I am always surfing the Internet and there always seems to be those blogs and informational pieces that are not just opinion, but completely misleading and wrong. And for the most part, that's how rumors start.
When it comes to FHA loans, I will state this.... I am not god, I am not perfect, and I don't know everything. But I will say this, I would think that I am very good at what I do, that I am knowledgeable, that I think outside the box, and if I don't know something... I will ask and research it first before I write about it. Do I make mistakes? I think we all do at some point in our lives. But when you put out information that is not even close, that you didn't confirm its source, or that you are just winging it... then I have a major problem with that.
Overall, it's bad enough with the many changes in regards to FHA loans and conventional loans.
So, what have I seen that has been misleading or blatantly incorrect?
- Here is a biggie. Credit scores - Yes, there are some investors that have changed the minimum scores to 620, but this is not nationally nor across the board. I just read a blog here on AR last week that stated that credit scores were going to change to 620 by 02/12/09 on all FHA loans and VA loans.
Here is the sad part about this, I asked this person where they got his information from and he stated that he received it from two of his reps. Secondly, he was questioned on how much FHA business that he does and he said that he isn't even FHA approved. But that he wanted to put the information out there. I then asked him to fax me or send me the so-called letters that his reps. gave him pertaining to this mandate. That was over 6 days ago and nothing.
Here is the reality of the situation. HUD/FHA never sent out a new mortgagee letter, that would give any or all changes. Congress never passed anything new regarding credit score changes. And this would leave any and all investors and lenders that sell their loans on Wall Street. When it comes to this part, there are no real rules, but that the investor can change and or add any guideline as they see fit in order to be able to sell that loan to other investors or to Wall Street.
- There was a rumor going around that you now need 2 months reserves on all FHA mortgages. This is absolutely not true and it is case-by-case, depending if you need a compensating factor on the loan to make it approved.
- Locking interest rates - I actually had two different clients tell me in the last 10 days that their loan officer told them that they couldn't lock into a rate until 5 business days before settlement. In today's market, you can lock in for 60 days and some will lock in you in for 90 days. But you can lock in your interest rate once you have a property and have filled out a full application. Now, there are exceptions to the application part, depending on your loan officer. But you do need a property with a physical address. There might be a Federal Credit Union that would be different, but for the most part, in most cases, there are no more shop and lock programs as there were in the 90's.
- Lastly.... FHA loans don't take forever to close. That is usually because of an inexperienced loan officer or lender. FHA loans can still be done in 2 to 4 weeks. I have closed many in 6 business days, but those were emergencies, because the other lender dropped the ball. Preferably on any type of loan, FHA or conventional, it is nice to have 3 to 4 weeks so you can properly process the loan. Processing a mortgage is not like buying a car. Just food for thought.
Overall, I just wanted to point a few things out that have disturbed me when surfing the internet, blogs on Active Rain, and from listening to other loan officers. FYI : Don't always assume when shopping for a loan. It doesn't hurt to do a little searching and ask questions. If the loan officer doesn't seem sure, question them some more and call someone else, it could end up saving you thousands of dollars. Just don't shop yourself out of the market. Please read this : Shoopers that shop themselves right out of the market
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Copyright © 2011 by Jeff Belonger of Infinity Home Mortgage Company, Inc
Jeff. This is nothing new.
Mortgage companies, mortgage banks and mortgage brokers who are NOT FHA or VA approved have always, always misrepresented FHA and VA loans.
Sadly, too many agents are tied to too many loan officers who are NOT approved and merely Parot what that loan officer has told them.
I have found over the years that there are vast geographical areas where FHA and VA loans are rarely done and the agents, because of their lack of knowledge, permit the conventional lenders and brokers to dictate the types of loans that are provided.
It's a dirty little secret. Glad you posted this.
Well Done, Jeff!
The consumer faces two problems with Loan Originators.
One is simple gross incompetence!
Two and far more sinister are those who lie to avoid competing with honest Originators.
I love redundancy so let me repeat: The only protection the consumer has is the personal integrity of their Loan Originator!
