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The 500 Page Mortgage Application?

A CNN Headline this morning caught my attention:  The 500 Page Mortgage Application

 

The "500 Pages" is referring to is all the documentation needed to fund a loan. While, in actuality, its less, it can be overwhelming to new buyers.  The income, assets, taxes, etc that Fannie and Freddie now require with the application.  As the promise of "QM" in 2014 will only make that more true.  The article talks about the need for everything from  the borrower including the "source of large deposits" which is something we run into often with borrowers' assets. A lot of this can be avoided, or at least streamlined, at the Pre-Approval Process.

 

If I can give one piece of advice to you to pass on to your buyers it's this: get the loan officer everything upfront during the pre-approval process.  The article reiterates that as well, stating:

 

"All this amassing and analyzing of documents costs both time and money. And new mortgage lending rules that are going into effect in January will make it even more complicated.  'New rules require you to triple-check everything,' said Jeff Taylor of Digital Risk, a mortgage processing company. 'The best thing you as a borrower can do to help yourself is to have all your documentation together before you apply. Get needed items like your credit report and get any errors corrected so you can get through the process as smoothly as possible.'"

 

Heres the article if you want to read:

 

http://money.cnn.com/2013/12/12/real_estate/mortgage-applications/index.html?iid=HP_River

 

FHA eases up on buyers with past short sales or bankruptcy on credit

If you have had a past short sale or bankruptcy there are different timelines you must meet to buy again based on the new financing you are buying with.  For example, Conventional, (Fannie  Mae or Freddie Mac), VA or FHA.

Fannie Mae will lend again 2 years after a short sale with 20% down or 4 years later with 10% down.  If you had a bankruptcy the timeframe is 4 years for a chapter 7 or 2 years for a chapter 13 (from the discharge date). 

VA loans require 2 years on a short sale, 2 years on a Chapter 7 and 1 year past a chapter 13. 

FHA is 3 years post short sale if you had mortgage lates leading up to the short sale,  (no lates the time is less) and they are 2 years on a chapter 7 and 1 year on a chapter 13  However, FHA is shortening the waiting period for some borrowers who had had previous short sales, bankruptcies.

For borrowers who meet certain requirements, FHA is trimming down the amount of time that homebuyers must wait after a bankruptcy or short sale before they may qualify for a FHA mortgage to 1 year.  This is great news as the waiting period had been 2 years after the completion of a bankruptcy and 3 years after a foreclosure or a short sale.

Who can qualify under the new “back to work extenuating circumstance” policy? Borrowers must be able to show their household income fell by 20% or more for at least 6 months and prove the reduction was tied to unemployment or another “economic event” beyond their control. 

Feel free to contact me with any questions.

Investing in Haiti / Changing Lives

 

Many of you know I have a passion for the country of Haiti.  You have supported my trips and efforts there with donations of supplies, finances and prayer.  You often ask me how things are going in Haiti and want updates.  The birth of my son and my wife's difficult pregnancy prolonged my visit back.  But I have had the opportunity to help here in the US.

 

As you may know unemployment in Haiti  is 80%.  The older boys that live at Good Rest Orphanage have completed trade schools - but the opportunity to "go get a job" just isn't there.  The result is more poverty and the older boys who want to get married, move out on there own and begin their life end up living at the orphanage instead. 

 

These are young men that I have personally worked with side by side with.  I know their abilities and desire to work.   They have gone to school and now need to find employment.  I have teamed up with Children's Heritage Foundation to help these young men begin their career.  Our plan I simple; we are working together to raise funds to help them start their own company.   But were not just giving them a hand out.  Its a business loan.  Once they've established their business they will begin to pay the loan back.  Those funds will then be used to finance the next set of trade school graduates at Good Rest Orphanage. 

 

These boys are not looking for a hand out.  I personally know what its like to get a helping hand and I know that I am where I am today as a result of those of helped me.  If you are interested in investing in these boys lives the return on your investment could be life changing.  The posts below are a cover letter and our business plan for this endeavor.  If you want to contribute you can contact me directly or review the business plan and see what  you think.  The final paragraph explains how to contribute.

