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    Friday, October 31, 2008

    A quick update on loan programs

    Happy Halloween!

    A quick update on loan programs. Please call with questions.

    Agency Jumbo Loans : Loans that are between $417k -500k... your clients have 2 weeks to lock their loans in to get the benefit of conforming jumbo pricing which have lower interest rates than loan amount over $500,000. An agency jumbo loan was part of the economic stimulus program rolled out by the Government in February 2008 and is set to expire at the beginning of 2009. Loans must be locked by November 13th and closed by year end.

    USDA:100% financing is still available for your listings in DHS and Coachella and selected areas of Indio through the USDA! No credit score? That’s ok. No mortgage insurance required either. Call me to find out more info.

    Cal- HFA (Chaffa) still allows 100 percent financing with a 680 fico or better if you meet the low income requirements. USDA,

    Calsters - teacher program. 3% down 80% 1st and 17% 2nd with no mortgage insurance and payments are deferred on the 2nd mortgage for 5 years!

    FHA is still my favorite program because it has no income or property eligibility restrictions and is the most lenient for underwriting guidelines. Current down is 3%; however it will change January 1, 2009 to 3.5%. Get your buyers off the fence now!

    Canadian/ Foreign Nationals: 30% down with a minimum loan amount of $200,000. Full Documentation with an International Credit Report and reserves with the servicing bank.

    Franklin Loan Center provides me the platform to stay competitive for you in this market. In-house local approvals and 30 day fundings! I look forward to working with you soon.

    I am NEVER too busy for any of your referrals! Make it a great day.

    Monday, October 27, 2008

    Happy Halloween Week!

    Happy Halloween Week!

    Franklin Loan Center has the competitive platform you need to navigate this lending environment. We are a mortgage bank which means we can approve your deals in-house with our own underwriters who want deals approved, closing quickly, drawing loan docs with my team members, and funding NOW!! We are NOT the average broker who doesn’t have control of underwriting or funding. Use us to stay competitive.

    Take control of your deals and refer them to Franklin Loan Center today!

    I’m NEVER too busy for any of your referrals. This week’s rate sheet is attached.

    Be prepared to set your clocks back 1-hour this Saturday night as Daylight savings will kick in until the Spring!

    Friday, October 17, 2008


    I am still cranking out loans and what a great week! Franklin Loan Center is continuing to expand their underwriting, processing, and funding departments to make your fundings quicker and make you look good! Use us and experience the difference! We are continuing to expand our platform to remain competitive for loan programs. Cal-HFA, USDA, FHA, VA, Reverse Mortgages and Hard Money, as well. Call me for all of your funding needs!!

    GO TO TO RSVP FOR MY FHA EVENT ON TUESDAY MORNING 8:30 TO 10:00AM AT CDAR. (See the attached flyer)

    Market Update

    Mortgage Bonds are attempting to build on the gains seen over the past two days, after being helped by some weak news in the Housing sector.

    The lower-than-expected New Homes Sales for September were reported at their lowest level since January 1991. Additionally, building permits came in at a 27-year low. This weaker-than-expected news gave Mortgage Bonds a bit of a boost today.

    Stocks continued their volatile ride yesterday as the Dow climbed a staggering 400 points after being down 400 on the day. This wild volatility demonstrates the need to work with a mortgage professional who is knowledgeable about the market in these crazy times. For now, I recommend floating to see if Bonds can continue to build on their momentum. I will be monitoring the situation carefully, and I will let you know if anything changes.

    Wednesday, October 15, 2008

    “Guideline Changes for the Mortgage Industry”

    To continue with our theme for 2008 “Guideline Changes for the Mortgage Industry” we have another update!

    FHA loan limits will be decreasing to $355,350 for the County of Riverside for all loans that have an approval dated after Jan 1, 2009.

    There will no longer be a classification of Jumbo Gov 30, just Gov 30.

    Yesterday was the last day to lock loans Agency or FHA Jumbo between $417,000 to $500,000.

    Conventional loans will also be lowering their loan limits in Riverside County back to $417,000 down from $500,000. Call me with questions and make it a great weekend!

