A Closer Look

By Brian Hays and Kris Kesling –Hays

Lic Real Estate Broker Lic Mortgage Lic Mortgage Originator Originator

Talking points

Who are Brian & Kris Hays?

• Loan origination in Today’s Market • What differentiates a Mortgage Originator from other types of “lenders”? • What training is required as a Mortgage Originator?

• What do Mortgage Originators do?

• How do Mortgage Originators earn their income?

• Different Loan Programs • Scenario workshop

• • • • www.Prefhomes.net

www.preferredpropertiesofsarasota.com

FOR BUYERS

· Our Listings · MLS Search · • Dream Home • • Loan Application (en) · www.hgffl.com

Loan Application (sp) · www.hgffl.com

• Continued Lending Constraints – Products – Guidelines • Regulatory Changes – S.A.F.E ACT – Changes in RESPA and TILA • Real Estate Inventory – Foreclosure and short sale influence

Option Arms

CASH FLOW LOAN!

Purchase Price or Value Start Rate Margin Current Index Fully Indexed Rate

FIRST

LTV Loan Amount Minimum Payment Fully Indexed Payment

SECOND

LTV Rate Loan Amount Payment

FIXED

Rate Payment $220,000 1.500% 3.450% 3.790% 7.240% 66% $145,000 $500 $988 $0 $0 6.250% $893

4 Payment Options from Month to Month:

* Minimum Payment * Interest Only Payment * 30 Year Payment * 15 Year Payment

Equity Builder Bi-weekly Payment Option:

* Auto. Draft 1/2 the minimum monthly payment every 2 weeks.

* Reduces the life of the loan by 7 to 11 years.

MRV, 10/ 01

Year

7 8 9 10 1 2 3 4 5 6

Min. Pmt. - 1st

$500 $538 $578 $622 $668 $718 $772 $830 $892 $959

Effective Rate

1.500% 2.028% 2.571% 3.132% 3.711% 4.310% 4.931% 5.576% 6.247% 6.946% The Effective Rate is w hat the fixed interest rate w ould have to be in order to give the resulting Minimum Payment show n.

Pmt. - 2nd Total Pmt.

Fixed Rate Pmt.

Fixed Rate

$0 $0 $0 $0 $0 $0 $500 $538 $578 $622 $668 $718 $893 $893 $893 $893 $893 $893 6.250% 6.250% 6.250% 6.250% 6.250% 6.250% $0 $0 $772 $830 $893 $893 6.250% 6.250% $0 $0 $892 $959 $893 $893 6.250% 6.250%

Total Cash Flow in the First 8 Years: Monthly Cash Flow

$392 $355 $314 $271 $224 $174

$20,780 Minimum Monthly Payments Guaranteed

$1,200 $1,000 $800 $600 $400 $200 $0 1 2 3 4 5

Year

6 7 8 9 10

• • • • • • • • • • • • • • • • • • • • • • • • • • • •

Subprime Loans

FundemAll Bank NICHES

Low rates on non-conforming products No M.I

…….Escrows Optional 100% Purchases, + 6% seller CCs (incl ppds) 100% C/O Refis 100% w/575 score 100% w/one active trade, OR, RENT 100% Limited doc 100% Stated Income 100% Condos (Hi Rise, too) 100% 2-4 units, O/O ….STATED

100% 1st Time Home Buyer 100% 1 Day out of BK or FC 100% REHABBED FLIP Properties 100% 18 month S/E

CONFORMING FALLOUT

12 month personal or BUSINESS BANK STATEMENTS w/525 6 month STATEMENTS w/650 = Limited Doc Mtg lates OK, if incl in score (or, will be graded) No VOR programs No payment shock, reserves or VODs (on most programs) Debt ratios to 55% Collections/Chg offs remain open (Child Supp must be in repymt) Judgements < $1,000 remain open Interest Only option, 90K min, 2,3 or 5 yr.

