts in a short period may show someone preparing to overextend, therefore high risk
-how many new accounts, especially credit cards
-how long since new account opened
number of recent inquiries, i.e. recent requests for credit
-though report shows 2 years of inquiries only 12 months count
-different types of inquiries count, i.e. if shopping for a car loan or
mortgage may have many car loan inquiries-length of time since
inquiries made by lenders
-is there a good recent credit history following bad period--show people recovering
• Type of Credit 10%
"healthy mix"e.g., installment (mortgages and loans), revolving credit (credit cards)
-loans from banks are good but loans from finance companies are bad
Note on inquiries
- multiple auto or mortgage inquiries made within a 14-day period count as one
-ignores all auto or mortgage inquiries made 30 days prior to scoring
(so inquiries will not affect score while shopping for auto or mortgage
loan
-less than 5% of people will be adversely to the degree of changing loan decision
G-Reason codes
-significant reasons why score is not higher than it is
-maximum of 4 given
NOTE: Remember the score is calculated by analyzing the {whole
Of credit information} in the report and the various factors that make up the whole report
No single piece of information or factor by itself determines your credit score
9:30 am
C scoring model 350-850 not sure why this is here
D Clint Eastwood of credit the Good the Bad ant Ugly
E facts about credit
H Job- Insurance- purchase power
I Good credit will save you money
4- Play DVD—Start your life of
Credit
9:45 am
5-Who uses credit and
why
10:10 am
Most retailers and creditors pay to have credit reported by the bureau
This way they may view your payment history
A-Lenders-they will pull a try merge credit pull weight the most on your credit
B-credit card companies-If you have a credit card with them they will pull your credit about 3 times a year
C-banks—line of credit on your check—Heloc—there bank cards—this also will be a full pull on your credit
D-department stores--sears –target –any department that
offers a card will pull your credit, but this will be a consumer
pull.—you must be careful to many consumer cards can hurt your
credit, but if you need credit these are the easiest to get
E-Auto dealers—this guys will shop your credit to several
investor, to see who will take your loan—I have see on credit
reports in a=just one weekend 10 credit checks
F-Power Company—If your credit so not that great they can ask for
more deposit or in some cases I have heard they have ask for a cosigner
G- Home, auto, and health insurance---having bad credit is a big money
maker for them, they say people with lower scores don’t pay as
will, they will pull your credit, and your policy is base on that
score. This includes cars-boat off road Vech. -anything you insure
H-35% of employers use credit checks—buy law they must first secure an application before pulling credit
I-41% of all retailers pull credit—credit is going to rule your life more and more--
J-We are protect by the National retail Security Survey
K-phone companies—cell phones—ever time you up great change your service they will pull your credit.
6- what effect will your credit have on you
-saves hundreds to thousands of dollars yearly giving you best interest rates on loans, credit cards, and insurance
-helps future employer determine how responsible you are and whether or not to hire you
10:20 am
Break 15 min
6-Credit Risk
Models
10:35 am
How Lender View Score
A-general scoring range is 300-850--- Your score changes almost
ever month, the ,creditors send in your information ever month to the
credit bureaus. any change in your financing will trigger a score
change.---- timing see critical when your are in the middle of a deal,
most creditors report new changes a round 10-20 of the month
B-there are 5 categories of risk
C-780-850-low risk
D-740-780-Medium low Risk
E-690-740-Meduim –Risk
F- 620-690-Medium High Risk
G-620-and Below-High Risk or Sub –prime
7- Credit score Calculated
Remember the score is calculated by analyzing the {whole
Of credit information} in the report and the various factors that make up the whole report
No single piece of information or factor by itself determines your credit score.
8-Pie chart Break down
10:55 am
The break of credit information in 5 different categories
This is one of the ways you are scored on
A-Payment History—35%----1-late payment may lower your score up to 70 points,, and affect yours score for up to 5 years
B-Amount owed ---30%---credit card balance-department stores, lines of
credit, auto loans –and time your balances exceed more than 50%
of your limit your score will be affected
C-Length of Credit history—15%--trade lines opened from 6-12
months add 12 points 12-23 months 35 points—24-47 months 60
points—48 or more 65 points
D-Type of Credit 10%--financial trade line –and consumer’s trade line are scored different
E-Inquires-10% ------remember there are different types of
pulls—tri merge for mortgage –auto loans ---consumers
pull—bank cards –department
stores
F-What is not Consider in credit
1-race- color-marital status income-age-employment history-interest
rates on charged on credit cards—child or family support
obligation
10;50
9-Mortgage default rate chart
ODDS
Good Payers To Bad Payer
1-Below
600---
8 to 1----sub prime loans ---LTV—90% or less –for ever 8
loans 1 will default
2-620--659---
26 to 1---the differences form 619—620 --- your odds of getting a
loan –triples
3-660--679-----
38 to 1—you’re still considered sub prime credit
4-680—690-----
55 to 1—alta A programs look at you as
5-700—719-----
123 to 1—this where the car lots throw the keys at you
6-720—759----
323 to 1—at the 720, lender do a program call fast and easy loan,
because your default rate is so low
7-760—799---
597 to 1—at this point the credit card companies are sending over
new cards every week. Your odds of getting the best rates and
program are at one of the highest
Above
800----
1292 to 1—this when the banks calls you and ask you where you
want them to dump the money
11:10 am
10- Translating a Credit report
A-What is on a credit report
B Types of score EF TU EP
C Reason codes what they really mean 1-3---the first one has the most affect on your Credit
D Payment history—past and present---your payment history will affect your score up to 5 years or more.
E Trade lines –different types---------bank cards-financial trade
lines—department’s stores-have too many can affect your
score. The difference between have a trade line for 1 year or up to
five years could be as much as 50 point--
F late payments—30 -60-or 120—delinquent on
payment—by correcting a current delinquent account could raise
your score almost a medially
G collection-- charge offs settlements---accounts charge off will be
with you for a long time---up to 5-years---same as settling an
account—if you can pay it off, this will help your score--
H Judgements-bk-7-13-12-11—tax liens, child support---will have
affect on any type of new credit you are try to establish. There is a
time limit on Bk-7-11-13 ---child support and Tax liens must be paid
off before any home purchase or paid of during a refi at title
I information on creditors
J Joint—Co—Brower –authorized user – codes on your credit ---telling who’s credit it is
11:50 am
10- Translating a Credit report
A-What is on a credit report
B Types of score EF TU EP
C Reason codes what they really mean 1-3---the first one has the most affect on your Credit
D Payment history—past and present---your payment history will affect your score up to 5 years or more.
E Trade lines –different types---------bank cards-financial trade
lines—department’s stores-have too many can affect your
score. The difference between have a trade line for 1 year or up to
five years could be as much as 50 point--
F late payments—30 -60-or 120—delinquent on
payment—by correcting a current delinquent account could raise
your score almost a medially
G collection-- charge offs settlements---accounts charge off will be
with you for a long time---up to 5-years---same as settling an
account—if you can pay it off, this will help your score--
H Judgements-bk-7-13-12-11—tax liens, child support---will have
affect on any type of new credit you are try to establish. There is a
time limit on Bk-7-11-13 ---child support and Tax liens must be paid
off before any home purchase or paid of during a refi at title
I information on creditors
J Joint—Co—Brower –authorized user – codes on your credit ---telling who’s credit it is
11:50 am
11-What doesn’t count on credit score?
