Clients2Homeowners

Home prices are so high that more than half of down-payment assistance programs are now open to buyers earning over $100K

Thu, 19 Feb 2026 09:41:31 GMT

The number of down-payment assistance programs is on the rise as housing costs remain high.

There’s been an increase in the number of down-payment assistance programs across the country. Many now allow prospective buyers who earn over $100,000 to get funding.

Key Points

The number of down-payment assistance programs increased by 6% over the last year, totaling approximately 2,600 nationwide.
Sixty-two percent of down-payment assistance programs now support buyers earning over $100,000, with 10% having no income limits.
The average funding from down-payment assistance programs was $18,000, with over half offering forgivable loans.

Home prices and mortgage rates are not where most aspiring home buyers want them to be.

Yet there’s still good news for people who have been shut out of the housing market: the number of down-payment assistance programs is on the rise, and a growing share are open to people of all income levels — even six-figure earners.

On Thursday, the average rate for the 30-year fixed-rate mortgage ticked up 1 basis point to 6.1%, according to a weekly report from Freddie Mac. Elevated mortgage rates have been a sore spot for many home shoppers, who are also contending with ever-rising home prices.

But help is out there. Over the last year, the number of down-payment assistance programs that people can use to offset the cost of a down payment has been on the rise.

What’s noteworthy for buyers now is that these programs have become more flexible about their income restrictions, and more now allow prospective buyers who earn over $100,000 to get funding, according to new data from Down Payment Resource, which tracks the availability of these programs.

More down-payment assistance programs are becoming flexible

Traditionally, down-payment assistance programs have mostly been available to people who make 80% of an area’s median income or less. For instance, a family of four living in Columbus, Ohio , that makes 80% of the area’s median income earns about $87,200; in Houston , it’s about $80,900.

Today, earning at least six figures has become a prerequisite for most home buyers in the U.S. To buy a median-priced home at about $400,000, a prospective buyer would need to earn about $121,000 for the house to be considered affordable, meaning that the housing costs don’t take up more than 30% of their gross income, according to the Federal Reserve Bank of Atlanta’s Home Ownership Affordability Monitor . The actual median household income in the U.S., on the other hand, is about $85,000.

First-time buyers offered a median down payment of 10% of a home’s sale price in 2025, according to the National Association of Realtors — matching the highest level since 1989. On a $400,000 home, that’s roughly $40,000. Repeat buyers offered a median down payment of about 23% of the home’s sale price.

The average amount of funding that buyers got from down-payment assistance programs was $18,000 as of the latest count, Down Payment Resource said, and many programs also provide help with closing costs and reductions in mortgage-insurance costs.

In the fourth quarter of 2025, there were about 2,600 down-payment assistance programs nationwide, up 6% from a year ago, Down Payment Resource found. The company maintains a database of such programs in the U.S., and works with real-estate agents and mortgage lenders to match home buyers with available programs.

The rise in down-payment assistance programs, most of which are government-funded, is a reflection of how expensive buying a house has become.

“Affordability will remain the defining challenge for home buyers in 2026, and down-payment programs are one of the most practical tools lenders have to address it,” Rob Chrane, founder and chief executive of Down Payment Resource, said in a statement.

More than half — 62% — of down-payment assistance programs now support buyers earning over $100,000. Additionally, 10% of these programs have no income limits at all, which is a 15% increase since last year, Down Payment Resource noted.

The majority of these down-payment assistance programs are available only to first-time buyers, but there has been a 3% increase in the number of programs open to repeat buyers.

The most common type of down-payment assistance, according to Down Payment Resource, is a second mortgage, or piggyback loan, which has grown in popularity as affordability has challenged home buyers.

Other down-payment assistance is aimed at helping certain groups of people become homeowners. For instance, a program in the Bay Area city of San Bruno, Calif., provides up to $140,000 in down-payment assistance, or 20% of the property’s purchase price, to city employees who buy a home in San Bruno.

The program also has no limitations on income, and the second loan would be due upon the sale of the house or if the property is no longer the homeowner’s primary residence. Recipients would also have to pay back the loan if they left their job with the city. The median home value in San Bruno is $1.25 million, according to Zillow data , down 0.4% from the previous year. California has the highest number of down-payment assistance programs in the U.S., followed by Florida and Texas, according to Down Payment Resource.

Generally, down-payment funding for higher-income buyers “runs out the quickest,” Pam Marron, a Palm Harbor, Fla.-based mortgage broker, told MarketWatch. In a given month, she helps about 10 to 12 buyers qualify for down-payment assistance.

But over the course of the last four months, in particular, “I have noticed a huge increase in the people that need down-payment assistance,” Marron said. She’s also seen an uptick in the number of mortgage-loan officers trying to get financial assistance for their buyers.

Down-payment assistance doesn’t necessarily mean free money

To be clear, down-payment assistance is not necessarily free money. Though some programs offer grants or forgivable loans, many are structured as a second loan for the buyer.

In those cases, the buyer pays zero dollars up front, because they take out a loan for the down-payment amount in addition to a mortgage to cover the rest. Both of these loans will then be collected by the lender over time.

However, over half of down-payment assistance programs — about 1,035 of them — offer forgivable loans. Buyers don’t need to pay these loans back as long as they meet certain conditions — for instance, the homeowner must live in the home they purchase for a set number of years.

If buyers meet that criteria, their second loan falls off partially or completely after a certain period, without any financial impact to them. Local mortgage brokers will be able to advise if potential buyers qualify for these programs.

Piggyback loans can evoke memories of the subprime mortgage crisis for some. But today’s second loans are not the same variety, experts have told MarketWatch.

Though these programs can substantially bring down the cost of buying a house , that doesn’t necessarily mean that they’re fueling speculative home buying or encouraging people to take on risky loans that they can’t pay back, Marron noted.

“Buyers who use these programs must meet certain requirements, just like other borrowers,” Marron said. “They are meeting a minimum credit score to qualify. Their income has got to fly, just like any other borrower. We’re just getting them money to help them get in.”

How 90-Day Student Loan Delinquency Reporting Is Derailing Homebuyers - What LO's Can Do

Fri, 15 Aug 2025 17:31:18 GMT

The Silent Credit Crisis Pushing Homeownership Out of Reach

A massive credit crisis is quietly unfolding, and most borrowers—and even some mortgage professionals—don’t see it coming. Due to the 90-day federal reporting rule on student loan delinquencies, millions of borrowers are experiencing sudden, drastic credit score drops—just as they’re applying for a mortgage. Unlike other consumer debt, federal student loans aren’t reported delinquent until the 90th day past due, meaning credit damage doesn’t surface until it’s too late. For many, that delay results in a 100- to 150-point plunge in scores, derailing mortgage approvals and pushing homeownership out of reach for an entire buying season or longer.

Why the 90-Day Delinquency Policy Is a Problem

Most creditors—including private student loan lenders—report delinquencies at 30 days past due. But federal student loans, governed by the Higher Education Act of 1965, operate differently. Servicers wait until borrowers are 90 days late before reporting to credit bureaus. While intended as an administrative buffer, this delay has become a liability. Mortgage lenders rely on current credit data, and by the time a federal student loan appears delinquent, a client’s score may have already plunged—without warning. This delayed shock has sidelined thousands of qualified homebuyers who were otherwise ready to purchase.

Even more alarming: many borrowers are in forbearance or eligible for income-driven repayment plans, yet are still reported as delinquent due to servicing issues or communication breakdowns.

Common Triggers of Unexpected Student Loan Delinquency

Mortgage professionals working with clients affected by this issue often see the same root causes:

Clients unaware repayment resumed after the October 1, 2024 restart.
Auto-pay not reactivated with new servicers after pandemic forbearances ended.
Incorrect assumptions that loans are still under forbearance (especially SAVE plan borrowers).
Inability to afford payments , made worse by lack of guidance on income-driven repayment (IDR) plans.
No alerts or communication until 90-day delinquency hits the credit report—often discovered during the mortgage process.

MLOs can’t afford to wait for a credit report surprise. Identifying these risks early can save both the deal and the borrower’s financial future.

Proactive Steps Mortgage Loan Originators Can Take

1. Help Clients Explore Income-Driven Repayment (IDR) Plans

Encourage clients to log into StudentAid.gov to explore IDR options that can lower their monthly payments based on income and family size. Lower student loan payments can improve debt-to-income ratios and keep the mortgage application on track.

Tip for MLOs: Also use tools like Student Debt Solutions for a fast side-by-side breakdown of all eligible repayment options. Then plug the new estimated payment into your LOS to calculate improved affordability.

2. Obtain and Review Student Loan Payment History

Help clients gather updated payment history letters from servicers. Make sure documentation includes current status and “Date Reported.” This is especially critical if repayment plans are in process or clients are within the 90-day reporting window.

Tip for MLOs: Advise clients not to go under contract on a home until repayment plans are finalized and documentation is in hand.

3. Use Credit Tools to Strategize Score Recovery

Tools like CreditXpert and FICO Mortgage Score Simulator can help determine how long it will take to restore scores—or if there are faster options. For a recent clientwhose score plummeted from 660 to 520,, checking ONLY on student loan wait timeframe (available with CreditXpert) resulted in a 9 to 15 month wait to increase these scores to mid-620. However, a ratio utilization below 30% on a credit card for the same client resulted in the midscore coming up to a 620 in a much shorter timeframe. These results vary based off of the status of other client credit.

Tip for MLOs: Weigh the time to process a repayment plan alongside the time needed for credit recovery. Share realistic timelines with your clients upfront.

4. Understand CAIVRS and Federal Default Consequences

Once a federal loan is 270+ days delinquent, it enters default—and triggers a CAIVRS alert. This flag blocks access to FHA, VA, USDA, and reverse mortgages until the default is resolved. These clients also face wage garnishment, tax refund seizures, and loss of eligibility for aid or repayment flexibility.

Tip for MLOs: Run CAIVRS checks early—especially when working with FHA/VA/USDA borrowers. Don’t let defaulted loans ruin your client’s loan product eligibility.

5. Run AUS Using Soft-Pull Credit Early in the Process

Run AUS (Automated Underwriting System) for both Fannie Mae and Freddie Mac to detect hidden credit risks—especially student loan issues that may not yet be visible on a credit report.

Tip for MLOs: Run AUS before issuing a pre-approval letter to avoid surprises mid-contract that result in costly Rapid Rescores that the MLO must pay.

Warning Signs: Know the Delinquency Timeline

Understanding the federal student loan delinquency timeline is crucial:

Day 1 : Loan is delinquent, but not reported.
Day 90 : Major credit hit—scores drop 100–150+ points.
Day 270+ : Loan defaults; borrower becomes ineligible for FHA/VA/USDA loans via CAIVRS flag.

There is a short window for MLOs to intervene before clients face long-term damage.

Help Clients Before It’s Too Late

The warning signs are clear—and we can’t afford to ignore them. The 2008 housing crisis taught us the consequences of neglecting consumer credit risk. Now, federal student loan delinquencies are creating a similar threat.

Mortgage professionals must act now :

Ask every client about their student loan status—early in the process.
Guide them to income-driven repayment options.
Use credit tools strategically.
Don’t issue pre-approvals until all loan and credit issues are verified.

Helping borrowers navigate student loan repayment isn't just good service—it’s a smart, strategic move that protects your business, your pipeline, and the broader housing market.

Need Help Navigating Student Loan Issues?

�� Pam Marron
Florida-licensed Mortgage Loan Originator | NMLS #246438
�� pam.m.marron@gmail.com
?? Clients2Homeowners.com
�� (727) 534-3445

MLOs: For Clients with Student Loans, Be Aware of These Points!

Tue, 08 Apr 2025 16:26:05 GMT

A Few Extra Points MLOs Need to Know For Clients With Student Loans

MLOs, Be Aware of These Points!

If your client doesn’t know what their current payment is, have them use SDS to find out and check on other plans available to them to compare.

Payment Plan implementation takes 60-90 days to complete. Don’t let clients write a contract before getting plan in place!

Help keep Student Loan Clients Out of Default! Default can result in higher payment, may be longer forgiveness wait (if available) and client wait timeframe of 9-12 mo’s to get new mortgage while student loan credit improves with on-time payment arrangement.

Make sure clients set up new repayment plan and recertify income ASAP! Client should make sure they’ve arranged for additional forbearance while this is being processed!

IMPORTANT: current student loans and payment history ARE NOT showing up on many credit reports yet! Run client’s loan through FNMA/FHLMC AUS and review Findings direction before giving pre-approval!

If you are an MLO that needs help with a client that has student loans, please contact Pam Marron at 727-534-3445 or email pam.m.marron@gmail.com. We are looking into various credit problems that have come up with student loans and want to see these clients through while resolving their issue. Because this is a recent concern, there is a need to see what AUS credit shows and what AUS findings occur. By allowing help, you are assisting mortgage professionals who want to get in front of any problems for clients with student loans to make their process smoother for all of us!

MLOs: Review 7 Points Before Pre-Approving Clients with Student Loans

Tue, 08 Apr 2025 03:59:55 GMT

MLOs: Review 7 Points Before Pre-Approving Clients with Student Loans

Investigate these 7 points BEFORE giving a client with student loans a Pre-Approval letter for a mortgage.

1. Retrieve a Complete Student Loan Payment History Letter

When reviewing the credit report of a client who has student loans, you may find that the most currently serviced student loan may not show up on the credit report, and a previously serviced student loan will. Have your client contact their current servicer and retrieve a complete payment history letter with a payment noted and that is up to date. If your clients’ loans were transferred from a different servicer within the last 24 months, make sure your client retrieves a payment history letter from that servicer as well.

Directions for how to retrieve this information for federal student loans can be found at Studentaid.gov at “How can I see my federal student loan payment history?”

Separately, Federal Student Loan Updates provides where previous servicers have transferred to if this is unknown.

Getting the complete payment history is especially important if the client has delinquent payments in their student loan payment history. Student loan default starts at 270 days, which equates to 9 months.

2. Get Written Proof of the Current Student Loan Payment

Make sure that the client gets a letter from their servicer that provides a minimum monthly payment amount. Having a $0 monthly payment will require that the loan originator count a minimum percentage of the full loan balance as the client’s student loan debt. And if the student loan still shows in “forbearance”, an automatic 1% of the balance is the required payment that loan originators need to insert for student loan debt.

Most often, the minimum required payment can be calculated by the servicer and is usually lower than the percentage dollar amount required for each mortgage loan type .

3. Run client’s loan application through both Fannie Mae Desktop and Freddie Mac Loan Product Advisor automated underwriting systems (AUS) for an Approval before issuing a pre-approval letter.

The Fannie Mae and Freddie Mac AUS systems pick up back-end credit that may not be visible on a mortgage credit report.

a. Run the clients file through both Fannie Mae and Freddie Mac automated systems. Go to Findings and check Credit for any directions related to student loan accounts and follow them. Compare credit detail addressed in the AUS findings to your credit report.

b. If there are late payments and you’re not sure which of the credit bureaus reported the late payment dates, detailed credit history for each bureau of TransUnion, Equifax and Experian can be seen on credit reports that are provided through Meridian Link. (Not all credit reporting agencies use the Meridian Link platform.) This applies to both soft and hard-pull credit reports and Meridian Link is on both reports if your credit reporting agency uses them.

The credit report at the bottom of this page shows where you may find the Meridian Link on your credit report for the 2 credit bureaus, Trans Union and Equifax, that are shown.

4. Check CAIVRS UPFRONT to Make Sure a Client's Federal Student Loan is Not Prohibiting Them from Getting an FHA, VA or USDA Mortgage.

Get your client cleared through the CAIVRS system upfront ! CAIVRS is a database used by federal agencies to identify individuals who are delinquent or in default on federal debts, including student loans. A CAIVRS alert can prohibit your client from proceeding with an FHA, VA or USDA loan. There are solutions for delinquency and default. However, having adequate time to resolve these issues is needed.

I spoke with a Sr. HUD Underwriter at the HUD Resource Center on 3/24/2025 who then sent a response via email. Regarding CAIVRS, we should check public records and credit information through CAIVRS UPFRONT to verify that the Borrower is not presently delinquent on any Federal Debt.

5. Let Clients and Their Realtor Know Not to Actively Seek a Home Purchase Until a Loan Repayment Plan Has Been Fully Approved!

