[Published Jan. 22, 2015, in the Jeffco editions of the Denver Post's YourHub section and in four Jefferson County weekly newspapers]
I don’t envy mortgage brokers their work. No wonder so many of them have left the business! As a real estate broker, I only have to deal with rule changes and new forms every year or two. The poor mortgage broker has new rules, guidelines and rates coming at him or her every hour of every day!
There are FHA, conventional, CHFA, HUD, VA and other loans and new underwriting guidelines for each of them which can change at any time, with or without notice. If the loan officer or underwriter fails to follow each guideline or rule precisely, not only will the loan not be funded, but if the mistake is caught in a post-closing review, Fannie Mae or Freddie Mac could make the mortgage company which wrote the loan buy it back. This can put a mortgage company out of business very quickly, because mortgage companies must sell their loans to Fannie, Freddie or someone else so that they will have the cash to fund future loans. If several loans have to be bought back because of underwriting errors, the mortgage company quickly runs out of working capital and closes up shop. This has happened too often.
One of our trusted lenders, Bruce Gustafson of Crestline Mortgage (303-596-0780), spent an hour this week going over some recent mortgage lending developments at our weekly meeting. There’s only room to share some of what he taught us.
1) Denver has renewed funding for its Mortgage Credit Certificate (MCC) program which allows buyers with income under $93,360 to get 30% of their mortgage interest refunded to them on their tax returns (up to $2,000 per year) for the life of their mortgage loan. It’s expected that the statewide MCC program will be funded again by the end of March.
2) Starting April 1st, buyers with deferred student debt will have their debt-to-income ratios — so important in qualifying for a mortgage — recalculated to include 1% of their loan balance each month, which can make them unable to purchase a home. If you have student debt and can qualify for a conventional loan instead of FHA, get under contract and apply for your loan before April 2nd. With FHA, a similar rule goes into effect in June. Ask your loan officer for details.
3) The Colorado Housing Finance Authority (CHFA) has long offered buyers the ability to put down only $1,000 to buy a house by writing a second mortgage to go along with an FHA or conventional loan, but starting Feb. 2nd, they will change that second mortgage to an outright grant that does not have to be repaid! Again, ask Bruce or another CHFA-certified lender for details.
This just skims the surface of what Bruce shared this week, so perhaps you can see why being a loan officer can’t be second or part-time job! I’m glad I’m a Realtor, not a loan officer!