Beware Using Non-FHA Approved Mortgage Brokers

Work only with an FHA approved mortgage broker with a Mini-Eagle or an FHA approved Lender with a Full Eagle.

Since the FHA Insurance program is pretty much the only way to get a mortgage these days, I’d like to caution you against working with any mortgage professional that is not approved by HUD to originate FHA Insured Loans.

The process of obtaining such an approval is difficult and expensive. When a mortgage broker is approved, the office receives what is known as a “Mini-Eagle.” The Mini-Eagle is the permission from HUD to originate FHA loans. A Direct Lender, approved by HUD, has a Full-Eagle.

As we become more and more aware of the excessive lengths some unscrupulous mortgage people will go to in order to make money without paying any attention to legalities, ethics, or professional conduct, we need also understand these same lowlifes will try to jump on any bandwagon in order to make a buck.

Fact is the regulation is in place to prevent anyone from jumping on the FHA bandwagon. That regulation is the Mini-Eagle and Full-Eagle.

FHA does allow in certain instances a Non-FHA Approved mortgage broker to recommend a client to a Full-Eagle Lender and to act as a consultant for the client. This permission is limited to consulting and the fee is limited as to how much the consultant can earn. The consultant is paid by you, the client. Consultant means exactly that: advice, counseling and consulting. The Non-FHA approved mortgage professional cannot originate the loan, cannot write the loan application or become involved in any aspect of the process for loan approval. For that you will work directly with the Lender.

Think of the Non-FHA approved mortgage person as a facilitator who connects you with a Lender, is available to answer your questions and offer advice on the program, but cannot do anything more than that.

Beware of the mortgage people walking around saying, “I can do FHA loans.” More often than not these lowlifes are not FHA approved and they plan on convincing you to doing a loan application with them for an FHA loan. “I’ll find an FHA Lender for you. Sign here.” This is ILLEGAL.

Further, this consultant doesn’t have any real standing in terms of accessing information about FHA products or interacting with the Lender to get your loan processed timely for an approval.

Why should you pay one of these people when you can easily find and work with an approved and experienced FHA mortgage professional?

These folks are just trying to take your money by joining in the current mortgage market opportunity without making the proper professional investment (in time and money) to obtain the proper licensing.

Work only with an FHA approved mortgage broker with a Mini-Eagle or an FHA approved Lender with a Full Eagle. You can find listings of both types of Mortgage Company in your area by visiting and entering your zip code.

FHA: Mortgage Solution for 2009

The FHA program was created to make it easy for families to acquire their own homes. I say this often these days, “The FHA is the ONLY game in town.”

When I started in the mortgage business in 1989 I was introduced to the FHA Insured mortgage loan. As a Mortgage Banker, the loans I made were typically FHA as this had long been the province of mortgage bankers in general.

During the Sub-Prime “Boom” I found myself often confronted with clients who, in my professional opinion, were prime candidates for FHA financing. The problem with the boom times and FHA was simple: there is a limit to FHA loan amounts, and during the boom, those limits were far below what was needed in the marketplace. FHA loan limits had not kept up with market price advances.

Now, the FHA limit here in the NY Metro region is $625,500 for a single family home. This is something we can work with.

The FHA loan program was created in 1934 during The Great Depression as part of the New Deal. The concept was simple: turn a nation of renters into a nation of homeowners. At the time, 70% of the United States population rented. The FHA program was created to make it easy for families to acquire their own homes. To this end, the FHA was spectacularly successful.

I like that there is so much rich American history associated with the FHA. I have always loved helping my clients obtain their dreams of homeownership with the FHA program. And I am thrilled that during these terrible economic times the FHA has once again come to the forefront to create possibilities of homeownership. I say this often these days, “The FHA is the ONLY game in town.”

And I like that.

I’ll write more about FHA, in the meantime, visit FHA’s website for more information about this wonderful loan program.

Prepare for Tax Time

Homeowners and Renters alike need to prepare for a different kind of conversation with their tax professional during these troubled economic times.

In the next few weeks, employers all across the country will begin sending out 2007 W-2 forms so that we taxpayers can get our papers together and submit our annual tax returns.

As you await the arrival of your W-2, might I suggest spending a Saturday afternoon preparing for your meeting with your tax professional?

If you are a homeowner, you’ll need also to receive from your mortgage Lender your annual 1098 form indicating how much interest and taxes you paid throughout the year. For most of us, the mortgage interest and property taxes on our primary residences are seriously important tax deductible items. Often, these deductions can bring about a large refund for a homeowning family.

Homeowners should also bring to their tax pro any and all documentation to support any other potential tax deductions they may have the right to claim: charitable contributions, Union dues, unreimbursed employee expenses, proof of medical bills in excess of 2% of your adjusted gross income, and more. Bring as many items as you may feel are deductible; let your tax pro be the judge of what is feasible as a deduction, and what’s not. As a homeowner, you’re most likely filing a Schedule A for itemized deductions and that’s where the mortgage interest, property taxes and all those other deductions will be collected to provide a substantial reduction in your adjusted gross income—usually much larger than the standard deductions provided for by Uncle Sam.

I’d like to suggest this year that you Homeowners also consult with your tax professional about important tax-saving strategies for 2009. In the current state of the economy, we could all use a boost in our take-home pay or at least solid advice on how to save on your 2009 income taxes.