    Monday, October 13, 2008

    More inflation news will follow

    "THOSE WHO CAN SOAR TO THE HIGHEST HEIGHTS CAN ALSO PLUNGE TO THE DEEPEST DEPTHS." Lucy Maud Montgomery. Despite all of the government's efforts, markets here and around the world plunged this week as the financial crisis continues to grow.

    On Tuesday, the Fed and Treasury Department announced plans to purchase short-term commercial paper that many companies rely on to finance their day-to-day operations, to help businesses with their short-term credit and funding needs. The government hoped this announcement would help ease uncertainty, restore confidence, and give Stocks a boost. They hoped for a similar result on Wednesday when the Federal Reserve cut the Fed Funds Rate by 50 basis points, and coordinated an emergency global interest rate cut with the European Central Bank, Canada, the UK, Switzerland and Sweden. The Central Banks in Asia followed suit and cut their benchmark interest rates overnight as well.

    However, on Thursday, Stocks plummeted nearly 700 points to a five-year low, and on Friday Stocks ended the day another 126 points lower (after plunging 500 points three times throughout the day). Bonds and home loan rates also worsened sharply in the second part of the week, as Bonds dropped below several important floors of support, and home loan rates ended the week .50% higher than where they began.

    From a historical perspective, we are in the midst of a brutal bear market that began on October 9th 2007. Remember that a decline of 20% constitutes a bear market...and a 10% decline is a "correction." The last bear market occurred between March 24th of 2000 and October 9th 2002 saw a 49% drop. Overall, the average bear market lasts for 12.3 months, with the average decline being 32%. The current bear market is right in line with the average historical time frames, and the extent of the decline is worse than previous bear market averages, but still slightly better than the bottom made in 2002. So the historical data might suggest that we could be nearing a bottom. I will continue to monitor this situation closely, and let you know how this will impact home loan rates in the weeks and months ahead. One bright spot is that oil prices are also plunging, falling from a high of $147 per barrel last July to around $80 per barrel Friday morning...which at least makes a tr ip to fill up at the gas station slightly less painful.


    Forecast for the Week

    Last week was a volatile one despite the lack of scheduled economic reports, and this week several big pending reports could add to the volatility...even with the markets being closed on Monday in observance of Columbus Day. Wednesday will bring the wholesale inflation measuring Producer Price Index and the Retail Sales report for September. The Retail Sales report is a measure of the total receipts of retail stores, and changes in these numbers are closely followed as a timely indicator of broad consumer spending patterns. It will be especially important to see what kind of impact the financial crisis has had on recent spending trends.

    More inflation news will follow on Thursday, as September's Consumer Price Index (CPI) report, which gives a read on inflation at the consumer level, will be released. CPI tells us how much more expensive goods and services are this month over last month, and this widely watched inflation indicator will definitely make headlines. And given what's been happening in the markets, it will be important to note what's happening in the housing sector, which Friday's Housing Starts and Building Permits Report for September will reveal.

    Remember when Bond prices move higher, home loan rates move lower...and vice versa. As you can see in the chart below, Bonds and home loan rates worsened this week, due to a variety of factors. I will be watching closely to see if Bonds and home loan rates can change direction.

    Friday, October 10, 2008

    Agency Jumbo Loans

    Mortgage bonds went on a rally as I predicted this week and mortgage pricing improved by about .25%. Take a bond at the candlestick bond chart below. On Tuesday, we will remember all the Veterans how have fought and are fighting for our liberties and freedoms.

    **If you have a client looking to get a loan amount between $417,000 and $500,000 have them get locked in before this Friday!**

    There are not too many reports this week that will impact financial news so mortgage pricing will most likely take direct from the stock market.

    Attached is a free appraisal for any new clients you refer to me after 11/09/08. I am NEVER too busy for your referrals and I appreciate your business.

    It’s been another unbelievable week in the mortgage business.

    It’s been another unbelievable week in the mortgage business. I am still getting your clients approved and deals are coming together! Yes, it’s true. Here are some tips that are helping as I am continuing to be creative.

