Virginia Hard Money Blog

Will my mortgage be sold and why?
When you refinance or secure purchase mortgage financing on your new home chances are it will be sold to different mortgage companies over time.
When the holder of your mortgage changes, so will the mailing address for your payments. Lenders are required to notify you of the change but don’t depend on them alone: any late payments will still be counted.

When you obtain a mortgage, your mortgage lender will have the right to sell or transfer your mortgage as they so choose. None of the original terms of the mortgage loan can change. The only thing that will be different is who you make your checks out to each month and where you send it. You will sign a servicing disclosure form at closing explaining the lenders guidelines on selling and transferring mortgages and how often they have done it on average, over the past 3 years.

Lenders will sell your mortgage for the loan amount plus a little extra. Then they take that money and provide a mortgage for another homeowner. Then they repeat the process again.

If your mortgage is transferred to another company, you should receive a written notification from both the old company and the new company. The transfer of the loan will not change the rate, balance of the loan, payment amount, payment date, or any other terms of the loan.

It is also important to verify that escrow payments are still accumulating. It is not unusual for the escrow payment to change slightly, but if your mortgage is being transferred within a couple months of the deadline for paying your annual or semi -annual real estate taxes, you should confirm with the lender that these will be paid ontime.

For a 60 day period following the transfer of your mortgage, the new servicer cannot report your payments sent to the former servicer as being late. This does not relieve you of the responsibility for the payments, but sending payments to the previous servicer is a frequent problem.

The fact that mortgages and their respective servicing can be sold allows for liquidity for mortgage bankers. Lenders can thus manage their loan portfolios and be more efficient. This efficiency leads to lower rates for the consumer. This is also why there are standardized documentation requirements for loans.

Moreover, its important to note that there are actually two parts to a mortgage — there’s the loan itself and then there’s the SERVICING of the loan — and both can either be sold together or separately.

The servicing company is who you make your payments to. They also handle any escrow accounts and send out late payment and delinquency notices as needed. They also handle foreclosures when necessary.

In fact, its this ability to continually create new business which facilitates the flow of loans and actually helps keep mortgage rates low.

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is not a commitment to lend. Restrictions may apply. Information
is subject to change without notice. All loans are subject
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Why do I apply once & get 15 calls?

Why do I apply once & get 15 calls? - This can be part of a recent problem with the credit bureaus selling their information upon an inquiry, its called a TRIGGER LEAD…If a mortgage company pulls your file, your info may go to many other brokers who have paid for that information from the bureaus…Do a Google search for more information on TRIGGER LEADS…Other reasons are that some of the places you apply will sell you application to up to 4 brokers as well as to other lead suppliers who will then resell them to up to 4 other brokers…There is a way to avoid this, its called “opting out”…Again google for additional information on how to do this…
Some loan officers are not very good at finding new customers. They don’t get many referrals, often because they don’t treat their customers well enough that those customers will refer their friends and family members. They don’t provide enough valuable information on their websites so that visitors would know if they are knowledgeable and helpful.
Instead these loan officers pay money for your personal financial information! And the credit bureaus sell it to them!
These loan officers are not counting on referrals from you because they usually don’t get them any way. So they are less concerned about treating you well than getting the sale. This leads the less ethical of the group to do such things as quote rates lower than they can get for you. They figure that when they eventually tell you that you don’t qualify for the quoted rate, you will be so far along in the loan process that you won’t be able to switch to another loan officer.

Find out the lead generation companies name and do your own research. Find out what their privacy policy is and if they do affiliate marketing. If the answer is no affiliate marketing and a solid privacy policy then you can feel somewhat safe you will only recieve the appropriate amount of calls.

I will be happy to do a free ananlysis of the GFE’s provided by other lenders, and happy to call them with you on the phone to point out any discrepancies or fees they clearly left off when giving you the quote. A GFE is a very simple form to create and doesn’t hold much weight, as it is not binding upon application. Many lenders leave out required State Taxes or Title Insurance, to appear they have lower costs, but truly do not…

There are many lead generation companies out there that promise to help you out by letting lenders compete for your business. These types of lead companies will sell your information to however many mortgage professionals will pay them for it. Sometimes your information could be sold a countless number of times and your phone will ring for months after you applied with the lead company. Many times it is better to simply apply with 1-2 separate lenders individually that to go ahead with any of these types of lead companies that promise to let lenders compete for your business.

To prevent receiving a flurry of phone calls regarding your credit report every time it is pulled, consider visiting optoutprescreen.com, the only website which allows you to prevent all three major credit bureaus from releasing your information to third parties when you apply for credit.

