Condo Insurance – What you don’t know can cost you a lot of money

What you MAY NOT know about Condo insurance

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Newer lender regulation REQUIRE people owning a condo and even some town homes to get homeowners insurance. This policy is similar to a “renters insurance policy“, but is actually called an HO6 policy.

If you or one of your clients owns a Condo or a Townhouse, there is an important coverage to consider.

It is called “extended protection”.  this coverage protects the owner for any damages that may occur that the owners association will not pay because the master policy for the association has a deductible of $5,ooo or $10,000.

If for example, the owner grills out on the deck and gets too near the vinyl siding and damages it,  the association will make them fix it but will not pay for repairs until the deductible is reached.  So the owner may be on the hook for that 1st  $5,000 or $10,000.

With extended protection,  insurance will pay the damage up to the deductible.  And the coverage is relatively inexpensive.

The death of FHA Loans – Starts April 1, 2012

The Federal Housing Administration (FHA) is following through with absurd increase in FHA loan mortgage insurance.

When consumers get an FHA loan, they pay UMIP (Up-front mortgage insurance premium), which is added to their loan amount, and a monthly mortgage insurance fee. Starting April 1, FHA will hike its upfront premium by 75 basis points to 175 bp on all single-family loans, including jumbos. The monthly mortgage insurance will remain the same, at 1.15% for loans over 95% loan-to-value.

On a $200,000 loan, borrowers would actually end up making payments on a $202,000 loan. ($200,000 X 1.00%). After April 1st, 2012, the same person will now have a loan of $203,500. ($200,000 X 1.75%).

According to FHA, the fee increases are designed to strengthen FHA’s capital position and “have minimal impact on the market and borrowers,” according to FHA acting commissioner Carol Galante.

These premiums are expected to dramatically slow down new FHA from $218 billion in the current 2012 fiscal year that ends September 30 to $150 billion in FY 2013 as consumers continue to rely more heavily on standard Fannie Mae and Freddie Mac loans, which now have cheaper mortgage insurance.

In a smart move, FHA noted that FHA streamline refinances are exempt from these new premium hikes.

Why you should wait for HARP 2.0

Why you should wait until April to get a HARP 2.0 Loan

Just a few years ago, consumers with weaker credit getting a conforming mortgage loan (one designed to be sold to Fannie Mae or Freddie Mac) got a great deal.  If you barely qualified with a low 620 credit score, you got the exact same rate as someone with an excellent 800 credit score.

Wait for better HARP 2.0 Interest Rates

When the mortgage markets collapsed and the housing agencies started hemorrhaging cash, they instituted new fee policies known as Loan Level Pricing Adjustments (LLPA) and Adverse Market Delivery Charges (AMDC) as a means to fix their balance sheets on the backs of homeowners that were still able to obtain loans.

The fees were intended to price loans based on the risk inherent in each loan. LLPA is the more significant of the two fees. It adds fees to a loan based on loan type (purchase, rate and term refinance or a cash out refinance), loan to value, and credit score. To illustrate the impact of the LLPA, a borrower with a 620 credit score will pay a rate nearly 1% higher than a borrower with a 740 credit score.

Because of the inherent risk of HARP refinance, most consumers over 80% loan-to-vale have been hit hard by AMDC and LLPA requirements

HARP 2.0 – Best Change Worth Waiting For

As part of HARP 2.0, AMDC and LLPA rules have been changed, providing consumers who wait a potentially much better interest rate.

  • Reduced fees charged by the agencies on loans with a loan to value in excess of 80%.
  • On loans with amortizations of 20 years or less, the LLPA and AMDC are eliminated.
  • On 25 and 30 year loans, the cap is reduced, which means the borrower with the lower score in the example above saves another .25% in rate.
  • Removal of loan to value cap on fixed rate mortgages (effective March 17th 2012) – no equity, no problem. In fact, negative equity refinances will be allowed.

Eliminating the fees on 15 and 20 year loans is significant. Rates on those loans are already well under 4%, so this should open up HARP refinance opportunities for borrowers that are interested in the rapid principal reduction that comes with shorter amortization mortgages.