    1. Counting Rental Income if Converting a Primary to an Investment- If qualifying is a problem get a co-mortgagor to help offset the debt to income ratios if they are too high.
    a. Conventional - 30% equity and 6 months PITI reserves to count rental income
    b. FHA – 25% Equity and 6 months PITI reserves to count rental income
    2. Source the down payment – getting a gift or having money in the bank makes getting approved easier. We can use gift down payments from relatives.
    3. Zero Down? – I have USDA Zero down programs for rural housing, CALHFA for 100% financing with a 680+ fico, and VA loans with no mortgage insurance.
    4. Low Down – 3% down until January 1, 2009 and 3.5% thereafter! We can use gift money from a relative it’s so easy!
    5. Credit Problems? Talk to about a credit repair program. It’s easy and its low cost to turn your clients into approved buyers.
    6. Think Full Documentation – 2 years tax returns, 2 months bank statements, current paystubs. Set realistic expectations.
    7. Investors – 20% down with no more than 4 properties with loans on them – Per Fannie Mae Guidelines
    8. Investors – 30% down with more than 4 properties with loans –

    Hope this helps! Oh by the way, I am never too busy for referrals!

    Tuesday, October 7, 2008

    What is the expected impact of HOPE for Homeowners (H4H)?

    What is the expected impact of HOPE for Homeowners (H4H)? Per

    The Congressional Budget Office estimates that as many as 400,000 homeowners could avoid foreclosure through this program over the next three years.

    What is the value of the HOPE for Homeowners program to lenders?

    Only FHA approved mortgagees can originate H4H loans. H4H loans may benefit lenders by helping them avoid foreclosure expenses. Although the lender will likely have to write down their existing loan in order to originate an H4H loan, it is still less expensive than foreclosure and disposition of property.

    Why should existing lien holders accept the short payoff that is required under the terms of the law?

    HUD understands that it will be a challenge to encourage lien holders to accept short payoffs in order to participate in this program, especially when there are other loss mitigation tools available that may provide a more suitable solution. However, in instances where those tools are ineffective, we believe that the holders of these mortgages should accept the short payoffs in lieu of the tremendous losses associated with foreclosure. Similar challenges exist with subordinate lien holders but by offering them the opportunity to have an interest in FHA’s share of future appreciation in the property, we hope to entice these lien holders to participate as well.

    What advice should loan servicers/lenders give borrowers who are facing difficulties fulfilling their obligations on their existing mortgage(s)?

    The H4H program is another loss mitigation option to keep borrowers in their homes on sustainable and affordable terms. Lenders should provide information to borrowers on possible options include contacting a HUD approved counseling agency. Borrowers may call 1-800-569-4287 or visit

    When can I start originating H4H loans?

    The program is effective from October 1, 2008 to September 30, 2011.

    Eligibility and Underwriting issues

    How does the H4H program differ from FHA Secure?

    Under H4H:

    • Any type of first mortgage as long as it was originated on or before January 1, 2008.

    • All existing lien holders must waive prepayment penalties and late charges, as well as extinguish all liens against the property.

    • Existing first lien holders are required to accept the proceeds of the H4H mortgage as payment in full.

    • Borrowers will be required to share both the initial equity created with the H4H loan, and future appreciation.

    • The maximum loan amount is $550,440, nationwide.

    How does the appreciation sharing piece work?

    To entice subordinate lien holders to participate in the negotiation process and release their liens, FHA has the authority to share its future appreciation entitlement with them. At settlement, subordinate lien holders will receive a certificate that evidences their interest as an obligation backed by HUD, with payment conditional on the value of HUD’s appreciation share.

    Are there special underwriting requirements for the H4H program?

    Yes, in addition to standard underwriting procedures, the underwriter must:

    • Determine that the borrowers existing total monthly mortgage payment is in excess of 31% of their gross monthly income in March of 2008.

    • Determine the borrower’s total monthly mortgage payment on the new H4H loan is less than the borrower’s total monthly mortgage payment on existing loans.

    • Determine that the DTI’s are at or below 31/43. However, if the borrower has successfully completed a 3 month trial modification, ratios can be expanded not to exceed 38/50.

    • Review income as reported on the transcript or copy of the borrower’s income tax returns for the previous two years.

    How is the total monthly mortgage payment on the existing loan(s) calculated for the purpose of qualifying the borrower for the H4H program?

    The total monthly mortgage payment is defined as the fully indexed, fully-amortizing Principal, Interest, Taxes and Insurance (PITI) payment. This includes homeowner’s association dues, grounds rents, special assessments, and all subordinate liens as of March 1, 2008.

    Can I add a non-occupying co-borrower to help qualify?

    No, however you may add a non-occupying ,co-signer who does not have any ownership interest in the property.

    What if there is currently a non-occupying co-borrower on the loan?

    The non-occupying co-borrower will need to quit claim their interest in the property prior to the occupying co-borrowers applying for the H4H program.

    What loans are eligible for refinance under the H4H program?

    Any type of mortgage is eligible for refinancing under the H4H program, including conventional (prime, Alt-A, subprime), or government backed (FHA, VA, or Rural Development), fixed or adjustable rate mortgage.

    The loan must have originated on or before January 1, 2008, the borrower must have made at least six (6) payments on the existing mortgage, and the total monthly mortgage payment exceeds 31% or the borrower’s March 2008 gross monthly income. The borrower may be current or delinquent at the time the new H4H mortgage is originated.

    What properties are eligible?

    The property to be refinanced must be the borrower’s primary and only residence in which the borrower has an ownership interest.

    Only 1-unit properties are eligible, including condominiums, cooperative units and manufactured housing permanently affixed to realty.

    Does the borrower have to be delinquent on their existing loans to be eligible for the H4H program?

    No, the borrower may be current or delinquent at the time of application for the H4h mortgage.

    What must the existing lienholders do?

    Existing first mortgage lien holders must waive any and all prepayment penalties and late payment fees, agree to accept the proceeds from the H4H mortgage as payment in full, and release their outstanding mortgage liens.

    Existing subordinate lien holders must waive all prepayment penalties and late payment fees as well as release their outstanding mortgage liens.

    Will I have to get a new appraisal or can I use an AVM?

    In all cases a new FHA appraisal must be ordered specifically for the H4H transaction and the appraisal should be no more than 3 months old at the time of closing.

    What are the rates for the Upfront Mortgage and Annual Insurance Premiums (UFMIP)?

    The Upfront Mortgage Insurance Premium (UFMIP) is 3% and the Annual is 1.5%

    Can the UFMIP be financed?

    Yes, however the maximum LTV under the H4H program is 90% regardless of whether or not the UFMIP is financed.

    Will there be additional disclosure requirements?

    Yes, the originating lender must provide the HOPE for Homeowners Consumer Disclosure and Certification form at the time of initial application for the Program.

    Are there additional lender certifications?

    Due to the statutory requirements and the unique nature of the program, lenders and underwriters will execute a certification assuring HUD that they have underwritten and closed the loan in accordance with the H4H program guidelines.

    What is the maximum LTV for the H4H program?

    The maximum LTV for the Program is 90%, including any financed UFMIP.

    Who can pay closing costs?

    Standard FHA policy regarding closing costs is applicable, including the 1% cap on origination fees.

    • Borrowers may pay closing costs from their own assets,

    • They may be financed into the mortgage provided the 90% LTV limit is not exceeded,

    • The servicing lender, originating lender and/or a third party (e.g. a Federal, state or local Program) and/or

    • The originating lender my pay the borrower’s closing costs and prepaid items through premium pricing.

    Is subordinate financing allowed to pay closing costs, like under FHASecure?

    No. Subordinate financing is not allowed in the first 5 years of the mortgage except in when necessary to ensure maintenance of property standards.

    Will Wall Street be receptive to purchasing these new loans?

    These loans can be securitized in Ginnie Mae FS Pools, making them attractive to Wall Street and other investors.

    The Labor Department's Jobs Report

    The Labor Department's Jobs Report came in much worse than analysts expected, with 240,000 jobs lost in October. In addition, the Unemployment Rate jumped to its highest level since 1994.

    In market news, Stocks are coming off their worst back-to-back days since the 1987 Stock Market crash. Although Stocks opened higher this morning, they could be in for more of a decline as today's poor Jobs Report sinks in. This could create selling pressure on Stocks, which may help bonds improve.