If your client has recently applied for a student loan repayment plan, make sure your client and their realtor are not actively looking for a home. The wait-timeframe for this service is currently 30 to 60 days. Consider having the client use the Student Debt Solutions platform (SDS) that shows all repayment plans available and will go all the way through selecting a plan allowing you, the MLO, to see what payment the client could realize. This is FREE and SDS only charges if the client wishes to proceed with an application for the desired plan.

6. Make Sure Your Client IS or GETS CURRENT on Their Student Loan Payment!

Make sure your client stays current on their student loan, and if they aren’t, getting current needs to be their priority! We’ve already seen credit scores drop dramatically due to delinquent student loan credit. And default solutions will stall your client from getting a mortgage for 6 to 9 months AFTER getting a default payment option in place.

7. Make Sure Your Client Recertifies Income With Their Student Loan Servicer by the Deadline They’ve Been Provided!

If your client misses the recertification deadline for their income-driven repayment (IDR) plan, they’ll be removed from the plan and placed on an alternative repayment plan, likely with a fixed monthly payment amount, and potentially higher payments.

When MLOs pro-actively take the time to go over these points with clients who have student loans and who desire to purchase or refinance a home, your clients will view you as a trusted resource. Checking these steps upfront allows us an opportunity to assist our clients and avoid pitfalls, like having to do a Rapid Rescore mid-contract that we MLO’s have to pay for. Let’s get in front of this, MLO's!

Go to DIY Student Loan Help for Clients at Clients2Homeowners.com for more.

Article author Pamela Marron is a licensed loan originator (NMLS#246438) who made Clients2Homeowners.com as a resource for mortgage loan originators to assist clients with challenges that may prevent them from obtaining a mortgage. Ms. Marron receives no compensation from any services mentioned in this article or on the website Clients2Homeowners.com.

The red arrow below shows where Meridian Link is accessible on the credit report. In the gray box that shows 90+, 13 months of lates show up. This account could be a defaulted student loan already as default starts at 270 days, or 9 months.

MLO Student Loan Questions Answered

Sat, 29 Mar 2025 11:56:41 GMT

Questions answered about student loan repayment plans, default and more.

Questions below were asked by loan originator colleagues and answered by Melissa Maguire, student loan consultant with Student Debt Solutions.

Are Income-Driven Repayment (IDR) plans gone?
No, IDR plans are not gone; they are currently on pause. The pause is primarily due to ongoing litigation regarding the SAVE plan. If SAVE is removed, prior IDR options will likely be reinstated under existing law.

Can federal student loan borrowers use SDS to determine if they qualify for a lower payment, even if it’s not income-driven?
Yes, borrowers can explore multiple repayment strategies through SDS. Options such as consolidation, graduated repayment, and extended repayment plans may offer lower monthly payments. Given the uncertainty surrounding SAVE, borrowers should proactively review all available repayment alternatives.

If a client is in forbearance under plans like SAVE or PAYE, can they explore other repayment options through SDS? Will they need to start making payments once a new plan is in place? Could the new payments be lower than the 1% balance calculation used in mortgage applications?
Borrowers in forbearance under SAVE or PAYE should review alternative repayment options. While new applications for IDR plans like IBR are currently blocked, borrowers may still explore other options to exit forbearance. Transitioning to an eligible repayment plan could lower the amount counted in the mortgage qualification process, potentially reducing the 1% balance calculation.

If a client is struggling financially and cannot afford even the lowest repayment amount, should they consider default resolution?
If a borrower cannot afford any repayment plan, they may explore deferment or forbearance as temporary solutions. Default resolution is only applicable for borrowers already in default—meaning they are more than 270 days past due and their loans have been referred to collections.

Do federal student loans in default get reported to the Credit Alert Verification Reporting System (CAIVRS), that can prevent a borrower from obtaining an FHA, VA, or USDA mortgage?
Yes, federal student loans in default are typically reported to CAIVRS. This can prevent borrowers from obtaining government-backed mortgages, such as FHA, VA, or USDA loans, until the default is resolved.

How many federal student loans are currently in forbearance?
Data on federal student loans can be referenced from Data.gov , though the latest dataset has not been updated since 2021. Historically, about 20% of federal student loans are in some form of deferment or forbearance. However, due to the pause on SAVE, this number is currently estimated to be closer to 40% or more.

If a borrower is applying for a new repayment plan as their forbearance ends, should they continue making payments in the meantime?
Yes, borrowers should continue making payments if required, as the repayment plan application process can take 30–60 days. SDS advises borrowers to contact their servicer and request an Administrative Forbearance while their new repayment plan is being processed.

Can a borrower in default enroll in a repayment plan that includes forgiveness or an income-driven option?
Yes, but they must first resolve the default. Once they exit default—typically through rehabilitation or consolidation—they can then apply for an IDR plan or other repayment options, including those that offer loan forgiveness. SDS provides guidance on both default resolution and post-default repayment planning.

What is the difference between an IDR and an IBR plan?
IDR (Income-Driven Repayment) is a broad category that includes all repayment plans based on income.
IBR (Income-Based Repayment) is a specific type of IDR plan, which includes both the original IBR and the New IBR plan. Other IDR plans include Income-Contingent Repayment (ICR), Pay As You Earn (PAYE), and Revised Pay As You Earn (REPAYE/SAVE). Each plan has different eligibility criteria, discretionary income calculations, and interest subsidy structures.

If a borrower is not yet 270 days past due, are they still eligible to apply for a repayment plan, or do collection rules apply?
Collection actions do not begin until a borrower is more than 270 days past due. Before reaching this point, borrowers can still apply for a repayment plan or consolidate their loans to prevent default.

Keeping Calm Through Change: Student Loan Updates You Can Rely On

Fri, 28 Mar 2025 16:15:13 GMT

Update: Effective March 26th, 2025, IDR Processing is Available Again!

As student loan borrowers continue navigating the complexities of repayment, we know the uncertainty surrounding Income-Driven Repayment (IDR) plans has been a major source of concern. While there haven’t been any groundbreaking announcements in the last week, we anticipate updated guidance regarding automatic extensions for recertification deadlines very soon. For now, let’s take a moment to cut through the noise and provide clarity on what’s happening.

Recertification Extensions: A Light at the End of the Tunnel

Borrowers currently enrolled in an IDR plan may soon receive official confirmation that their recertification deadlines will be extended, ensuring they remain in their current repayment structure without disruption. This new guidance, expected within the next few days, is crucial, as many borrowers have been receiving mixed messages from their loan servicers regarding their repayment status.

For borrowers on the SAVE plan, forbearance remains in effect while the courts deliberate. If you are on another IDR plan and are not facing immediate recertification, you should be able to continue your repayment plan without issue. The primary group facing potential impact at this time are borrowers up for recertification, but the anticipated extension should provide much-needed relief.

The Bigger Picture: What to Expect by Summer 2025

With the SAVE plan’s legal status still unresolved, the student loan landscape remains in flux. However, we remain optimistic that by the summer of 2025, the dust will settle, and clear processes will be in place. The next 90 days are expected to bring more clarity, and while waiting can be frustrating, borrowers should take comfort in knowing that these changes aim to bring stability to repayment plans for the long term.

Department of Education Layoffs: What It Means for You

Recent news about layoffs at the Department of Education has sparked concern, but let’s break down what it really means for borrowers. Your loan servicer remains responsible for setting up your repayment plan, processing requests, and offering guidance. While we have seen challenges in servicing since repayment restarted after a four-year pause, these layoffs primarily affect federal oversight groups such as:

The Ombudsman Group
Borrower Defense to Repayment
Public Service Loan Forgiveness (PSLF)
Total and Permanent Disability Discharge (TPD)
General Call Center teams

What does this mean for you?

While hold times may increase and processing delays could occur for these specific programs, your repayment obligations and overall loan structure remain unchanged. If you are in an IDR plan or another repayment program, your servicer will still handle your payments and plan management.

Moving Forward

We know this period of uncertainty can be overwhelming, but we encourage borrowers to stay patient and informed by monitoring communications from their loan servicers and staying engaged with trusted resources. The expected guidance on recertification extensions should provide some immediate relief, and we remain hopeful that by the summer of 2025, a final resolution will bring the clarity borrowers deserve.

While the road ahead may still have twists and turns, one thing remains constant: borrowers have options and support. Student Debt Solutions is here to help you understand your repayment choices and make informed financial decisions.

Stay tuned, and as always, Student Debt Solutions is here to help you navigate these changes every step of the way.

Mortgage Credit Score vs Consumer Credit Score

Fri, 28 Mar 2025 14:06:05 GMT

The blog below explains the difference between mortgage credit scores and consumer credit scores.

Mortgage lenders use a FICO score, which is different from the Vantage 3.0 consumer credit score that individuals may access through services like Credit Karma.

Key points:

Mortgage Credit Score (FICO): Used by over 90% of mortgage lenders and emphasizes payment history (35%), credit utilization (30%), credit length (15%), credit mix (10%), and inquiries (10%). Scores range from 300 to 850.

Consumer Credit Score (Vantage 3.0): Emphasizes payment history (40%), age and type of credit (21%), credit utilization (20%), balances (11%), recent credit (5%), and available credit (3%).

Payment History : It’s crucial for both scoring models, and late payments can negatively impact the score.

Credit Utilization : It’s important for both but holds more weight in the FICO score.

Differences: The consumer credit score also considers balances and available credit, while the FICO score places a heavier emphasis on credit mix and length.

Now, onto the good stuff…

If you’ve ever applied for a mortgage only to find out that the credit score the lender sees is much different than what you’ve found pulling your credit scores from Experian or your credit card services, you aren’t alone.

Mortgage lenders use a different credit scoring model than consumers have access to, which means they may see a different credit score than what you expect.

Here’s how they differ.

What is a Mortgage Credit Score?

Your mortgage credit score is likely FICO, a score created by Fair Isaac and Company. Over 90% of mortgage lenders use this credit scoring model from all three credit bureaus – Trans Union, Equifax, and Experian.

The credit scores range from 300 – 850 with 850 being the highest score.

How are Mortgage Credit Scores Calculated?

Mortgage credit scores put a lot of emphasis on payment history and credit utilization with other factors playing a role too.

35% payment history – Your payment history tracks how well you make your payments. Any payment made 30 days or more past the due date hurts your credit score, whereas a timely payment history can greatly improve your credit score.

30% credit utilization – Your credit utilization is a comparison of your total outstanding debt compared to your credit lines. For example, if you have a $1,000 credit line and you have $500 outstanding, you have a 50% credit utilization rate. Ideally, you should keep your credit utilization rate lower than 30% for the best results.

15% credit length – The age of your credit affects your credit score too. The ‘older’ your credit is, the better it is for your credit score. Don’t close old accounts unless it’s absolutely necessary as this is an easy way to increase your credit score.

10% credit mix – Lenders like to see that you can handle a variety of debt including credit cards (revolving debt) and installment debt (mortgage loans, personal loans, car loans, etc.)

10% inquiries – Each time you apply for new credit or take out new credit, it slightly influences your credit score.

What is a Consumer Credit Score?

Consumer credit scores are the scores you see when you use services like Credit Karma or check your credit score provided by your credit card company or bank.

Consumer credit scores use the Vantage 3.0 scoring model, which as you’ll see below uses different factors.

40% payment history – Your payment history is extremely influential in your consumer credit score, just as it is with your FICO score.

21% age and type of credit – Next is your credit history length and type of credit, which is a combination of your credit length and credit mix with a FICO score.

20% credit utilization – Your credit utilization rate doesn’t affect your credit score as much as it does with a FICO score, but it still plays an impactful role.

11% balances – Higher balances, especially credit card balances, can hurt your credit score as lenders like to see lower balances for a lower risk of default.

5% recent credit – Your recent credit activity including opening new accounts or even just applying for new credit can affect your future financial capabilities.

3% available credit – It doesn’t have a large impact on your credit score but having too much available credit could show that you take out any credit that’s available to you even if you don’t need it.

To learn more about how CreditXpert can help borrowers and for a mortgage credit calculator, click here .

The Major Differences

As you can see, your payment history plays the largest role in both your mortgage and consumer credit score. You must make your payments on time. From there, the differences begin with credit utilization a major factor in lenders’ decisions since too much outstanding debt can make it hard to afford a new mortgage.

Mortgage credit scores focus mainly on your payment history, credit utilization, and credit mix. This is how they determine you are a good risk and could afford the mortgage payment you’re applying for.

Final Thoughts

Even if you have a good consumer credit score, don’t assume your mortgage credit score will be the same. Work with your lender to raise your mortgage credit score using CreditXpert – achieve more purchase power and a lower interest rate.

You may also want to take care of any collections as quickly as possible as depending on the FICO model lenders use, collections may get included in your score, even if you’ve paid them. The more time in between when they’re paid and when a mortgage lender pulls your credit though, the better it will be for your credit score.

Sources: https://www.forbes.com/advisor/credit-score/what-is-vantagescore /, https://www.investopedia.com/financial-edge/0212/how-is-fico-calculated.aspx

From CreditXpert website.

Student Debt Delinquency and Its Impact on Your Financial Wellbeing

Tue, 18 Mar 2025 21:53:03 GMT

As federal student loan repayments resume, millions of borrowers are facing the very real risk of delinquency. Falling behind on payments can feel overwhelming, but understanding the long-term financial consequences is essential. Delinquency can trigger a chain reaction that affects your credit, career, housing, and overall financial stability.

What Is Delinquency?

Delinquency occurs the day after you miss a payment on your student loan. This status remains until you catch up on your past-due payments or until the loan enters default, which typically happens after 270 days of non-payment for federal loans. From day 91 of delinquency, your loan servicer will begin reporting missed payments to the credit bureaus, which can severely damage your credit score.

The Financial Ripple Effect

The impact of student loan delinquency extends far beyond the immediate strain of missed payments. Here’s how it can cause a financial ripple effect that may affect several aspects of your life:

Higher Interest Rates : A lower credit score from delinquency means you'll face higher interest rates on future loans, including mortgages, car loans, and credit cards. Over time, this can significantly increase the total cost of borrowing.
Job Opportunities : Some employers, particularly in industries requiring financial responsibility, conduct credit checks as part of the hiring process. A poor credit history due to delinquency can reduce your chances of landing certain jobs.
Housing Challenges : Renting a home or apartment can become more difficult. Landlords often run credit checks, and a lower score might not only limit your housing options but also lead to larger security deposits or denials.
Increased Insurance Premiums : Many insurance companies use credit scores as a factor in determining your premiums. A lower score can result in higher costs for auto, home, and even life insurance, adding to your financial burden.
Diminished Financial Flexibility : Delinquency can lead to difficulty securing new lines of credit or loans. This restricted access to credit can make it harder to cover unexpected expenses or prevent you from homeownership.
Long-Term Financial Health : Even after resolving delinquency, the marks on your credit report can linger for up to seven years, affecting your ability to secure favorable terms on loans and hindering your ability to build wealth.

How to Avoid or Recover from Delinquency

If you're struggling to make payments, don't wait until delinquency sets in. Federal student loans offer several options, such as Income-Driven Repayment (IDR) plans, which base your payments on your income, making them more affordable. Loan consolidation, deferment, or forbearance can also offer temporary relief to keep you from falling further behind.

If you’ve already slipped into delinquency, act quickly. You may be able to consolidate your loans to bring your account back into good standing or apply for forbearance to catch up on missed payments. The longer delinquency lasts, the more severe its impact becomes.

Protect Your Financial Future

Staying proactive can prevent the financial ripple effects of delinquency from spreading into other areas of your life. At Student Debt Solutions, we’re here to help you understand your options and guide you toward the best solution for your situation. Explore your options and take control of your financial wellbeing today. Log in now to explore your options.

This article and more about student loans can be found at the SDS Advisor Resource and Blog .

What Happens if I Don't Pay My Student Loans?

Tue, 18 Mar 2025 21:11:46 GMT

What Happens if I Don't Pay My Student Loans?

If your federal student loans are not in repayment, after the on-ramp ends on September 30th, a few things could happen, depending on your specific situation:

Late Fees and Interest : You may incur late fees or additional interest charges. Federal student loans still accrue interest during periods when you are not making payments.
Credit Score Impact : For Federal Student loans, late payments will be reported to the credit bureaus after 90 days of missed payments. And these reports can negatively affect your credit score.
Collections : After 270-360 days of missed payments, your loans are at-risk of defaulting which could lead to collection actions, including garnishment of wages, tax refunds or even Social Security benefits.
Loss of Benefits : You might lose eligibility for benefits like income-driven repayment plans, deferments and access to additional federal aid.