 

 

Were looking for individuals who are will to contribute financially to this effort.  The funds received will go directly towards the start-up activities of the company.  We have a start date of July 15, 2013.  Please consider making an investment in the economic well-being of these young Haitians.  Please mail your contributions to Children’s Heritage Foundation and write “Haiti Construction Company” in the memo.  Children’s Heritage Foundation 991-C Lomas Santa Fe Drive, PMB 427 Solana Beach, CA 92075.

Business Plan to help young men in Haiti

 

Good Rest – Haiti Construction and Re-development Company

 

Mission Statement

Our goal is to further the long-term economic well -being for graduates of Good Rest Orphanage (Good Rest) and the Haitian community through job creation and skills building.

Background

The unemployment rate in Haiti is currently 80%.  For the young adults of Good Rest, more needs to be done to fight poverty, secure a more sustainable economic future and ensure a successful transition to independent adulthood.  Although education is a top priority, with such a high unemployment rate, they simply cannot just “go get a job” after graduation.   Children’s Heritage Foundation, (CHF) in it’s continuing effort to bring an economic self-sufficiency to the people of Haiti will launch a new construction company in partnership with graduates of Good rest.   It will be operated by the young adult graduates of Good Rest who have completed the appropriate construction related training. 

Who will this help and how will it be done?

No other industry in Haiti has more room for growth than construction.  As Port au Prince and outlining communities rebuild after the devastated earthquake, the opportunity for work and jobs will become more accessible to those with construction related skills and knowledge.  This work will be made available through Haitian government funded projects and private sector development.  Each of the eight employees, who will co-own the company, (referred to here as “employee/owners”) have completed trade school in their related fields of construction.  Mr. Chatlin, a prominent businessman in Haiti, will mentor the employees/owners. He will use his contacts and broad network to assist the company with securing a broad range of jobs.   

  They will also receive administrative support under the direction of CHF’s American associate in Haiti, Carl Fielstra.  The employee owned company will establish a trustworthy reputation of hard working, knowledgeable and well trained employees who each own a share of the company.  Through this model we will to build a “pride of ownership” in the work performed by the business.  

CHF will utilize its contacts and associates, both Haitian and American, to secure job opportunities across Port-au-Prince.  The company will engage in some pro-bono work in order to build the company’s portfolio and reputation in the industry. For example, the company will provide the first day of work at no charge on certain projects in order to give perspective clients a “no risk” evaluation of the employees’ skills and abilities. 

Initial funding

The initial funding of the project will provide sufficient financial support to allow the company to complete the medical building that is currently under construction at Good Rest.   The completion of this project will not only benefit Good Rest but also add to their business, a resume.   The project will also allow the employees/owners to refine their construction skills and build team synergy.

Investing in the Fight Against Poverty

Children’s Heritage Foundation hopes to raise approximately $15,000 to $20,000 in startup capital to seed the business including: provide the initial equipment and payroll expense while the company grows.  Some of the initial startup funds will subsidize payroll while employees seek to acquire projects and contracts.   Salaries will be subsidized on a decreasing sliding scale over 100 days.  The decrease in subsidized wages is expected to offset by income from news jobs.  Eventually, all of the subsidized income will be phased out.

 The itemization of funds is as follows:

·         Initial wages for employee/owners  $8,000-$9,000

·         Tools and materials $2,000 - $3,000

·         Transportation for the company (purchase of truck and its delivery to Haiti) $6,000 - $8,000

Our Measurement of Success

The start-up funds while not a loan, in the traditional sense; will not be a gift either.  The company’s employee/owners will be expected to become completely self-reliant within a 6-month period.   Employees/owners are expected to re-pay the initial startup investment over a period of 2 years.  These funds will then be used in a modified “micro-bank” model to fund and support other entrepreneurial endeavors by current and future residents of Good Rest. 

Our goal is to invest in the start up the company for a limited duration of time.  The goal is for the company to become self-sufficient, teaching and allowing the employees to be economically independent and self-reliant.  As the company grows, builds a portfolio and reputation of success, it will in turn benefit the community beyond Good Rest; by job creation and hiring of other Haitians needing work.

