Archive for August, 2014

Fairway and You, a Winning Combination! – By Randy Cullen

August 22nd, 2014
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Partnerships in our business are the key to our success.  We are very fortunate to have relationships with top Real Estate agents and Builders in our market.  This is not by chance.  We work every day to help strengthen and deepen our ties and provide needed answers so you can concentrate on providing a product to the client that we can back up with an approval.  We are not an internet lender, and there are so many of them out there.   We DO provide all the conveniences that the internet provides, but our business is driven by providing answers and service for you and your clients.

Consider us an extension of you.  We know you and the service levels you provide.  We strive to enhance the experience by standing with you to take the worry out of your client’s ability to perform.  Spending time with a client that will not qualify for the dream they wish to buy or build is a time waste for you and the client.  Get them to us right away so we make sure the path they are on is the right path. Read the rest of this entry »

How is your credit score determined? -By Barb Crea

August 15th, 2014
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According to the Federal Reserve and the Mortgage Bankers Association, getting a mortgage is getting easier – IF you’re a Prime Borrower. The credit pendulum IS swinging back to more historically normal standards, BUT what about those marginal borrowers or those still struggling with lingering credit issues from the past few years?

Recently, upon updating the credit report of one of our construction loan borrowers, we were shocked to see their great credit score had dropped just enough to cause their single mortgage insurance premium to go from $4,611 to $6,219. These first time home buyers had saved during construction so they could pay a single mortgage insurance premium to avoid monthly mortgage insurance payments, which are more expensive. The drop in their credit score increased the single mortgage insurance premium by $1,608 – money they didn’t have.   After carefully analyzing the credit report, we found no apparent differences between the expired credit report and the updated credit report. Frustrated, we did some extensive research. We did uncover two possible reasons for the drop: 1.) Paying several student loans after the due but before a late payment was accessed, 2.) Making only the minimum required payment on revolving credit cards for 6 consecutive months, which is defined as a “slow pay”.

Many consumers think that as long as they pay their bills on time or before a late payment is assessed, they will automatically have high credit scores. That’s not how it works. Obviously, paying your bills on time is important, but understanding the factors that make up your credit scores is the key to maintaining excellent credit, as well as your key to taking immediate and lifelong steps toward credit improvement. The health of our credit is becoming more and more important as the use of credit scores continues to expand outside the lending industry.

How is your credit score determined? The exact formula for calculating your credit score is not public. It is under U.S. Patent Law, and only Fair Isaac & Co  (FICO) has access to the formula. According to Fair Isaac & Co., the creator of the scoring system, there are five factors that go into calculating credit scores. Read the rest of this entry »

Millennials, Technology and The Housing Market! -By Randy Cullen

August 8th, 2014
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The Joint Center for Housing Studies of Harvard University published the 2014 State of the Nation’s Housing report. You can read the full report at www.jchs.harvard.edu/research. The report is a summary of key trends that have developed over past years in the housing market. It includes demographics and rental housing. The report is full of facts and charts for those who enjoy all that detail.  I will focus on my abridged version of what the report calls out as the key demographic to a strong housing recovery, Millennials.

First, let’s look at the definition of this generation. The millennial generation is the generation of children born between 1982 and 2002, some 81 million strong.  The millennials have different characteristics than any generation before them. They have grown up in a society that is plugged into technology, are the first generation for which Hispanics/Latinos will be the largest minority group instead of African Americans, and have the most educated mothers of any generation before them. They are the most scheduled generation ever, are true multi-taskers, expect to have 6-8 careers in their lifetime and are attracted to diverse environments. They are also burdened by higher than ever student loan debt which has some 2.1 million adults in their 20’s and another 300,000 in their 30’s living with their parents. Read the rest of this entry »

The BIG question is always “how can we offer more to our customers, while still protecting ourselves”? – By Barb Crea

August 1st, 2014
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Recently at Fairway’s Annual Meeting and Awards Dinner in Madison, Randy and I participated in an Investor Panel meeting which included Fannie Mae, Freddie Mac, and three other key investors. A couple of takeaways were, to seek wise counsel and set correct documentation expectations up front with borrowers.

Setting expectations up front with borrowers flowed into “Purchase Certainty.” The investors discussed KNOWING the documentation requirements and providing ALL of them up front the first time – timing is everything. If we question whether we need something or not – just get it. It’s going to be much harder to get required documentation from a borrower after the loan closes. Missing required documentation will jeopardize the salability of a loan which led them into a discussion regarding “lender net worth.” Lender net worth is being closely watched by investors; at a moment’s notice a lender can be expected to write a check to an investor for hundreds of thousands of dollars, or even millions of dollars. How deep are the pockets of the lender you’re working with? Could they be here today and gone tomorrow because they closed loans that were not “investor quality”?

RESPA (Real Estate Settlement Procedures Act) and Data Quality were among concerns of these Investors. The Consumer Financial Protection Bureau (CFPB) has released its final rule for new integrated mortgage disclosures with an implementation deadline of August 1, 2015. The overwhelming consensus was that lenders who haven’t started implementing these changes are in deep trouble.

With Documentation and Data Quality front and center, I thought it was a good time to re-visit the core criteria that investors and lenders have always looked for – The 4 C’s of Mortgage Underwriting: Read the rest of this entry »