Bill
FHA has always been a program that I have used since I started in this business. I used to be amazed at the number of agents that were not familiar with the program and the misinformation that they quoted. I didn't really think about some lenders feeding the misinformation to agents and the consumer? Kudos to you for keeping us straight.
Jeff - Lots of misleading information out there, for sure. Nature of the beast, I guess. Part of our job is to ensure we correct it and kill the proverbial rumor mill.
Sincerely,
God;)
Jeff--This is why I never quote mortgage information and leave it to experts such as yourself to discuss with my clients. Misinformation is worse than no information.
Jeff- Good for you! You need to clear up all the rumors. I just heard another one, I should have sent it to you but now I forgot where on AR that I found it. Hmmm, I will think about it and call you.
LENN.... . well, you and I know this... usually the experienced realtor or loan officer that knows their business knows this. And not someone with just time and service, which so many seem to throw out there.. another pet peeve of mine.
I loved your parot statement, in which it is so true and seems to have gotten worse over recent months, hence why I decided to write this post. And you are so right about those that do one type of loan, yet they give out information on other types of financing that they don't know much about, but assume. Always good to hear you chime in with your words of wisdom. thanks
WILLIAM..... . you hit two nails on the head with one hammer. Bingo.... and they are still out there giving out misinformation. thanks for the follow up and for your feedback.
AUDREY..... . I have been in the business since 1992 and my first FHA deal was 1993. Not much has really changed since then, even with this market. Yes, some things, and even the appraisal issues have gotten better. And yes, there are loan officers that give out misleading information... either because they just didn't know (assuming), or that they lied to get the deal in the door, or just heard it from a wrong source... thanks
JASON..... . oh yes, you and I both know that, from what we read and from talking to each other. Glad that you were multi-tasking as you were on the phone call also. ;o) But seriously, I agree, part of our job in my opinion is to ensure that we put the right information out there. thanks for the feedback.
TERI.... . wow, excellent statement.,,, "misinformation is worse than no information"... I couldn't agree more with you. Hence why I tell a client, if I am not sure, let me get back to you first. Even when I think I am positive, I check sometimes... things just change so quickly. thanks
I know for me, I have two great loan officers I know that I call with questions.
I think the problem is that changes seem to happen daily in the morgage world, and its hard for we agents to keep up. Me, I send people to good loan officers who are top of things because I know I can't possibly keep up on what is real or what is rumor.
There was one rumor I read on AR here about FHA and I called my mortgage brokers about it, and neither of them had heard it. Clearly it was not true.
I do believe that when I want accurate info I look to the professionals in the industry....one of them being you :)
Hi Jeff. Thanks for setting the record straight.
Good info to know. A rapidly growing part of my business.
Thanks for writing,
Ken
Hey Jeff, any truth to the FHA limit changing back to $417K in the San Bernardino county of California by the 15th of the month. A couple of the lenders that work our area had an email stating it might happen.
KATERINA.... . would love to see the rumor that you saw... And yes, we need to clear some of this up. I speak to about the same 10 to 15 loan officers on a weekly basis and a few of us have seen it get worse with misinformation. thanks
MELINA..... that's great that you have two. I think for many, it's hard to even find one. You might want to get a hold of Thesa Chambers here on Active Rain and let her now also. I say this because she has one that she trusts, but her company is not as aggressive as they use to be.. CW. And she wanted to use me, but we haven't gotten licensed in Oregon as of yet.
In regards to the rumor that your two people squashed, what was it about? I love hearing about them all. It's another way for all of us to keep educated. thanks
SALLY.... . I think many of us want accurate information and not that fluff, misleading crap. And thank you very much for that kind compliment.
KEN T. ..... . my pleasure and that's good to hear that it is becoming a big part of your business. Not that all FHA should be ones business, but if you are in that market and conventional doesn't work, it's great to have. thanks for stopping by.
KIM..... . as I wrote to you, this is my thought, so others can read this.
