I like to share my thoughts on the mortgage industry as an insider on the from lines. It’s been a month since my last blog entry and that is too long!!

 As you may already know, the $8000 tax credit for first time home buyers (defined as an individual who has not owned a home for the past three years), expires on November 30th. Will it be extended? Let’s hope so! The tax credit has really helped sell some homes! There is speculation of expanding the program to include buyers who are not first time homeowners. Of course, Congress has a lot on their plate with health insurance reform as well as climate change legislation. In my view, extending the credit is crucial to our economy, especially in Arizona, Florida, California, Nevada and Michigan. The National Association of Realtors and the National Association of Home Builders are doing some intensive lobbying of Congress. Hopefully, they can get a few words in edgewise between all of the health care and energy lobbyists.

I have also heard first hand that banks are making a concerted effort to renegotiate mortgages and facilitate short sales. You know why? It’s because the government is putting a lot of pressure on the banks. They have received billions of dollars and have helped only a small percentage of homeowners so far. Even if you were already turned down, you may hear from your lender again. In some cases, homeowners were experiencing hardships like reduced hours of work when they attempted to redo their mortgages and were still declined. Many of these at risk borrowers have lost their jobs, but are still trying to hang on to their houses! If you or anyone you know fits into this situation, don’t despair and good luck!

There have been a few regulations implemented in the past month. The biggest change involves the Truth-In-Lending (TIL) disclosure. Mortgage originators have always had to deliver a TIL within three days of application (Sundays and bank holidays are not included). The new changes include an additional seven day period to coordinate the loan disclosures. Another change is if the final rate for the loan is one eighth (.125%) higher than the original TIL, a new TIL needs to be sent over to the borrower within three days before the closing. The minimum time to close a mortgage is ten days or thirteen days if the final rate is higher than the original disclosures. In case you are wondering why a rate might be higher for the final mortgage than the initial rate, there are a few scenarios which can affect interest rates. For example, if a borrower “floats” the interest rate and the market worsens, the final “locked” rate would be higher. Also, a rate could change if the credit score changes or the loan-to-value ratio changes.

Another change is FNMA (Fannie Mae) underwriting is the verification of a self employed borrower. Thirty days prior to the dates on the loan closing documents, third party employment verification must be done. Approved verifications include a CPA letter, a Yellow Pages ad or a website.

As always, if you need any direct advice for mortgages, please contact me, David Wolsky at Mortgage Services by calling 520-529-7515. The email address is david@davidwolsky.com.

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