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     | Wednesday, October 25, 2000 - 04:51 am  Is this Possible? I have been learning a lot from your site an others - thanks to all of you. Without taking too much bandwidth I believe I should be able to do this (or at least something similar.) My question is simple for those of you that work in this area. I'm looking to refinance! I know many of you get folks that want everything and understand nothing - that is not me! What I want to do is not what I HAVE to do. I do not want to take any of your time if this is not possible. From this forum I also have learned there are many LOs that want only "cookie cutter, slam dunk" A paper packages, brokers that mislead and AEs and UWs that never agree with anyone else. I purposely left out the lawyers:-) I won't waste your time if you won't add another unnecessary inquiry on my CR. I am serious! Here is what I have! 8 months seasoning on the first and 2 months on a second. I wish to refinance the first and second but will settle on refi 1st alone because of the short seasoning (I understand.) Property is new construction in DE (completed and closed on March 2000) and appraised at $275K back then - prior to additions. Since then I added a pool, deck & lighting at gross cost of $42K. 1st is $228K with 2nd $50K Primary is 26+ months out of discharged bk. (7) with my last reported scores in the low to mid 600s (but that was 4+ months ago with only positives since.) Debt to Income is below 25% and 5 good lines credit. 0-30, 0-60 and 0-90 last 3+ years. 15+ years' employment with same company and constant verifiable income is available (1040s, employer,paystub etc.) The purpose for the refi is to lower the 11.5% first and 15% second. Is there a lender that will do this? Someone that can lower interest rates on this. Respectfully to all members please don't tell me that "you can't do a refi with such short seasoning" or "you can't get lower rates" or "you need more time out of 7" or "LTV is too high" etc. I have followed many boards for the last 6 months and have seen some "unique" and difficult request workout. If that is your advice, save the bandwidth; you can't do it and that is ok. I am looking for the person/company that can do it not the one that can not. Please if you have constructive advice or input let me know. As I said if this could be done I would like to do it. If it can not I will wait for such time as it can happen. Thanks in advance and thanks to all of you for you information! You can post your answers here or give me an e-mail address to contact you privately. Thanks again Frank (Esajh)
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| | Wednesday, October 25, 2000 - 10:14 am I think you need a good loan broker specializing in difficult loans who'll shop your loan until somebody wants it. I'd try for an 80% LTV refi, it would be worth your while paying the 2nd down. Much depends on your Scores and the appraisal.
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| | Wednesday, October 25, 2000 - 08:37 pm Frank, You don't need to have a broker shop your file. Shopping it is going to get you credit pulled by everyone around the country. What you need is for your file to be run through the automated DU/LP system. Since most "A" loans go to FNMA or FHLMC, this is the best way to "shop" it. Once approved via the automated systems, then it's just a matter of whcih lender has the best price. This is what a good broker can do. They can shop for price not whether you loan can be approved. I doubt you are going to be able to combine the first and 2nd into one loan. Problem is the second since it is so recent is going to be considered "Cash out" and your LTV may be limited(depends on what the house is worth now). You didn't mention what the current value of the home is now that you've done these improvements. This may be a key number. Even using the old value. You may fall into FNMA or FNMA ALT A. The first does not have a seasoning issue even though you purchased less than a year ago. If approved you would be able to lower the first. The second would be tougher as most seconds are totally credit score driven. Most programs require at least a 630 score and then you talking about a 13.25% rate if your using 100% LTV. Rate drops as credit rises and LTV drops. If interested, let me know. Cost to run it through the system is $21.65. Now some will say the lender should suck this cost up as a "cost of business". We could, but it helps weed out the people that are truely interested and the dead weight, plus it's cheaper than charging a couple of hundred $$ application fee to cover "the cost of doing business". When is goes through the system we also get be a 3 bureau report with all three score. I'm happy to share those with people as it helps to resolve issues. Finally, your first is most likely a subprime loan. Probably has a Prepay penalty. I would find out what it is before you proceed with anything. Some state allow faily large ones. This could change your whole deal. Good luck.