In regards to your question, I have not heard anything about HUD raising the loan amounts again. I have a good contact in HUD, so I can ask. Only 2 things are possible, from what I know. Congress has to approve this in a new bill, just as when they did last year, when they raised it or.... If it's just your county, you can appeal this through HUD to get a limit raised in a specific county. It has been done before. So maybe that happened? Or it's in the new stimulus bill, which I have heard nothing about. I hope this helps some. thanks
Spot on Belonger!
and a very crisp, clean and concise post attacking some of the more prevalent lies going around. How true that too often these lies are spread by lenders that can't or won't do FHA in an effort to compete. FHA is the best low down program in the country now. The numbers show it. If you aren't using it, you are losing deals to it.
Gerry Suarez, Jr.
Your FHA Loan Pro!
Great point Jeff!
Like you Jeff, I've been doing FHA loans for over 22 years and I am truly amazed at how many lenders - especially in CA don't know what they are doing. And they are calling themselves FHA EXPERTS???! It took years of doing these loans with all the different scenarios to become an expert -as you know - so how can these lenders that just got approved to do them call themsevles experts? And even worse - the ones that aren't even FHA approved putting info out there? It sickens me that there are still many lenders in the business that have no business being in THE BUSINESS!
Great post Jeff. Its been a while since I have heard those things by someone Im working with, but I know I've heard the issues before. Since you do many FHA loans, Im sure you hear that all the time. As you stated, FHA is not difficult but there are things you must know when working on them. Its still a new product to many because they use to push subprime instead. I've never touched Sub-prime loans, but I also do not complete a ton of FHA loans. I like them but just don't need to use that product very often.
Hi Jeff I think the post was great and I have heard these kind of rumors, but again it's usually those that are not Fha Approved they always mis represent FHA and VA Loans.
GERRY.... . what's sad is that there are a few other things that I didn't mention. But yes, I agree, hence why I wrote this. We just need to keep the correct info in front of the consumer and the realtor. And thanks for the kind words.
COLLEEN.... . I know, that you are younger than me, yet that you have been doing this for 6 years more. ;o) I know you told me the stories of when you moved out to California and that it was scary on how many loan officers out there just didn't know what they were doing. I have seen a few on Active Rain that never did a FHA loan until 6 months ago and they have FHA specialist or expert under their name. Gee, even after I id this for 8 years, I wasn't a true expert. I knew a lot more than the average person, but you don't become a true expert until you have done 100's, because there are so many different types of scenarios.. It does drive people like you and I crazy... we just need to keep educating. thanks
JOHN.... . no, it's not difficult, but as I just mentioned to Colleen, one can't be a true expert until you do 100's of them, because of the different types of scenarios. And that many guidelines haves changed recently. Just over a year ago, the MIP requirements changes, to where you now have both the upfront and the monthly. Someone just told me on another blog of mine, that another lender said that they don't need both, yet this was changed over 1 year ago. Thanks for the compliment.
MARYANN.... . yes, many of these rumors come from those that aren't even FHA approved, just like my credit score example. That owner of the mortgage company even admitted to the fact that he's not even FHA approved, yet he passed out very wrong info. And thanks for the kind compliment.
Well, I for one have not done hundreds. I knew about the MIP changes, but no where near an expert. Another reason I keep up with posts hear (well, on certain posts), so I can up to speed on things I have not read about yet.
Thanks for the info. Misleading information can lead you down a very dangerous path, especially if your a Realtor.
Good clarifications Jeff. Too many people do sloppy work reading the lender memos and then spit out information without checking it. What I don't understand is where the feeling that FHA loans are so much more work or take much longer to close come from. I guess some of it is from people not approved to do FHA which want to give some excuse as to why FHA is "no good", or from those that have little experience with the program. It has always been and continues to be a great option.
Good info Jeff. Guess alot of people have out of date info. I do remember when I cringed when a buyer said they were going FHA. Nice that things have changed.
Jeff, my mortgage broker is dragging and dragging. He told me it takes six weeks to close an FHA loan and my buyers might possibly lose the home. What to do?
Suzanne, I just closed an FHA in 2 days from App to close. Maybe your file has a myriad of issues, but your comment stating that HE SAYS....FHA TAKES 6 WEEKS TO CLOSE? Your broker is on crack or his back office is in shambles. I don't want to do the 2 day process ever again as that in and of itself can be brutal. However, I will say that you can go from app to close in less than 2 weeks without sweat on an FHA. You can switch companies and get this thing done in a week.
