Nevada City Virtual Tour

Monday, July 21, 2014

Short sale within the last 4 years?

Bad news for buyers who’ve had a short sale within the last 4 years (and who now have a 20% down payment); they now will be forced to fund their loan with an FHA loan!
Today Fannie Mae has announced that on August 16, 2014, they will be changing the waiting period associated with the purchase of a any home after a short sale (or a deed in lieu of foreclosure), FROM A MINIMUM OF TWO YEARS, TO FOUR YEARS.
If you are a prospective buyer which fits this profile and is “on the fence”, you will need to get your loan application “D/U” approved before the August 15th deadline.
To beat the deadline you don't have to have a home picked out OR be in escrowyou simply must apply for the “DU” (which can take up to 3-5 days as everyone will be rushing to beat the deadline).
The added costs are:
1) 1.75% funding fee at COE
2) A monthly mortgage insurance premium of 1.35%.
Based on a purchase price of $350k (280k loan amount) you will likely pay:
1) $4900 up front MI fee
2) $315 per month until they can refi into a conventional loan.
Editor’s Note: Freddie Mac has announced whether they will follow suit, I’ll keep you posted as the info unfolds.

Monday, July 14, 2014

Loan delays and Problems Closing Discussed

Here are the borrower's issues that typically arise

1)   Lack of disclosure: 

Buyers need to tell Loan Officers anything / everything that remotely affects the financing of the home. 

I fix “broken deals”. But I can’t fix issues that aren’t disclosed.  

For example : Just because an issue is not (initially) listed on a buyer’s credit report, it does not mean it won’t raise its ugly head at the very end of underwriting.

Any issues that involve past government contact, (i.e. tax liens, unpaid student loans, pending litigation, or criminal fines) often go undisclosed (particularly where there is a “remarriage”) and one (or both) of partners wish to hide their past from the new spouse.  

Often these items are so far in the past they (conveniently) “forget” to disclose. These items ALWAYS show up at the very last POSSIBLE moment via a government data base (i.e. "Cavirs").  

Unfortunately “Cavirs” is the VERY LAST STEP of the “Quality Control” process (after loan docs are drawn, signed and returned to the doc dept.).  

This lack of disclosure will certainly “sour” an UnderWriter feeling about a file and may cause them to decline a marginal loan application just “because they can”.

2) Lack of preparation/ cooperation. 

The best indicator cooperation is them going thru the process of getting fully (pre) approved BEFORE they run you around looking at homes. 

This involves them completing a loan application and assembling the items listed on a buyer’s checklist.  

Only then will you be able to judge how much energy you're willing to invest with each buyer.  

3)  Buyer’s go out and apply for credit or make large purchases. 

All drastically lower FICO scores, and raises debt ratios. 

4) Transferring money around without a “clear paper trail”. 

Post 9-11 the government has used currency laws to pry into our bank accounts. No paper trail = NO Close of Escrow.  

If the borrower is receiving gift funds, OPTIMALLY it is best to have the $$ in the receiver’s account approx. 60- 90 days before loan submission.
Doing so eliminates the need for a gift letter (and the giver’s subsequent documentation).   

The problem with gifts is: givers must provide a proof / source of funds (bank statements).

Often the giver (last minute) resents / refuses to provide their banking info. It's a deal killer. 

5) Liquidation of 401k or IRA accounts. 

Borrowers need to begin the liquidation process approx. 2 -3 weeks before the close of escrow.  

6) Illegible or Unsigned Documents 

From an illegible purchase contract to “blacked out account numbers” on bank statements (yes…I’ve seen it all) borrowers and sometimes agents submit unreadable documents.  

7) Servicer’s are backed up. 

Our industry is “boom or bust”. Most support companies are loath to hire and train new employees.  

Hence the chain of information required to approve the transaction is delayed at every level (i.e. escrow documents, title reports and appraisal turn times and yes …loan processing as well).

8) Many loan officers simply prefer processing “refi” transactions. 