Starting Now

Children’s Heritage Foundation is looking for individuals who are will to contribute financially to this effort.  The funds received will go directly towards the start-up activities of the company.  We have a start date of July 15, 2013.  Please consider making an investment in the economic well-being of these young Haitians.  Please mail your contributions to Children’s Heritage Foundation and write “Haiti Construction Company” in the memo.  Children’s Heritage Foundation 991-C Lomas Santa Fe Drive, PMB 427 Solana Beach, CA 92075.

My Haitian Friends

Haiti is currently the poorest country in the Western Hemisphere with 80% of the population living under the poverty line and 54% in abject poverty. The country population also suffers from low levels of education and a highly corrupt government. The unemployment rate for young males within the age group 18-35 is about 80%, the highest unemployment rate in the Caribbean.

The 2010 earthquake also dealt a tremendous blow to this poor nation, from which it will take years to recover. Millions are still without homes & the country is fighting to achieve some level of economic recover.

Over the last two-year we have working with a group of amazing Haitian young men on several volunteer construction project in Port-au-Prince, Haiti. We have had the privilege of assisting with the development of their construction trades skills through hands-on training and leadership development through mentoring and coaching. These young adults have great entrepreneurial drive, demonstrated construction skills and creative ideas that they hope to use to create jobs for them and for others.

In spite of their excellent skills and commitment to hard work, it is almost impossible for them to find a job in the local labor market due to the 80% unemployment rate for young men. Therefore, CHF and partners have decided to helping these young men use their skill and entrepreneurial drive to start a small construction company. The company will focus primarily on residential construction.

Children’s Heritage Foundation is seeking partners (individuals a& businesses) who are will to contribute financially to this effort.  The funds received will go directly towards the start-up activities of the company.  We have a start date of July 31, 2013.  Please consider making an investment in the economic well-being of these young men and their families.

Children’s Heritage Foundation (CHF) is a Christian humanitarian charity organization dedicated to working to secure a more prosperous future for vulnerable children and their families worldwide.  Our work is motivated by a desire to show God’s love through

Whats happening with rates?

Hello.  Heres my disclaimer.  I didn't write this.  An account executive for a lender I work with wrote it.  But it sums up whats happening in the market right now nicely.  Were seeing rates go up - as result of "positive" things taking place in the economy.  Whether its really happening or just psychology we will see...  (when he talks bout "price" he refers to the price to buy the rate...so example, if a rate had no points and its a .25 point worse that means that "no point rate" now costs a 1/4 point.)

Jobs Report Has Bonds Down - Prices Worse The 30-year bond is down after the Jobs Report came in pretty much as expected. Pricing is worse from yesterday by 0.250 since bonds are selling off...now down -37bps on the day...Interbank has already priced this fall into this morning's rates.

The Jobs Report was not too far off expectations. 170,000 new jobs were expected and it came in at 175,000 new jobs...not monumental. Nevertheless, since there are more new jobs traders figure the economy is strong and therefore they sold off bonds to invest in stocks. When traders sell off bonds the price of bonds drops and lenders' rates/pricing worsen. To counter the nominal uptick in new jobs was the unemployment rate which went up slightly from 7.5% to 7.6%. An increase in the unemployment rate means more people are claiming they don't have jobs...a weak economic signal. But the increase was so small it had little impact.

As a result, we had an uneventful Jobs Report and Unemployment Report. But if you recall, I said yesterday that the market would react more vigorously to today's reports because of all the volatility of late. I also said there was more downside to upside because signs of a strong economy reinforce Bernanke's new position to taper QE. So, even though the reports this morning were far from exciting, traders still reacted to it by selling off bonds.

And so, this morning has not gone according to plan. It's not what I was looking for - that's for sure. I was really hoping for some upward motion in the price of bonds, but alas, my prayers were not answered in that respect. I am also confused as to why the price of bonds increased over the last few days but we did not get an improvement in pricing...very odd that completely omits the logic. However, the good news it appears the harsh drop in bonds has leveled out. Even if we don't get back the 400bps we lost in May we have some hope that things will not get dramatically worse. And I can assure you the Fed will not be eliminating QE any time soon. That's what I'm taking into the weekend....