And Items they don’t consider on your report
A-not scored
1-tradelines opened for less than six months
2-tradelines updated in the last six months
B-not scored
3-Deceased—when the SSN number matches the administration deceased SSN file
Not considered
1-Race, color, religion, national origin, sex, or marital status
Receipt of public assistance, exercise off consumer
rights under Consumer Credit Protection Act
2-Age
Underwriting scoring models consider age but NOT Fair Isaac
3-Salary, occupation, title, employer, date employed, employment history
Lenders may consider that information
4-Place of residence
5-Interest rate being charged on credit card or other account
6-Items reported as child/family support obligations or rental agreements
7-Certain types of inquiries (i.e., certain requests for your credit report or score)
8-Any information not found in your credit report
19-Any information not proven to be predictive of future credit performance
12: pm
12-Reason Codes
Reason Codes tell the story of your credit score
1-Amount owed on account is too high
2-Level of Delinquency on account
3-Too few revolving account
4-Porportion of loan balance is too high
5-Too many banks or National revolving accounts
6-Lack of recent installment loan information
7-Too many accounts with balances
8-Too many consumer accounts
9-Too many inquiries in the last 12 months
10-Porportion of balance to credit limits is too high on
Bank revolving and other revolving accounts
11-Amount owed on revolving accounts is too high
12-length of time revolving accounts have been established
13-Time since delinquency too recent or unknown
14-Length of time accounts have been established
15-Lack of recent bank revolving information
16- Lack of recent revolving accounts information
17-No recent non-mortgage balance information
18-Number of accounts with delinquency
19-Too few accounts currently paid as agreed
20-Date of last inquiry too recent
21-Time since derogatory public records or collections to short
22-Number of bank or national revolving accounts with balance
23-No recent revolving balances
24-Length of time installment loans have been established
25-Number of revolving established
26-Number of bank or other revolving accounts
12:30 pm
Lunch
12:30—1:30
14-Derogetory credit
Lenders take on these issues 13Dallas,I can only find this info for FHA loans
1-How lenders look at Bankruptcy’s 7—11-
2-Mortgage late—30-60 day
3- Foreclosure
4-auto repo
5-Student loans
6-collections
7-consumer lates
1:45 pm
13—Judgments that can kill your deal
A-Tax liens
B-Child support Liens
C-Chapter-13 BK---
D-Chapter 7- BK must be discharged before you are able to complete your traction
1:55 pm
14- Identity Theft
A-Call your local Police department
B-FTC-(800) 438-4338---or 800-ID THEFT
C-www.consumer.gov/idtheft
D-Keep good records
2:00 pm
15-Dispute Tactics
A-Nature of the Dispute
B-Three Avenues ---Mail-Phone or Online
B-Calling Creditors
C-Collecting documentation for Creditors
D-What should be on documents?
E-Writing Dispute letters-First Class Mail
F-Online Dispute
G- This is immediate, and is instantly forwarded to the Credit Grantor
H-After obtaining your credit score online at the credit Bureau’s
Web sight, you can click on specific Derogatory trade lines, find the
dispute button, and click on that to dispute it. When you do this, the
credit bureau says it instantly forwards your dispute to the creditor.
J-{when you order your own credit report or score on line it does not count as an inquiry on your credit.
2:15pm
16-Misreporting credit
A-Paid off collections not reporting correct
B-Credit card or retailers reporting wrong on payment history
C- Misreporting other people’s credit on your credit
D-SR—or JR—credit misreporting on each others credit
E-After BK creditors still misreporting on credit
F-Judgments not show paid off
2:25 pm
17-True Credit is not Truly FICO Score
A-Knock-off Credit scores can mislead you
B-Consumer Credit
C- FICO-Credit
D-Experian’s sells Plus Credit Score
E-Trans Union sells True Credit
F-Equifax’s sells FICO score
G- There are 5 industry-specific versions of Class FICO Score
H-The bottom line is you can not rely on score bought at a Web site
They are consumer scores and are might be higher than FICO score
2:40 pm
18- Credit Score Web sight
Use this sight for pulling your own credit {do
not let other people pull your credit it will show as an inquiry on
your credit}
A-www.myFico.com
b-www.Truecredit .com
c-www.Ficoscore.com
2:50pm
19-Secrets of Building Credit Score
A-Start with looking at Reason codes
B-Credit Card Debt
C-Revolving accounts Debt
D-No longer authorized user will help with the lenders but will improve score
E-months in file on Trade lines
F-look if any recent Derogatory credit
G- Length of time since revolving account was opened
H-Credit cards limits are not reporting right
I-Remove OLD Credit
J-Clean up Old Judgments that are miss reporting
K- all else false you can call the NACA National Consumer Advocates Center
www.naca.net
L-National Consumer Law Center-NCLC www.nclc.org.
M-Calling creditors that are not reporting your payment
history—anything over six months of payment history will increase
your score
3:20pm
Break 15 min
3:35 pm
20-Reading your own credit report
A Assessing your credit
B-Check personal information on your report
C- Looking for errors on your credit
D writing down any mistakes or changes you can make to your credit
E- Review all of your creditors
F- B-Co-J-I-A
4:00 pm
21-Mantianing your credit
A-pay your bills on time
B-keep your credit cards debt low
C-pull your {own credit on line] and review it 2 times a year
D-Do not open to many credit cards—3-5
E-use your credit cards and make payments even if they are small, this will give you payment history
4:10 pm
22-Seven Deadly Sins of Credit
This is for the first time home buyers
Or people building a home
Mistakes made buy buyers
A-should I file bankruptcy to clean my credit
B-I should close my open accounts
C-I should finance some new furniture for my new home before I close on the mortgage
D-My recent late payments are not that bad
E-I should carry zero debt
F- I should take advantage of zero interest credit cards as often as I can
G-Why bother? My bad credit will haunt me forever
4:20 pm
23-Credit Mentoring can make you money
A-Offering free credit classes can bring you loans
B-Good credit awareness can give you the upper hand on competitors
C-Increasing credit can lower payments on home loans ---credit cards---auto loans—auto-home insurance
4:30 pm
24 Final Discussions
A-Credit----
B-review your credit report—tonight---write down how you can improve your score
4:50 pm
25 5 facts about credit that might surprise you
1-40 million
2- Car purchase
3-credit reports with errors
4-consumer credit card debt
5- 1-20 credit card fraud
5:00 pm
Day
---2
8:00 am
Guideline To the Lending World
Troy's opening
1-Overview of the First Day Class
Credit scoring
Credit reporting
Credit reports
Credit models
Credit Bureaus
Credit repair
Credit
mentoring
8:30 am
The three Credit ---Collateral---Capacity to repay a Loan
1-Becoming a successful Mortgage Originator
1—with the potential of earning $100,000—$1,000,000 plus in income per year.
What
is a loan
Officer?
8:35
1- also know as a loan agent –loan originator---sales person
2- the loan officer my work as a independent contractor as an employee of Mortgage company
3- Loan agents may or not need to be licensed depending of the state law.
The loan officer’s main duties
1-taking a complete and accurate loan application from the client
2-pre-qualifying borrowers with a suitable loan program
3-collecting necessary documentation from the borrower
Working with the processor -- underwriter ---and lender
5-make sure the loan process goes along smoothly and closes on a timely manner
8:45 am
2 Who is in the lending Game?
1-account Executive
-person representing a specific banker or wholesale lender
-contact person for mortgage loan originator
-has details for rates and loan programs lender offers
2-borrower
applies for and receives funds in form of a loan he repays under terms of loan
3-credit reporting agency
complies, maintains and provides credit and personal info to creditors
4-escrow
procedure where third party acts as intermediary for buyer and seller,
handling all paperwork and distribution of funds as requested by buyer
and seller
5-lender
-institution or individual providing funds in loan
-most have warehouse lines (lines of credit) to fund loans before selling them to secondary sources
(brokers usually do not have warehouse lines and cannot fund loans)
6-loan originator
takes borrower's application and finds best loan program for a fee
7-loan service
company that collects mortgage payments and often handles escrow too
8-mortgage broker
-does not fund loans or lend money
-arranges loans through mortgage banker or lender
9-mortgage banker
direct mortgage lender who originates and funds loans in own name or
for resale in secondary mortgage market ( Fannie Mae, Freddie Mac,
Ginnie Mae)
10-processor
-works with loan officer
-gathers info needed by underwriter to get loan approved
11-realtor
licensed to negotiate real estate sale or purchase on behalf of buyer or seller
-in some cases may represent both buyer and seller
12-real Estate agent
-licensed to negotiate and transact real estate property sale
-can work for buyer or seller
13-real estate broker
supervises real estate agents who have less experience
14-appraiser
gives property's fair market value based on specific market data
15-surveyor
-measures boundaries of parcel including improvements
-provides survey
-most lenders require survey of property
16-Mortgage insurance company
-insures lender for higher risk loans
-required when down payment is less than 20% on conventional loans
-protects lender by paying costs of foreclosure if borrower defaults
15-settlement Company
-coordinates closing between buyer, seller, and lender
-usually an escrow or settlement company
-exchange of property ownership happens here with signing of all docs of loan
16-settlement attorney
-lawyer or attorney specializing in real estate
-in some states act as settlement or escrow company
17-Title Company
-provides title policy and exam
-records deeds and other legal doc
-does title searches and insures title to property
18-Underwriter
-works for lender
-reviews loan and decides whether or not to make loan
19-whole sale Lender
-works only with mortgage brokers
-accepts and underwrites completed loan packages
-offer mortgage brokers discount pricing return for up-front work done by mortgage broker
9:00 am
3-
Net Branch
1-the ability to own business while having support of big company
2-two types of net branches operation—mortgage brokers—and a mortgage bankers
3-there are no requirements that specify how big or small a net branch can be.
