Rick Lee and other Mortgage guys ,can you look at these docs?

lendaddy · 12-12-2007, 09:13 AM

Not for me but they asked me if this looks OK (people think I know things though I have no idea why). Anyway, he is in an ARM now and needs to get out. His credit is low-mid 600's due to random stupidity

Basically, do these numbers look fair for closings costs? Anything he could/should question?

Thanks!

Rick Lee · Rick Lee's Garage

Lotta junk fees in there. Does the borrower know he's paying points on this? That's what the loan origination and discount fees are. A lot of folks don't like to pay points on refi's. The admin., processing and underwriting fees might be negotiable. Title insur. is nuts on a refi. Just get the reissue for a fraction of the price, though I don't know the state's law in this area. What the hell is $95 for overnight fee and winter taxes?

What's with the mort. insur. premium? Is this an FHA loan? Also, the borrower would save some prepaid interest if he closes toward the end of the month. Don't know if your state has a three day right of recision period before the loan funds. He should know he'll get his old escrows refunded to him after the old loan is paid off. 7% of loan amount is insane for closing costs, at least in normal states.

lendaddy · 12-12-2007, 09:48 AM

Thanks Rick, I'll run this by him and get you answers.

Moneyguy1 · 12-12-2007, 09:57 AM

Agree with Rick. Lots of stuff in there of questionable value. THis guy needs a darn good attorney to give this the once or twice over. Payment @ 7.25% is to the penny, but the mortgage insurance figure is mystifying. The inclusion of 2 points is also mystifying. This is an excellent example of how people get flim-flammed because they cannot be expected to understand all the jargon and put trust in the "professionals".

Rick Lee · Rick Lee's Garage

Quote:

Originally Posted by Moneyguy1

Agree with Rick. Lots of stuff in there of questionable value. THis guy needs a darn good attorney to give this the once or twice over. Payment @ 7.25% is to the penny, but the mortgage insurance figure is mystifying. The inclusion of 2 points is also mystifying. This is an excellent example of how people get flim-flammed because they cannot be expected to understand all the jargon and put trust in the "professionals".

Well, the devil IS in the details, but the bottom line is that anyone should know that $7k in closing costs for a $92k loan is excessive or at least very expensive. However, a $92k-$98k loan doesn't pay much of a commission to a loan officer, but a low 600 FICO can make it a lot of work. So he may be adding those points to make it worth his while. Some people wouldn't bother doing the loan, as it can be more work than the commission is worth. This happens on low-end condos a lot. If the existing loan is an FHA, then this is absolutely criminal. Tell this guy to do an FHA Streamline Refi. and it would cost FAR less.

lendaddy · 12-12-2007, 10:06 AM

Thanks guys, he's getting me answers now. I don't think this is FHA.

RANDY P · RANDY P's Garage

there's over 4 PTS in there....

lender is First Horizon Home Loan Center? I assume he's dealing with a lender vs. a broker?

rjp

lendaddy · 12-12-2007, 11:59 AM

He's getting back to me but he does believe his existing mortgage is FHA but I have my doubts. Did they even do FHA ARMs?

Anyway, the guy did not tell him he was paying any points.

He's less than happy right now but is going to get hard info. I told him everything is negotiable so don't burn the bridge yet.

RANDY P · RANDY P's Garage

some places did, but in the last 3 years there hasn't been a reason to sell them since they were in fact priced worse than the 30 year fixed - everyone got those.

I assume he is taking money out of the house, if he isn't have him apply for an FHA streamline instead.

Rick Lee · Rick Lee's Garage

Yes, FHA did and still does ARM's. I had one and did a streamline refi once or twice on it. If he has no mortgage lates and it's an FHA, he should be able to do a streamline for very cheap and his credit score doesn't matter. I don't remember exactly, but I thought on streamlines there is no upfront MIP. If there is, you get a partial refund of your previous one.

lendaddy · 12-12-2007, 12:17 PM

Thanks,

I'm sure he has some lates, his life has been pretty wild over the last few years with hospital stays and what not. He also has medical collections in dispute. Do the numbers make more sense given his track record?