For instance, you can change your withholding at work and reduce the tax dollars deducted from your weekly paycheck, thus taking home more of your hard-earned dollars. Next year, you’ll get a lower refund, but, so what? That’s your money the government is returning to you—a loan you made, interest-free to Uncle Sam—not a windfall from the Treasury.

Your tax pro might also suggest refinancing your mortgage at what are right now the lowest interest rates since a man named Eisenhower was in the White House. Your tax professional will likely tell you to pay points not only to obtain the lowest possible rate, but also to obtain a further tax deduction over the next two years on your annual returns.

Homeowners, when you meet with your tax professional this year, go for the maximum deductions and discuss money-saving, tax-reducing strategies. It’s your money, it’s your home and you worked danged hard for both of them!

For those of you who are renting, I’d recommend similarly probing for the sage wisdom buried in your tax professional’s mind as to ways you can save money on your 2009 taxes. There are certainly things you can do now and throughout the year—contributions to an IRA and the like—that will invest your money for the future and lower your tax liability when you file your 2009 return next year.

I’d bet that for many renters your tax professional may look at your income, look at your lack of deductions and your inability to file a Schedule A for itemized deductions and make a radical suggestion: Buy a Home!

If ever there was a reason to ignore all the bad news about falling home prices, instability in the economy and the payroll of the New York Yankees, buying a home for the purpose of paying less income tax is as good a reason as you can find.

So, renters, get ready for a serious conversation with your tax professional this year. Then, ring me up to get prequalified for a mortgage. I’d be happy to oblige in your quest to pay less income tax next year. And, it would be my pleasure to help you make a dream come true: that of owning your own home!

A New Hope…just like the Old Days

As a new sense of optimism sweeps into the housing market, the old-fashioned way of getting your mortgage comes once again into vogue.

There’s a feeling of hope we’re seeing from new clients; they want to buy homes. Monthly payment leads the day when it comes to determining if they can buy a home, not the rate, not the state of the economy, not the state of the housing market. And that’s just like the old days.

The hope is driven by the idea there will be a new President, a new administration, and a new attitude in Washington.

These people are coming out in the cold, looking at homes, asking questions, making offers and ultimately buying a home. Many of them are being qualified using another traditional mortgage “standard” the FHA Insured mortgage loan.

FHA has been around since The Great Depression and is still, in my humble opinion, the best way for a family to purchase a home. FHA financing allows for a more “human” understanding of a borrower’s qualifications; lower credit scores (not “deadbeat” credit, just the stuff life throws at you), lower cash required for downpayment (important in the NY Metro region where the cost of living and closing costs are so high), and the ability to use more of your income to qualify for the loan.

I’ve performed miracles using FHA loans throughout my career; and a lot of plain old boring loans that didn’t require a miracle, just a human touch.

FHA is a government insurance program; it’s not a bailout. The bank makes the loan, Uncle Sam insures it against foreclosure. So an old program comes into it’s own just in time. As a new sense of optimism sweeps into the housing market, the old-fashioned way of getting your mortgage—with some help from the government through the FHA—comes once again into vogue.

Yay for that.

Last Night’s Save: Another Buyer Rescued

I did it again last night: I wrote a loan application to save a purchase where the Buyers had gone to two other mortgage companies. Those companies couldn’t find a way to approve their loan request.

The mortgage biz ain’t rocket science. Why is it so difficult for mortgage people to get their act together?

I met a couple last night who are purchasing their first home. They have good credit, they work hard and they are receiving a gift of $40,000 from her Mom to buy the home. Her aunt attended our meeting too because she is cosigning on the loan with them.

When this situation was first presented to me by the Realtor the day before, I kept thinking there must be something I’m missing or something really bad about this loan application that the other companies can’t get it done.

I knew the fundamentals for mortgage prequalification were in place. I had spoken briefly to one of the clients on the phone; the rest of the information had been provided by the Realtor. I saw a potential “save” of this loan application using an FHA Insured mortgage. FHA is known as “the story loan” and, if you know your guidelines, you can help a lot of folks achieve their dreams of homeownership.

I came to our meeting at the real estate office warily and with an exit strategy so I wouldn’t look too foolish. I had told the Realtor the night before that all looked good and that I could find a loan approval. Now my reputation was on the line, and I hadn’t even met the clients yet.

I continued my wary thoughts last night. I grilled the clients with lots of extra underwriting-type questions just to get to the root of the problem. After two hours of this and a call to my Ops Manager (the smartest man I’ve ever worked with in the mortgage biz), I had the clients sign the loan applications and we were on our way to obtaining a loan approval and a closing.

The issue at hand was the husband’s employment history. At first blush it seemed awfully spotty. But, when the time was taken to sit there with a blank sheet of paper and note the dates and the continuity of same, well, then the puzzle was solved. The rest of the qualifications were fairly straightforward.

I’m still scratching my head wondering why the other mortgage “professionals” couldn’t get this done. But, then, a lot of the people remaining in the biz grew up during the fantasy boom when all you had to do was take someone’s pulse to approve a mortgage loan. A loan officer didn’t have to actually “think.”

I must confess, too, that as I wrapped up the paperwork, photocopied the ID’s and asked the clients for referrals, I had a nagging suspicion that I was missing something. In the end, I realized my experience of having sat through thousands of interviews like this had served me well. The “detective work” was rigorous, leading me to solve the problem; the rest was automatic.

I guess experience really does count for something. That and a thorough knowledge of FHA underwriting guidelines got me through to a successful conclusion.