Jeff Belonger, I'm not sure why this post isn't featured. You da man! Stellarest of the stellar posts! Great job home boy!
Suzanne... You need to look around for a new loan officer. Not all have the same setup.
Agree with Larry....
Jeff, great and very timely information here! These days its critical for consumers to have accurate information! I can always count on your posts for enlightenment!
JOHN.... . well, just keeping up with the changes, at least you are doing your part there. Those that just assume and not ask about the changes or that they thought they knew, but weren't 99% sure, those types of loan officers don't help either. If I have any doubt, I just ask and or research. thanks
JENNIFER.... . even more so if a loan officer, because you affect not just the borrower, but the agents and the seller. As I have mentioned, I thought it wouldn't have gotten worse, but it seems like more people are putting misinformation out there more than ever before.
ROLLAND.... . in the case of the credit scores above? That owner of the mortgage company assumed because he listened to 2 mortgage reps that come into his office. I am always verifying stuff like that. One thing, that means he is a broker also, which I knew that. We get updates from our investors directly and it also goes to our underwriters, who then put out these memos. No matter what the reason, so many use the "things change to quickly" excuse. It has become more of a problem as of lately. thanks
EILEEN.... . out of date? Just not sure if people (loan officers), pride themselves to make sure that they have the right information. I think out of date is another poor excuse. And there are many places as a loan officer to check, if not sure. thanks for the compliment.
SUZANNE...... well, I think it's time to find someone else. Especially if this hasn't been the first time. And if it has, and they are just giving poor excuses? Again, find someone else. I passed your information onto Larry Bettag, who commited below you. If they were an honest lender, they wouldn't tell you why. But even some of my broker friends, it's still only 3 days in underwriting. And with my company, even though we are a banker, we are 2 to 3 days... good luck.
LARRY.... . I closed 6 loans in 2008, one was 3 days from start to finish and the other 5 were in about 5 to 7 business days. But you do have to drop what you are doing in order to do that, when fully processing these loans. And you can't do that on every loan.
TOM...... bingo.... and there many good ones still out there. It's called setting your clients expectations to a certain level, even the realtors.
BRIAN & MARIE..... . it's very critical and the excuses that I am hearing, sad... I just approved one that the lender had since Nov. 16th, and they had asked for 3 different extension dates, after missing the Dec. 17th closing. This went on through January. I received this client on February 3rd and had it approved on February 5th.... and even $10,000 more in price than the other lender had. They just didn't know what they were doing. And thanks for the compliment.
Well I guess you've said it best, that's how rumors start and it occurs to me that lenders that are not FHA approved are the ones that are throwing the most mud. Thanks for setting the record straight.
Your one of the best. Keep up the good work.
LYN.... . it's not even those not approved to do FHA loans that are spreading these rumors. I have come across many that are FHA approved and they still spread rumors. Overall, you will find this in any industry.
MIKE..... . well, thank you very much for those kind words. I truly appreicate that.
Hi Jeff - Bravo my friend - It is amazing the amount of bad information that is out there - Don't these posters check their source for accuracy? I am working on gathering information for a post with a similar tone. I was a bit hesitant because I do not want to offend anyone, but the truth must be known. You just inspired me to move forward. Thanks for putting this information out.
Great post, thanks for clearing some things up.
I was under the impression that FHA did not do credit scores.
That is a shame that innacurate info is being given to these consumers about locking their rate.
Hi Jeff I just read your response on the credit score comment in regards to one of my post..here was your comment
yes, many of these rumors come from those that aren't even FHA approved, just like my credit score example. That owner of the mortgage company even admitted to the fact that he's not even FHA approved, yet he passed out very wrong info. And thanks for the kind compliment
I just wanted to make it clear that I do work with a company that is FHA approved if you were directing your comment about our company. Not sure who the company was you were directing to but for the record.
Maryann... I am sorry, but I am 110% confused on what you are trying to say. Okay, you read my comment... is part of what you placed in the comment above my comment? Quoted? Hence one reason why I am having a hard time understanding this. Please clarify. thanks