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| | Thursday, October 26, 2000 - 07:56 am Thanks Christine and Don: I do appreciate the information but first I must mke a correction. I stated the first was $228K when in fact it is $238K - an unintentional 10K error - oops! I have been on the list for quite a while and appreciate all your good information - both of you. First of all I would gladly pay the fee for the Desktop UW analysis. When I got started I was like so many others - my file (CRA files) were a mess. The last 12+ months was a true exercise in dealing with the CRAs. For those still involved with it, hang in there. Well my file has been accurate for some time now. In September I paid off two good credit lines. One was 3 years old and never late and the other was 2 years old and never late. By now the CRAs should have their files updated and accurate with this information. This act was the last act that should allow my FICO, Beacon, Emperica scores to maximize (you know that ambiguous number of "proper" open items and credit cards.) I now have 5 open items with a debt to income ratio of 23.82% including 1st and 2nd mortgages. I understand that with the 7 being only 27 months since discharge, I will at best be "A-" paper, but it should be in that category. There are no derogs on the files other than the 7. No lates, charge-offs, liens, judgments, collections, or repos! The DTI is as stated above. The proper (whatever that means) number of lines of credit should exist along with the right (another ambiguous word) number of "closed - paid as agreed" to "open - never late" account ratios. There should be less than 2 inquiries in the last 90 days and under 3 the last 6 months (but there are quite a few in the 6 to 12 month period when I was correcting errors.) So Don I do believe my middle score should be near 650-680, but as with so many of us I can not tell. As for prepayment penalties, I took care of that with my original loan (with Wells Fargo.) I paid an extra one point at closing so as NOT to have any prepayment penalties. So I can refinance the first at will once I get the deal? I do agree with you on the second and it is actually not in my best interest (from a tax standpoint and payment benefits) to close this account. I would do it if I could get a really great rate on a combined but there is no need to do that. I get a reduced rate and a partial return of points once I pay 24 months on this loan anyway. As a result the net rate will be lower and from what I understand (confirmed by what you said Don) it would be difficult to do at best. The final point you asked is what is the value of the property. That I do not know! I do know that the original appraisal was $275K. I put an additional $42K into the pool, decking etc. I also know that this may not be a linear increase in appraised value; however, it should not HURT that value at all. I have heard that since the first is less than 12 months old the refi would only use the purchase price and not the appraised value. If this is true the purchase price was $269K; however, it could also help. Some additional options I added after the purchase could have been enclosed in the original purchase therefor, increasing that overall price as well (i.e. deck, exterior lighting etc.) In the worst case scenario the LTV is 88.48% ($238K loan to $269K sales price.) Realistically I believe A- paper could look at $238K to $275K appraised value or 86.5% LTV. If 50% of the additional investment correlates to increased appraised value $275K + $21K that will equate to an 80.4% LTV. In any case I would like to consider it without any increase in value, therefor not requiring additional appraisals (unless there is a significant difference in interest rates available.) Thanks again for all your help. Don, how do I get in touch with your DU so as to have the numbers crunched. Here is my e-mail so you can contact me directly if you wish. Thanks again. Frank Svetahardy@yahoo.com
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| | Thursday, October 26, 2000 - 10:58 am Don wrote: You don't need to have a broker shop your file. Shopping it is going to get you credit pulled by everyone around the country. Have to say that I wasn't aware that this is how other brokers shop a loan. When I brokered, I had wholesale reps come to my office, and I'd show them my difficult deals. Often they made a call to their underwriting manager about specific problems, and if the lender had any interest, I'd give them a complete copy package. The package of course contained the credit. If the lender then agreed to do the loan, they'd get the original, and THEN they would run their own credit. I *thought* that's how everybody does it. Frank should definitely get started with Don to get the numbers straight. There are too many unknowns at this time. I do agree with you on the second and it is actually not in my best interest (from a tax standpoint and payment benefits) to close this account. That part I don't understand. Also, I didn't think the 2nd would be considered cash-out if you can document you used the money for home improvements. To get in touch with Don you can click on Don's name above his posting to get his E-mail address.
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| | Thursday, October 26, 2000 - 12:10 pm Thanks Christine. A few questions to grab your expertise (and I do appreciate it.) Knowing what you do of this desired refi, of mine, would you say that it is better to pay down the 1st or the 2nd? Not withstanding the difference in interest rates but from a refi standpoint desiring to lower the overall interest rate. 80% LTV on a first with a 2nd for the difference or 90+% LTV on the 1st with a low 2nd. It was my limited knowledge that said "lower the 1st" since it is more important and larger. Now the next question. You are right that I used most of the 2nd for improvements to the tune of $42K. I used the rest to pay off a pair of non-deductible auto loans. So while most of this amount did go into the property (and the appraisal should show that in some proportion) I heard that this would not work (refinancing and combining both the 1st and 2nd) because the 2nd was so new and unseasoned. So much for what I heard! But are there products out there that can refi an unseasoned 2nd along with an 8th month old 1st? Also, with mid scores around 650 (assuming that is what it comes out to) would a 90-95% LTV be available in the 8-9% interest rate? Would it still be available if the 2nd was not rolled in and the 1st was keep at $238K? There is a trade off when the 1st is low enough so as to negate the higher 2nd. However, taking a higher total rate by combining the 2nd, could be good only to a point - I don't know where that is? Now that leads right to the next statement/ question. How does anyone find a good/reputable/hard-working broker? How do we know that we are not getting some cookie cutter broker? If the computer can not complete it I don't want it. Even if this is a slam-dunk, is the deal the best one available?. I know there is a line of diminishing returns for the broker's efforts but what indicator do I have that she/he is approaching that level or far from it? How do you even find a broker? I know tons of them are on the grapevine but they only talk to each other. How do we find the Christine's of the world? Thanks Frank