If you are having trouble making payments, now is a good time to review your student loans and determine if you are in the right repayment plan. Log in to SDS to determine if you are eligible for lower monthly payments and check for cancellation/forgiveness eligibility. There is no-risk, no credit card required, to see available solutions for your loans!

This article and more about student loans can be found at the SDS Advisor Resource and Blog .

Income Driven (IDR) Repayment Processing Paused - What Borrowers Need to Know

Tue, 18 Mar 2025 17:50:14 GMT

March 5, 2025 – We want to keep you informed about critical changes affecting income-driven repayment (IDR) plans and loan consolidation applications.

Key Updates on IDR & Loan Consolidation

The Department of Education (ED) is still not accepting online applications for IDR plans or loan consolidation.

ED is accepting paper Loan Consolidation applications via mail.
IDR payment processing and recertifications are paused for 90 days as a result of ongoing legal challenges.

Why is this Happening:

The 8th Circuit Court has sent the ongoing lawsuit about the SAVE plan back to the U.S. District Court for the Eastern District of Missouri. That court must now decide whether to fully strike down the SAVE plan. Until a ruling is made, the Department of Education has instructed student loan servicers to pause IDR application processing and recertifications for at least 90 days. This pause could end sooner or be extended depending on how the court case progresses.

What Borrowers Should Know:

Although processing for IDR plans is currently paused, IDR plans are still available and may remain the best option for many borrowers.

We strongly recommend reviewing your repayment options now so you are prepared when processing resumes. Making an informed decision today ensures you’re ready when IDR processing restarts. This temporary pause in processing is an opportunity to plan ahead and understand the best financial path forward.

If you cannot afford your current payment, a forbearance may be a good option to help avoid financial hardship and keep your loans in good standing during this period.

We have been made aware that at current time the Department of Education has not given clear instructions to servicers regarding their decision to pause the IDR processing. For borrowers who have recertification deadlines coming up, some select servicers have proactively extended the recertification deadline. However, some servicers have not extended the deadline and are advising borrowers to enroll in non-IDR plans or apply for a forbearance.

Need Help? We've Got You Covered

We understand that these developments can create uncertainty and confusion. That’s why Student Debt Solutions is committed to providing the support and resources you need during this time, including:

Personalized repayment guidance
Understand which forbearance request is right for you
Paper application assistance

If you have any questions or need assistance, please contact our team at support@myresolvent.com . While logged on, you can also use the chat feature to reach us. Our trained staff are experts in student loan repayment options and are available to assist you in understanding how these changes may impact your specific situation.

Prepare Clients to Use Student Debt Solutions (SDS)

Sun, 09 Mar 2025 21:42:20 GMT

Info Needed for SDS and How to Download NSLDS File

Information Clients Need to Have Available to Use SDS
For federal loans, NSLDS file username and password.
Have your FSA ID ready.
For private loans, most recent statement.
Family size, income and tax filing status.
Are payments current, late or in default?

Have your FSA ID ready and Login to Studentaid.gov.

If you don't remember your FSA ID, go to https://studentaid.gov/fsa-id/sign-in/retrieve-username .
Directions to enter a secure code from authenticator app, text a secure code to mobile phone, email a secure code, answer challenge questions or recover account with a photo ID will be provided.

View How to get your Student Loan File from Studentaid.gov.

Click here for PDF NSLDS download directions.

Identify Your Student Loan Servicer

Fri, 28 Feb 2025 20:12:23 GMT

Identifying Student Loan Servicers

Information is located here .

The following are loan servicers for loans that the U.S Department of Education (ED) owns. To find out who your loan servicer is,

visit your account dashboard and scroll down to the “My Loan Servicers” section, or
call the Federal Student Aid Information Center (FSAIC) at 1-800-433-3243.

Loan Servicer

Contact

Edfinancial 1-855-337-6884
MOHELA 1-888-866-4352
Aidvantage 1-800-722-1300
Nelnet 1-888-486-4722
ECSI 1-866-313-3797
Default Resolution Group 1-800-621-3115 (TTY: 1-877-825-9923 for the deaf or hard of hearing)
CRI 1-833-355-4311

What's the Difference Between IDR and IBR Plans?

Sun, 26 Jan 2025 20:09:16 GMT

What's The Difference Between IDR and IBR Repayment Plans?

What’s the Difference Between IDR (Income-Driven Repayment ) and IBR (Income-Based Repayment) Plans?

"IDR" stands for Income-Driven Repayment, which is a broad term encompassing various student loan repayment plans based on your income, while "IBR" (Income-Based Repayment) is a specific type of IDR plan, meaning that IBR is considered one option within the larger category of IDR plans; essentially, all IBR plans are IDR plans, but not all IDR plans are IBR plans.

Key differences:

· Scope:

IDR refers to the overall category of income-driven repayment plans, including IBR, PAYE (Pay As You Earn), and others, while IBR is a specific type of IDR plan with its own calculation rules and eligibility criteria.

· Payment Calculation :

Both IDR and IBR base your monthly payment on your income, but the specific percentage of your discretionary income used to calculate the payment may differ depending on which IDR plan you choose (like IBR or PAYE) and when you took out your loans.

· Borrower Eligibility :

Depending on your loan type and borrowing date, you may qualify for one IDR plan but not another.

[1] What’s the difference between IDR and IBR for #student loans? Jan. 14, 2025 Youtube: https://www.youtube.com/watch?v=kfRu9LUxzyk&t=0

[2] Income-Based Repayment Calculator (All IDR Plans) | Student Loan Planner | https://www.studentloanplanner.com/income-based-repayment-calculator/

[3] Which plans fall under income-driven repayment? | Student Loan Planner | https://www.studentloanplanner.com/income-driven-repayment-plans-guide/

Streamlining the Path to Homeownership: The Benefits of Using HomePrep to get Clients Mortgage-Ready

Wed, 10 Jul 2024 15:15:16 GMT

Empowering Clients on Their Journey to Mortgage Readiness with HomePrep

Mortgage readiness can be challenging for many clients. They often face setbacks like poor credit, student loan repayments, and insufficient down payments. While Mortgage Loan Originators (MLOs) can help with specific issues, there isn't a playbook that makes it easy. This is where HomePrep comes in. HomePrep connects MLOs, HUD Counselors, and clients, providing a structured pathway and expert guidance. With HomePrep, clients get the support they need to achieve their dream of homeownership. Below are the fundamentals of getting clients mortgage ready through HomePrep.

What do you do with clients who aren’t ready for a mortgage yet?

Most clients unprepared for a mortgage struggle with credit, student loan repayment, and down payment. While MLOs can often assist with individual issues, finding a comprehensive solution remains a challenge.

HomePrep connects MLOs, HUD Counselors, and clients seeking assistance.

The MLO:

Signs up for HomePrep. Schedule a HomePrep Demo Here.
Client signs a Memorandum of Understanding (MOU) and a Client Authorization to Release Financial Information that provides a credit at time of closing if the client returns to the referring MLO for their mortgage.
Inputs detailed summary of client needs into HomePrep portal.
Connects with HUD Counselors.

7 Services provided by HUD Counselors through HomePrep

Credit help: short term (0-6mos) & long term (7mos to 5 yrs)
Budgeting
Student Loan Repayment Plan (SDS)
Down Payment Assistance
Homebuyer Education
Freddie Mac HomeCoach automated findings using soft credit
6 mos of post-mortgage HUD counseling follow-up

What do HUD Counselors do to help clients?

On the initial assessment with a client, HUD counselor reviews soft credit, income and assets with client and then provides an Action Plan that includes the estimated timeframe of completion when client will be mortgage ready. The Action Plan is given to the client & MLO; great to share with the referring realtor and is updated as client progresses.

Final step of mortgage-readiness: Client file is run through the Freddie Mac Homecoach!

Freddie Mac Homecoach is used exclusively by HUD Counselors and only requires soft credit! HomeCoach is identical to the Freddie Mac LPA and enables HUD counselors to see if there is anything else delaying a client from moving forward with a mortgage. A MUST DO upfront for your clients!

What happens next?

As the referring MLO, you are notified that the client is mortgage ready! Most likely, you will already be communicating with the client through their journey to homeownership!

Schedule a HomePrep Demo Today

Ready to see how HomePrep can help your clients on their journey to mortgage readiness? Schedule a demo now and discover the powerful tools and resources available to you. Click the link to book your demo: Schedule a Demo . Empower your clients with the support they need to achieve their dream of homeownership!

2 Ways Loan Originators Can Locate Down Payment Assistance for Clients

Wed, 24 Apr 2024 13:41:37 GMT

Down Payment Connect is already being used by MLOs and Realtors. Now it's available to HUD Counselors through HomePrep!

Down payment assistance is quickly rising to the top need for clients wishing to purchase a home. Down Payment Connect , the back-end data provider for the parent Downpaymentresource.com , houses every down payment assistance program in the US and provides extremely detailed information laid out in a consistent format for each DPA program in their system.

Throughout the last two years, Downpaymentresource.com administrators have worked with MLO’s and the HomePrep developers to add nearly all wholesale down payment assistance programs to their platform and they didn't stop there! Extensive filters that allow for selection of specific client needs such as type (ie. SFR, manufactured homes, condos, multi-family, ADU’s), uses like renovation, above AMI income levels, non-1st time homebuyers are just a few of the filters you will find along with stand alone 2nd mortgages, combined 1st and 2nd mortgages and grants.

DownpaymentResource.com is also in many MLS systems across the US and provides limited directory information and a free landing page for realtors to promote that they use DPA. Both MLO’s and realtors can subscribe to Down Payment Connect to get more of the extensive directory and back-end tools.

Now, through HomePrep, HUD counselors can also use the Down Payment Connect system to filter trhough DPA programs that clients are qualified for, and can even provide wholesale programs when working with an independent loan originator (often called a mortgage broker)! Through HomePrep, HUD counselors are now able to provide MLO’s and clients with the DPA programs that they have found the client is eligible for.

Important for Borrowers with FFEL Loans

Wed, 24 Apr 2024 09:29:30 GMT

If you have FFEL Student Loans, Take Action Before April 30th!

The Education Department has set April 30, 2024, as the deadline to consolidate certain types of federal loans and enroll in an IDR plan to maximize the benefits of this adjustment. Borrowers who miss this deadline may still receive partial credit for past payments but will not fully benefit from the forgiveness available by meeting the April 30 consolidation requirement.

Specifically, borrowers with commercially-held FFEL , Perkins , or HEAL loans, as well as those with a mix of loan types, will need to consolidate into a new Direct Consolidation Loan by the deadline. This ensures that repayment history on the oldest underlying loans is fully counted toward forgiveness.

Consumers with Federal Student Loans who would like to view the benefits of this one-time account readjustment should log in to Student Debt Solutions. New users can register or existing users will pick up where they left off. SDS offers a range of tools and expert staff to assist you in navigating the consolidation process and paperwork. Remember, it is always free to see repayment options and select a specific plan that is best to help achieve their financial goals.

If you have a client who might need to get this message, encourage them to login to the SDS Borrower portal at SDS Borrower Login

If you have any other questions please reach out to our support team at support@myresolvent.com

Best Loan Originator Client Services Available Ala-Carte, or “Packaged in One With Extra Bonuses” That Utilizes HUD Counselors Through HomePrep

Tue, 09 Apr 2024 20:06:43 GMT

Three great tools that mortgage loan originators (MLO) can use to assist clients who need help with credit, down payment assistance and student loan repayment services have been used, fine-tuned and are already in use with individual MLO’s.

These tools combined with the Freddie Mac HomeCoach automated system along with budgeting help and Homebuyer Education are all integrated in the HomePrep online platform that connects MLO’s with clients who have challenges to HUD counselors that get them mortgage ready.

For the last two years, MLO’s and developers at Indisoft, a leading provider of SaaS products, have been working on a platform that connects MLO’s who have clients that need help getting a mortgage to HUD counselors that get these clients mortgage ready. The services discussed are individually available to MLO’s. But, these services are also included in HomePrep and are provided by HUD counselors to assist clients.

All of Us Have Encountered This!

The worst problem an MLO can have is when a client is already under contract and in process…. and a problem is uncovered that threatens to unravel the whole deal! The services explained in this article take care of the most common issues that MLO’s encounter that prevent clients from getting a mortgage and are meant to be used in the pre-purchase process of getting a loan.

Whether you utilize these services individually or get the help of a HUD counselor through HomePrep, these are “must use” services to avoid issues later!

Credit Help

An issue with credit is the number one problem MLO’s encounter as the stumbling block of getting a mortgage. Credit either needs to be built, improved on or corrected. (And NO, this IS NOT credit repair!) Sometimes the issue cannot even be seen on the face of a credit report.

The best credit tool to target what can be done within a specific timeframe to improve credit scores, build credit and resolve credit issues is the CreditXpert Wayfinder and even more specifically, the CreditXpert What-If Simulator . The CreditXpert Wayfinder gives a summary with a dollar amount attached for the best possible option to improve and correct issues. The even more detailed What-If Simulator can pinpoint specific accounts and how the score can change based off of a precise account balance and the timeframe of the change. The What-If Simulator can also show how an added secured credit card can improve a credit score and is specific to the credit bureau, the balance and how long the credit must be open. Additionally, CreditXpert What-If Simulator can confirm if a dispute that needs to be taken off credit will affect credit negatively or not.

CreditXpert tools are currently available at a cost with every credit reporting agency (CRA) and is most cost effective when bundled with soft pull credit reports, where trigger leads do not exist. Check with your CRA for the best costs.

HUD counselors working on the HomePrep platform use CreditXpert tools on soft pull credits. HUD counselors even found the best secured credit cards that can be added to improve credit and provided the directions to add.

Student Loan Repayment Service

We all know that student loan forbearance ended Sept. 1, 2023 and payments restarted October 2023. But did you know that clients with student loans need to have a repayment plan in place before October 1 ^st of 2024? Servicers can start reporting late and missed payments to the credit bureaus on Oct 1, 2024 which could have a negative impact on your clients’ credit score.

I am sure many MLOs have the experience of pre-qualifying clients who may not have brought up student loans because they aren’t paying them yet, but we see the student loans on the credit report. As we approach October 1 ^st , 2024, there will be a scramble to get student loan repayment plans in place. Some clients have been doing this for months with various degrees of success. Some have experienced confusion or a lack of direction on what repayment plan is best for them. A major tip is stressed: DO NOT refinance government student loans. Instead, sign up for a repayment plan that can provide benefits that may still apply in the future. Even if your payment is $0, arranging for your repayment plan is imperative to do prior to October 1 ^st .

The Student Debt Solutions (SDS) tool quickly shows a client what they can expect as a payment based off of answers to questions upfront. All payment options are shown with forgiveness, acceleration and cancellation options if available.

The client only pays for this service if they want to proceed with a repayment plan, and the cost is to complete the required paperwork (with answers to additional questions not answered prior) after which the client downloads paperwork, signs paperwork and sends paperwork in for the chosen repayment plan. SDS continues to make this service easier to use and cost effective for clients to get a repayment plan in place as soon as possible. I personally have been on Zoom calls with clients using the SDS system and it is quick, easy and questions are usually answered on the chat. If clients want more in-depth help, this can be provided for an additional cost. Bottom line: MLO’s tell clients to get a repayment plan in place NOW before the RUSH to October 1 ^st , 2024!

The HomePrep platform is set up for HUD counselors to send clients who need student loan repayment services directly to the SDS platform. Or, those interested in this service can go directly to Student Debt Solutions here .

Down Payment Assistance (DPA)

Throughout the last two years, Downpaymentresource.com administrators have worked with MLO’s and the HomePrep developers to add nearly all wholesale down payment assistance programs to their platform. Extensive filters were added and continue to be created that allow for selection of specific client needs such as type of property like SFR, manufactured homes, condos, multi-family, ADU’s, uses like renovation, above AMI income levels and non-1 ^st time homebuyers, even separate programs, both combined 1 ^st and 2 ^nd mortgages and just 2 ^nd mortgages for wholesale lenders that independent mortgage loan originators use. These are only a few of the filters available!

DownpaymentResource.com can be found in many MLS systems across the US and provides limited directory information and a free landing page for realtors to promote that they use DPA. But MLO’s and realtors can subscribe to Down Payment Connect to get the extensive directory and back-end tools.

HomePrep HUD counselors also use the Down Payment Connect system to filter DPA programs that clients are qualified for and can even provide wholesale programs when working with an independent loan originator (often called a mortgage broker). HUD counselors provide MLO’s with the DPA programs they have found that the client is eligible for.