One of the great things you can do for a borrower is teach them about their credit.
The site optoutprescreen.com has been great for my borrowers. Not only does the site let you opt out for a specified period of time, such as 5 years, 10 years or forever. It also let’s you choose to opt back in whenever you choose.
Another benefit of this site is that it sometimes will raise the borrowers credit score. It will not raise it by much, sometimes only 2 or 3 points but it usually will raise it.
So if you have a borrower on the edge of not qualifying due to credit, have him first pull his own credit so save the inquiry hit, sign up for a credit monitoring program so they can watch their changes happen on their report, and then have them opt out on this site

Be wary of lenders who place a sense of urgency and require you to make a decision-and deposit- immediately. A reputable lender wants you to make the best decision for yourself. That is how reputable lenders earn one’s trust and business.

You might also be getting called by automatic dialers, once your name and phone number are added to the marketing list of everyone who purchased your lead.

Use one mortgage broker you can trust to do your shopping for you. If you apply online, make sure you hit the optout buttom to prevent numerous junk emails.

Despite advertising claims to the contrary, these lead companies do not care if you get the best mortgage deal for your financial situation. They just need another name and number to sell for $35 to as many high pressure salesmen as they can. If you want lenders to compete for your business, check with your real estate agent, your accountant, your financial planner or even your friends. Then make some calls to a few different lenders. You will do a much better job of finding lenders who will really care about your needs and desires because they want other people to continue to refer clients to them. They won’t just close quick and move on to the next lead.

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Subprime Loan - Subprime loans are not just for people with less than perfect credit. While many subprime loans are used for people with not such good credit, many are also used for creative financing, unique situations, and for loans that dont meet traditional conforming guidelines (conforming loans are generally for people with good credit).
Sometimes the subprime market will offer up better interest rates for a borrowers unique situation, than could be achieved applying for a mortgage with a prime(AAA) lender, Even if the borrower is not considered to be subprime.

Subprime loans are also referred to as nonconforming loans, because they do not conform to standards set forth by Fannie Mae or Freddie Mac, the two largest purchasers of mortgage backed securities.

There is a wide range when it comes to the interest rates of sub prime lenders. It is your mortgage brokers job to shop your loan to multiple sub prime lenders and obtain the best deal for you. Most sub prime loans are written as 2 or 3 year ARMS.

There are many different sub-prime programs available. There is much more flexibility on documentation required. A good example is a VOR (Verification of Rent), may not be required using certain subprime lenders. This makes it easy to finance someone that can’t verify their rental history. There are many more examples of subprime programs!

Because “subprime” is another word for “non conforming” financing anything that does not conform to Government Sponsored Entities (GSE’s)lending guidelines, such as those for FNMA and FMHLC, fall into this category. Although credit may be the first indicator to some how a loan is underwritten or graded, other important factors play part too, such as loan amount. The FNMA conforming loan limit for 2006 is $417,000. If your property is in California where the average home value could be as high as $490,000, you will never be able to qualify for conforming financing without splitting the loan into two balances, thus splitting up the risk for the investors. Loans over the conforming loan limits are commonly called “jumbo” and “super-jumbo” loans, and sometimes even “luxury” home loans. All of these types of loans fit into lending perimeters of non-conforming and subprime financing, sometimes also referred to as “niche” lending.

Sub-prime, or sometimes refered to as non-prime, lenders are often the source for loans that are secured by non-warrantable condominiums and cooperatives. Non-warrantable condos and coops are projects that do not meet the criteria set by Fannie Mae and Freddie Mac and therefore the mortgages secured by these type of condos and coops are not eligible to be delivered to FNMA and FHLMC. Sub-prime mortgages are sold to investors who do not have such criteria.

Subprime loans are also known to close faster than their counterparts. These loans are often the first choice of borrowers who are in situations where they need fast closings.

Subprime loans are able to close faster because the underwriting guidelines are not as strict as conventional lenders. Looser guidelines allow for faster closings. Where a conventional lender may require two years worth of a verification of rent, by a management company, the subprime lenders may allow you to have a twelve month VOR from a private party. It is little things like this that may require you to go subprime for the time being.

Non prime loans will also allow you to purchase a home immediately after bankruptcy, after a foreclosure, allow collections, disregard consumer credit lates or many other options that you may not be aware. If there are any questions please contact us for your consultation.

Many times an experienced mortgage professional can qualify a traditionally subprime borrower for conventional or “prime” financing. This can be done by properly documenting assets, doing some credit repair, or by utilizing various automated underwriting systems. Contact an experienced mortgage professional to review your financing options.

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This is not a commitment to lend. Restrictions may apply. Information is subject to change without notice. All loans are subject to credit approval. Equal Housing Opportunity.