4-requirements
• must have 3-5 years of strong management experience
• top producer with a large referral base
• good rapport with lenders, realtors, builders
9:10 am
4- Loan Lingo
1-1003
loan application
2-commercial loan
for business or commercial property
3-conforming loan
conforms to standards of Fannie Mae or Freddie Mac
4-conventional loan
not insured or guaranteed by government agency like FHA, HUD< VA or Farmer's Home Administration
5-Federal Home loan Mortgage Corp –Freddie Mac
-government sponsored private shareholder-owned (quasi governmental)
that facilitates sale of conventional loans in secondary market
-does not lend directly to home buyers
-loan limit for current conforming loan: $359,650.00
6- Dept of Veterans Affairs VA
government agency, guarantees a portion of mortgage loan to qualified vets and active duty personnel
7-Federal housing administration FHA
-part of HUD
-insures residential mortgage loans made by private lenders
-sets standards for construction and underwriting
-does not lend money or plan or construct housing
8-Federal National Mortgage Association –Fannie Mae
-government sponsored private shareholder-owned (quasi governmental)
that facilitates sale of conventional loans in secondary market
-does not lend directly to home buyers
-loan limit for current conforming loan: $359,650.00
9-Good Faith Estimate
-itemizes costs and expenses to process and close loan
-must be given to applicant within 3 days of application
10-Home equity line of credit –HELOC
usually a second mortgage that homeowner can draw upon for cash
11-Non conforming
-any loan not fitting Fannie Mae or Freddie Mac criteria
-typically subprime or jumbo loan program
12-preapproval
-borrower fills out application and underwriter approves it for certain loan amount and assumes interest rate at time of loan
-also provides estimates of taxes and insurance and other costs
-applies only to borrower
-once property is chosen also applies to lender guidelines
13-purchace financing
mortgage for buying a property
14-refinancenance financing
-changing one's mortgage to get money, to reduce payments, to change loan type
-uses equity in house
15-state-specific Predisclosure
lender must provide borrower with state specific government related disclosures
16-streamline refinance
not require income verification or
appraisal
17-Sub Prime loan
loan with B-D credit not conforming to normal guidelines
9:30 am
5-
Obtaining a First Mortgage
1-Prequalification
process where buyer works with loan officer to determine how much buyer
is eligible to borrow; loan officer reviews credit, income, programs
2-Finding the property
look for property in established price range and make an offer
3-Application stage
once offer accepted, all parties sign purchase agreement
if buyer not prequalified, loan officer takes loan application, gets
authorization to get credit report, provides required disclosures,
provides preapproval letter to realtor
Select a an escrow or settlement company to collect all deposits and documentation for sale
NOTE: in conventional loan programs, loan officer can take loan using
automated underwriting system to get an approval--which lets borrower
lock in rate for specific number of days. The longer the lock, the
higher the rate. Floating rate when not locked in
4-processing stage
loan officer works with processor to get all documents; orders
appraisal. Title and surrey report, when ordered, pest or termite report
5-Lender approval
when working with mortgage broker-submit loan to lender for approval
- wholesale-broker is intermediary between lender and borrower
-retail-loan officer makes loan directly to consumer
when working directly with lender, loan begins underwriting
6-Underwriting stage
makes decision on loan
7-conditional approval or denial
processor requests (from broker) necessary extras for underwriter to approve loan
loan officer gets items, processor approves them who send them to underwriter
If not approved, loan is denied
Loan officer notifies borrower and realtor of status
8-Final approval stage
when all loan conditions are met
9-Loan doc stage
processor gets loan documents from lender and escrow to settlement company
10-Signing stage
processor coordinates time and place of signing between borrower and escrow or settlement company
usually done in round table with all parties present
escrow closings- (mostly in California) takes place separately between parties
11-Review
lender receives and reviews docs, makes sure everything is there and signed
lender then releases funds on date agreed upon by buyer and seller in pourchase agreement
at round table closings-funds released at signing
12-Funding stage
lender wires funds to escrow or settlement company who disburses funds
appropriately according to lender instructions and HUD-1 (settlement
statement)
escrow or settlement company instructs title company to record mortgage
or deed of trust of local public county recorder (in California,
must occur prior to release of funds)
all parties notified when loan is funded and recorded
13-servicing stage
lender sets up account for mortgage payment collection
lender may sell servicing rights to outside company of they do not service their loans
9:45 am
6
Refinancing
1-consider the benefit
-must show reason, e.g., lower interest rate, lower payment, debt consolidation, cash for home improvement
2-Application stage
take application, request authorization for and then get credit report, provide disclosures, get docs to process loan
3-Gathering documentation
-work with processor to get all docs, appraisal, choose escrow or ssettlement company, order title report
-Note: FHA, VA, and conventional loans offer streamline refinances
4-Processing stage
-if processor works for mortgage broker submits loan package to lender
for approval or run loan through Desktop Underwriter(DU) or Loan
Prospector (LP) for automated underwriting
- if processor works for lender, submits to in-house underwriter
5-underwriting stage
reviews file and issues conditional approval or denial
6-review by processor
reviews decision then gets additional info from loan officer if needed
7-Final approval stage
all conditions met, lender issues final approval
8-loan doc stage
loan processor coordinates delivery of loan docs between lender and escrow or settlement company
9-signing stage
-loan processor coordinates date and time of signing loan docs with escrow or settlement company and buyer
-sometimes escrow or settlement company has traveling notary public
take docs to borrower for signature. Then returns signed docs to lender
10-Review by lender
-reviews signed docs the prepares to release funds on 4th day after right of rescission
-(right of rescission only applies to refinances and HELOCs)
-right of rescission does not apply in wet-funding states
11-Funding stage
-lender wires funds to settlement company who disburses them appropriately
settlement company then tells title company to record mortgage or deed
with local public county recorder, Loan is funded, recorded and all
parties notified
-in California, recordings occur before funds release
12-Servicing stage
lender sets up loan servicing to collect payments
10:00 am
Break
10:15 am
7-What is a
Mortgage?
1-The down payment
lump sum paid up front to reduce amount financed
2-PITI
Principle, interest, tax, insurance make up the mortgage payment
1. mortgage payment
principle+interest+taxes+insurance
2. interest
percentage of total amount borrowed
3. taxes
property taxes-held in escrow to be paid when due
4. insurance
hazard, flood, PMI
10:25 am
8-- Categories and types of Loans
1-two categories: conventional loans and insured government loans
2-conventional loans-2 types
1-conforming-Fannie Mae and Freddie Mac
2-non-conforming-jumbo, subprime, Alt-A, negative amortization, second mortgage
3-Fannie Mae and Freddie Mac
-largest purchasers of loans on secondary market
-backed by US Treasury therefore less credit risk and lower rates
-loan limit $417,000
4-Nonconforming loans
do not meet Fannie Mae or Freddie Mac requirements
• jumbo loans
loan amounts above Fannie Mae or Freddie Mac limits
• sub prime loans
for people with bad credit or limited down payments
• Alt-A loans
Stated income or ARMS with credit score at least 640
• Negative Amortization Mortgage
• Second Mortgage-with higher LTV and lower credit score
5-insured Government loans insured by FHA and VA loans
-FHA insures residential loans made by private lenders
-sets standards for underwriting mortgage loans
-VA fixed rate loans guaranteed by U.S. Dept. of Veterans Affairs
10:35 am
9-- Rate Locks
is a rate commitment
1-rate float
delay of decision to fix interest rate
2-float down option
lock in a rate and take advantage of any rate drop before closing10;45
10- What Determines the Rate?