Not Until After March

When lenders underwrite loans, the first step is to log into Fannie Mae or Freddie Macs computers to get an underwriting decision. These two agencies have indicated lenders won’t be able to do that until sometime around March 17th. To get the better mortgage rates from HARP lenders, you need to wait!

One caution about the changes to the loan to value cap; sometimes lenders do not adopt changes announced by the agencies word for word. Some overlay their own underwriting guidelines and they are always more conservative. While Fannie and Freddie may state they don’t have a loan to value limit for fixed rate HARP loans, many lenders will have a cap.

The agencies continue to tweak their programs with the goal of improving the performance of the loans in their portfolio. If you haven’t refinanced yet, maybe this change is the one that will benefit you.

The amazing FHA Streamline Refinance Program

The FHA Streamline Refinance Program

FHA Mortgage Loan Expert in MN and WI
FHA Streamline Mortgage Loan Expert in MN and WI

Minneapolis, MN: If you currently have an FHA mortgage you are eligible for one of the simplest money saving refinances available today. The FHA Streamline Refinance allows existing FHA borrowers to reduce their interest rate without having to jump through a lot of hoops. Basically, if you have made on time payments on your current FHA loan for the past 12 months. You get (almost) an automatic approval for the streamline refinance! How COOL IS THAT?

Most current FHA loans qualify for a no out-of-pocket cost streamline refinance loan that lowers your FHA interest rate and reduces your monthly mortgage payment without increasing the principal amount owed on your first mortgage. The FHA streamline refinance provide a rare opportunity for FHA borrowers to refinance any time the interest rate drop to level saving them more than 5% a month over their existing payment. FHA loan guidelines are changing, so ask your FHA loan expert how this could impact the FHA streamline program.

FHA mortgage rates have fallen to the lowest level since Eisenhower was President!  FHA streamline rates are as low as or even lower than conventional interest rates, so don’t sit back waiting for lower rates.  If you have made your loan payment on time and you already have this government loan, the FHA streamline refinance programs are easy to qualify for.

  1. no appraisal required

  2. lower credit requirements

  3. limited documentation

  4. skip a month of payments


You may have heard of HARP, the Home Affordable Refinance Program. HARP is only available if you have a Fannie Mae or Freddie Mac loan. and it allows you to refinance even if your home is underwater. FHA’s streamline streamline refinance has a  no appraisal option. So if your home has lost value, you can possible still refinance to today’s low mortgage rates too!

FHA streamline loans are highly regarded by FHA customers. FHA mortgage rates have never been more attractive so act now and lock into the lowest streamline rates in years.

With mortgage refinance rates this low it makes sense to reduce your monthly payment if you have any mortgage loan, but especially government insured loans like an FHA loan or a VA Loan.


An “Interest Rate Reduction Refinance Loan” (IRRRL) or VA Streamline Refinance allows Veterans to refinance their current mortgage interest rate to a lower rate than they are currently paying. This program is only available to veterans who are refinancing their original VA mortgage in which they utilized their original eligibility. 

VA Streamline Loan Guidelines:

  1. There is no cash out on an IRRRL loan
  2. The VA charges a 1/2 percent funding fee to guarantee the IRRRL Loan
  3. The VA loan being refinanced must be current and have a perfect pay history for the last 12 months
  4. No assumptions are allows
  5. Second mortgages can not be included and must be subordinated

Like the FHA streamline refinance, the VA streamline loan can be done with “no out of pocket money” by including all closing costs in the new loan or by making the new loan at an interest rate high enough to enable the lender to pay the costs.

Stupid Appraisers?

FHA guidelines state that a house has to meet MPR (minimum property standards) for existing houses, and MPS (minimum property requirements) for new construction. FHA is very concerned with the three S’s: Safety, Security, and Soundness.

When a Realtor was asked what the three FHA S’s were, he replied, “Stupid, more stupid, and seriously stupid FHA appraisers,” which I thought was pretty funny, however, a little off the mark. The three FHA S’s have to do with the following:

Click here to READ the FULL STORY



New Mortgage Statement to eliminate confusion?

Classify this under Government solution without a problem.

Under the 2010 Frank – Dodd Financial Reform Act came a lot of mandated changes that won’t fix anything, but created a lot of extra paperwork and bottlenecks for the housing and mortgage industry. One of those items was the creation of the Consumer Financial Protection Bureau.