Added Benefits of Using HomePrep

HomePrep is not for every client looking for a home. But MLO’s will want to consider HomePrep for:

Clients that need one or more of the services described that the MLO is not signed up for.
Clients that have a challenge or numerous challenges that may take time some time to resolve.
Clients that need someone to stay in touch with them on resolutions until they are completed and to notify you, the MLO, when the client is mortgage ready.

1. Freddie Mac HomeCoach

Additionally, Freddie Mac has developed an automated system called HomeCoach , a mirror of the Freddie Mac Loan Product Advisor automated underwriting system (AUS) that mortgage loan originators use. The Freddie Mac Homecoach AUS can only be used by HUD counselors, and it works with a soft pull credit, not a hard pull credit that produces trigger leads.

Sometimes, credit issues can only be found in The Fannie Mae or Freddie Mac automated underwriting system (AUS). (Specifically, which credit bureau is housing the problem can be found in credit reports that use Meridian Link, but that’s an article for another time!) The Freddie Mac HomeCoach AUS is the last service rendered to all HomePrep clients to insure that there are no other underlying problems that need to be dealt with before the client is deemed “mortgage ready”. End result: the client has already been run through one AUS submission before you get them back and you can see the findings!

2. Budgeting

All clients are required to complete a budget that is reviewed with the HUD counselor as the 1 ^st step of HomePrep. The task of finding funds that can be used to save for down payment, to pay off debt that make ratios work or to resolve credit issues is done from the beginning by a HUD counselor upfront. And shouldn’t that be upfront anyway?

3. Homebuyer Education Class

Homebuyer education classes are commonly taught by HUD counseling agencies (HCA) and follow the National Industry Standards for Homeownership Education . These courses are 8 hours long, are offered in-person and on-line, are required by nearly all down payment assistance programs, and must be attended by at least one of the borrowers if not both needing DPA. Some Affordable conventional loans require a shorter homebuyer education class that can be done online.

Cost Analysis: Services Provided by HomePrep or Paid Individually

Want to better understand the HomePrep Workflow?

Try out our interactive chart and see each step of the process for you and for your clients.

MLO’s: What’s Your Time Worth?

Though we are optimistic about a few decreases in interest rates this year, many of us are seeing more clients who need extra attention to issues that are still hanging on since Covid. And with the lower housing inventory that is available, clients need to be very prepared and ready to purchase a home. Client issues need to be resolved in order to take advantage of some of the best programs the mortgage industry has seen in years and be poised to partake of an abundance of down payment assistance now available.

Clients with NO issues are not the norm at present. Even well qualified clients with pretty good credit are in need of down payment assistance and lower student loan payments to afford today’s higher priced homes.

Use HomePrep and HUD counselors to work with clients who need more attention than you are able to give right now. Or, get the services we’ve explained in this article but know them inside and out to use them well. HomePrep was made to give you the off ramp to send clients that need more time than you can offer and keep your mortgage business constant.

Student Debt Solutions (SDS) is Now Connected to HomePrep!

Tue, 09 Jan 2024 21:22:06 GMT

Student Debt Solutions for Home Borrowers

Existing student loan repayment plans have re-started in October 2023 after the COVID-19 payment deferral pause. For prospective homebuyers, this means that student loan payments need to be disclosed and documented to qualify for a mortgage.

HomePrep, an IT platform that connects MLO’s with challenged clients to HUD counselors that can help those clients get “mortgage ready” recently added Student Debt Solutions (SDS) Repayment Plan services. Covid-19 deferred student loan payments are now due again and an income-driven repayment (IDR) plan based on your client’s income and family size may provide a lower payment, making purchasing a home possible. For some, IDR payment plans can be as low as $0 per month. And with some plans, forgiveness or cancellation may still be available.

SDS can also help clients who are already in a home and want to find the best student loan repayment plan for their needs.

Being prepared to use SDS

1) Set aside 15-20 uninterrupted minutes

2) Have your Login information ready for Studentaid.gov

3) Be aware of your household income, family size and tax filing status

In additional to providing this information, a few customized questions will be asked leading to a section called “Decide your Plan” where the user can select a specific plan that meets their goals – either the lowest monthly payment or the lowest total repayment.

How to make your plan a reality

Once the plan has been selected there are tools to help the user to act on their plan:

1) Action Plan – this is a complete set of instructions on the required forms and the steps required to make your selected plan become the new payment plan that reduces your student loan debt.

2) Document Preparation – this process uses questions to gather the needed information to complete all forms required to complete your plan application.

3) Expert Assistance – if needed, expert assistance can be scheduled for an additional fee. This would include a live 30-minute session with a student loan expert to review the user’s plan and provide answers to questions or guidance on difficult situations.

Click here to watch the Student Debt Solutions demo that gives a thorough description of the entire process!

SDS is an online application that helps student loan borrowers identify default resolution, cancellation, and forgiveness that they are eligible to receive for their Federal Student Loans - additionally, SDS identifies the best repayment program eligible for the borrower based on their financial goals as well as their current circumstances (income, family, occupation, federal student loan file and a brief questionnaire).

A few of my clients allowed me to watch on a Zoom call as they navigated through the Student Debt Solutions website. The system asks questions while guiding you through and is very easy to navigate! Clients see what their payment could be upfront, but only pay the $99 cost after deciding to proceed with a plan.

Clients who are preparing for a mortgage can include the SDS Student Loan Repayment Plan* with five other HomePrep services** to prepare for a mortgage. HomePrep also offers a single use service to SDS for clients that don’t need a mortgage but are looking for a student loan repayment plan to reduce or escalate payments.

**Cost is $99 for 5 HomePrep services. *SDS Student Loan Repayment Plan is an additional cost of $99.

As a special for Jan. 17 ^th Brokers & Bagels webinar attendees, take 50% off your 1 ^st client that goes through HomePrep to use this SDS product by entering code HomePrep on the paywall through the month of January! – REGISTER FOR BROKERS & BAGELS HERE

Don’t forget to register here to join us on Jan. 17 ^th from 11am to 12 noon at the next Brokers and Bagels webinar that shows exactly how Student Debt Solutions SDS works!

Writer Pamela Marron is a licensed Loan Originator NMLS #246438 in Florida who works for Innovative Mortgage Services, NMLS #250769 in Lutz, Fl. Articles written are strictly her opinion and are published to help loan originators, real estate professionals and mortgage clients. This is not used to solicit for business.

Pam Marron | NMLS# 246438

Tara Jerse | NMLS# 2105127

Innovative Mortgage Services, Inc. | NMLS# 250769

Equal Housing Lender

HomePrep: A Value-Added Service for Mortgage Loan Originators (MLOs) With Clients Who Need Help Getting Mortgage Ready

Tue, 28 Nov 2023 21:04:58 GMT

By Pamela Marron, NMLS#246438 : Innovative Mortgage Services, Inc. NMLS#250769

MLOs…

What do you do with a client that you’ve pre-qualified, but they aren’t ready for a mortgage due to low credit scores? Do you have credit tools to assist these clients yourself? Do you have the time to assist them?
What do you do with a client who makes a decent amount of money but their expenses are out of line with purchasing a home?
How many of you aren’t fully aware of the down payment assistance (DPA) available in your area or state, so you don’t offer it? How many of you know there is a national DPA database available for all 50 states?
How many of you thought you would get an automated underwriting system (AUS) approval and then find out mid-process when the AUS is run that it’s a denial? How many of you know what the Freddie Mac HomeCoach is?
How many of you have clients who have deferred student loans but don't know they need to have a repayment plan in place by Sept. 30, 2024... and that student loan late payments will start showing up on credit again after Oct. 1, 2024?

You may have some of these answers. What if there was a place where you could find help in all of the areas mentioned above?

The HomePrep module, under the Indisoft LLC National Housing Advocacy Platform (NHAP), is a multistakeholder technology solution that was made specifically for loan originators who have clients that aren’t quite ready for a mortgage. HomePrep seamlessly connects MLOs and their clients to HUD-approved housing counselors who work with those clients and get them mortgage ready.

The final step of being mortgage ready is an automated underwriting submission (AUS) of the client through the Freddie Mac HomeCoach AUS, done by the HUD counselor and with a soft pull credit. Then, the HUD counselor alerts the MLO that the client is mortgage ready.

So, What’s a HUD Counselor?

HUD counselors are certified and work for non-profit HUD housing counseling agencies. They offer guidance on homebuying, renting, reverse mortgages and post-mortgage services like default and foreclosure prevention and modifications. Many are also certified to assist with credit issues. Not all HUD agencies offer every housing counseling services A list of approximately 1600 approved HUD housing counseling agencies in all 50 states can be found here .

Making a Unique Connection With a Common Goal: Get More Clients into Homes

From the start of the program, it was apparent that though methods of MLOs, HUD counseling agencies and software companies may be different, the end goal was the same – to connect MLO’s with clients who need specific services to HUD counselors who were trained to get clients through issues to become mortgage ready.

✓ Here is how Freddie Mac has integrated HomeCoach into the HomePrep technology platform to support the growth of sustainable homeownership .

✓ HUD counselors have experience working with MLOs at banking institutions that often use Community Reinvestment Act (CRA) funds to pay for HUD counseling services.

✓ Let’s Make Home the Goal is in the HUD counselor DNA.

✓ Freddie Mac has provided HUD counselors HomeCoach that mirrors Loan Product Advisor but can be used with a soft pull credit.

✓ Fannie Mae mentions the use of HUD housing counseling in 40 places throughout their Equitable Housing Finance Plan 2023 and even mentions Indisoft LLC [1] as a technology service provider.

✓ IndiSoft counseling technology is certified by HUD facilitating regulatory compliance.

Client Paid Counseling Upfront

Though clients below a certain income level can get services for free from HUD counseling agencies, MLOs are often working with clients where income levels may be higher, or above low to moderate income (LMI) levels where a sliding scale or “Fee for Service [2]” cost is acceptable.

While compensation for the HUD-approved mortgage readiness counseling services can take many forms, a “Fee for Service” Client Paid [3] option was decided upon for the HomePrep MLO version.

Here, the clients pay a fee for counseling services to get them mortgage ready.

However, the MLO provides a Memorandum of Understanding (MOU) [4] that promises a credit towards that clients closing costs if they return to the MLO for their mortgage.

Specific Services That Address Top Issues that Prevent a Mortgage Were Developed

Attention was given to the top issues that MLOs find prevent a client from proceeding with a mortgage. Those issues where help is most needed are:

1. Credit: both short term (1-6 mos) and long term (7mos to 5 yrs) using CreditXpert tools and more

2. Find down payment assistance available in all 50 states including additional programs available for independent mortgage loan originators !

3. *Student loan repayment plans through Student Debt Solutions (SDS) , whether for purchasing a home or just needed individually

HUD counseling agencies also provide these services included in HomePrep:

4. Homebuyer education needed for down payment assistance and specific grants

5. Budgeting for a home

6. Freddie Mac HomeCoach : specifically for HUD counselors to use, works with a soft credit pull, and for conventional Affordable mortgages.

Costs

There is an MLO cost of $15/per submitted client and a yearly subscription of $150 to use the HomePrep platform.

The client pays a $99 cost for services 1, 2, 4, 5 and 6 and is connected with a HUD counselor who will assist the client through needed steps. There is an additional fee of $99 for the SDS student loan repayment plan services only if the client proceeds with a plan. If they choose to proceed, the client is guided through additional documents needed and how to finalize the plan by sending signed documents to the proper location.

MLO Benefits

The benefits for the MLO are numerous!

Frees up MLO time to originate more loans.
Client gets action plan and bi-monthly or monthly help from HUD counselor to get mortgage ready.
Client pays for help needed upfront which prompts seriousness to getting mortgage ready.
MLO gets updates from HUD counselor through HomePrep portal or phone call.
MLO has opportunity to stay in front of realtors who have referred clients with client progress.
Memorandum of Understanding (MOU) provides best possibility that client will return to MLO for mortgage once the client is mortgage ready.

Tips and Observations So Far!

I am on my second client that is soon graduating from HomePrep and another client is in the wings!

✓ It is not uncommon for clients to reconnect with you prior to services being completed, and their energy to move forward is palpable!

✓ Let your clients know they need to have the intake and budget done at least 4 days ahead of the initial call with the HUD counselor. The initial call can be 1 to 1.5 hours long and this will get clients onboard from the start!

✓ Yes, there have been hiccups, but lessons are being learned on all fronts and fine-tuning is ongoing to make the process better.

✓ The benefit of having a HUD counselor consistently helping non-mortgage ready clients to the mortgage ready finish line outweigh the dollar credit I decide on upfront on the MOU. I am forming a perpetual pipeline!

✓ Most importantly, I can concentrate on what I know how to do best. Originate loans!

Try HomePrep yourself. We will help you onboard your first client.

Pam Marron, NMLS#246438 Licensed Loan Originator | Innovative Mortgage Services, Inc., NMLS#250769

(727) 534-3445

Clients2Homeowners@gmail.com

[1]Indisoft LLC | Fannie Mae Equitable Housing Finance Plan 2023; pg 51, Technology service providers/fintech; https://www.fanniemae.com/media/document/pdf/2023-housing-finance-plan.pdf

[2] Fee for Service | Model Funding Agreements and Fee Structures -HUD; pgs 2, 4; https://www.hud.gov/sites/documents/ohc_mfa100612.pdf

[3] Client Paid | Model Funding Agreements and Fee Structures -HUD; pgs 3, 4, 5, 6; https://www.hud.gov/sites/documents/ohc_mfa100612.pdf

[4] Memorandum of Understanding | Model Funding Agreements and Fee Structures -HUD: pgs 5, 6, 10; https://www.hud.gov/sites/documents/ohc_mfa100612.pdf

Pam Marron | NMLS# 246438

Tara Jerse | NMLS# 2105127

Innovative Mortgage Services, Inc. | NMLS# 250769

Equal Housing Lender

Empowering MLOs: Clients2Homeowners.com's New Chapter in Mortgage Solutions

Mon, 10 Apr 2023 13:40:55 GMT

Clients2Homeowners.com makes a pivot!

The Influence behind Creation of Clients2Homeowners.com

Back in 2011, amidst the housing crisis, a unique mortgage networking group called "Brokers and Bagels" sprouted in Clearwater, Florida. The members included independent mortgage brokers, mortgage wholesale lenders, and other mortgage professionals, all grappling to find their footing in the industry.

Rising from the Ashes: Learning the New Mortgage Landscape

The group's popularity soared as word got out that this was the place to learn the ins and outs of the new, stricter mortgage landscape. Mortgage brokers transformed into licensed independent loan originators, and an ironic twist due to stricter mortgage regulations leveled the playing field between retail lenders and licensed mortgage broker companies with a cap on compensation.

Helping Clients Overcome Life's Hurdles

With clients still in need of homes, mortgage professionals had to navigate a complex world of helping those with life-altering events, such as divorce or job loss, which often led to damaged credit and foreclosures or short sales. And the challenge didn't end there—many mortgage colleagues found themselves in similar situations while guiding others through the process.

Reminiscent of past support received from “Brokers and Bagels” to the mortgage broker community, it's time to make changes to Clients2Homeowners.com.

The initial creation of Clients2Homeowners.com was to help buyers overcome obstacles preventing homeownership. But now more than ever, MLO's are experiencing major changes. Good mortgage products are coming out continuously but the battle to find available affordable homes, coupled with the highest interest rates in decades, is resulting in less use of these programs.

MLOs need to think outside of the box to make these mortgages work. So clients2homeowners.com is now pivoting to promote and share ideas that work for MLOs with these good mortgage products to help get real estate agents and clients across the finish line.

Embracing Change: The Site's Exciting Pivot

Clients2Homeowners.com is now shifting gears to be a resource center primarily for mortgage loan originators, offering mortgage "how-to" guides and introducing explanation of new loan products that loan originators can use to make it easier for realtors to assist clients looking to buy homes.

A Nostalgic Twist: "Brokers and Bagels" Reimagined

Paying homage to its roots, Clients2Homeowners.com is launching "Brokers and Bagels on Zoom," a monthly virtual meeting where the mortgage community can come together to share ideas and collaborate on getting clients into their dream homes.

MLO Collaboration is Welcome!

