DallasLoanGuy’s - Texas Home Loan Weblog

It happened again this week…. Got an appraisal that came in $10,000 short. I wonder where this will lead?!?!?!

Now, to be fair…. there was some seller paid closing costs(just under 3%). BUT….. The contract was BELOW the list price of ~ $232,000!!!

Typical deal. Realtor writes up contract close to list price with seller paids…. All is good in approval land until the appraisal comes in really low. Then, yep, you guessed it, the listing agent calls me to tell me they have another appraiser who will be able to come in higher. They found some comps that were priced higher. Seems that the builder in town is putting out some killer incentives and driving down the existing sales market for the time being…. But they really feel like the property supports the higher price as it has upgrades itself.

But, it seems that this appraiser was willing to build an appraisal out of a deck of playing cards…. because these new comps are NEW CONSTRUCTION.

Now, lets not even get into the discussion about why you can’t use new construction for an appraisal comp on existing sales. I am sure that Meg Stewart can discuss all the ins and outs of that. But for ANY Realtor, regardless of which side of the transaction you are on, to suggest that we ‘need a new appraiser’ is absolutely ridiculous.

I blogged about this a while back…. “Don’t Be That Realtor” actually got all of 3 comments(one of them was my own comment). It seems that either this topic is a sore subject… or maybe it is just so darn ridiculous that no one thinks it is necessary to mention. But it seems that it IS worthy of mention…. Because it keeps happening!!!!

My first notice of this was when the appraiser left me a message. 30 minutes later I get a phone call from listing agent wanting to use new appraiser. My first phone call was to the referring Buyer’s Agent and she was rolling on the floor laughing. She would NEVER agree to a new appraiser. Besides, the current appraiser is very well respected around town and unless there are some FSBO comps they missed the Listing Agent will have to explain himself to the sellers.

So, we all agreed to have the Seller Agent submit any new comps to the appraiser for reconsideration as they do have a right to challenge the appraisal. And it seems that the Seller Paid Closing Costs will have to be amended out of the contract as the buyer wants to proceed. But myself and the Buyer’s Agent undoubtedly have counseled the borrower/buyer on the ramifications of paying full list price and have encouraged them to resist any thoughts of re-appraising the property so they can roll in the seller paids. Although it would be nice to keep that extra cash free for curtains and appliances, they do qualify with paying those expenses out of pocket.

How do YOU respond when the appraisal comes in low?

Or, for that matter…. how do you respond when an appraiser is willing to fabricate an appraisal out of thin air?

Tom Burris
DallasLoanGuy.com
Dallas, TX

http://www.dallasloanguy.com/

“Cartoon credit: Andy White. Contact for rates.”

Hip Shot Cartoons
P.O. Box 48594
Fort Worth, TX, U.S.A. 76148

Other products and services include: Hip Shot greeting cards, and autographed Hip Shot cartoon prints. He also offers gag-writing services.

 I’m still seeing 100% financing in the Great State of Texas!!!

I got a call from a realtor on a deal we were working on together. She asked all of the usual questions about what I have done and what she could get for me to smooth this deal.

Then came ‘THE question”.

“Is there going to be any problems with the “100% Financing”? <= I get that one a LOT!!! LOL

What a lot of people do not understand is that the people who 'NEED' 100% financing are more affected by the recent tightening of guidelines than people who 'ELECT' 100% financing. This borrower could have put down 5-10% if they chose, but wanted to reserve their cash until their other house sold.

I still do more 100% financing for Texas Purchase Money Loans than any other deal. And there is nothing ‘dicey’ about them. Full approval requires an underwriter’s review of income and assets, but the conditional approval is just minutes away with Automated Underwriting.

Still nervous about those 100% financing deals on your listings? Then learn what to ask. Brian Brady, America’s Most Opinionated Mortgage Broker wrote about this. Even did a podcast about Realtors Prequalifying Buyers.

1. What type of loan is this? Conforming? Alt-A? Subprime?
2. What conditions need to be met in order for the borrower to get this loan?
3. Are the debt ratios well within lender’s guidelines?
4. Has income been calculated?
I am sure there are lots more questions…. I bet ‘ole Brian can think of some…. because I need to publish this and get back to work.

Tom Burris
DallasLoanGuy.com
Dallas, TX
Texas Home Loans

“A Home Loan for Every Texan”

http://www.dallasloanguy.com/

…….. And ‘go to jail’

I know all the tricks. I hear about the techniques. I know that people can read the “Fair Credit Reporting Act” or “Fair Debt Collections Practices Act” and use that info to remove some bad stuff from their credit reports. I have even seen folks get added to mommy’s credit card as an “Authorized User” to boost their credit depth, and FICO scores as a result.

