No Seasoning on Cash Out Refi’s

No Seasoning on cash out refinances after cash purchase

Borrowers who purchased the subject property within the past six months are eligible for a cash-out refinance if all of the following requirements are met:

The new loan amount is not more than the actual documented amount of the borrower’s initial investment in purchasing the property, plus the financing of closing costs, prepaid fees, and points (subject to the maximum LTV, CLTV, and HCLTV ratios for the transaction).

The purchase transaction was an arms-length transaction.

The purchase transaction is documented by the HUD-1, which confirms that no mortgage financing was used to obtain the subject property.

The source of funds for the purchase transaction can be documented (bank statements, personal loan documents, HELOC on another property). Any loans used as the source for the purchase transaction will be required to be repaid on the new HUD-1.

All other cash-out refinance eligibility requirements are met and cash-out pricing is applied.

Note: The preliminary title search must not reflect any existing liens on the subject property. If the source of funds to acquire the property was an unsecured loan or HELOC (secured by another property), the new HUD-1 must reflect that source being paid off with the proceeds of the new refinance transaction
Taken from:

Mortgage Insurance…When Can I Stop Paying?!

Mortgage insurance is a policy that protects lenders against losses that result from defaults on home mortgages. FHA requirements include mortgage insurance primarily for borrowers making a down payment of less than 20 percent.

New FHA Annual Mortgage Insurance Premium
President Obama signed a bill in August of 2010 giving HUD the flexibility to increase Annual Mortgage Insurance Premiums. According to Mortgagee Letter 11-10, the increase in Annual Mortgage Insurance Premiums will be effective for all case numbers dated on or after April 18th 2011.

HUD is implementing a 25 basis point increase in the annual premium for terms of greater than 15 years and equal to or less than 15 years. On loans with greater than 15 year terms, the new amount depends on the down payment. If the down payment is equal to or greater than 5%, the new Annual Premium is 110 basis points (bps). If the down payment is less than 5%, the new Annual Premium is 115 basis points (bps).

On loans equal to or less than 15 year terms, the new amount depends on the down payment. If the down payment is equal to or greater than 10%, there will not be any MIP charged. If the down payment is less than 10%, the new Annual Premium is 50 basis points (bps).

Upfront Mortgage Insurance Premium
Effective for loans on or after October 4th, 2010, for FHA regular purchases and refinance products, the Upfront Mortgage Insurance Premium is 1.00%, which decreased from 1.5%. This amount remains unchanged.

FHA’s monthly mortgage insurance payments will be automatically terminated when these conditions occur:

  • For mortgages with terms 15 years and less and with Loan to Value ratios 90 percent and greater, annual premiums will be canceled when the Loan to Value ratio reaches 78 percent regardless of the amount of time the mortgagor has paid the premiums.
  • For mortgages with terms more than 15 years, the annual mortgage insurance premiums will be canceled when the Loan to Value ratio reaches 78 percent, provided the mortgagor has paid the annual premium for at least 5 years.
  • Mortgages with terms 15 years and less and with loan to value ratios of 89.99 percent and less will not be charged annual mortgage insurance premiums



New HARP Program/Refinance

Eligibility criteria for HARP Phase II loans are as follows: 
  • The mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae;
  • The mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009;
  • The mortgage cannot have been refinanced under HARP previously unless it is a Fannie Mae loan that was refinanced under HARP from March-May, 2009;
  • The current loan-to-value (LTV) ratio must be greater than 80%;
  • The borrower must be current on the mortgage at the time of the refinance, with no late payment in the past six months and no more than one late payment in the past 12 months.
    Info taken from the Briggs and Lang Team (Cobalt Mortgage)

97% Conforming Loans Are Back

Are you looking for an alternative to FHA loans? 



97% Conforming loans may be your answer.  Below are the requirements;

  • Must be Owner Occupied
  • Purchase loans
  • Fixed Rates Only
  • No Upfront Mortgage insurance premium
  • Mortgage Insurance approval required
  • 720 middle score required
  • Arizona Declining market is Ok



 Loan Humor



New Underwriting Guidelines effective 12/1/2011 

* All Borrowers’ Birth Certificate will be required with Pictures taken in the hospital with medical staff. Birth certificate with a live home delivery will not be eligible for first time home buyers.

* Marriage certificate with bridal dress will be required if both husband and wife are required to qualify for the loan

* GFE will not require signature but will require blood sampling from a recognized institution within three days of application

* DNA test will be performed at closing to avoid any ARM length transaction. Loan funding will be contingent upon satisfactory receipt of DNA results.

* Verification of deposit will be acceptable only if Bank representative is present at the closing.

* Copy of Pay stubs and W2 will only be acceptable through IRS only with a wax sealed envelope mailed directly to the lender.

* 7 Witnesses from neighborhood will be required as proof of primary residence in case Borrower owns more than 1 property.

* All appraisers will be required to use Mask and ear plugs at the time of inspection to avoid any personal influence by the Borrower for the appraised value.

* In order to correctly calculate DTI and true house running ratio a list of Grocery items, monthly usage and brand names will be required with receipts and projected 12 months consumption chart.

* Closing will not occur without loan officer presence at settlement and Loan officer picture will be taken at the closing in a Mug shot format with loan number. Picture should meet standard guideline of 2 X 2 inch in color format with one facing and one side view.

* Loan officer picture will be attached to the Deed and note and will be made available for general public and security agencies in case Borrower defaults on the loan.



Wes Lueseck…LO

Freddie Mac To Offer New Loan Modification Option

Financially distressed homeowners with Freddie Mac mortgages will have a new option for loan modifications beginning next month.

The new option, called a Standard Modification, is designed for borrowers who are ineligible for a Home Affordable Modification Program (HAMP) loan modification or have previously defaulted on a HAMP or other loan mod. For those who are approved, the program reduces a borrower’s mortgage principle and monthly payment by at least 10 percent each, thereby making the payments more affordable.

To qualify, homeowners must be at least 60 days past due on their mortgage, that is, having missed at least two monthly payments. Those who are not at least 60 days past due can qualify by proving they are in imminent danger of default, through demonstrating an eligible hardship and providing verification of income.

5 percent interest, 40 year term

Mortgages that are modified will have their interest rates set to 5 percent and the amortization period (time required to pay off the mortgage) extended to 40 years from the time of the modification. Lenders approving such modification will receive cash incentives of up to $1,600 per homeowner approved.

Borrowers approved for the program must undergo a three-month trial period during which they must keep up with their new payment schedule before the loan modification is finalized and made permanent, similar to HAMP. Lenders will have incentives to encourage them to finalize borrower’s status within two months of the end of the trial period.

Trial mods may begin Oct. 1

Lenders may begin trial modifications for approved homeowners under the program as soon as Oct. 1, 2011. As of Jan. 1, 2011, all borrowers seeking a loan modification of any type on a Freddie Mac-supported mortgage must be evaluated for eligibility under the program.

The new Standard Modification replaces an existing type of Freddie Mac loan modification called a Debt Coverage Ratio, which now is being referred to as a Classic Modification. The government’s HAMP loan modification will continue to be available as well

–Information  By Kara Johnson Banking and Financing

HUD to Reduce Maximum Loan Amounts

Effective October 1, 2011 the maximum loan amounts for an FHA loan will be reduced to. Loan amounts will be based on the county. for Maricopa County, the maximum will be reduced from #346,250 to $271,050. Most of the counties in California will be affected as well. Any loans that have been originated under the current guidelines will need to be funded by mid September.