Collaboration was a key benefit learned from the original "Brokers and Bagels". Networking with industry colleagues always seems to lead to new, novel ideas! Don't miss out on this exciting opportunity to transform your mortgage business and help clients achieve their dream of homeownership. Connect with the new Clients2Homeowners.com community today and be a part of the innovative mortgage collaboration that's changing the game. Click here to sign up for our monthly 'Brokers and Bagels on Zoom' meetings and start making a difference!

Pam Marron | NMLS# 246438

Tara Jerse | NMLS# 2105127

Innovative Mortgage Services, Inc. | NMLS# 250769

Equal Housing Lender

Why Every City Should Consider ADUs

Tue, 14 Feb 2023 20:47:43 GMT

Accessory Dwelling Units (ADUs) are small, separate living spaces that are built on the same property as a single-family home. They have gained popularity in recent years as a way to provide additional housing options in urban areas. In this article, we will examine how ADUs can benefit cities, including through increased revenues, multigenerational living, vacation and rental opportunities, and increased security.

ADUs Increase Revenues For Cities

One significant advantage of ADUs for cities is the potential for increased revenues. Because ADUs are separate living spaces, they can be rented out to generate additional income for the property owner. This can be especially appealing for homeowners who may be struggling to afford the mortgage on their primary residence. By allowing ADUs, cities can tap into this potential new source of income and potentially increase their own revenues through property and other taxes.

ADUs Encourage Multigenerational Living

ADUs can also provide a space for extended families to live together, encouraging multigenerational homes. This can be especially beneficial for families with aging parents or adult children who may not be able to afford a separate residence. By allowing ADUs, cities can support families in staying together and provide a more affordable housing option.

ADUs Add Vacation And Rental Units

In addition to providing additional living space for extended families, ADUs can also be used as vacation or rental units. This can be a great opportunity for homeowners to generate additional income by renting out their ADU to travelers. For cities, this can provide a new source of tourism revenue and can help to support local businesses.

Increased Security Of ADUs

Another potential benefit of ADUs is increased security. Because ADUs are often occupied by family or friends of the property owner, they can provide an additional layer of security for the neighborhood. This can be especially appealing for homeowners who are concerned about their safety or the safety of their property.

Common Misconceptions About ADUs

Despite the many potential benefits of ADUs, there are still some common misconceptions about them. Some people may believe that ADUs are inhabited by unwanted residents or run by slumlords, but this is not necessarily the case. In most instances, the owner of the property lives next to the ADU and takes care of its maintenance. Additionally, most ADUs are occupied by people who are known to the landlord.

How Fannie Mae And Freddie Mac Support ADU’s

Fannie Mae and Freddie Mac support ADU (Accessory Dwelling Unit) financing by offering unique mortgage products. Freddie Mac even offers their existing CHOICERenovation mortgage that allows an option to use a no cash-out refinance mortgage to pay off short term financing used to add on an ADU. This can help borrowers who are looking to refinance their cost of construction of an ADU paid upfront.

What City Planners And Developers Can Do To Learn More About ADUs

ADUs can provide many benefits to cities, including increased revenues, multigenerational living options, vacation and rental opportunities, and increased security. While there may be some misconceptions about ADUs, the reality is that they can be a valuable addition to communities and should be considered as a viable housing option.

If you are a city planner or developer interested in learning about unique financing for ADU’s that can benefit your city, contact Clients2Homeowners today.

Pam Marron | NMLS# 246438

Tara Jerse | NMLS# 2105127

Innovative Mortgage Services, Inc. | NMLS# 250769

Equal Housing Lender

Down Payment Connect is a Game Changer for Mortgage Loan Originators

Thu, 26 Jan 2023 22:30:57 GMT

Mortgage Loan Originators, Realtors and HUD Housing Counselors Who Need to Find and Promote Down Payment Assistance (DPA) to Clients Need this Tool!

Downpaymentresource.com is a free public-facing website that offers prospective home buyers the ability to find down payment assistance programs they may qualify for. But did you know that there is a back-end tool called Down Payment Connect that mortgage loan originators (MLO), Realtors and HUD housing counseling agencies (HCA) can use to find nearly all down payment assistance (DPA) programs in the United States?

There is a monthly fee for this tool, but having this comprehensive, up-to-date information about each DPA program in the same place with filters now available to drill down precisely for client and property criteria has just made getting DPA easier for prospective buyers!

MLOs often share a reluctance to dive into DPA products citing bad experiences they’ve had in the past. Others feel matching the 1 ^st mortgage criteria with the DPA criteria is too cumbersome. But the growing need for down payment assistance has moved to the top of the list of what clients need to purchase a home. Let’s get right into how this invaluable tool can help!

MLO Promoted as DPA Originator

Mortgage loan originators (and Realtors) that sign up as a subscriber receive a landing page through Down Payment Connect that can be linked to your personal website. On this landing page, a subscriber MLO can select the DPA programs they can originate and only those programs show up to potential clients. Marketing resources including social media, live and recorded webinars, articles about DPA to post, videos and even reporting that shows how many visitors have visited your landing page are all provided.

Highlights In DPA Directory

The most important tool in Down Payment Connect (to me) is within the DPA Directory located on one of the eight buttons subscribers see once logged in. This button opens to your selected DPR (state) Program Directory (shown below) that houses hundreds of DPA programs and provides a consistent overview of each program page in the same order.

On the DPR (state) Program Directory:

Type lets you know if the DPA is a 2 ^nd mortgage*, Grant**, Mortgage Credit Certificate (MCC) or Combined Assistance***.

* 2 ^nd mortgage and Grant are what MLO’s can commonly add to 1 ^st mortgages you are already originating. **A Grant is treated like a gift. ***Lender provides and underwrites both 1 ^st and 2 ^nd DPA mortgage.

Max Asst shows max dollar or percentage amount client can receive.
Changed (days ago) alerts you how long ago a recent update to a program occurred.
Funding Status shows if a program is Active, Suspended or Inactive.
The Approved column allows an MLO to select the programs they want visible to prospective clients.

What Each DPA Program Page Contains

Within each DPA program page are 10 headings of “need to know” information and all DPA pages are in the same order.

Here are a few “need to know” details.

Program Overview:

Participating Lenders commonly provide direction to get approved for DPA.
Eligible Use of Funds can let you know if rehab/repairs may be an acceptable use of funds.
Program Overview has added Wholesale programs available to independent mortgage loan originators/brokers on Eligible Channels!

Program Terms:

Approved 1 ^st mortgage types show your 1 ^st mortgage type that DPA program can be subordinated to.
On all programs, check under Program Terms for deferral, forgiveness and criteria that must be met for forgiveness.

Borrower Eligibility:

the most important heading for MLO’s and HUD housing counselors! Here’s where you find:

Maximum (combined) Qualifying Ratios
minimum Credit Scores
if Home Buyer Education is required and where clients can go to get needed education. HUD housing counseling agencies may even want to use this knowledge to investigate more avenues of housing education to facilitate.
Income limits apply?: yes or no, and if income is based on HUD or GSE (Fannie Mae/Freddie Mac) income levels.
Maximum annual household Income by household size: many DPA program are based on HUD Area Median Income (AMI) levels that are derived from the total household family size and the total income of all household members over the age of 18.
HUD income levels ARE NOT the same as Fannie Mae and Freddie Mac income levels! Which income to use (HUD or GSE/Fannie Mae or Freddie Mac) is noted in Income limits apply?, and income max is commonly listed in Maximum annual household Income by household size.
This difference can be seen in DPA programs that are specific to Fannie Mae and Freddie Mac. Income limits apply? May state Income limits from FHFA/GSE 2022 80% AMI guidelines or tell you to check with lender.

Some DPA programs have a maximum dollar amount of assets (commonly $20,000) that a client can have to be eligible for DPA. This will be found under Borrower Eligibility in Maximum Assets Allowed if this field is shown. Check with DPA programs for this detail.

Property Eligibility:

Eligible property types shows if manufactured homes are allowed, which can also be found using filters: Property Eligibility>Eligible Property Types>Manufactured Homes.
Maximum #units allowed shows up to 4 if multi-family allowed. Also use filter: Property Eligibility, select Yes under multi-family.

Yes, there is DPA listed for… Use Filters! (Also, click on small i in blue circle for more information.)

For licensed mortgage loan originators/brokers to specifically find Wholesale lenders, click on Product/Program Overview>Eligible Channels and select Wholesale from Retail, Wholesale, and Correspondent in the dropdown.
No income levels! Click on Income Limits> Limits Apply?> No: Only show programs that do not have limits on borrower income.
Multi-family properties! Click on Property Eligibility>Multi-Family>Yes: Only show programs available for multi-family (2-4 unit) properties.
Deferred and Forgivable DPA: Click on Product/Program Terms and pick yes or no under the Deferred Payments and Forgivable tabs.
First-time homebuyer ( FTHB ) or not, is found under Borrower Eligibility.

The information provided in this article is tip of the iceberg!

Once you open Down Payment Connect , you will use it daily! MLO’s are getting emails about new DPA programs that lenders are providing more often, and DownPaymentResource.com continues to add these programs and improve originator, Realtor, HUD housing counselor, and client awareness of all down payment assistance nationally. MLO’s, to subscribe and get access to all things DPA to assist more clients, you need Down Payment Connect !

Stay tuned.

Pam Marron | NMLS# 246438

Tara Jerse | NMLS# 2105127

Innovative Mortgage Services, Inc. | NMLS# 250769

Equal Housing Lender

Education Series for Most Needed Services to Assist Clients Trying to Get “Mortgage Ready”

Fri, 09 Dec 2022 19:28:58 GMT

Focusing on Specific Client Needs, What Tools Can Be Used to Assist, and How to Bundle Targeted Services to Reduce Costs

A Pilot program called Home Prep that connects mortgage loan originators (MLO) to HUD housing and credit counselors who can get clients past final hurdles to become “mortgage ready” has been finetuning details on the areas where prospective mortgagors need the most help. Presently, the area of most need is for short and long-term credit help, though down payment assistance is a very close second place. It has been found that MLO’s and HUD counselors often work with the same resources but utilize these resources differently.

Discussion and awareness of WHY, WHAT, and WHEN to use specific resources has become a learning curve for both sides and has also provided surprises like bundled, targeted services that can save MLO’s and HUD counselors money as they get clients “mortgage ready”.

Series articles will focus on known issues, available tools that mortgage professionals and HUD housing and credit counselors can use with clients, along with guidelines and visuals to implement.

1 ^st Series Article: Getting a Client “Mortgage Ready” by Working on the Best Possible CREDIT Before Starting Anything Else Is the 1 ^st Step.

Everything BETTER for a mortgage starts with the BEST, MOST ACCURATE CREDIT possible. The BEST CREDIT leads to better interest rates, the lowest down payment required, access to best and most down payment programs that client may be eligible for, and automated underwriting approval when required.

Credit Issue: Deleting Disputes

Dealing with disputes is a common issue that can show up in Fannie Mae and Freddie Mac automated underwriting system (AUS) findings.

Credit repair companies often dispute accounts to improve credit scores. Sometimes those same disputes must be removed from the credit report to receive a Fannie Mae and Freddie Mac automated underwriting system (AUS) approval. Why? Because disputes hide credit. When the dispute is removed, negative credit may return.

1. What Dispute notification in Fannie Mae Desktop Originator/Underwriter Findings looks like

2. Fannie Mae Selling Guide Directions to follow for deletion of noted Disputed Credit Report Tradelines

The entirety of direction to follow in the Fannie Mae Selling Guide for disputes on a credit report is below.

When the credit report contains tradelines disputed by the borrower, DU will first assess the risk of the loan casefile using all tradelines, including those disputed. If DU issues an Approve recommendation using the disputed tradelines, no further documentation or action is necessary. DU will issue a message specific to this scenario.

If DU does not issue an Approve recommendation when including the disputed tradelines, DU will re-assess the risk without using the disputed tradelines. If DU is then able to issue an Approve recommendation, the lender must investigate the tradelines to determine whether the borrower is responsible for the accounts or if the account information is accurate or complete.

If the borrower is not responsible for the disputed accounts, the lender must obtain supporting documentation and may deliver the loan as a DU loan. No further action is necessary regarding the disputed tradelines.
If the borrower is responsible for the disputed account, the lender must investigate the information, including determining the aspect of the tradeline that is being disputed. If the borrower is able to provide documentation to disprove any adverse information (such as canceled checks), the lender may deliver the loan as a DU loan.
If the borrower is responsible for the disputed account and the account and tradeline information is accurate and complete, the loan is not eligible for delivery as a DU loan. The lender may manually underwrite the loan if the transaction is eligible for manual underwriting.
A borrower’s account was referred for collection by the creditor. Subsequently, the borrower paid off the account, but the pay-off was not reported on the tradeline. The borrower requested that a dispute be placed on the tradeline. The tradeline information was accurate, but because it did not reflect that the borrower paid off the account, it may be considered incomplete. The borrower must provide documentation that the account was paid in full.
A borrower and his son have the same name (Sr. and Jr.). The borrower’s credit report contains a tradeline that actually belongs to the son. The tradeline is reported as disputed. The borrower can provide confirmation that he is not obligated on the account.
The servicer of a disputed loan indicates a late payment in January of the previous year. The borrower can provide documentation (such as canceled checks or bank statements) that indicate that the payment was made on time.
The credit report indicates a disputed tradeline on the borrower’s mortgage being refinanced. The tradeline indicates a 60–day late payment in January of the previous year. The borrower cannot provide any documentation to support that the payment was made on time.

The monthly payments for the disputed tradelines must be included in the debt-to-income ratio if the accounts belong to the borrower.

Note: Tradelines reported as medical debt are not shown in the disputed tradeline message. Therefore, lenders are not required to investigate disputed medical tradelines.

Examples

The following scenarios are examples of when a loan receiving an Approve/Eligible recommendation with the disputed tradeline(s) excluded from DU's risk assessment would be eligible for delivery as a DU loan:

The following scenario is an example of when a loan receiving an Approve/Eligible recommendation with the disputed tradeline(s) excluded from DU’s risk assessment would not be eligible for delivery as a DU loan:

3. How to use CreditXpert What-If Simulator to check what credit score will be when dispute is removed

Go to time 3:30 on CreditXpert What-If Simulator video ^[1] to find out how the removal of a dispute will affect your clients credit score.

How to check: Click on “REMOVE DISPUTE” button on CreditXpert What-If Simulator

IMPORTANT: Removing a Dispute does not always change the credit score.

Directions for the client are listed on the right.
The CreditXpert timeframe for what a client can do to change the score are only available to you for 30 days from the date the credit report is pulled.

You can check 1 or all 3 bureaus (Experian, Equifax, TransUnion) for a credit score change when deleting a dispute. Additionally, check with your credit reporting agency and ask for bundled costs for both soft and hard pull credit reports with the CreditXpert tools added to ALL credit reports. You may find that the cost per credit report may be more, but the monthly credit report bill, especially using soft pulls, to have CreditXpert on ALL credit reports rather than paying individual CreditXpert costs is less. (I am using CreditXpert that much!)

Next: 2 more credit tools: Wayfinder. Then, Meridian Link. Stay tuned.

^[1] CreditXpert What-If Simulator Directions on YouTube for Dispute AND MORE at 3:30: https://creditxpert.com/credit-insights/xpert-tip-creditxpert-what-if-simulator-all-the-actions-you-can-simulate/

Pam Marron | NMLS# 246438

Tara Jerse | NMLS# 2105127

Innovative Mortgage Services, Inc. | NMLS# 250769

Equal Housing Lender

When Fannie Mae AUS Findings Require the Removal of a Dispute, Use CreditXpert What-If Simulator to Check on Credit Score After Deletion

Wed, 23 Nov 2022 14:49:03 GMT

Credit repair companies often dispute accounts to improve credit scores. Sometimes those same disputes must be removed from the credit report to receive a Fannie Mae and Freddie Mac automated underwriting system (AUS) approval. Why? Because disputes hide credit. When the dispute is removed, negative credit may return. Check with CreditXpert and use their What-If Simulator tool to see if the removal of a Dispute will affect credit scores.

First, what Dispute notification in Fannie Mae Desktop Findings looks like.

Directions for deletion of Disputed Credit Report Tradelines per the Fannie Mae Selling Guide

The entirety of direction to follow for Disputes in the Fannie Mae Selling Guide for disputes on a credit report is below.