1-10 year bond yield
2-inflation
rates correlate with direction
3-loan risk
-getting paid back too quickly
-not getting paid back
5-credit score
lower scores are higher risk and get higher rates
10:55 am
11- How Mortgage Makes Money
1-Origination fee
usually 1% loan amount
for cost of originating loan
for loan officer, staff, office overhead
2-Miscellaneous fees
-lenders may charge 3rd party fees e.g., doc preparation, underwriter fees, tax service fees
3-overage
-difference between lowest available price and higher price borrower
agrees to pay-some lenders allow this and it is often paid to loan
officer
4-servicing income
year-round income source to lender or servicer
5-sales of servicing rights
can be 1-2% of mortgage amount when selling mortgage to servicing company
big profit to lender
6-SRP
servicing release premium is amount a wholesaler is willing to pay for the servicing value of a loan
11:05 am
12--
Mortgage Loan Type
1-Fixed rate Mortgage
interest rate and payments are same for life of loan
30 year, 20 year, 15 year are most common
2-Fixed rate hybrids
-great for people staying in home 7years or less
-usually starts with fixed rate then changes to ARM
-includes balloon, graduated payment, growing equity, temporary buydowns, the Flex ARM program
3-adjustable rate mortgage
interest rate changes with changing market rates and economic trends
4-2nd mortgage
-made in addition to earlier first mortgage
riskier as all liens go to primary mortgage first
people do this to get money for needs and wants
11:15 am
13- Amortization
-fully amortized means fully paid off at end of term of loan
-decrease principle with monthly payments of principle and interest
-to find schedule need principle loan balance+interest rate+loan term+starting month and year
11:20 am
1-fully amortized
11:35 am
14- Prepayments penalty
1—hard prepay
2- Soft prepay
3-1 or 3 year prepay
Chart of states that allow prepays-------------------
1-
2-
3-
11:55 am
15-- Interest only Program
gets the lowest payment because only paying interest not principle
$100,000 x 6.5% = $6500/12 = $541.66
12:05 pm
Lunch 1:05
16- Negative amortization
-when minimum monthly payments do not cover interest due, interest gets added to unpaid loan balance
-home buyer may wind up owing more than original loan
2 types:
1-scheduled negative amortization
knowing, at beginning of mortgage term, there will be negative amortization
2-potential for negative amortization
not knowing future rate on an ARM so not knowing if negative amortization will happen
17-- The Five features of an Arm
1-Index
-reflects changes in market interest rates
includes: Cost of Fund index (COFI), Treasury Bill Constant Maturity
(TCM), London Interbank Offered Rate (LIBOR)Monthly Treasury Average 12
months (12-MTA)
2-Margin
lender's profit
3-adjustment period
agreed upon interval at which principle and interest rates are changed
e.g. one year ARM, two year ARM
4-Rate caps
maximum allowable interest lender can charge on ARM
5-Conversion
-option to convert ARM to fixed
-costs less than doing a refinance
1:15 pm
18-- What is a second
Mortgage Loan?
Made in addition to another mortgage
1-combination of 1st and 2nd lien place simultaneously
both done at closing
2-Stand- alone 2nd
-occurs at later date than closing, usually to attain funds for some purpose
-cheaper and faster than a refinance
3-HELOC
Home Equity Line of Credit--available funds to use as needed
1:20 pm
19--
Combo Loans
concurrent loans, by percentage
1-80/20
2-80/10
Chart--------------
1:35 pm
20-- Equity lines of Credit
HELOC
Revolving line of credit
borrower takes as much as he wants when he wants to
• 1-Operate similarly to a credit card
• 2-access by check or draft
• 3-floating interest rate
1:45pm
21-- Program Guidelines
1-Conforming loans
• debt-to-income, monthly minimum debt payments/monthly gross income
usually 28/36 (can be higher with DU or LP)
28 is maximum housing ratio/36 is total debt-to-income ration
• borrower invests at least 5% of own cash in
purchase where loan-to-value (LTV) greater than 80% PLUS have 2 months
of mortgage payments (PITI) in reserve after closing
-extra money can be borrowed if buyer qualifies for the additional debt and an owned asset secures that loan
-loans below 80%, entire down payment may be a documented gift,
specific for this purpose, from spouse or child, individual related by
marriage or adoption, borrower's fiancé or fiancée or
domestic partner
• seller's maximum contribution is based on sales price or appraised value NOT mortgage amount
2-nonconforming loans
-subprime loans (use subprime matrix)
-maximum allowable range for debt-to-income ratio is between 50 and 55%
-no cash reserve requirements unless loan is 100% and on stated income
-stated income docs may be bank statements
-requires business license or letter from CPA verifying borrower in business at least 2 years
-credit scores as low as 500
-mortgage history or rental payments for last 12 months to determine credit grade
Note: borrower can be one day out of chapter 7 bankruptcy or
foreclosure and qualify for subprime loan with LTV restriction,
typically up to 70%; consumer credit history usually not considered
unless it affects title of property, i.e., judgments or tax liens
1:55 pm
23-- Guidelines Matrix
see Pinnacle Matrix
2:20pm
24-- Sub prime Loans
(done above)
1-jumbo loans
2-less than perfect credit
3-investor loan
4-high loan to value loans
5- Negative amortization loans
6-Alt-a loans
2:45pm
25-- Subprime Matrix Guidelines
use Pinnacle chart
1-
2-
3-
4-
3:00
Break
3:15pm
26- Qualifying Ratio
1- LTV or Loan To Value Ratio
Ratio of loan amount to appraised value or sales price (which ever is less) expressed as a percentage:
LTV= loan amount divided
appraised value or purchase price
If two mortgages, use combined loan-to-value ration (CLTV):
CLTV=sum of two mortgages
appraised value
2- Up to 100%
Graphs
3;25pm
27 What is DTI?
Adds monthly liabilities to housing expense to calculate borrower's monthly debt
Varies by type of loan
-Commonly called: DTI or Debt to income Ratio, back end ratio, debt ratio
-Conforming loans 28/36%
-Jumbo loans 38/40%
-Nonconforming loans 50/55%
Chart---------
3:40
28- Rate Sheets
1- conforming
2- nonconforming
3;55pm
29-- How to read a rate sheet
1-what is a point
-1% of loan amount, price for the loan paid by borrower at closing
-discount fee paid by borrower up front to discount rate over time
-rate change of ¼ of a percent is 25 points
2-cost and rebate
-to understand the rates of the lender with whom you do business so you can find best program for borrower
-each lender has own format to figure amounts
3-add-on or adjustment
adjustment lender makes on rate sheet
4-par rate
zero discount on pricing
Chart
4:10pm
30-Using a financial Calculator
1-pmt
payment
2-pv
loan amount
3-n
term or number of payments (e.g., 360 for 30 years)
4-i/y
interest rate
5-cpt
compute
Example
Title 101
From Contract to closing
Land American Lawyers Title
Becca Nye-guest speaker
1-Question to ask at contract
2-Holding title
3-What is title insurance
4-Endorsements
5-What are all those fees paid at closing
6-Closing day
7-Power of attorney
8-1031 Exchange
9-100% customer service
Satisfaction Guarantee
10 taxes liens –mortgage liens
11-reconveances title
12 -plate maps
13-perposed insured on title
14-letter
4:45pm
1003 application
What is a 1003?
Filling out your 1003
The same form is used for all types of loans
-Married couple files on one form
-Non-married people each fill out own separate application
-10 sections in 3 pages plus addendum page 4 (left blank intentionally)
- Must check box telling if spouse's income is taken into account or not
I. Type of Mortgage and Terms of Loan
II.Property Information and Purpose of Loan
III.Borrower Information
IV.Employment Information
V. Monthly Income and Combined Housing Expense Information
VI.Assets and Liabilities
VII.Details of Transaction
VIII.Declarations
IX. Acknowledgement and Agreement
X. Information for Government Monitoring Purposes
Section 1.
1-Mortgage type
Van conventional, FHA, RHS or other
2-loan amount
preliminary amount borrow requests--may change during process
3-interest rate
indicate borrower's target rate
4-number of months
term of loan
5. amortization type
fixed (includes balloons), graduated payment, ARM
II. Property Information and Purpose of Loan
1-subject property address
full street address including zip, if condo include unit number
2-number of units
residential is 1-4 units (over 4 is commercial)
3-legal description of subject property
insert "see legal description in title"
4-year built
borrower or lender should know year of construction
5-purpose of the loan
select 1 of 5 options:
1. purchase
2. refinancenace-includes home equity lines, lines of credit and second mortgages
3. construction
4. construction-permanent or other*
5. *specify, if other
6-property type
choose one of three:
1. primary residence
2. secondary residence
3. investment (non-owner occupied)
7-information for construction or construction-permanent loan
fill in year lot required, original cost of lot, amount of any existing
liens on property, present value of lot, costs of improvement
(construction),
TOTAL of present value plus improvements
8-info for a refinance loan
list year aquired, original cost, , amount of any existing liens on
property, purpose of refinance, description of any upcoming major
improvements that may add value to property or need to be paid off with
loan
9-title will be held in what name
legal names listed in property title as owners of property. Must be same in all documents and application
10-manner in which the title will be held
individual or dual ownership
15-estate will be held in
fee simple-permanent ownership OR leasehold-temporary ownership
16-source of down payment, settlement charges, and subordinate (secondary) financing
borrowers must disclose source of funds in as much detail as possible
e.g., checking account, 401 (k), sold home, equity, gift, or seller contribution
TIP: review the following at this point:
• loan amount, down payment (are they accurate numbers?)
• escrow date (enough time for closing?)
• include association dues
• ask for HOA contact info
• seller contributions (check guidelines to be sure all is ok)
• signatures ( all signed by all parties)
If Condo or PUD:
• include association dues
• ask for HOA contact info
• get master condo policy
• request condo certification
III.Borrower Information
1-borrower's name
must use full legal name as will appear on title and loan docs
2-SS number
must use social security number for US citizens
resident alien identification number for non-citizens
3-home phone number
applicant must have phone number
4-age
on date of application OR date of birth
5-Marital status
must be one of three:
• married
• separated
• unmarried (includes single, divorced, widowed)
6-years of school
years of school completed, graduating high school is 12
7-Dependents (number and ages)
list dependents and ages--only once, co-borrower does not repeat same names
8-present address
street address with zip, whether rented or owned, how long living there
9-former address
if less than 2 years at current address
IV.Employment Information
1-name and address of employer
-must be accurate as employment verification will be sent to that address
-self-employed check "self-employed" box
2-years on job and in this line of work
number of years with that employer and number of years in that line of work or profession
3-position, title, type of business
official title or position
for self-employed or if title is vague, list type of business
4-business phone
business primary phone, include area code
5-former employment
-if less than 2 years at present job
-list any part time or second jobs here if doing so longer than 2 years
V. Monthly Income and Combined Housing Expense Information
1-base employment income
gross income as documented by pay stubs and W-2
2-overtime, bonuses, and commissions
average over past 2 years
3-dividends and interest
must support with statements
4-net rent income
use 75% of gross rental income as personal income
5-other income
alimony, child support, public assistance--support with docs
6-rent or first mortgage (principal and interest or P&I)
current payments for rent or mortgage
7-other financing
any other mortgage, e.g. 2nd mortgage, or line of credit on other property
8-taxes –hazard insurance-mortgage insurance
on refinance--report monthly payment
9-Homeowner's association dues
for condo or PUD--usually include hazard insurance payments
10-proposed (last column)
loan officer projects future mortgage (P&I), property tax, hazard
insurance, and, mortgage insurance, and/or housing association payments
per month
TIPS:
• do the pay stubs match borrower's name, address and social security number
• do wage earnings on pay stubs match your calculations
• does year-to-date on stubs reflect stable or increasing pattern--if higher or lower explain
• do pay stubs reflect deductions not shown in credit report (credit union, 401(k) loans
VI. Assets and Liabilities
Only need to list enough assets to secure loan
1-Completed jointly or not jointly
show if assets and liabilities are joint or not
2-assets
list real and personal property assets
3-cash deposit towards purchase held by
if earnest money deposited, who has it
will be verified during loan process
4-checking and savings accounts
bank name, address and contact info
include current balance of at least one account
4-stocks bonds
5-life insurance with net cash value
if required to meet asset requirements then give name and cash value
6-subtotal liquid assets
sum of: cash deposits+checking and savings accounts+stocks and bonds+net cash value of life insurance policy
borrower must document enough liquid assets to cover closing costs, down payments and reserve requirements
7-real estate owned (market value)
estimate of current value owned real estate
show details in "Schedule of Real Estate Owned" top page 3 of application
8-vested interest in retirement fund
use if needed
9-net worth of businesses owned
use if needed
10-auto owned
specify type and value of all owned cars, especially if outstanding car loan
11-other assets
valuables like jewelry, electronics, furniture, investment artwork--use if needed
12-total assets
total of liquid+nonliquid assets
13-liabities
disclose ALL liabilities
14-debts owed
-if more than 7, use addendum sheet
-include:
• name and address of creditor
• account number
• required monthly payment
• current unpaid balance
15-alimony, child support, or separate maintenance payments owed to
disclose and document all that apply
16-job related expense
-includes childcare, transportation, union dues
-if borrower wishes to include these items include info about recipient and payment amount
17-total liabilities
sum of all liabilities due not monthly payments
18-net worth
total assets minus total liabilities
19-schedual of real estate owned
-list all owned real estate on top of page 3
-note outstanding mortgages
20-other name
if borrower ever got credit under another name (e.g. maiden name or previous marriage) provide those other names
TIPS:
• include sufficient docs for assets, down payment, and reserves
• remove all installment debts ( except auto leases) with fewer than 10 payments remaining
• check accuracy of credit report and correct
errors, remove items paid off but not listed as paid off and get docs
showing items paid off
• for rental property-get tax returns and lease agreements
• if more than 10 properties owned, check lender guidelines and restrictions
• check bank statements for large deposits or large withdrawals
• have 12 month rental or mortgage history
VII. Details of Transaction
Charges incurred in loan process
1-purchase price
for a purchase of property
2-alterations, improvements, repairs
already done or to be done, include in loan amount and indicate amount needed or used
3-land (if acquired separately)
if construction loan requiring lot purchase, include lot price here
4-refinancenance
-show total liens and other liabilities to be paid from loan
-include current mortgage, credit card debts or personal loans being consolidated with this refinance
5-estimated prepaid items
-total of escrow and prepaid items in good faith estimate
-to calculate: 3 monthly housing payments (mortgage+taxes+insurance)
6-estimated closing costs
sum of costs on good faith estimate
7-PMI, MIP, funding fee financed
FHA and some loan programs let borrower finance mortgage insurance for a fee
List that fee here if doing so
8-discount (if paid by borrower)
leave blank (many lenders include discounts in closing costs estimates)
9-total costs
sum of items 1-8
10-subordinate financing
any loan funds in addition to 1st mortgage (2nd mortgage held by seller, etc)
12-borrower's closing costs paid by seller
list dollar amount here
13-other credits
other funds or payments borrower already made (closing costs, application fee, appraisal fee)
14-loan amount (excluding PMI, MIP, funding fee financed)
loan amount prior to adding financing funds to cover mortgage insurance premium
15- PMI, MIP, funding fee financed
-option with government loans to have part of mortgage insurance financed in loan,
add that amount here
16-loan amount (total)
total of lines 14+15
17-cash from /to borrower
borrower must be prepared to pay this amount at closing. To determine amount:
-a-calculate total amount credited to borrower (lines 10+11+12+15)
-b-calculate remaining debt or service (line 9)
-b-a=total due at settlement
18-Section VIII
one of most important parts of application--must adhere to without discrepancy
list of yes-no declarations
yes answer requires further explanation on addendum sheet:
o outstanding judgments against you
o declared bankruptcy in last 7 years
o had property foreclosed or given title or deed in lieu in past 7 years
o involved in current lawsuit
o been directly or indirectly obligated on any loan
that went to foreclosure, transfer of title in lieu of foreclosure or
judgment
o delinquent or default in any federal debt, other
loan, mortgage financial obligation, bond, or loan guarantee
o obligated to pay alimony, child support, or separate maintenance
o any part of down payment borrowed
o co-maker or endorser on a note
o US citizen
o Legal resident alien
o Is property primary residence
o Owned property in past 3 years
IX. Acknowledgement and Agreement
basic agreement description of application
applicant signs and dates it to authorize loan application
BE SURE YOU and APPLICANT UNDERSTAND THIS AGGREEMENT
X. Information for Government Monitoring Purposes
has no bearing on loan
5:10pm
What is in a good faith –and what is?
Itemizes costs and expenses of processing and closing the loan
Provided to applicant within 3 days of application
4 categories of closing costs
How to prepare a good faith
Lender fees
1-801-loan origination fee
for lender's costs in obtaining financing and administrative costs
often a percentage of loan amount
2-802-loan discount fee
charge to lower rate on loan
3-803-appraisal fee
covers cost of appraising property to get fair market value
appraisal-used to calculate loan-to-value ratio
4-804-credit report fee
covers cost of getting credit report
credit report helps determine risk of borrower, amount lender can loan and interest rate
5-805-lender inspection fee
covers any inspections of property by lender or outside inspector
usually with new construction
6-806-mortgage insurance application fee
if mortgage insurance is needed, fee covers processing it
7-assumption fee
when borrower takes over and existing loan
8-808-mortgage broker fee
any fees charged by broker
9-809-underwriting fee
covers final analysis and approval of mortgage
often is lender's cost to investor who will purchase the loan
10-810-tax related service fee
set up service identifying payment due date of local taxes for loan servicer
11-811-aaplication fee-
reimburses lender or broker for internal costs of initiating application process
12-812-commitment fee
lender or broker can charge borrower to secure mortgage loan
13-813-lender's rate lock-in fee
to lender to lock in rate
14-814-processing fee
covers cost of processing and closing loan
15-flood certificate fee-
for search to see if property is in flood zone
16-816-wire transfer fee
charged by lender to transfer funds to closing agent's account
Graph
Lender prepaid items
1-901-interest
-due on mortgage from closing date to first day of following full month
-calculated using loan interest rate, loan amount, and number of days until first payment
-always collected in arrears
2-902-mortgage insurance
-often required when LTV is greater than 80%
3-hazard insurance
-at closing, borrower must pay first year's premium or prove property already covered (if refinance)
-covers against damage from fire, wind, natural hazards
4-905-VA funding fee
mandatory fee charged by VA to a Vet getting VA loan
Escrow account Deposit
Account used when lender will pay homeowner's insurance and property taxes on behalf of borrower
1-1001-hazard insurance
-fee represents amount lender withholds to ensure homeowner's insurance is paid on time
-usually lender requires firs t two months of premiums at closing, remainder added to monthly payments
2-1002-mortgage insurance reserves
if private mortgage insurance needed, borrower may have to prepay it
3-1003-school tax
if school tax exists where property is located, borrower must pay a portion of tax at closing
4-1004-taxes and assessment reserves
if city taxes apply, borrower must pay a portion of taxes and assessments at closing
5-1005-flood insurance reserves
if property is in flood zone and flood insurance is required, portion of flood insurance must be paid at closing
Graph
Title charges
1-1101-closing or escrow fee
pays for services of escrow holder or settlement service that handles all financial transfers and payments of closing process
2-1102-1104-title examination and search fee
title search, title examination, title abstract fees
3-1105-document preparation fee
lender or title company may charge fee to cover costs of preparing final legal documents required for closing
4-1106-notary fee-
licensed notary public's fee for assuring individuals who signed documents arte the people named in those documents
5-1107-attorney's fee
-pays for legal services of settlement service provider at closing
-oversees signing of documents
6-1108-title insurances
covers total cost of lender's title insurance
7-1109-title insurance lender's coverage
-protects lender against loss in relation to the title
-includes loss for coverage not identified by title search and examination
8-1110-owner's title insurance
covers part of the title insurance policy that protects owner against loss due to disputes over ownership of property-
-not needed in refinance (original is in effect for as long as owner owns property)
9-1112-courier fee
pays for overnight delivery of mortgage documents
Other fees
1-Paid Outside of Closing-POC
-fees borrower paid before closing, e.g. appraisal, credit report
-may be listed onHUD-1 settlement statement
-may also list yield spread premium--rebate to mortgage broker from
lender after closing and settlement--is included in interest rate and
not extra cost to borrower
-RESPA law to show premium on good faith estimate to disclose to
borrower that interest rate is higher than par pricing and therefore
provides rebate to broker
-
Government fees
1-recording fee
to record mortgage deed at county office
2-1202-city/countytax/stamp
if applicable
3-1203-state tax/stamp
state where property is located, may charge tax on mortgage
4-intangible tax-
may be charged by state where property is located
Additional Settlement Charges
1-1301-survey fee
lender may require survey
• Exact location of home, lot line, easements and rights of way
• Protects borrowers giving them a record of their property boundaries and size
2-1302-pest inspection fee
for termites and other pests
3-1303-lead-based paint inspection fee
homes built prior to 1978 may need one
Graft
5:30pm
Final Discussion
5:45 pm
Day 3 Integrity of selling 8:00 am
Troy's opening
Review of the last 2 days
1- Credit
2-loan officer
3-program
4-Lending guidelines
5-Title
6-disclosures see
sheet
8:20am
Contracts- Disclosures – Appraisals--and the Integrity of selling
1-Construction loans
1-
2-
3-
4-
5-
6-
7-
8:45am
2-Construction to perm loans
1-
2-
3-
4-
5-
6-
7-
8:55 am
3 Rehab loans
1-
2-
3-
4-
5-
6-
7-
9;10 am
4-Appraisal review
How to order your appraisal and what type
1-prices very
2-who to order from
3-approved appraisers
4-always collect up front money
5-asking for a comp.
9:25am
5-Jeff Miller---Miller appraisals
239-410-2357
1-how to read an appraisal
2-what makes up comparable sale?
3-Type of appraisal {SFR, land, Multi Family and Manufactured, rule property
4-dealings with reviews
5-AVM [Automation valuation modules] vs.
6-USPAP Regulation Appraisal are required to comply to
7-Fannie Mae &Freddie Mac Guidelines for appraisals
8-the difference between owner occupied and investment property
9-comment section
10:00 am
Break
10:15am
6-Real Estate purchase contract
What is in this contract?
Jim Benson
Sailfish Reality
1-
2-
3-
4-
5-
6-Market trends
10:40am
7- Reviewing construction to perm contract
Michael Dukes
You’re Homes of Charlotte
What information is provided by the builder?
1-construction contract
2-lot purchase contract
3-cost break down
4-seller concision
5-interest reserve account
6-feature sheet
7-drawing
8-lot plate map
9-futer development of area
10-title information
11-draw schedule
12- NOC
13-permiting process
14-pool permit
15-Fl construction codes
16-construction mangers
17-building background
18-review finished homes
19-curb appeal
11:30am
8-Lender views on lease option contracts
see example
1-lease option-the first part of the contract is the option to lease or rent the home.
2-terms of the contract—most lease option contracts run for 1-3 years with the option to by the property.
3-guideline of contract—they state you are liable for home, any repairs, and improvement made to the home.
5-option to buy—this state’s you have the right to purchase
the home for the price set by the contract. They also require a
deposit,and most state it is non refundable.
6-price---option prices are usual set at the current market price, this
is why most leases are 1-3 years. The hope of the buyer is there value
will increase. The deposit put down by the buyer, in most cases is non
refundable.
7-record option-lenders like to see at lease 12 months canceled rent checks or money orders for the amount of the lease.
8-escrow account---your payment may be made through escrow at the title company, this also expectable to the lender
9-finacing term—usual the contract states the buyer is
responsible for finding the own financing, the positive part about the
lease is the most lender will look at this as a refi, not a purchase.