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| | Thursday, October 26, 2000 - 05:40 pm Christine, That was the good old days. When you had AE that knew what they were doing. Problem is today that many AE's are goffers. Their job is to get the file in the door to let the U/W look at it. A/E's promiss the world. Where did all the ones with great product knowledge go. Sometime borrowers know more than the AE. One they get your package, all they want to due is run their credit report and then let you know. I don't like to have every Tom, Dick and Joe Lender run peoples credit. You as the Lender/Broker have to study guidelines and know products. Having run a wholesale opperation in the past it amazed me how many brokers shopped via the shotgun fax approach. Put the file in the fax and hit all the speed dial buttons. To Frank, The $10k oops could make a problem as now your CLTV is >100% based on the purchase price. However, with the less than 1yr seasoning, you should be ablel to use purchase price plus documented(reciepts) improvements as the value. In any case you will eventually need a new appraisal. No way around that issue. As for my thoughts on which to pay down. You have to take into account the rate, regardless of any tax benefits. You should pay off the higher rate of the two. Lender look at LTV and CLTV's. Different products have different requirements. Some loans may do a 95% first but only allow and 80/10/10 if a second is invloved. Also, with an LTV over 80%, PMI is usually involved. However, with a LTV of less than 80% but a CLTV > 90% there may be an increase in the interest rate. I just allways believed in pay down what is costing you the most. As to you question on brokers and the best deal. You'll never know if you got the "best deal" or the "lowest interest rate". Since these answers imply a finite number, there is only one lender in the country that can offer "the absolute best". It's like buying a car. The day after you buy it you always here about a better deal. Problem with interest rate is they change daily. It should be more important to find somebody that you feel confident in. Somebody that has the necessary experience your situation requires. Find out how long they've been in the business? Who is their typical client? If in the first minute of your conversation with them they start quoting rates, wrong person. They should ask you A LOT of questions about you and should not be in such a hurry to run and pull your credit. Too many Loan officers rely on the credit report instead of the merrits of the deal. As for compensation, you generally get what you pay for. I would suggest dealing only with a Broker that will use this form http://www.hud.gov/fha/sfh/res/mbcontr.pdf and be an agent for you. This takes the mystery out of the whole deal. Problem is most consumer think that brokers should make a couple of hundred buck for their efforts. Many brokers think they have to max every deal. This puts people on opposites sides of the table. Since this is a business, i can tell you that I look at every loan and try and determine how much time, effort and expense it is going to take to get it closed. "Slam Dunks" should not make as much. Again unfortuately the customer generally wants to know a price before the broker has a chance to evaluate the situation. I can't think of one time when a custoemr has called in off an add and NOT asked in the first sentance, "What's your rate". Followed by, "and what closing cost do you have". On this site Christine has some good info on Broker compensation. If you haven't read it check it out. To contact me directly use dsemler@metloan.net. I don't know if it is appropriate to post a phone number on this board so we'll just leave the email for now.
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| | Thursday, October 26, 2000 - 07:33 pm Don, feel free to post your number if you want to. I'd recommend you put it and your company info in your profile. I also had a tough time getting good reps, and one of the many reasons why I quit brokering was a purchase loan totally screwed up by North American Mortgage with the most ridiculous conditions. It was embarrassing, and extremely stressful for me and my clients. The weirdest part was that their loan rep Niels was one of the best reps I had, and then he became manager and they screwed up like that. I could never understand it. And to Frank, as Don said, there's no way to ensure that you're getting the "best" deal. It comes down to trust. The way the system is set up, corporate gets to see a large percentage of our obligations and payment performance in the last 7 to 10 years for about 50 cents or less. On the other hand, we have no way of knowing how a broker or lawyer treated his clients. Except for those often fictitious client testimonials, we got nothing to go by. And here is the OTHER side: After I quit brokering, I offered purchase consultations for $150. No more endless hours of working for nothing. I got my client's credit, we usually met for a couple of hours. I helped complete the application, ran ratios, we'd talk about anything that could be a problem. If there were problems, I'd sometimes shop the loan. Once I brought the package to a broker I've known for a long time. He gave my clients a discount on his fees because he got a complete loan package and that saved him a lot of time. I got the buyers from a B or less to A- doing some credit work. One problem was that she had great income, but was contracting and only doing so for a few months. The buyers were writing offers and needed pre-approvals. The broker got several lender commitments over several months for A rates. Then it came time to close. The buyers got their loan from BofA. By that time the loan was so clean, the employment fairly seasoned, even BofA wanted the loan. The broker got nothing. They seemed like such nice people, I have NO idea what they were thinking. I got paid over $400 for MY work. Still, I never did another purchase consultation. And I really can't say anything about rates and programs. There is NO POINT to discussing terms without your credit, completed application and in your case appraisal. Don't know if you read my page on Loan Shopping. Personally, I sure would give Don a try. I'd start with the application and credit and determine then whether to spend the cash on the appraisal. If seasoning the first is a problem, at least your package is ready to refi as soon as your 12 months are up.
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