If the borrower is not responsible for the disputed accounts, the lender must obtain supporting documentation and may deliver the loan as a DU loan. No further action is necessary regarding the disputed tradelines.
If the borrower is responsible for the disputed account, the lender must investigate the information, including determining the aspect of the tradeline that is being disputed. If the borrower is able to provide documentation to disprove any adverse information (such as canceled checks), the lender may deliver the loan as a DU loan.
If the borrower is responsible for the disputed account and the account and tradeline information is accurate and complete, the loan is not eligible for delivery as a DU loan. The lender may manually underwrite the loan if the transaction is eligible for manual underwriting.

The monthly payments for the disputed tradelines must be included in the debt-to-income ratio if the accounts belong to the borrower.

Note: Tradelines reported as medical debt are not shown in the disputed tradeline message. Therefore, lenders are not required to investigate disputed medical tradelines.

Examples:

A borrower’s account was referred for collection by the creditor. Subsequently, the borrower paid off the account, but the pay-off was not reported on the tradeline. The borrower requested that a dispute be placed on the tradeline. The tradeline information was accurate, but because it did not reflect that the borrower paid off the account, it may be considered incomplete. The borrower must provide documentation that the account was paid in full.
A borrower and his son have the same name (Sr. and Jr.). The borrower’s credit report contains a tradeline that actually belongs to the son. The tradeline is reported as disputed. The borrower can provide confirmation that he is not obligated on the account.
The servicer of a disputed loan indicates a late payment in January of the previous year. The borrower can provide documentation (such as canceled checks or bank statements) that indicate that the payment was made on time.

The credit report indicates a disputed tradeline on the borrower’s mortgage being refinanced. The tradeline indicates a 60–day late payment in January of the previous year. The borrower cannot provide any documentation to support that the payment was made on time.

How to use CreditXpert What-If Simulator to check credit score if Dispute removal is done.

How to check: Click on “REMOVE DISPUTE” button on CreditXpert What-If Simulator

To find out how the removal of a dispute will affect your clients credit score, check what removing the dispute will do to a credit score at all 3 bureaus with the CreditXpert What-If Simulator available through your credit reporting agency.

Directions for client to follow are on the right. Note: Removing a Dispute does not always change the credit score.

Stay tuned.

Pam Marron | NMLS# 246438

Tara Jerse | NMLS# 2105127

Innovative Mortgage Services, Inc. | NMLS# 250769

Equal Housing Lender

When Inaccurate Credit Exists on the Credit Report, Use Five Fannie Mae Codes in Desktop Originator/Underwriter to Submit Correctly

Wed, 16 Nov 2022 13:38:31 GMT

When inaccurate credit exists on a credit report for mortgage delinquency, bankruptcy, foreclosure, short sale and extenuating circumstances, there are five entries that can be used in the Fannie Mae Desktop automated underwriting system (AUS).

Loan originators need to know when to use these codes and where to insert them in the FannieMae.com xml loan application when needed.

Entries noted below should be inputted EXACTLY AS SHOWN, with spaces (no underscores), and are case sensitive! Entry information shown for the five codes can be found in the Fannie Mae Selling Guide under B3-5.3-09, DU Credit Report Analysis (12/04/2019 ). Freddie Mac does not have a workaround code for these issues.

WHAT Code To Use

Confirmed Mtg Del Incorrect

(Confirmed Mortgage Delinquency Incorrect)

Underwriting when the Credit Report Contains Inaccurate

Mortgage Delinquency Information

When DU identifies a mortgage delinquency on the credit report and the information is inaccurate, the lender may instruct DU to disregard the mortgage delinquency information on the credit report. This is done by entering “Confirmed Mtg Del Incorrect” in the online loan application and resubmitting the loan casefile to DU. When the loan casefile is resubmitted to DU, the mortgage delinquency information on the credit report will not be used.

If the lender enters “Confirmed Mtg Del Incorrect”, the lender must document that the mortgage is not currently 60 days or more past due and has not been 60 days or more past due in the last 12 months.

Confirmed CR BK Incorrect

(Confirmed Credit Report Bankruptcy Incorrect)

Underwriting when the Credit Report Contains Inaccurate Bankruptcy Information

When DU identifies a bankruptcy on the credit report and the information is inaccurate, the lender may instruct DU to disregard the bankruptcy information on the credit report in the eligibility assessment. This is done by entering “Confirmed CR BK Incorrect” in the online loan application and resubmitting the loan casefile to DU. When the loan casefile is resubmitted to DU, the bankruptcy information on the credit report will not be used.

If the lender enters “Confirmed CR BK Incorrect”, the lender must document that the Chapter 13 bankruptcy was discharged two or more years or dismissed four or more years from the disbursement date of the new loan, or that the non-Chapter 13 bankruptcy was discharged or dismissed four years or more years from the disbursement date of the new loan.

Confirmed CR BK EC

(Confirmed Credit Report Bankruptcy with Extenuating Circumstances ^[1] )

Underwriting when a Bankruptcy Was Due to Extenuating Circumstances

When DU identifies a bankruptcy on the credit report and that bankruptcy was due to extenuating circumstances, the lender may instruct DU to disregard the bankruptcy information on the credit report in the eligibility assessment. This is done by entering “Confirmed CR BK EC” in the online loan application and resubmitting the loan casefile to DU. When the loan casefile is resubmitted to DU, the bankruptcy information on the credit report will not be used.

If the lender enters “Confirmed CR BK EC”, the lender must document that the bankruptcy was due to extenuating circumstances, and that the Chapter 13 bankruptcy was dismissed two or more years from the disbursement date of the new loan, or that the non-Chapter 13 bankruptcy was discharged or dismissed two or more years from the disbursement date of the new loan.

Confirmed CR FC Incorrect

(Confirmed Credit Report Foreclosure Incorrect)

Underwriting when Inaccurate Foreclosure Information Exists

When DU identifies a foreclosure on a credit report tradeline and the foreclosure information on that tradeline is inaccurate, the lender may instruct DU to disregard the foreclosure information on the credit report in the eligibility assessment. This is done by entering “Confirmed CR FC Incorrect” in the online loan application and resubmitting the loan casefile to DU. When the loan casefile is resubmitted to DU, the foreclosure information on the credit report tradeline will not be used in the eligibility assessment.

If the lender enters “Confirmed CR FC Incorrect,” the lender must then document the foreclosure was completed seven or more years from the disbursement date of the new loan, or that the account was not subject to foreclosure and the loan complies with all other applicable requirements.

Confirmed CR FC EC

(Confirmed Credit Report Foreclosure with Extenuating Circumstances)

Underwriting (Foreclosure) when Extenuating Circumstances Exist

When DU identifies a foreclosure on a credit report tradeline and that foreclosure was due to extenuating circumstances, the lender may instruct DU to disregard the foreclosure information on the credit report in the eligibility assessment. This is done by entering “Confirmed CR FC EC” in the online loan application and resubmitting the loan casefile to DU. When the loan casefile is resubmitted to DU, the foreclosure information on the credit report tradeline will not be used in the eligibility assessment.

If the lender enters “Confirmed CR FC EC,” the lender must then document that the foreclosure was due to extenuating circumstances, the foreclosure was completed three or more years from the disbursement date of the new loan, and the loan complies with all other requirements specific to a foreclosure due to extenuating circumstances.

WHERE to insert needed code.

AUTHOR DISCLAIMER: Some loan operating systems (LOS) DO NOT have spaces between code letters. This may affect the outcome of the AUS decision. The Fannie Mae Job Aid shows where to insert code WITHIN FANNIEMAE.COM and stated that code (in their system) needs to be EXACTLY AS SHOWN in Fannie Mae Selling Guide under B3-5.3-09, DU Credit Report Analysis (12/04/2019) for each code provided.

Fannie Mae Job Aid gives direction on where to insert code in FannieMae.com .

https://singlefamily.fanniemae.com/job-aid/new-desktop-underwriter/topic/navigating_loan_application_fields.htm#DerogatoryCredit

Input needed code directly into xml loan application in FannieMae.com .

In your xml loan application on FannieMae.com , insert code in “5b. About Your Finances” under DU Policy Feature. If more than one code is needed, click on +Add Description to open additional field. Input EXACTLY as code is shown with spaces and is case sensitive! Then click Done.

^[1] B3-5.3-08, Extenuating Circumstances for Derogatory Credit (12/16/2014): https://selling-guide.fanniemae.com/Selling-Guide/Origination-thru-Closing/Subpart-B3-Underwriting-Borrowers/Chapter-B3-5-Credit-Assessment/Section-B3-5-3-Traditional-Credit-History/1032990301/B3-5-3-08-Extenuating-Circumstances-for-Derogatory-Credit-12-16-2014.htm

We are looking for up to 10 licensed mortgage loan originators to be part of this pilot. You can be new or experienced. Call Pam Marron at 727-534-3445 , email pam.m.marron@gmail.com or use the form below to be considered for the pilot.

Stay tuned.

Pam Marron | NMLS# 246438

Tara Jerse | NMLS# 2105127

Innovative Mortgage Services, Inc. | NMLS# 250769

Equal Housing Lender

Loan Originators Should Consider Targeting Specific Mortgage Products That Are Still Being Sought By Prospective Homebuyers.

Wed, 19 Oct 2022 14:29:01 GMT

Loan Originators Should Consider Targeting Specific Mortgage Products That Are Still Being Sought By Prospective Homebuyers. The NEED is There.

Mortgage headlines are now projecting two more years of a downturn in the housing market, but this is the time loan originators need to laser focus on a client NEED market and learn about recent mortgage products that are gaining traction. Fannie Mae and Freddie Mac Affordable products specifically benefit 80% of area median income (AMI) clients.

You may be surprised at the income levels in your area. Unique mortgage products such as Freddie Mac’s 95% LTV on owner-occupied 2-4 unit properties, manufactured home financing, renovation loans, and a newer mortgage product for Accessory Dwelling Units (ADU), where space can be added to a home to offer independent living to family members or for rental income are all available now. The FHA 203H, 100% financing available in designated disaster areas, the NEED for down payment assistance (DPA) which is elevating, and credit tools for loan originators to prepare clients with the best credit scores are also available.

Fannie Mae ^[1] and Freddie Mac ^[2] have been aggressively promoting refinance and purchase of Affordable mortgage loans that are available for clients with an income up to 80% area median income (AMI). The Freddie Mac tool even has a link to Downpaymentresource.com to show what down payment assistance can be found in a specific address area.

For both Fannie Mae and Freddie Mac, the maximum income can be for one borrower or both in the household to qualify. At 80% AMI, 97% financing is available with reduced PMI rates that get better with higher credit scores. The array of Fannie Mae products NEEDED now can be found here and the array of NEEDED Freddie Mac products are here . Freddie Mac is even offering up to $2500 for eligible clients through their BorrowSmart program at pilot mortgage companies and with an additional $7500 for clients in an eligible minority census tract in Baltimore, Chicago, and Detroit.

Maximum 95%LTV financing for owner-occupied 2-4 unit properties is available through Freddie Mac .

Accessory Dwelling Unit (ADU) refinance and purchase mortgages that allow adding on space to offer an independent living area to family members or to gain residual income by renting out the unit and are available through both Fannie Mae and Freddie Mac . ADU NEED is growing, and municipalities are adopting changes to existing building codes to make way for this option.

Down payment assistance (DPA) has been elevated to a top spot of the NEED list for prospective homebuyers. Downpaymentresource.com , a national data resource for DPA, includes wholesaler DPA resources available to mortgage brokers nationally. DPA clients can connect with mortgage professionals through Down Payment Connect . Tip: loan originators need to be focused on details of the DPA 2 ^nd mortgage to ensure a good match with the first mortgage.

The FHA 203H program through the Federal Housing Administration (FHA) allows 100% mortgage financing from qualified lenders to victims of a major disaster who have lost their homes and are in the process of rebuilding or buying another home. This program is a big help for Florida after hurricane Ian.

Getting your clients the best credit score for the best mortgage products and lowest PMI is key now more than ever and can be done through CreditXpert products such as the What-If Simulator and Wayfinder . These products are available to loan originators through your credit reporting agency and can be used on soft and hard credit pulls. Credit score increases can be applied quickly through a paid Rapid Rescore but loan originators need to pay for this. Or, the client can do the steps needed and wait 30 to 45 days before seeing the changes applied to a new credit report.

Tip: When you see disputes on a credit report, go to What-If Simulator to find out what deleting this account will do to the credit score ahead of time. Deleting the dispute is often a requirement found in Fannie Mae and Freddie Mac's findings.

Freddie Mac Income and Property Eligibility Tool

Finally, don’t forget that some of your clients may be eligible for the student loan forgiveness funds and this may make them eligible for a home purchase. This gives you an opportunity to solicit both prospects and past borrowers and let them know that they or others they know may now be eligible for a mortgage.

There are many areas where mortgages can be made. Learn what clients in your area NEED and then get those tools. Home prices are becoming slightly more affordable. Be ready for the NEED of your clients by educating yourself now.

Stay tuned.

^[1] Fannie Mae Area Median Income Lookup: https://ami-lookup-tool.fanniemae.com/amilookuptool/

^[2] Freddie Mac Income and Property Eligibility Tool: https://sf.freddiemac.com/working-with-us/affordable-lending/home-possible-eligibility-map

Pam Marron | NMLS# 246438

Tara Jerse | NMLS# 2105127

Innovative Mortgage Services, Inc. | NMLS# 250769

Equal Housing Lender

Are You A Fixer or Referrer of Client Problems? Home Prep is Being Developed to Help Both Types of Loan Originators.

Thu, 01 Sep 2022 13:55:27 GMT

Home Prep is Being Developed to Help Both Types of Loan Originators.

Loan originators deal with issues that prevent a client from proceeding with a mortgage in different ways. Some attempt to resolve the problems themselves, but the vast majority prefer to refer these clients to an outside resource. Some even refer to other loan originators who are known to handle client challenges.

As a "fixer" loan originator, how many times have you started to help clients overcome hurdles preventing them from getting a mortgage… and then get slowed down when the current loan business increases and decreases your time available to assist? As a "referrer", how many of you have tried to help clients and then had a bad experience instead… and prefer to refer "those clients" to another loan originator or service that can help?

Home Prep is a pilot portal that will connect clients with issues preventing a mortgage with a HUD housing or credit counselor who can help. Assistance will be available for five common problem areas noted below. A sixth area will provide direction and videos for loan originators to check details for unique problems experienced today. The objective is to have clients truly "mortgage ready" before they even start looking for a home.

Five Common Issues

Credit: Short-term help

MLO can provide a client credit report with authorization. Includes building credit if none or less than 3 scores, increasing credit scores to min. 640 middle score, correcting short-term credit issues such as resolving/deleting disputes, short-term payment plan for miscellaneous negative credit.
Credit: Long-term help: can include payment plan for paying off debt, possibly filing for bankruptcy or doing foreclosure or short sale. 6 months up to 5 years of credit help. No Debt Management. Not Credit Repair.
Student Loan Refinance: Student loan consolidation that may be income based and refinancing of negative student loan debt.
Down Payment Assistance (DPA): Using the comprehensive part of Downpaymentresource.com called Down Payment Connect, loan originators and HUD counselors can match clients with DPA programs they are eligible for.
Budgeting for Home Purchase: review the budget and set up a home savings plan. This can be coupled with evaluating the client for DPA funds available.

This step is just for Loan Originators to use:

Pre-Purchase Help Just for Loan Originators: Final vetting of the client to be Mortgage Ready
The working objective is to have availability to run loans with a hard credit through both the Fannie Mae and Freddie Mac automated underwriting systems (AUS).

The goal is to have all clients run through both AUS for approval before the client is released as Mortgage Ready. If there is no approval, the client may need a manual underwrite.

✓ Issues are often first seen in the Fannie Mae AUS system but can also appear in the Freddie Mac AUS. Clearing clients here helps ensure that issues don't surface while applying for a mortgage.

✓ As a part of Home Prep, pilot loan originators are working on videos showing how to use the Fannie Mae dropdown of past derogatory events if credit in the AUS reports a negative event incorrectly.

For clients who have had a bankruptcy with a property included in their past, retrieve a verification of mortgage for the mortgage that was included in bankruptcy where the payment history of the mortgage is suppressed and unable to be seen after the bankruptcy discharge date unless the debt was re-affirmed.
When government loans of any type (mortgage, student loans, etc.) exist that may have been in default, pull CAIVRS UPFRONT to check that there are no deficiencies to be resolved.
When a veteran has had a past short sale, foreclosure, deed in lieu, or modification due to deployment, check on Certificate of Eligibility. If there is no eligibility, check with VA on Bonus Entitlement.
Work to show loan originators effective ways to use down payment assistance through DownPaymentResource.com, and utilize Down Payment Connect, which provides comprehensive detail on all down payment assistance available nationally, how to use it, and how to promote the availability of DPA to clients. More to come on this greatly needed resource. Additionally, videos of how to use DPA and unique options available now, such as Freddie Mac Borrow Smart, stacking multiple programs, and avenues available just for mortgage brokers, will be explained.