    Currently, prices are battling a strong ceiling of resistance. Should prices break out above current levels, it would be very bullish. Therefore, I recommend floating, even though prices are modestly weaker right now and may even worsen slightly before bouncing.

    Monday, October 6, 2008

    The FHA Loan to Value Requirements

    Good Morning!

    Mortgage backed securities are up on the day today and getting a good start for the week! I am carefully floating as of right now and if I see the market turn I am ready to pull the trigger and capitalize on this quarters best rates for your clients.

    It may have been confusing regarding Mortgage Insurance Premiums (MIP), Monthly Mortgage Insurance (MMI), Private Mortgage Insurance (PMI) information updates I provided. Let me clarify:

    Conventional financing only has PMI if you put down less than 20%.
    The minimum down payment for a primary residence is 10% for conventional.
    FHA minimum down today is 3%, as of January 1, 2009 it will be 3.5%.
    FHA financing has a one-time MIP, now 1.75% of the loan amount, which can be financed into the loan, along with MMI payment paid monthly.
    MIP and MMI are two separate insurance premiums.
    MIP is paid to HUD directly at closing and the borrower pays the MMI monthly to HUD.

    Sorry about the confusion. I hope this helps.

    The FHA Loan to Value Requirements are staying at 3% until January 1, 2009. Attached is the mortgagee letter from HUD which gives example and can help you understand. Please call with any questions.

    Oh by the way, I am Never too busy for any of your referrals!

    Saturday, October 4, 2008

    January 2009 the minimum downpayment will change to 3.5%.

    Please be advised! There was a mistake as to the dates of change for the down payment requirements for FHA. As of January 2009 the minimum downpayment will change to 3.5%. What did change on October 1, 2008 was the risk based mortgage insurance. Today it’s a pre-paid amount of 1.75% up from 1.5% for MIP, either financed or pre-paid at closing. The annual rate of .55% up from .50% applies for the monthly mortgage insurance. This is still a discounted rate when compared to conventional mortgage insurance at .78% and the minimum down payments are much lower. Conventional financing still requires 10% down to avoid MIP and the interest rates are higher. Thanks for keeping this in mind.

    Friday, October 3, 2008

    Changes in Loan Programs - There is change afoot!

    Dear Friends and Clients!

    Happy October! Wow another great week of change! I know you are getting busy out there! I am NEVER too busy for any of your referrals!

    Changes in Loan Programs - There is change afoot!

    Mortgage guidelines are changing for conventional and FHA financing. I am keeping up with these to keep you informed. See the bullet points below:

    · Turning a primary residence into a rental requires 30% equity for conventional and 25% for FHA to count rental income toward qualifying ratios.
    · Investment properties require a 20% down payment.
    · Second Homes require only 10% down!
    · FHA now requires 3.5% down payment as of October 1, 2008.
    · Down Payment assistance (Seller Paid) – like Nehemiah, HART, etc is not allowed as of October 1, 2008.
    · Down Payment assistance – Gift funds from a family member, non-profit, employer still ok.
    · Bankruptcy Seasoning – Discharged = 2 years with re-established credit Dismissed = 4 years with re-established credit.
    · Short-sales – two-year seasoning period with re-established credit.

    NOTE: MOST FIRST TIME HOMEBUYERS WILL QUALIFY FOR A LOAN!! IT IS NOT DOOM AND GLOOM! Let’s take a dream of homeownership and make it a reality and focus on what we can do!

    Market Update
    The Labor Department reported this morning that 159,000 jobs were lost in September. This is much worse than the 105,000 lost jobs that economists were expecting.

    Normally, Bonds would move higher on the news; however, speculation that rate cuts may be coming in the future has Bonds bouncing around a bit.

    Attached you will find my current rate sheet for the weekend. These rates have been accumulated from, Chase, Wells Fargo, IndyMac, Countrywide, Citi Mortgage, Wachovia, and Everbank. I have handpicked the best rates from all these banks for the most popular loan programs, so that I can ensure you and your clients the very best deal.