Purchase transactions are more tedious and require much more attention to detail than refi's. 

As a result your (purchase) transaction gets pushed to the “back burner”.   

Obviously I don’t need to tell you this, I’m sure it’s already happened.

9) Appraisal values come in low. 

With multiple offers on each property it’s tempting for sellers to choose the highest offer (vs. the most realistic ). 

To keep the escrow from cancelling the seller may need to carry a second TD.  

New laws in 2013   make "Seller Carrys" extremely difficult and any silent seconds are (essentially) bank fraud. 

Let me digress briefly. Dodd-Frank legislation requires all appraisals to be conducted by an independent appraisal (arm’s length) service. 

The intention (among others) is to eliminate real estate bubbles caused by bloated appraisals and easy lending rules. 

Appraisals are to REFLECT current home prices (based only on previously) solds vs. LEADING home prices (based on future/anticipated close of COE).  

There is no appeal process because lenders have absolutely no contact with the appraiser. If the value comes in low, we have real problems. 

The only other alternatives are to lower the price or order a 2nd appraisal. 

If the loan is FHA or VA, the appraised value is “set in stone” for at least the near future (no second appraisal is allowed). 

Make sure your Listing Agent is there to 'help' 'explain' the best features / value and supply even more comps to prove the value.

10) Verification of (previous) employment. 

Many buyers working for large corporations must be verified thru an automated system.

It requires them to go on-line, get a “one time pin number” (only good for 24 hours) and give it to us, who must then hit that 24 hr. window period.  

If the borrower has a job change, this process may have to be repeated if we’re to count overtime, bonus or commission to qualify.   

Some companies only verify “gross wages” in which case we need to have all the past 2 years of pay stubs to count the additional income. 

11) Buyer has bought a new home. 

New home builders operate on their own schedule can often (combined with labor shortage and weather conditions) thwart the best laid plans. 

12) Your buyer has "auto pay" accounts.

I'm speaking from experience (vs. having any statistical analysis), often they close bank accounts connected to  credit card payments AND FORGET to redo them with the new accounts and then "wham" 30-60 day lates begin showing up like drunk relatives at Christmas time. 

13) A critical person in the transaction goes on vacation/ family/ medical leave / etc. (all of which are simply a part of life). 

The most key person is your escrow person(s), loan processors followed by the "Listing Agent" any of which (if not physically present) will inevitably lead to delays.

In Closing 

These are just the most common issues. There are others. 