This asset will be presented to HUD housing counselors to show them what additional mortgage broker products are also available.

Stay tuned.

Pam Marron | NMLS# 246438

Tara Jerse | NMLS# 2105127

Innovative Mortgage Services, Inc. | NMLS# 250769

Equal Housing Lender

WHY the 6th and Final Step of the Home Prep Pilot is Critical to Getting Clients “Mortgage Ready”

Thu, 18 Aug 2022 13:32:53 GMT

Below are 5 common issues that often prevent clients from getting a mortgage.

Short-term credit issues that can be resolved within 6 months.
Long-term credit issues can take up to 5 years to remedy.
Student Loan refinance help.
Down Payment Assistance(DPA) with the help of DownPaymentResource.com and a resource for loan originators called Down Payment Connect .
Budgeting for a home purchase.

A pilot program called Home Prep is being developed to connect loan originators and realtors to HUD housing and credit counselors who can work with prospective homebuyers on resolving one or more of these issues and get clients “mortgage ready”.

A 6 ^th and final step for clients who have had specific credit issues in the past will provide a safeguard so that the same issues don’t come up on a new mortgage.

Ask your client if they have had any of the issues noted below in their past and apply remedies UPFRONT before a client even starts looking for a home.

Ask the client if they had a past short sale, foreclosure, deed in lieu (DIL), modification, or bankruptcy where property was included.

During the past housing crisis, a foreclosure credit code often showed up on credit for short sales, DIL and even modifications. The foreclosure code requires a longer wait period to get a new mortgage. This incorrect credit often could not be visibly seen on a credit report but did show up in the Fannie Mae and Freddie Mac automated underwriting system (AUS) findings.

Asking clients detailed questions when specific past credit issues exist and then running their loan through AUS systems UPFRONT is CRITICAL to ensure that these past issues will not pop up during the loan process and prevent the client from getting a mortgage.

Run loan through the Fannie Mae and Freddie Mac automated underwriting systems for FHA, VA and conventional programs, and through the Guaranteed Underwriting System (GUS) for USDA loans.

In fact, run ALL client loans through both the Fannie Mae and Freddie Mac AUS systems UPFRONT for prospective homebuyers to insure a thorough pre-approval.

There is nothing worse than finding out that a client cannot get an AUS approval AFTER the client has signed a contract, put a deposit down, given notice to a landlord, and paid for a home inspection and appraisal. An AUS denial towards the end of a contract can be catastrophic, where the only options for a client are a government loan manual underwrite with stricter guidelines and a higher interest rate, or a non-QM loan with a higher interest rate and more down payment required.

Ask the client if they had a bankruptcy and a property was included that had a short sale, foreclosure, Deed in Lieu (DIL) or even excessive late payments.

When a bankruptcy has a property included, the mortgage payment history ceases to show up on a credit report after the bankruptcy discharge date unless the debt is re-affirmed. Remedies to get the payment history and closing date of a short sale, foreclosure or DIL:

Retrieve a verification of mortgage (VOM) from the past mortgage company.

The client can request a mortgage payment history from the past mortgage company.

Your credit reporting agency has a report that can provide this information for a fee.

Check the final date the mortgage showed as reported and closed and review the payment history to make sure the client meets derogatory credit wait timeframe for specific loan types ^[1] .

Ask the client if they had a defaulted student loan or mortgage.

Check the Credit Alert Interactive Voice Response (CAIVRS) system UPFRONT, a federal government database of delinquent federal debtors, to ensure client credit is clear.

Ask the client who is a veteran if they had a past short sale, foreclosure or deed in lieu.

Pull a Certificate of Eligibility (COE) FIRST to confirm existing eligibility.
If there is $0 eligibility:
Contact VA at 877-827-3702 to get determination of Bonus Entitlement.
Calculate VA Bonus Entitlement:

The calculation for basic + bonus full entitlement looks like this:

Stay tuned.

Pam Marron | NMLS# 246438

Tara Jerse | NMLS# 2105127

Innovative Mortgage Services, Inc. | NMLS# 250769

Equal Housing Lender

Customized Resource for Mortgage Loan Originators (MLO) to Assist Prospective Homebuyers to Get Mortgage Ready!

Wed, 06 Jul 2022 20:19:07 GMT

For the last four months, efforts have been underway to form a pilot program that can assist mortgage clients who aren’t quite ready to purchase a home to get “mortgage ready”. The model is uniquely laid out to address six issues (other than an expensive housing market!) that mortgage loan originators (MLO) commonly run into that prevent their clients from purchasing a home. The goal of this effort is to make sure that clients are matched with HUD housing and credit counselors who are trained to get clients past hurdles and “mortgage ready” before these prospective home buyer starts looking at homes with a realtor.

The Key To Helping Future Homeowners

The key to making this pilot work is a robust communication portal that can be shared between the prospective homebuyer, the mortgage loan originator (MLO), and the HUD housing and credit counselors that keeps all parties apprised of the client’s progress. Services are paid for by the client as a Fee for Service, but the MLO will provide a designated credit towards the client’s mortgage closing costs using a Memorandum of Understanding (MOU) if the client returns to that MLO for their mortgage.

Below are the common hurdles that MLO’s commonly see that prevent a client from purchasing a home. Although HUD housing and approved credit counselors can provide more than the 6 issues noted below (like rental assistance and post-purchase help), these 6 are what the platform is concentrating on for the pilot called Home Prep.

IMPORTANT: Credit help IS NOT credit repair!

Short-term credit issues: 0-6 months to remedy. Building credit, improving credit scores to a minimum 640, and resolution of short-term credit issues.
Long-term credit issues: 7 months to 5 years to remedy. Debt management, bankruptcy, resolution of long-term credit issues.
Student Loan Refinancing
Pre-Purchase Check-Up: includes running client through Fannie Mae Desktop and/or Freddie Mac Loan Product Advisor, pulling verification of mortgage when the past mortgage was included in a bankruptcy, running CAIVRS for past government loan clearance, providing clear VA Certificate of Eligibility (COE) for veterans that had past short sale or foreclosure due to required move for deployment and checking for Bonus Entitlement if VA COE has no eligibility.
Down Payment Assistance (DPA): for clients who meet DPA requirements for any eligible programs they may be eligible for including wholesale DPA.
Budgeting for Home Purchase

Prospective homebuyers can expect to pay an average of $750 for services needed, and participating MLOs will be asked to provide a credit commensurate with the client's cost towards mortgage closing costs. The logic of the credit coming from an MLO is that instead of usurping time needed to assist clients who can’t get a mortgage today, the client is referred to a trained HUD counselor that will assist the client to handle issues and also provide an anticipated date of completion for “mortgage readiness”.

The MLO will be able to check on client progress through the pilot portal and communicate on progress with the client, and a referring realtor if there is one. The client will get the credit towards closing costs from the referring MLO who provides the Memorandum of Understanding if they return to that MLO for their mortgage.

A few things have been learned along the way.

A keen selection of agencies and organizations that can assist with the 6 specific areas of need is being vetted now. Not all HUD housing counseling agencies (HCA) have the same or all services. Some specialize in specific areas (ie. not all agencies provide long-term credit help or student loan refinancing). Therefore, we’ve started with larger HUD intermediary agencies that can service the entire U.S., including regional HUD agencies.

There needs to be an educational component for MLOs to understand what HUD Housing Counseling Agencies (HCA) can do to assist clients upfront and a goal to get clients thoroughly “mortgage ready” before the client starts looking at homes. There also needs to be a breaking down of barriers between MLOs and HUD HCAs and an understanding of what each industry does that can help the other. Past distrusts, particularly from the housing crisis, must be overcome.

MLOs will need to provide a detailed summary of why the client cannot proceed with a mortgage upon entry into the Home Prep portal with an indication of services in priority that the MLO believes is needed. On the HCA side, quick onboarding and an anticipated “mortgage ready date” will keep MLOs engaged with the pilot concept.

Realtors have conveyed a strong interest in this concept, proven with questions about pilot articles that have been published. MLOs, pay attention to this. This is your path to work with new clients who have issues and connect with more realtors!

Finally, we are looking for up to 10 licensed mortgage loan originators to be part of this pilot. You can be new or experienced. Call Pam Marron at 727-534-3445 ,email pam.m.marron@gmail.com or use the form below to be considered for the pilot.

Stay tuned.

Pam Marron | NMLS# 246438

Tara Jerse | NMLS# 2105127

Innovative Mortgage Services, Inc. | NMLS# 250769

Equal Housing Lender

Need a Solution to Clearing Past Credit Problems That Can Result in a Mortgage Denial?

Wed, 08 Jun 2022 20:32:22 GMT

Do These Safeguards PRIOR to Giving a Mortgage Pre-Approval!

A growing number of clients have past credit issues that visibly don’t show up… but can still cause a new mortgage denial. What can mortgage loan originators (MLO) do? Be PRO-ACTIVE UPFRONT.

Run Loans Through the Fannie Mae Automated System (AUS) UPFRONT

During the past housing crisis, it was learned that past short sale credit was being erroneously coded as a foreclosure on credit reports [1]. This wasn’t visible on the credit report to loan originators, and the way that the problem was found was through the Fannie Mae AUS findings that would issue a Refer/Ineligible mortgage denial with a statement that there was a Foreclosure on the borrower’s credit.

Buried even deeper was the specific credit bureau (most often Experian) that triggered the Foreclosure indication… but this was only visible on the Meridian Link platform within a credit report.

So, what should a mortgage loan originator do when a client has a past short sale, foreclosure and even a bankruptcy in their past?

Specifically, run the loan through the Fannie Mae automated system (AUS) UPFRONT to insure getting an Approve/Eligible before giving a mortgage pre-approval. Fannie Mae findings will state what the specific problem is. Freddie Mac will not.

For information on how to correct erroneous credit in Calyx and Fannie Mae, go here .

Why is running a loan through the Fannie Mae AUS UPFRONT so important to do?

In most cases, affected past short sellers were told their loan received a denial AFTER the mortgage originator had told them they met the “wait time-frame” needed after a short sale, AFTER they had signed a home purchase contract and AFTER the homebuyer had spent hundreds of dollars on an appraisal and home inspection! The mortgage denial usually came from an underwriter who commonly runs the loan through the Fannie Mae and/or Freddie Mac automated systems towards the end of a contract period. In 2013 when a solution occurred within the Fannie Mae AUS, I intervened with hundreds of clients whose lenders were unaware of the Fannie Mae workaround. Often this was still too late in the process and many of these clients lost the contract they were in or settled for a higher interest non-QM loan with a greater down payment.

Other past credit issues that need to be checked on PRIOR to giving a mortgage Pre-Approval

Veterans who had to deploy to another location and ended up having to short sale or go into foreclosure on their past home are surprised to find they have no eligibility on their VA Certificate of Eligibility (COE). For these clients, contact the VA for Bonus Entitlement and have your lender check CAIVR for clearance upfront.

If a client had a prior bankruptcy and owned a property, and especially if that property went into foreclosure, retrieve a verification of mortgage (VOM) from the mortgage lender of that property to check the mortgage history for any late payment dates. Mortgage history does not show up on a credit report after a bankruptcy unless the mortgage is reaffirmed[2]. Don’t be caught off guard by late payments that can show up recently enough to result in a denied mortgage.

Help for Mortgage Loan Originators (MLO) to Connect Clients to Assistance for Credit Issues, Down Payment Assistance, Student Loan Refinancing and More is Coming

A handful of MLO’s have started working with HUD housing and credit counselors on a pilot program that matches clients with a need to counselors who can assist these clients to overcome issues and get “mortgage ready”. The pilot is leveraging IndiSoft’s National Housing Advocacy Platform (NHAPP), a cloud-based collaborative, seamlessly connecting MLOs, HUD-certified housing counselors and investors to support mortgage readiness counseling. Clients who need help will pay a “Fee for Service” upfront to HUD counselors and be referred by their MLO with a Memorandum of Understanding (MOU) that promises a credit back to the clients’ mortgage closing costs if they return to that MLO for their home mortgage. Fine tuning of seven services and costs that HUD counselors can provide is currently being assessed. Who and when safeguards discussed in this article are applied are being considered as well.

DO SAFEGUARDS UPFRONT!

This I know. There were solutions that resulted from problems that arose out of the housing crisis. Those solutions are still valid, and most are simple to do. The key is to apply safeguards upfront.

Probe deeper with clients who have had issues in the past and pro-actively check to make sure those issues don’t stall any of your clients from becoming a new homeowner. If you don’t know how to run clients through Fannie Mae and Freddie Mac automated systems, LEARN IT NOW, or find out how your lender can do this upfront. Find out who can pull CAIVR at your lender, call VA yourself on COE Bonus Entitlement and order needed VOM’s before your client spends any money. As mortgage professionals, we owe this to our clients.

Stay tuned. Coming up… bigger, better affordable housing mortgages.

Pam Marron | NMLS# 246438

Tara Jerse | NMLS# 2105127

Innovative Mortgage Services, Inc. | NMLS# 250769

Equal Housing Lender

[1} Short sales may be treated like foreclosures by credit-reporting agencies | May 17, 2013 | By Ken Harney | Washington Post | https://www.washingtonpost.com/realestate/short-sales-may-be-treated-like-foreclosures-by-credit-reporting-agencies/2013/05/15/af53f6a4-bc02-11e2-9b09-1638acc3942e_story.html

[2] Should You Reaffirm a Mortgage in Bankruptcy? | American Bankruptcy Institute | By Craig D. Robins, Esq.| https://www.abi.org/feed-item/should-you-reaffirm-a-mortgage-in-bankruptcy#:~:text=Reaffirming%20a%20mortgage%20debt%20requires,undue%20hardship%20on%20the%20client .

PEOPLE PLACES TALK ABOUT TOWN

Thu, 26 May 2022 22:22:47 GMT

People Places, LLC.

We Bring Out the Best in Both

5742 Main Street

New Port Richey, Florida

RSVP HERE:

MEDIA RELEASE

MEDIA CONTACT:

Lia Gallegos, Public Relations Director, Residential Activation Coordinator

727.385.5375

Lia@people-places.com

New Port Richey, Downtown, FL (May 24 , 2022) – Please join us for our next Talk About Town: Are You Mortgage Ready? on Tuesday, June 14, at Ordinance One (5738 Main Street, New Port Richey) from 6:00 pm to 7:00 pm with an opening Mingle at 5:30 pm. This event is open to the public and free to attend.

Many in our community are feeling the pain of soaring rent prices and are wondering if they will be able to continue living here–and if not here, where can they go that hasn’t also been affected? Pam Marron, a Florida licensed mortgage originator and former HUD Housing Counseling Federal Advisory Committee (HCFAC) member and her business partner Tara Jerse, also a licensed loan originator, will be presenting information on numerous new opportunities that make homeownership a real possibility for people who think they may not qualify.

These new home financing options include better mortgages for clients with income levels that are below the 80% median income for our area (under $58,160 annually), and for the first time ever, 95% financing for 2-4 unit properties that are owner-occupied. Additionally, a new program that can help anyone who is trying to get “mortgage ready” is being introduced and matches prospective homebuyers with issues that prevent home ownership to HUD housing and credit counselors who are trained to help clients become homeowners.

Attendees can expect to learn more about their community through this series from expert speakers and the exchange of ideas with the group during the discussion and Q&A session at the end of each gathering. For more information please, visit People-Places.com, and follow People Places LLC on Facebook or Instagram.

ABOUT PAM MARRON

As an independent, licensed mortgage originator for the last 37 years, Pam’s reputation is built on professionalism, integrity and the ability to keep transactions on track. In addition to assisting clients with FHA, VA, conventional, USDA, renovation and portfolio 1st mortgages, she is also uniquely qualified to provide specialized help with unique circumstances.

During the housing crisis, Pam worked with many government agencies and (past) U.S. Senator Bill Nelson (D-Fl) to get a fix for foreclosure credit code that was erroneously applied to the credit of past short sellers. Because of that work, Pam served as a member of the HUD Housing Counseling Federal Advisory Committee (HCFAC) from 2016 through 2019.During this time, Pam became aware of how HUD housing and credit counselors could assist clients to overcome issues that prevented them from purchasing a home. One of the results is a website called Clients2Homeowners.com that provides consumers, mortgage originators and realtors with direction for problem areas that often prevents prospective homebuyers from getting a mortgage.