You need to look at what payment they have been making during the
lease, because there new payment may not be higher than 2 times there
lease. The lenders call this payment shock.
11:45am
9-Pre disclosures
See samples
1-1003—is the official residential loan application.
Whether an application is taken online, by mail, or in person, you must
complete and sign a 1003. The 1003 is used to gather all crucial
information about the prospective borrower and is used by the lender to
evaluate the application’s creditworthiness.
2-certifcation and authorization form—allows the broker to
investigate credit history and to verify income and mortgage history.
2-truth and lending-the disclosure reflects the amount financed and the
annual percentage rate. [ARP] the borrower must be provided with this
no latter that three days of application or credit reports date
3-good faith estimate—explains the details of all the cost
associated with the loan, also must be provided with in three days of
application or credit date
5-transfer of service disclosure—describes the mortgage
lender’s policies and track record concerning selling the serving
rights of the mortgage the lender origination.
4-equal credit opportunity act disclosure—knows as ECOA; constitutes unlawful discrimination
5-notice of right to appraisal report –Discloses the borrower’s right to request a copy of the appraisal
12:00 am
Lunch
1:00pm
12:00 am
Lunch
1:00pm
10 Final Disclosures (all done above)
1-
2-
3
4-
5-
6-
7-
8-
9-
1:30 pm
Learning the Tec necks of become a professional loan officer
11-The Initial meeting with the borrower p.200
Learning the Tec necks of become a professional loan officer
11-The Initial meeting with the borrower
1-dress like a professional-first impression is very important,
remember the two biggest events in a person life are getting married
and buy a home.
2-be on time-no one like to wait, setting at the doctors office drives use crazy, so be on time
3-Be prepared—review all of your documents and be able answer any of there question about them
4-ask question related to the borrower’s situation-find out what
there goals are, up grade there home, need more room--refi to pay off
bills
5-Listen well—remember we like to talk, we will tell you everything about us and our situation
6- Take notes, so you can review latter— it is very hard to
remember what all was discussed at the first meeting. The borrower will
tell you what they are trying to accomplish
7-do as you say.—The borrower will hold you to what ever you tell
them, use the word’s , this is a estimate—or here are some
different option to look at.
8-be educated on the product and loan program----you should be capable
of explaining the entire loan process, including potential problem, up
front
10-follow-up after meeting
1:45 pm
Question you should ask at you meet with the client
1-problems they want to solve—home what is it –up
grade there current home –refi to lower payments-cash refi to pay
off debit. Buying investment property, or build their dream
2-solution they’re seeking—what is it –ask lots of questions, if you don’t ask you will never know
3-who’s involved in making a decision—is it a family
decision-wife- husband –mother –father-this is who you need
to talk too
4-quanities they need—is it refi with a new purchase, or buying
several investments. This will make a difference when you qualify them
5-what they want to happen that isn’t now happening
6-what their awareness in lending programs
7-goals they want to reach
8-risk they want to eliminate
9-Their degree of interest
10-sence of urgency
2:00 pm
Question borrower mostly to ask
1-do you work for a lender or a broker
2-if broker, what lender do you work with
3-do your programs carry a prepayment penalty
4-what fees do you charge
5-How do you get paid –are you on commission
6-how do you determine which loan program is best for us
7-How do I know you are qualified
8-are licensed
9-How long do you take for loan approval
10-how long does the process take
2:20 pm
What should the borrower bring for a purchase transaction?
1-Photo identification
2-Deposit receipt of down payment
3-Purchase contract
4-pay stub for the past 30 days
5- last 2 yeasr w-2s
6-last 3 months bank statements with all pages for checking, savings,credit union,401[k]
Copy of life insurance declaration-all pages for verification of assets
7-documentation of any other source of income, e.g., pension or social security
8-real estate agent and/or builder'sname adn phone number to contact about appraisal
9-if renting, a copy of lease agreement
10-if renting, name, address. phone number of landlord
11-if self employed, personal income tax returns of last two years with all schedules
12- if self employed, corporate returns for last two years with all schedules
13- if self employed, proft and loss statement signed by CPA or borrower
14-if applicable, written explanations for gaps in employment--signed and dated by borrower
15- if applicable, copy of all bankruptcy papers
16- if applicable, a copy of the divorce decree
17- if applicable, written explanations for any derogatory credit-signed and dated by borrower
18- if VA loan, certificate of eligibility or DD214
190- if VA loan, nearest living relative contact info
2:45 pm
Condos/PUD –some addition requirements
1- covenants, conditions and restrictions
2- bylaws
3- name phone and fax numbers, and address of HOA management
4-insurance agent's name and phone number
5-HOA financial statement
6- HOA certification form completed by management
2:55pm
What a borrower should bring for a refinance
1- pay stubs for last 30 days
2- W-2s for last two years
3- if applicable, any other source of income, e.g., social security
4- copy of current mortgage lender statement (should include phone number)
5- copy of the declaration page from the current homeowner's insurance
policy (include name and number of current insurance agent)
6-paid receipt for current year's property taxes
7-if applicable, copy of flood insurance policy
8- cash-out-only letter stating purpose of refi
9- if self employed, personal income tax returns of last two years with all schedules
10- if self employed, corporate returns for last two years with all schedules
11- if self employed, proft and loss statement signed by CPA or borrower-
12- if applicable, copy of all bankruptcy papers
13- if applicable, copy of divorce decree
14- if applicable, written explanations for any derogatory credit-signed and dated by borrower
3:15pm
Break
3:30pm
Integrity of selling
The six –steps System of selling
1-Approch
2-Interview
3-Demonstrate
4-Validate
5-Negotiate
6-close
3:45pm
The more I learn,the more I learn
There is to learn!
School is never out
The four traits of Highly Successful Salespeople
1 goal Clarity
2-Achievement drive
3-ability to understand emotiom
4-social skills
4:00 pm
Three dimension of Human behavior
1-who are you
2-How you got that way
3-How to change your life circumstance
Chart
Behavior style models
1-talkers
outgoing, friendly, affable. They like people, they are easy to
approach. They buy from people they like) not like to reject or
disappoint so buy); need social approval and acceptance and fear loss
of both
2-doer
bottom-line, get it done; pressed for time, action-oriented, decisive
adn want to deal with the top person; make quick decisions when grasp
the facts; crave respect for their achievements; fear loss of power
3-supporter
easy going, dependable, loyal; want to go slow and get lots of info;
like details; slow to d decide; team players--in background; need
sameness, predictability, security; fear taking risks
4-controller
reserved and distant; logical, unemotional; want facts and info;
disregard enthusiasm and personality; analytical and organized; slow to
make decision after collecting ALL the facts and data;greatest fear is
being wrong
The general info you want to ask
Open-ended need-development questions
• Problems they want to solve
• Solutions they seek
• Quantities they need
• Who's involved in decision making?
• What they want to happen that is not happening now
• What their awareness is of new products or solutions
• Goals they want to reach
• Risks they want to eliminate
• Their personal agendas
• Their degree of interest
• Their sense of urgency
• Their decision criteria
Pose different questions to each style
Talker:
• Who will use the product or service?
• What do other people like or dislike about the product or service they use now?
• How will morale or other people's happiness be influenced?
• Who else will be involved in decision making?
• How do you feel about what I'm offering?
Doer:
• What do you want to accomplish?
• What do you want to happen that is not happening now?
• What can you do to save you time?
• How important is it that you accomplish more?
• What problems do you have that I can help you solve?
Controller:
• What return on investment are you looking for?
• What would help your organization run more efficiently?
• What risks do you want to avoid?
• How do you make decisions?
• How do you manage your functions, jobs, yourself so efficiently?
Supporter:
• What would help you do your job better?
• What risks can I help you avoid?
• What details do you want explained?
• What worked well for you in the past?
• Would you please help me understand how your processes work?
7 Secrets to Achieving Your Goals:
How to Get From Where You Are to Where You Really Want to Be
1. A goal is not an end result but rather a means to keep you on track in your life.
When you set a goal and move toward that end you will gain new
perspectives causing you to stride for even bigger goals. When you
climb that first mountain, as you approach the peak you see an even
higher mountain to climb. After scaling the second mountain, again you
see one still higher and so on.