But, have you heard the latest craze? It’s called “Piggybacking“. For a fee, an internet site will add you to a good credit card with a high limit, low balance and perfect payment history revolving credit account. Net result? 50+ FICO point boost!!!

Some people call this practice, at best, deceptive. Others inerpret this as flat out “Mortgage Fraud”. What say you… Ed Rybczynski? What do you think a loan officer should do when they find out about this? My answer? “Deny the loan”. Why? Well, I blogged about it here => http://activerain.com/blogsview/22154/The-dangers-of-Credit ….. any questions?

While I haven’t seen or heard of any law against this practice… I DO BELIEVE that the current laws can be used to interpret Piggybacking as fraudulent behavior.

Food for thought…. and reason to be very skeptical of any credit repair companies.

Tom Burris
DallasLoanGuy.com
Dallas, TX
Texas Home Loans
“A Home Loan for Every Texan”
http://www.dallasloanguy.com/

 When Banks Compete, You Lose?!?!?! Huh? How can that be? Didn’t Lending Tree tell me differently? Yes they did!!
And they are kind of right, banks competing for your business does help you obtain a lower rate. Borrowers should shop around, getting a quote from both a bank and a mortgage broker. Compare what you have been offered and make an informed decision….But if you use one of the 4 or 5 companies that Lending Tree ‘sells your information to’ then you have to cover their overhead that came from Lending Tree. So, now that you are getting this info, you can make an informed decision about exactly ‘how’ to shop around and ‘how’ to engage a lender/broker.

First, lets look at the facts, it takes a considerably amount of money for a broker/lender to sign up with Lending Tree(or the many other lead generation websites). Thousands of dollars!! $10,000 is a number that I have heard from people who have used them to get leads. Then on top of that there is a fee per lead or a fee after the loan funds which can be in the hundreds of dollars. Who pays that? Do you think the lender/broker pays all of that money just so they can offer you the same rates as everyone else? Or do you think they have figured in the costs associated with buying your information when they offer rates and fees? I bet it is the latter….

Next, let’s consider why people ‘buy leads’ from Lending Tree. Do you think maybe it has something to do with the fact that those loan officers aren’t getting enough referrals from their friends, families and networking partners? It sure does!! Actually, these loan officers that buy mortgage leads are typically new loan officers who haven’t built up a network of influence for referrals. Basically, they buy leads because no one is sending business to them!! Do you want to trust your most important financial transaction to rookie loan officer? I wouldn’t. Now, while there are some very good loan officers who use ‘purchased leads’ as a way to diversify…. I believe that most consumers can do better for themselves by getting referred to good loan officers and doing their own comparison shopping without letting a lead generation website add on some costs.

Have you figured it out yet? Lending Tree spends millions of dollars on marketing/advertising to get the phone ringing. They cover those expenses by selling your information to a bunch of ‘wet behind the ears’ loan officer so these rookies can handle the most important financial transaction that most people will ever make!!

Lets take a pause. Let that last statement sink in………. kind of scary, huh?!?!

Lending Tree is right, when banks compete you win but they left out the part about how thousands of professional loan officers in the business can offer better terms and rates without the added expenses from the lead generation companies.

So, how do we find a loan officer to handle this most important transaction? How do we know who to trust? As you may have guessed, the DallasLoanGuy has some advice on that topic.

First, I always suggest to folks that they ask friends and family or maybe a trusted co-worker who they closed their home loan with and how they felt about the whole transaction. Next, try asking someone like your CPA or Financial Advisor. These folks know financing. They may even have a relationship with a trusted lender. Realtors are also a good source. They refer business to loan officers several times per month. And with many transactions under their belts, they certainly know who is competent and who is not. Now, that you have been referred…. What’s next?

Mortgage Bank or Mortgage Broker? Which is right for you…? Most borrowers these days have seen better rates/fees through brokers. Direct lenders can and do offer competitive deals, but usually those are for the ‘vanilla borrower’ who has a bag down payment and no job gaps or other issues that make their deal unique. But how do you really know for sure? Get a quote from one of each. Compare the ‘Good Faith Estimate’(GFE) for rates and fees. Pay particular to the fees numbered in the 800’s. The other fees are charged by third parties and the lender does not control these costs. Don’t get suckered into a loan with low third party fees to only get surprised later. Need help? Your realtor/CPA/financial advisor can help you compare the GFE from each loan officer to determine which is the right deal for you.

Remember, this could quite possibly be the most important investment in your portfolio. Do your homework and don’t be afraid to ask questions.
Tom Burris
DallasLoanGuy.com
Dallas, TX
“A Home Loan for Every Texan”
http://www.dallasloanguy.com/