Reasonable closing costs …$620, 1st….$200, 2nd (Fla.) Loan amounts to $750K, 1st $900K, combos Cash in hand to $150K, after debt consol & CCs

FHA Originations more common now than GSEs

Refinancing no longer a sure thing

By TARA SIEGEL BERNARD THE NEW YORK TIMES Published: Saturday, January 24, 2009 • Refinancing is a very difficult proposition right now • many have been unable to win approval • lenders have become more cautious about to whom they will lend • increasingly stringent credit requirements • plunging property values have erased all or most of the equity in their homes.

US mortgage insurers see claims still rising

By Kathy Shwiff Jan. 20, 2009 http://www.marketwatch.com/news/story/EARNINGS-PREVIEW-US-mortgage-insurers/story.aspx

• Mortgage insurers, which cover potential lender losses on loans to borrowers who can't come up with a 20% down payment, have seen claims skyrocket in the past year as the credit crunch made it difficult for borrowers to refinance and for lenders to resell foreclosed properties at a profit.

Currently no MI Co. will insure condominiums in Florida.

Wages by Occupation

SOC Code Occupation Title Mean Annual Mean Annual Mean Annual Mean Annual Mean Annual Mean Annual Mean Annual Mean Annual % change 2002 2003 2004 2005 2006 11 9141 Property Managers $46,390 $48,210 $50,530 $50,570 $52,290 2007 2008 2009 $53,530 $56,250 $58,660 2002-2009 26.45% 13-2021 23-2093 41-9021 Appraisers Title Examiners Real Estate Brokers $46,120 $37,300 $72,130 $49,610 $38,490 $74,100 $50,280 $39,420 $75,330 $49,830 $40,070 $76,930 $51,110 $40,660 $80,230 $52,290 $41,140 $79,800 $53,410 $42,090 $77,240 $53,520 $42,960 $78,360 16.05% 15.17% 8.64% 41-9022 Real Estate Sales $42,470 $45,640 $50,440 $52,090 13-2072

Loan Officers

$43,980 $47,530 $59,470 $59,350 $54,350 $55,090 $54,410 $53,100 25.03% $61,930 $62,610 $63,540 $63,210

43.72%

Wages by Occupation

Employment by Occupation

The Economy

• Good: Low interest rates • • • • • Bad: High Unemployment High Gas Prices Plummeting Property Values Tightened Lending Policies Challenges obtaining/cost of insurance

What Happened?

• Loan programs developed that would let almost anyone obtain a mortgage – Easy credit qualification – Stated income documentation – No income documentation – No asset documentation – No employment documentation – Adjustable Rate Mortgages with possible negative amortization –

Were Mortgage Brokers to blame?

People on Wall Street Were Buying These Loans

Seemed like a good idea at the time!

•

Mortgage Chief Resigns; Emergency Rules Instituted Aug 13, 2008 McClatchy Tribune Business News Author(s): Catherine Dolinski

• Aug. 13--TALLAHASSEE -- Florida's top regulator of mortgage brokers said Tuesday that he will leave his post Sept. 30 amid continuing criticism for

allowing thousands of ex-convicts to obtain mortgage brokering licenses and, in some cases, commit fraud.

• •

Meanwhile, the state is taking new steps

professional licenses.

to make it harder for ex-felons to get into the mortgage brokering business. But whether the new rules are legal remains unclear, since the state has made restoration of civil rights for felons nearly automatic - including the right to hold

All states must eventually comply with tough new federal regulations

•

Taylor, Bean & Whitaker Mortgage Corp. is no longer originating, underwriting, or processing loans in any jurisdiction, effective Wednesday, August 5, 2009.

• Taylor, Bean and Whitaker Mortgage Corp. – one of the largest non bank residential lenders in Florida – has been barred from issuing mortgages in the state by the

Florida Office of Financial Regulation

.

• • The state agency released an emergency cease and desist order Aug. 7 against Ocala-based Taylor Bean, which has 30 offices in Florida. State residents in the middle of the application process should be placed with viable alternate lenders.

The

Wall Street Journal

called Taylor Bean the third-largest underwriter of FHA loans in the country.

Old Education & License Requirements

What Do We Do?

• The SAFE (Secure and Fair Enforcement Act) Act of 2008 Requires Mortgage Originators to be Federally Registered.

• No matter where they go in the USA, they will be identified with a unique identification number • They need to pass a national test • They need to meet certain minimum credit history criteria

• •

Compliance News Recap Mortgage Licensing Registry Launched

•

The House recently passed a predatory-lending bill (H.R. 3915) that requires the creation of a nationwide mortgage licensing system and registry Licensed Mortgage Originators need a Federal Id Number

– – –

Traditional Mortgage Brokerage Business

Marketing:

Realtors Sphere of Influence General Public (ADV )

Loan Placement:

DU/LP (conforming) FHA Alternates (Jumbo, Niche, USDA) Hard Money Non- Institutional (private)

Attend Closing:

What do Mortgage Brokers actually do at closings?

Loan Pricing

Loan Pricing

Lock Period R a T e Q u o t e d

↔

Par

→

Pricing Pricing Adjustments 1 point yield

→

spread

Lets go shopping @ 5%?

NC Says "No" to Yield Spread Premiums

• Wednesday, August 20, 2008 – • Staff Writer, Originator Times • RALEIGH, NC - North Carolina Governor Mike Easley signed House Bill 2188 which eliminates rate or yield spread premiums - into law. North Carolina is the first state to ban yield spread premiums.

Hard Money

• * No Fico Requirement • * No Credit History Required • * No Seasoning • * Foreclosure Bailout- Ok • * BK buyout- Ok • * SISA • * Max LTV 65% • * Pre-pay buyout ok • * Rates from 11 to 12.5% • * Points range from 2 to 3.5% • * Loan modification

• • • • • • •

How much can be charged legally?

494.0042 Brokerage fees.

- (1) A mortgage brokerage fee earned by a licensee, pursuant to ss. 494.003-494.0043, is not considered interest or a finance charge under chapter 687. (2) A person may not charge or exact, directly or indirectly, from the mortgagor a fee or commission in excess of the maximum fee or commission specified in this section. The maximum fees or commissions that may be charged for mortgage loans are as follows: (a) On a mortgage loan of $1,000 or less: $250. (b) On a mortgage loan exceeding $1,000 and not exceeding $2,000: $250 for the first $1,000 of the mortgage loan, plus $10 for each additional $100 of the mortgage loan. (c) On a mortgage loan exceeding $2,000 and not exceeding $5,000: $350 for the first $2,000 of the mortgage loan, plus $10 for each additional $100 of the mortgage loan. (d) On a mortgage loan exceeding $5,000:

$250 plus 10 percent of the entire mortgage loan.

1/25/09

Renovation Lending • A Renovation Loan is a fully disbursed mortgage that adds the costs of repairs or improvements into the mortgage to purchase or refinance a property

Renovations to Consider

 Additions, alterations, improvements and structural changes to a home  Remodel kitchens and bathrooms   Repair or replacement of plumbing, heating, air conditioning or electrical systems  Flooring, Carpet or Tile Exterior siding, Windows and Doors  Roofing, Gutters and Downspouts  Repair an existing pool

General Specifications

   Purchase or No Cash-out Refinance 15, 20, 25 or 30yr Fixed Rate Mortgage 1-4 Family Owner Occupied Property;  Must be at least 1yr old & complete  An Appraisal based on the future value or “as completed” value of the property is required on all 203(k) loans  On HUD Repo’s, the “as is” appraisal (the original appraisal from HUD that comes with the contract) will also need to be provided

8/4/09 getting ready to close

• As soon as we receive the final approval of the HUD, I am going to call and set up a closing time with him and let him know how much he needs to bring to closing. The lender is pretty quick to respond so I should have the revised HUD approved shortly. • And then…………………

•

Taylor, Bean & Whitaker Mortgage Corp. is no longer originating, underwriting, or processing loans in any jurisdiction, effective Wednesday, August 5, 2009.