As you achieve your goals you empower yourself to aim for and accomplish even greater results.
2. Reaching a goal lets you feel a certain way. Just as you buy a drill
because you want holes, you set a goal because you want to experience
specific feelings: accomplishment, being proud, success, wealth,
health, being relaxed, secure, at peace, lauded, praised, etc.
3. Setting a true goal makes your heart beat faster. If it is truly
something worthy to pursue, worthy of you, your goal should be big
enough to scare you at least a bit. Set a goal you really, deep in your
heart, want to accomplish rather than one you feel pretty confident you
can achieve.
When you aim for the stars, if you fall short you will hit the moon.
You know your goal is big enough when you want it with all your being.
Most goals are not deep down desires. You hit every 100% from the heart
desire because you want it so bad nothing can stop you.
4. The greatest value in goal achievement is becoming the person you
have to become to attain your desired end. To have something you have
never had before you must first be someone you have never been who can
do things you have never done.
5.Achieving your goals creates a win-win situation in all areas of your
life. How you do anything is how you do everything. The steps you take
or fail to take to reach your personal goals duplicate your process to
reach your career goals.
6. Serious goal setting takes serious time and effort. History shows
that successful people write down their goals. Set aside at least 30
minutes for this process. Find a quiet time and place where no one and
nothing will disturb you. You may wish to put on some quiet music to
screen out external sounds.
Take three sheets of paper. Title one "What I want to be." On that
sheet write all the degrees, titles, characteristics and feelings you
want in your life. On the next sheet write "Everything I want to do."
Here write all you want to experience, the activities, the fun things,
the serious, the outlandish. On the third sheet write "Everything I
want to have." Here write the material things, the house, the car, the
friends, the business, the degrees, awards."
Spend a full 10 minutes on each sheet. You may need more than one sheet
for an area. Let your imagination go wild. List your endless
possibilities as though nothing can stop you. Imagine all the time and
money you need for any of your dreams flowing to you.
Then, next to each item, write the time frame in which you want to
accomplish that goal, 1 year, 5 years, 10 years, 25 years, 50 years.
Understand you may accomplish a one-year goal in less than one year and
so on.
Next, order the items from what you think will be the easiest to
hardest to realize. Write the top three on a new piece of paper.
Write each "want" as a goal you have already accomplished. Include a
date and always write in the present tense. Say something like, "On or
before January 14, 2008, I am so happy and grateful now that I am a
successful loan officer, enjoying a steady while getting people into
the homes they want."
Avoid statements using "want." Want means "not there yet, don't have
it...and never will" because you will always be in the state of wanting
it.
7. Nothing changes until you take action. Simply writing down your
goals will not make them happen. Two methods that work for many people
are:
1. Take a piece of paper. Cut out pictures of all you want to have and
accomplish adn paste them on that sheet. Hang it up where you will see
it during your day.Spend time visualizing yourself being, doing, and
having everything on your board.
2. Every day, first thing in the morning and last thing before going to
sleep at night, take out your one-year top three list. Close your eyes
and one by one, experience yourself living each goal. Use all five
senses. See, hear, smell, touch, and (whenever possible) taste all that
you will when you actually live that experience. The more detailed your
imagining, the faster you will really live it.
Ask, "What steps can I take today to make that goal happen?" Then say,
"Thank you. Thank you. Thank you." Open your eyes. Feel the gratitude
for all you have and all that is coming to you.
Then live your day consciously so you will notice and act on the steps
you need to take that day. You do not need to know how to get to your
end point. The Universe will show you each step. Your job is to take
each step.
Your brain does not know the difference between fantasy and reality so
spending the time living that dream brings it to you faster.
Two things you must know to make your visions real--you must completely align yourself with your desire.
1. If you have any doubt or any fear about achieving that goal, you stop the process of manifesting it.
2. You must live in a state of sincere love,
gratitude, and appreciation of everyone and everything in your world.
When you love and appreciate all you have, the Universe gives you more
of it. Without that love and gratitude, no matter how many hours you
spend visualizing or writing goals, absolutely nothing will change for
you. You see, the better you feel, the more good you bring into your
world.
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© 2007 Ali Bierman, Creating The Life
www.creatingthelife.com
Revealed: 7 Ways to End Procrastination
First of all, recognize that some forms of procrastination actually serve you.
• Sometimes mulling over alternatives before
committing to certain actions helps you make beneficial choices.
• Letting some items sit (e.g., email, letters,
ads for purchases) takes them out of your awareness. Anything that is
very important will still be important when you come back to it. Those
items that fail to add to or forward your life in any way will simply
fall away. Those items did not warrant the importance you
previously assigned to them.
• Some people work best when under time
pressure. By putting off an action, they create that time pressure.
For those times when procrastination interrupts your flow, impedes your
forward progress in life, and stops you from living the life style you
want to live, here are some methods you can implement right away:
1. Treat the cause not the symptom. Rather than experience some pain
you imagine will happen when you actually do the thing you are
postponing, you fail to take the necessary action. The failure to act
causes the effect--procrastination. The question is less how to stop
procrastination than it is why do you procrastinate.
When you focus on that fear, you magnify it to the point that your fear
of potential pain surpasses the potential benefits of acting. Cause
(fear) creates effect (procrastination).
Ask yourself, "What's in it for me if I do the thing?" Know that fear
of pain motivates more people than the potential to gain pleasure does.
Most people regrettably stay in their comfort zone (which is anything
but comfortable) rather than step out and take the risks that can free
them forever.
2. What do you avoid dealing with by staying perpetually busy? Busy
people use the excuse of their constant activity for not seeing
personal and business problems. The harried entrepreneur who makes the
deals and rakes in the money fails to notice his family leaving him
until they actually move out of the house. Does burying your head in
the sand protect you or the people and things you say you love?
3. Bad habits keep people stuck. Most people blame circumstances and
other people for their ho-hum existence. Do you do the same things
every day yet expect different results? Can your world change if you
fail to change your actions?
Look at the results you now create. Notice how you keep your life
looking that way. You can change one thing at a time or you can do what
the hugely successful do, they take massive action and change
everything they can think of all at once. They continue to implement
changes until they reach their desired outcome. Do you take
responsibility for your life or pass if off?
4. You cannot manage time. Thinking you can manage time using
techniques is like thinking you can permanently lose weight with diet
and exercise plans. You cannot control time. You can only control your
response to and use of time. The more you try to control something, the
more it controls you.
Learn what to pay attention to and when to act--and maybe more
importantly, learn what to ignore. Eliminate time bandits from your
life so your days flow comfortably.
5. Successful, happy people make the time to do all they want to do in
a day. They have the same 24 hours as everyone else yet they seem to
get more done because they choose to do so. Once you create the habit
of using time to accomplish what you need to do while ignoring anything
you do not need to do, you will find time appears for your desired
activities. Bottom line? You live with the choices you make.
6. Keep the big picture in mind. Focusing on the end result lets you
see the useful steps to get there while clarifying the wasteful ones.
Often, seeing a bunch of separate tasks appears overwhelming and causes
procrastination. Focus on one step at a time. Complete that single
task, knowing how it fits into the big picture. Then move on to the
next single task.
7. Calm down rather than slow down. For some people making lists,
prioritizing them and checking off items as they do them works. For
many, those practices strangle them with time pressure so intense they
fail to take even the first step. Procrastinators often feel
overwhelmed and look at the clock all day long, freaking out about
getting that list done. Worry depletes energy, clouds judgment, lowers
efficiency and decreases effectiveness.
People who benefit from making lists usually do not experience
procrastination in the first place--which is why they continue that
practice. However, as a panacea that process fails miserably.
Something to ponder:
If time management and self-discipline skills impacts
procrastination, why do so many people continue to struggle with it?
Why do the courses, date books, and instruments of that huge industry
collect dust on shelves of the people who bought them?
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You may share this article in is entirety, no changes, and maintaining the copyright notice
© 2007 Ali Bierman Creating The Life
www.creatingthelife.com