Rick Lee · Rick Lee's Garage

Plenty of lenders ignore medical collections. No, those number don't make anymore sense. Is the lender paying off any other debts with their points and fees? I don't know what 7.25% on a 30 yr. fixed is supposed to cost nowadays, but I'm pretty sure it's not this much. Mortgage lates in the previous 12 mos. can make a loan pretty difficult to do. But lates prior to that usually just hurt one's FICO.

lendaddy · 12-12-2007, 12:30 PM

So lets assume he has a few 30 day lates in the last 12 months, is there a chance they need these points to interest a loan buyer?

I'm just trying to figure out what direction to give this guy. Should he tell the lender that the points need to go or no deal?

He just told me that he sent the lender (rep anyway) an e-mail and I'm sure he'll get me the guys responses. Should be interesting

RANDY P · RANDY P's Garage

what are the terms of the new deal? Why is he asking for a refi? is he paying off credit cards and whatnot? What are his reasons for this?

lendaddy · 12-12-2007, 12:37 PM

He has an ARM that's killing him and a fixed at 7-7.5% saves him a couple hundred a month.

But it's all unimportant now as he got the e-mail back from the guy and the loan was denied anyway. Like I said, this guys had a wild couple of years so I'm not sure just how messed up his report looks.

Flyer88 · 12-13-2007, 03:06 PM

Quote:

Originally Posted by lendaddy

Thanks guys, he's getting me answers now. I don't think this is FHA.

If it's not it should be! He could easily get 6.5% with zero orig. and zero discount points on FHA today and probably not have as many BS fees either. Fha will refi non FHA loans up to 95% LTV and judging by credit score he should be approvable. I do this for a living - he looks to be geting hosed.

Flyer88 · 03:18 PM

Quote:

Originally Posted by lendaddy

So lets assume he has a few 30 day lates in the last 12 months, is there a chance they need these points to interest a loan buyer?

I'm just trying to figure out what direction to give this guy. Should he tell the lender that the points need to go or no deal?

He just told me that he sent the lender (rep anyway) an e-mail and I'm sure he'll get me the guys responses. Should be interesting

FHA has a special program for people who had subprime ARM loans (2/28 and 3/27). Tell him to go to www.hud.gov and look into it!

Flyer88 · 12-13-2007, 03:14 PM

Quote:

Originally Posted by lendaddy

He's getting back to me but he does believe his existing mortgage is FHA but I have my doubts. Did they even do FHA ARMs?

Anyway, the guy did not tell him he was paying any points.

He's less than happy right now but is going to get hard info. I told him everything is negotiable so don't burn the bridge yet.

Tell him to run away - FHA does 1,3,and 5 year ARMS and a streamline refi can be done if he hasn't been 30 past due in the last 12 months. If he has been late tell him to wait until he has 12 months clean.

Flyer88 · 12-13-2007, 03:22 PM

Just looked closer - I tend to read from the end forward. Looks to be FHA judging by the MIP upfront and the monthly. That part isn't bad assuming he is refinancing from a subprime ARM that is about to adjust, but the fees and rate are way off. He's probably being told that it is an A- FHA loan or some BS like that.

lendaddy · 12-13-2007, 03:24 PM

Quote:

Originally Posted by Flyer88

If it's not it should be! He could easily get 6.5% with zero orig. and zero discount points on FHA today and probably not have as many BS fees either. Fha will refi non FHA loans up to 95% LTV and judging by credit score he should be approvable. I do this for a living - he looks to be geting hosed.

Thanks, after some further research his credit is significantly worse than he originally thought. His three are something like 625, 550, 490. He only had the one at the time. I imagine he needs to clean this up quite a bit before anyone will touch him, FHA or otherwise.