• Taylor, Bean and Whitaker Mortgage Corp. – one of the largest non bank residential lenders in Florida – has been barred from issuing mortgages in the state by the

Florida Office of Financial Regulation

.

• • The state agency released an emergency cease and desist order Aug. 7 against Ocala-based Taylor Bean, which has 30 offices in Florida. State residents in the middle of the application process should be placed with viable alternate lenders.

The

Wall Street Journal

called Taylor Bean the third-largest underwriter of FHA loans in the country.

Lets lend out some

$ ?

$ ?

$

?

$ ?

$

Scenario Workshop

• Female age 25,620 middle - wants to purchase first home. Currently works in a restaurant as a server, a job she ’s had for the past 6 mos. She says she doesn’t claim all her tips so she won ’t have to pay taxes on the income. Current paystub shows $1200 per mos. Prior 2 year history work history shows 3 jobs non continuous and different lines of work. She currently lives with family and has for the past year. She has $500 in the bank.

• How can we help this young lady?

Loan Placement???

DU/LP (conforming) FHA Alternates (Jumbo, Niche, USDA) Hard Money Non- Institutional (private)

• A forty five year old business man ,725 middle wants to refinance his purchase combo loan from Aug 2005 into a single loan of 350K (amount borrowed in 05) at a fixed rate – no cash back. This man has a successful business, tax returns show him paying tax on an adjusted gross of $22000. • What can we do for this gentleman?

Loan Placement??

DU/LP (conforming) FHA Alternates (Jumbo, Niche, USDA) Hard Money Non- Institutional (private)

• 55 year old business man, 450 middle wants a $50000 first mortgage loan on his primary residence worth about 475000 which he owns free and clear. His business has been established for about 20 years and his debt to income is about 15%.

• What can we do for this man?

Loan Placement??

DU/LP (conforming) FHA Alternates (Jumbo, Niche, USDA) Hard Money Non- Institutional (private)

• Individual, 725 middle - wishing to buy primary residence. 3 mos on the current job with previous job in a different line of work, and a 2 mos job gap. Currently pays $800 per mos in rent which will go to approximately $1500 if approved. There is about $37000 in liquid reserves. Full doc ratio ’s are 40/41.

• What can we do to help this person?

Loan Placement??

DU/LP (conforming) FHA Alternates (Jumbo, Niche, USDA) Hard Money Non- Institutional (private)

• 681 middle, with solid credit history • 90%ltv rate and term, owned home for 2.5 years • $200 in a checking,$6000 IRA • Laid off in 2006,worked temp jobs and collected unemployment for the last 2 years, found new work 1mos ago, still in a temp position, although employer letter said this position was likely to be permanent.

• What can we do to help this person?

Loan Placement??

DU/LP (conforming) FHA Alternates (Jumbo, Niche, USDA) Hard Money Non- Institutional (private)

• Man with 780 middle wishes to buy condo in Sarasota as primary for 74K. In his line of work he travels extensively on the US on a work visa. He currently owns a home in the Northeast worth 250K . He has sufficient assets to pay cash for the property if he desired. Income is not a problem for ratio ’s Loan Placement??

DU/LP (conforming) FHA Alternates (Jumbo, Niche, USDA) Hard Money Non- Institutional (private)

Bonus Bonus Bonus BonusBonus

• 63 year old woman,450 middle, in foreclosure, house in poor condition, Owes 115000,house worth about 250,000 • Give away hint – We have not discussed this type of loan

• “ You must have a plan and actually implement and track for you to be successful. Wishing and praying and hoping are not enough,.. You must do something , You must have a plan and system that produces loans for you everyday regardless of rates , regardless of closed real estate offices , regardless of any other real or imagined excuse that pops up.

” • www.loanofficersuccess.com

• PS please feel free to forward this to anyone you think will benefit from it.