Nevada City and Grass Valley Things to See and Do

Summer Nights in Nevada City Starts Jul 16The Annual Summer Nights celebration, an outdoor street festival of crafts, art, food, and music, will be held Wednesday evenings July 16, 23, and 30, 2014 in Nevada City. During Summer Nights, Nevada City’s landmark historic district is closed to motorized traffic and filled with arts, crafts, classic cars, food, drink, and music. Leading Sierra […]
The Children’s Festival Jul 18On Friday, July 18th, The Children’s Festival will return to Pioneer Park in Nevada City. The park will be transformed into a lively Renaissance Faire for children with over twenty arts and crafts tables, strolling minstrels, face-painters, a bridge-guarding troll, a bevy of faeries, Pepper the Witch, medieval fencing, spinning demonstrations, Queen Elizabeth and her […]
“Peter Pan” Plays thru Aug 2Sierra Stages presents J.M. Barrie’s PETER PAN –  The Perfect Theatrical Event for Audiences of All Ages This Summer - July 10-August 2 at the Nevada Theatre in Nevada City Sierra Stages presents J.M. Barrie’s PETER PAN July 10 – August 2 Thursdays, Fridays, Saturdays at 7:30pm Sundays at 2pm Nevada Theatre, 401 Broad Street, Nevada […]
Post a Blog to Win “Peter Pan” TicketsErin Thiem of the Outside Inn is offering a pair of tickets to see Sierra Stages’ production of Peter Pan playing at the Nevada Theatre throughAugust 2nd.  The land of Neverland is full of pirates, fairies, mermaids, and magic, and while we may remember the Disney version of J. M. Barnie’s book Peter Pan, […]
Magic Show at Summer Nights July 16There is to be a Family Magic Show during the first Summer Nights, July 16th. Trevor Duffy is traveling from his home town of Johannesburg, South Africa for a second appearance at the historic Nevada Theatre. He entertained the summer crowd two years ago, with a wide variety of tricks and illusions. His contagious humor […]
Sierra Storytelling Festival Jul 18-20Sierra Storytelling Festival 2014 July 18-20, 2014 North Columbia Schoolhouse Tickets: Sierra Storytelling Festival 2014 Line-Up Announced Early Bird Tickets on Sale Now! Set among the towering pines and sloping lawns of the North Columbia Schoolhouse, the Sierra Storytelling Festival is now in its 29th year – a much-loved annual tradition for both locals […]
Harmony Ridge Market Open During Summer NightsStop by Harmony Ridge Market Downtown during Summer Nights in Nevada City!  We’ll be bbq’ing Jumbo Hot Dogs and serving up tasty Pulled Pork Sandwiches curbside.  We offer a full service deli, beer and wine, as well as homemade baked goods. And be sure to check out Tanglewood Forest right next door for an array […]
“As You Like It” Opens July 24As You Like It Jeffrey Mason, Director Synthetic Unlimited presents a modern all-ages interpretation of William Shakespeare’s As You Like It, a delicious comedy about politics and courtship, from July 24th- August 10th at the Synthetic Unlimited Opera House, 120 Joerschke Drive, Grass Valley. Jeffrey Mason has adapted and directs a vibrant version of this […]
The Wailers at Miners Foundry Jul 16KNOW & GO WHO: The Wailers Celebrate 30th Anniversary of “Legend” WHEN: Wednesday, July 16, 2014, Doors 8pm, Show 9pm, All-Ages WHERE: Miners Foundry Cultural Center, 325 Spring Street, Nevada City, CA TICKETS: Tickets are $25.00 Advance, $30.00 Door. Tickets are available online at, by phone or in person at the Miners Foundry, and […]
Film “DamNation” Shows Jul 20The South Yuba River Citizens League’s Wild & Scenic Film Festival and American Rivers bring you a screening of the film DamNation followed by a discussion on Yuba salmon as part of the Nevada Theater film series onJuly 20, 2014. Funds raised benefit American Rivers & SYRCL’s Yuba Salmon Now Campaign. This powerful film […]
Wild & Scenic Film Festival Call for ArtistsCall for Artists to submit original art for the 2015 Wild & Scenic Film Festival Jan 15-18, 2015.  Deadline for submissions is Aug 1, 2014.  Contest details and submission information available Download Press Release
Watch the 4th of July Parade on YouTubeWe had a great time in Nevada City last week celebrating the 4th of July with our annual parade! But for those who didn’t have the opportunity to make it to town for the parade, check it out on YouTube, courtesy of TouchDown Productions!  
North Star House Fundraiser Aug 16First Annual Fundraiser for The North Star Historic Conservancy! “House Party of the Year”with Lorraine Gervais & the Love Bombs August 16, 2014 • 7:30 – 10pm Gates open at 6:30 – Lawn Seating Tickets: $35 Early Bird Price through July 15th/$40 After July 15th Tickets available online at and in person at Nevada […]
Evan Strong Nominated for 2014 ESPY Award – VOTE NOW!Don't miss your chance to vote for local hero, Evan Strong, winner of a Gold Medal at the Sochi Paralympics. Voting closes July 16th at 9 p.m. (ET).
Upcoming Events at The CenterLook for these events and more at The Center For The Arts       Jewel – with Caroline Jones opening – July 17       Alices in Wonderland – PAG –July 17-27 Nirvana Tribute Show Arlo Guthrie – Here Come The Kid(s)Arlo Guthrie – Here Come The Kid(s)

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