I just read that the CFPB is out to make reading your monthly mortgage statement easier!  Was this really a problem? I’ve had plenty of mortgage loans from all sorts of different servicers, and I’ve never been confused.

According to many consumer protection group, confusing monthly statements has been a huge contributor to the current housing mess.  Huh??  I’m not fan of the large banks, but is this really a problem the government should be mandating?

The CFPB is apparently required under the 2010 law to put new mortgage servicing rules in place to help consumers. The law has specific requirements for mortgage statements, including a phone number and email address for the customer to get information about the loan, as well as information about housing counselors.

The newly created Consumer Financial Protection Bureau has finally developed a proposed new one page “standardized” monthly mortgage statement supposedly designed to provide clear information about your loan.

The prototype released Monday included a breakdown of how much of the monthly payment went to principal, interest and escrow. The form also detailed the outstanding principal, maturity date, prepayment penalty and, for adjustable-rate mortgages, the time when the interest rate could change.

Many servicers already provide such information on monthly statements, but there are no industrywide standards.  Initial reaction from servicers to the agency’s proposal was positive.

You can see a working draft of the standardized statement on its website, www.ConsumerFinance.gov, and give  input before a version of the form formally is proposed this summer.

WE EMPLOY PEOPLE TO DO THIS?  This is what is wrong with this country!

What do yo think?



$25 Billion Mortgage Settlement for lender abuses?


$25 billion agreement provides homeowner relief & new protections, stops abuses

WASHINGTON–U.S. Attorney General Eric Holder, Department of Housing and Urban Development (HUD) Secretary Shaun Donovan, Iowa Attorney General Tom Miller and Colorado Attorney General John W. Suthers announced on 02/09/12 that the federal government and 49 state attorneys general have reached a landmark $25 billion agreement with the nation’s five largest mortgage servicers to address mortgage loan servicing and foreclosure abuses. The agreement provides substantial financial relief to homeowners and establishes significant new homeowner protections for the future…

To read this press release in its entirety, look below:

The Real Story behind the story

Foreclosure abuses? This is a complete overstep of the government, a very bad precedent, and a major reason why this country is going down hill fast.

Whatever the reason, I’m sorry you lost your home to foreclosure.  I really am. But the bottom line is simply this.  You signed a promissory note. You promised to pay back the home loan. Period.  It didn’t say you promised to pay back unless...   Unless, you lost a job, unless the house lost value, etc. Nowhere in the documents did it say the bank was required to write down your mortgage balance, nor agree to any sort of loan modification.  The bank is a business.  They took a financial risk giving you a loan because of your promise to pay it back.

The abuse?  First a little background. When a lender forecloses on someone, they have to meet certain protection guidelines, including things as timely notice of impending action, etc. Ultimately, an officer of the company must sign off on the final foreclosure action, certifying the company has followed all required guidelines.

With the overwhelming new rush of foreclosures, the banks couldn’t keep up. So did they make a error. Yes. The banks did make a mistake. No doubt about it.  But what they simply did is rubber stamp the foreclosure certification, and used people other than an officer of the company to sign the document.

The government, after receiving a lot of pressure from consumer groups, and people desperate to save their home, ended up forcing the banks to this $25 BILLION agreement. The agreement will PAY, YES PAY people who were foreclosed on $2000. Many of those still in their home will have their balance written down by an average of $20,000.

Really? Should maybe the banks get their hand slapped.  Sure.  But to the tune of $25 Billion?  Of course not.  The underlying issue shouldn’t be that banks had someone not authorized sign a document, it should be the fact that people (on average) were over two years behind on the payments, and we are now rewarding them.

Bad precedent…  really bad!


——————- Full Press Release ——————-


Read more

New FEE (hidden tax) makes mortgage loans costs more

In December 2011, Congress reached a last-minute deal to fund the payroll tax cut extension. The payroll tax extension will provide a 2% tax reduction for individuals making up to $106,800 – so the tax extension will be very helpful for many Americans who are struggling during these tough economic times. But like so many things in our tangled economy, there’s a flip side. In this case, the tax cut deal has a rippling effect that will impact the mortgage world.

Read the full story: