Atlanta Mortgage News

Good afternoon,

 

A few weeks ago, the industry saw a rate drop due to a volatile 10 Yr US Treasury. Today, the industry is giving out higher  rates while things are constantly changing and evolving in these unprecedented times. Here are perhaps the main risks influencing rates today, not specific to any lender but the mortgage industry as a whole:

  1. The market has been extremely volatile lately, and the recent pattern of the market tanking-rallying-tanking-rallying is resulting in expensive and dangerous margin calls often costing an entire point or more. This is a VERY risky time for lenders to take new locks under these market conditions, which is a big reason you are seeing rates industry-wide that seem to say, “We aren’t locking right now”. To survive this storm, mortgage lenders have to make very smart decisions, including not taking huge indeterminable risks that could be detrimental to the longevity of the company.

  2. Mortgage Backed Securities are viewed as riskier today in these anything-but-typical market conditions we are currently seeing because:

    1. There is a concern that a disproportionately large number of the mortgages closing now will be paid off via refinances within 12 months (AKA “EPO, Early PayOff”) if rates drop again when the market stabilizes, resulting in an enormous cost to the original lenders. 

    2. There will certainly be a huge influx of missed mortgage payments in the coming months due to factors such as Fannie Mae and Freddie Mac temporarily suspending foreclosures and evictions, new forbearance options allowing borrowers to delay some mortgage payments, and borrowers losing their jobs or experiencing a pay cut affecting their ability to pay their mortgage payments. Some estimate that 25% of borrowers may not make their mortgage payments in the coming months. 

NOTE: Under current policy, mortgage servicers are STILL responsible for paying the principal, interest, taxes, and insurance to the bondholders, even when the borrower does not make the mortgage payments to the servicer. This is expected to cost the mortgage servicers up to an estimated $40 BILLION dollars over the next 3-4 months across the industry without Federal help.

Posted by Elizabeth Washburn on March 25th, 2020 5:52 PM

Title Insurance - Is It Worth the Extra Expense?

Likely, the biggest investment you will make is purchasing a home.  In the State of Georgia, determining the rights and interests to real property is the responsibility of the closing attorney who represents the lender. 

Let's start with the basics but HANG WITH ME!  This gets really interesting at the end, but I need to review the basics first.

What is title insurance?

Title is the paperwork for the ownership of property. Names on the title change as the property is sold.  The title company hired by the attorney searches the title (or ownership) history of the property. Through its research, the title company can almost always identify any title problems and clear up these problems before you close on the property; however, sometimes they miss something in the chain of title and that is where insurance comes in play. Sometimes the problems include:

· Defective title — "Defective title" covers any number of problems with the title to your home. It can even include a "contested title". Defects are rare, but they can be very difficult to get rid of, making the property inaccessible, unbuildable, or unsaleable. Any number of other complex problems define "Defective title." 

 ·  Contested title — This happens when someone who owned or even lived in the home before you claims to still have ownership. If this happens, the title insurance company will defend your title and the process will cost you nothing.

REQUIRED: Lender’s title insurance

The lender requires you get LENDER'S title insurance that protects the mortgage balance. 

OPTIONAL: Owner’s title insurance

The OWNER'S TITLE protects your interest in the property and it can vary in protection and cost. Here is the interesting part for the financially-minded:  Attorneys are legally obligated to quote STANDARD TITLE INSURANCE pricing unless they have permission within their forms to quote an ENHANCED TITLE INSURANCE. So I’m guessing you know what form most likely is include in their paperwork? :)

Here is the only significant between the policies:

STANDARD TITLE INSURANCE covers the equity between the purchase price and loan amount at the time of purchase. 

ENHANCED TITLE INSURANCE covers the house’s appreciation over a period of five(5) years up to 150% of face value.

The ENHANCED policy sounds really good until you read that sentence again.  Five(5) years, not 15 years or 30 years, or even 7 years (the average length of home ownership), is what they are covering extra with a significant jump in price. ASK and comparison check before you agree to your new policy. If the State requires STANDARD TITLE INSURANCE be quoted, that might be reason to pipe up with the questions and shop carefully.

**And here is my CMA -  I am not an attorney and this is not legal advice. If you want more information about title policies, search up title insurance companies or get quotes for both policies yourself. 

Posted by Elizabeth Washburn on March 14th, 2019 10:33 AM
Posted by Elizabeth Washburn on September 23rd, 2018 7:37 PM


Teaching the 3rd Grade

Recently I had the distinct pleasure of participating in Career Day at our local elementary school.  I started the lesson with self-employment.  I explained, while it is nice being your own boss and having a flexible schedule, your success will directly reflect in your pay check and your reputation within the community. 

It is difficult to properly convey the excitement of compound interest when your audience is eight-years-old.  I was competing for their attention with police officers, firefighters, and marketing directors (who had lots of gadgets).  Totally unfair!!  So, instead,  I reminded them, that though they may not want to be a loan officer, they may work with one when they want to own a home.  They seemed to enjoy looking a house photos and discussing prices.  We generally discussed how to buy a home too.

Finally, I explained the LIFE LESSON I wanted them to always remember, long after Career Day was over. (In the photo, that's what is highlighted on the board in yellow.)  Maybe you know this lesson?

If your outgo exceeds your intake,

then your upkeep will be your downfall.

I think some of them understood our discussion and all of them wrote it down.  I'm hopeful that a seed of financial knowledge has been planted on Career Day.  Have a fantastic week!  Need help on a mortgage?  Grab my app at http://NewThresholdMortgage.com

Elizabeth Washburn

Posted by Elizabeth Washburn on April 10th, 2018 2:49 PM
Posted by Elizabeth Washburn on March 7th, 2018 10:21 PM


PREPARING

Whether you're anticipating a total solar eclipse or a future home, both require preparation to get what you want out of the moment and save yourself from future headaches.

Here are two scenarios where I typically offer advice when given the time (61-90 days) to make the loan happen.

You're self-employed.; Move the money you are using for the purchase of a home to your personal account. If you have down payment in your business account, you can use it; however, the lender will want to "source" the funds in your business account(s). This means if there is anything private, like account numbers or client names in the bank statements, you may be revealing more than you desire. By having the funds transferred to your personal account more than 60 days before you go to underwriting, lenders can stay out of your business.

You're getting a gift for the down payment. If they love you enough to give you the money, perhaps they trust you enough to give that money 61 days ahead of underwriting. Of course, gifts are allowed on many loan programs if the transfer is documented and you have a gift letter; however, if the funds are already in your account for two months, the money is no longer considered a gift. This actually improves your qualifications in underwriting because a loan using your own funds for the down payment is considered a less risky than a loan with gift funds.  If it is yours for 60+ days, it is no longer a gift.

As a last tip,  I offer Fully Underwritten Loans WITHOUT a contract.  In other words, we can turn your offer into the equivalent of a full cash offer pending the appraisal and title work. This is a powerful option at your disposal for those hard to obtain homes.  Please let me know if I can help you purchase a home in Georgia. 

*Eclipse photo taken near Dillon, GA on August 21,2017 using Canon Rebel T6, 300mm lens.

Posted by Elizabeth Washburn on August 31st, 2017 2:35 PM

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