Additionally, Pam Marron and Tara Jerse are working with a high-level tech company to develop a new platform that will connect clients who need help getting “mortgage ready” through their realtor or loan originator with appropriate HUD housing and credit counselors. If clients pay a fee upfront for help, the referring loan originator will provide a designated credit towards mortgage closing costs once the client is able to purchase a home. Pam and Tara chose New Port Richey to test the program before launching it nationally. For more information and additional resources, please visit: https://www.closewithpamandtara.com.

ABOUT PEOPLE PLACES, LLC

People Places is a New Urbanist Real Estate development company founded by Frank Starkey in 2013 to create vibrant, people-oriented residential and retail places in walkable settings.

We believe that a society of connected people is better than a society of separated individuals and actively seek projects that encourage cultural diversity, inclusion, and equity.

Our work is currently centered on the revitalization of Downtown New Port Richey, Florida, a charming town founded in the early 20th Century. We do this through education, the activation of public spaces, and projects that have the greatest potential to improve the community and create places for people to connect.

Frank Starkey holds undergraduate and professional degrees in Architecture and Urban Design from Rice University, is a board member for CNU (Congress for the New Urbanism) and Habitat for Humanity of Pinellas and West Pasco. He leads a team of passionate, dedicated professionals who are committed to community revitalization.

The People Places office is located at 5742 Main Street in historic downtown New Port Richey, Florida. Hours of operation are Tuesday through Thursday, 9:00 am to 5:00 pm.

Pam Marron | NMLS# 246438

Tara Jerse | NMLS# 2105127

Innovative Mortgage Services, Inc. | NMLS# 250769

Equal Housing Lender

A Story That Sheds a Bright Spot on Client Mortgage Issues of Today

Fri, 13 May 2022 20:53:02 GMT

From 2016 through 2019, I was a member of the HUD Housing Counseling Federal Advisory Committee (HCFAC). Even though I have been a loan originator for 38 years, I was barely aware of HUD housing and credit counselors. These dedicated individuals could help clients who weren’t ready for a mortgage to get “mortgage ready”.

I also did not know that certified HUD credit counselors could help clients with short-term credit issues and work with clients for up to 5 years on long-term issues. From the non-profit financial counseling organization National Foundation for Credit Counseling (NFCC.org) , I learned the difference between the good that can come from Debt Management and the negatives that can result from Debt Settlement.

It became a mission to tell my mortgage colleagues how these HUD-approved professionals could assist our Prospects. Prospects who weren’t yet ready for a mortgage but pursuing the dream of homeownership. Prospects deserved undivided attention but were moved to the back of the line when our “mortgage ready” client business picked up!

Fast forward to 2020 and 2021. The Covid pandemic affected the world, but the mortgage business was surprisingly good. However, mortgage forbearances and student loan deferments became the new credit spots we all had to learn how to deal with. Knowing the difference between qualifying for a mortgage with student loan debt between FHA, VA, Fannie Mae and Freddie Mac and charting mortgage payments made and wait time after a forbearance to get a new mortgage became the norm.

For FHA loans, calculating the average number of hours worked over a year when clients have multiple “out-sick time” due to being quarantined for Covid outbreaks is another example of adjusting.

Here is the bright spot! Many who were involved in sorting out solutions during the past 2008 housing crisis started surfacing when Covid hit, and immediate awareness of triggers that might spiral out of control were being discussed with solutions underway. I learned about and met with many of these solution driven professionals from various parts of the mortgage industry through my time on the HUD HCFAC. HUD housing and credit counselors are already helping with solutions.

Though it seems like we are in unchartered territory again with new problems, a swift acknowledgement and then assessment to remedy issues seems to be in place this time.

I learned about DownpaymentResource.com from a HUD counselor. Down payment assistance (DPA) became a prevalent need to give clients a fighting chance to compete with an overwhelming number of cash buyers. In Down Payment Connect , a paid service of Downpaymentresource.com for mortgage professionals and realtors, I can see all DPA programs across the U.S., including many wholesale DPA programs available to mortgage brokers. Their DPA Directory keeps up-to-date information about contact information, program criteria, and if the program is open or closed.

An accumulation of information for "getting mortgage ready" resulted in the development of Clients2Homeowners.com , a resource primarily for loan originators and real estate agents, but also for mortgage Prospects. Most issues that you see in this article are detailed on the website.

Through the current difficult time, there is growing interest in connecting mortgage professionals to HUD-approved housing and credit counselors to help clients with issues to become “mortgage ready”. Progress has started. Stay tuned.

Writer Pamela Marron is a licensed Loan Originator NMLS #246438 in Florida who works for Innovative Mortgage Services, NMLS #250769 in Lutz, Fl an Equal Housing Lender. Articles written are strictly her opinion and are published to help loan originators, real estate professionals and mortgage clients. This is not used to solicit for business.

Pam Marron | NMLS# 246438

Tara Jerse | NMLS# 2105127

Innovative Mortgage Services, Inc. | NMLS# 250769

Equal Housing Lender

Ensuring that Past Issues Don’t Prevent Mortgage Prospects from Obtaining a New Mortgage Needs to be Priority #1 for Mortgage Loan Originators (MLO) to Clear UPFRONT!

Tue, 19 Apr 2022 14:23:42 GMT

Does your loan have lingering credit issues? Here's what to look for and where to start.

By Pamela Marron, Mortgage Loan Originator, NMLS #246438 | April 19, 2022

Currently, an increased amount of time is being spent on pre-mortgage Prospects by loan originators trying to help their clients primarily with lingering credit issues and to get needed down payment assistance (DPA). This is time well-spent to avoid issues later. But many MLO’s don’t know what to look for or where to start.

Now is the time to tap into the services of HUD approved housing and credit counselors for prospective homebuyer needs if MLO’s don’t desire or know how to help clients with issues.

For months, I have attempted to make a simple report within my loan operating system (LOS) that will allow tracking of Prospects who may be stalled from purchasing a home due to problems with credit, DPA needs and other issues. I’ve also investigated multiple customer relationship management (CRM) systems that can connect to an LOS to allow for a robust Prospect report to keep track of a growing number of pre-mortgage clients.

Getting current borrower and post-closed borrower information is often readily available no matter what LOS system is being used. But for pre-mortgage clients known as Prospects, field information is not as updated or available in many LOS systems. Less attention seems to be paid to the front side of getting Prospects ready for a mortgage refinance or purchase.

WHY is Prospect pre-mortgage attention so important?

Because of Covid forbearances and deferments, loan originators are seeing an increase in credit issues that need to be corrected to increase credit scores for the best mortgage possible. This is especially important as interest rates continue to increase.

In the last two weeks, I’ve worked with two VA clients, one with a foreclosure 13 years ago and one with a short sale 12 years ago that were the result of a required deployment to another country or state. These mortgage Prospects were told by the VA that their past mortgage issues would not affect them in the future, but the basic VA entitlement for both clients on a new VA purchase came back as $0 available. The good news is that both clients got automated underwriting approvals through Fannie Mae and Freddie Mac for a new VA loan. A VA Bonus Entitlement was sought to save one of these loans but was not enough for the other client. But what if the same issue showed up within the last 7 years? Would the loan even get an automated approval for a past negative mortgage credit profile?

Or what if the CAIVR system red flags these clients, as some loan originators are telling us is happening to their clients with government backed mortgages and student loans?

Loan originators need to ensure that credit is clear on both the credit report platform and within automated underwriting systems (AUS). If your HUD counselor can’t run an AUS, do it upfront yourself for the client. CAIVRS and VA Certificates of Eligibility (COE) need to be checked upfront for clients where there might be a possibility of a past problem. Being aware of specific issues from a client’s past can allow MLOs and HUD counselors the ability to correct and apply quick intervention to prevent a denial of a new mortgage. And if the loan originator doesn’t desire or know how to get this cleared, work with a HUD housing or credit counselor who knows how to handle these issues to clear the prospective mortgage client for you.

Recently, we communicated with a national IT company that sees the value of connecting mortgage loan originators (MLO) with HUD housing and credit counselors. They expect that the MLO and the HUD counselor will stay in touch on the progress of referred clients. A “Fee for Service” where the client pays upfront for the cost of HUD counselor services will be offset by a credit paid for by the MLO towards the mortgage prospects closing costs. The IT company also knows about DownpaymentResource.com and sees the benefit of the buyer having a source of money for down payment and closing costs set up in advance to be competitive with other buyers.

Stay tuned. We are also close to finding that CRM that can categorize what help prospective clients need.

Definitely more to come. To learn more about resources for Realtors and MLOs, visit our partner resources page . If you are a borrower learn more about getting mortgage ready by visiting our get mortgage ready page .

Confusion Still Exists About Down Payment Assistance (DPA) for Many Loan Originators.

Wed, 16 Mar 2022 20:50:51 GMT

Here’s How to Organize DPA for Your Area and Start Selling!

The problem is that DPA second mortgage underwriting criteria is often different than the guidelines for the first mortgage. But close attention to these 2 ^nd mortgage differences and applying these criteria to potential DPA clients FIRST is the key to making these programs work.

Additionally, there are two ways these programs are offered. Either:

The first mortgage and DPA 2 ^nd mortgage are provided together and underwritten and closed at one institution.
The DPA program is a second mortgage offered from a separate institution that can be added to your clients first mortgage.

When I initially started using DPA programs, I too had a bad experience. Yep, I got an approval on the first mortgage but not on the DPA 2 ^nd mortgage and the scrambling to find funds occurred a week before closing! To make sure this never happened again, I set up a Down Payment Assistance “At a Glance” spreadsheet with common detail about DPA programs within my area. As I find out about other programs, they are added.

Answers needed for questions about each DPA program is put in the first column of the spreadsheet. Because I am a mortgage broker, I offer DPA where the 1 ^st and 2 ^nd mortgages are provided and underwritten by one lender, as well as 2 ^nd mortgage DPA provided by housing counseling agencies (HCA), county SHIP programs, city programs and Community Reinvestment Act (CRA) funds that can be added to my client’s 1 ^st mortgage. Make your own grid on an Excel spreadsheet, or download ours.

Resources and Marketing

Check into DownPaymentResource.com . This national DPA tool provides loan originators, realtors and lenders as well as homebuyers with the ability to find all DPA programs in your area.
Sign up for Down Payment Connect through DownpaymentResource.com. As a member, you receive a logo to put on your promotional pieces that states “Ask Me About Down Payment” and links to a personal Down Payment Connect page where you can designate the DPA programs that you work with. Interested clients are directed to you for DPA help. Additionally, an incredibly comprehensive list of all DPA programs in your state is available to you and kept up to date with fund availability, program details and contact information for all programs.
Promote your spreadsheet on your website. This gives credibility to the fact that you offer DPA and provides prospective clients with information to know upfront if they eligible for DPA programs.
Get on County SHIP, city and CRA DPA program lists as a loan originator who is familiar with their DPA qualification criteria.
Sometimes funds from multiple DPA program can be used together.
Just a reminder…. Check with your clients on other funds that may be available for down payment:
tax return refunds
loan against 401K

In todays housing market which favors cash buyers, having down payment assistance for clients in your tool box can make the difference on a deal.

So, what do you need help with?

How To Build a Sustainable Mortgage Pipeline

Tue, 22 Feb 2022 21:41:25 GMT

For Loan Originators and Realtors:

Promote to mortgage Prospects who need help getting "mortgage ready". Then, direct them to the right help and keep in touch.

1) Find a customer relationship management (CRM) that works with your mortgage loan operating system (LOS) to help you keep track of “not yet mortgage ready” Prospects.

There are CRMs that connect to most loan originator LOS systems. Most are set up beautifully to stay in contact with past purchasers, but many CRMs lack the same ease of the process to follow-up with Prospects who are delayed on the front end from purchasing as they “get mortgage ready”. Cultivating Prospects who are working towards a purchase and keeping in touch with them and their HUD counselor until the client is ready to purchase a home can lead to a new avenue of business for loan originators.

How a good CRM can help. CRM's can be set up to track where and who you refer prospective clients to that need help with credit, down payment assistance and more. Finding a CRM that allows the best interaction with your LOS to stay in touch and track the Prospect client's progress is key.

If your LOS does not have a good follow-up CRM style system for Prospects, try customizing your own. This can be done in the Calyx LOS by customizing a Template and Report.

2) Find HUD Housing Counseling Agencies (HCA). Refer Prospects for help needed.

When loan originators try to keep clients on a mortgage track themselves, attention to detail usually wanes when business picks up.

What HCA services can provide. Look for HUD agencies that can help with specific needs that your prospective client has. HUD approved credit counselors can work with clients who need credit issues handled, credit built, and get payment arrangement made for student loans. Most HUD Housing Counseling Agencies (HCA) also provide help with down payment assistance (DPA) for city and county programs. HCA's can also assist clients with before and after home purchase services like rental help and post-home purchase help like Foreclosure Prevention and loan modifications. HCA services are sometimes free but are most often provided on a sliding scale income basis.

How mortgage loan originators can utilize HCA services. Check out which HCAs are in your area and what services they provide. Some HCAs provide services over a wider area and do so remotely. Create a relationship and know how to refer clients. HUD housing and credit counselors can follow clients until issues are resolved. Stay in touch with the HCA counselor on the progress of your client as they become "mortgage ready". This is where the CRM is beneficial. And if your client is getting DPA, the HUD housing counseling agency can often provide the education and certificate needed.

3) Embrace marketing tools that connect with Prospects as well as past clients.

Most of us have marketing tools to keep in touch with clients through the mortgage loan process and after the purchase. Fewer marketing tools are available to keep track of "not mortgage ready" Prospects, and marketing to these clients is often a second thought.

Retool Marketing for Prospects.
Make ads that promote that you can connect clients with help for credit, DPA and more.
Keep Prospects in separate database and group as 1) credit, 2) DPA and 3) other.
Make short ads that encourage those already getting "mortgage ready" and invite others that want to do the same.

Use Marketing but re-direct to Prospects .
Most of us have marketing available for free from mortgage wholesalers or our own lending institution to help sell a loan product. This marketing can be redirected to Prospects as they get "mortgage ready". Retool marketing to target prospective purchasers and add that you know about services that can help. Upload a separate database of Prospects and run ads that highlight success stories with credit, DPA, etc.

Promote that you can refer clients for services they need!
Promote that you work with agencies that can help assist clients! Promote those agencies. They are doing the work to get your Prospect "mortgage ready"!
Don‘t disregard clients because you don't know where to send them. Investigate the HUD.gov national counselor list that shows services offered by each HCA. Make ads like "Did you know you can get help with....?"
You may be surprised who calls you. though ads are geared to getting clients, real estate agents are also interested in talking with MLO's who can assist clients to get "mortgage ready"!

4) Most needed help for Prospects is with credit!

Good credit is the foundation block for purchasing a home and provides the greatest selection of programs, best interest rate and lowest mortgage insurance when purchasing a home. Get help with improving credit from HUD approved credit counselors for short and long term issues.

There are credit tools for loan originators! Credit reporting agencies can provide tools for loan originators to assist clients with credit such as Wayfinder and What If Simulator. And if you have a credit reporting agency that provides the Meridian Link platform, learn how to use this tool that allows you to see detailed payment history on each creditor.

5) Learn about new mortgage products!

There are more Affordable Housing programs available at present that are income driven and for 1st time homebuyers (haven’t owned home in last 3 years) than ever before for FHA, VA, USDA and conventional mortgages!

Conventional products: Conventional loan private mortgage insurance (PMI) premiums are less cost with lower rates for better credit score clients. Conventional also has programs with specific income criteria for 97% financing and 95% financing on multi-family units.

Other mortgage types and down payment assistance (DPA). Up to 105% combined loan to value (CLTV) with down payment assistance (DPA) is available for FHA and for specific Conventional products that meet criteria. DPA is available for FHA/VA/USDA as well as conventional loans, and wholesale DPA lenders always have funds available.

This will take some work on the loan originators part and you will need to learn new details about programs along the way. But laying the groundwork for incoming new business is one of the best tools a loan originator can have in this ever-changing mortgage market. Stay tuned.

For more loan originator, realtor and client help to get “mortgage ready”, go to our Partner Resources Page .

10 Things to Remember When Using Down Payment Assistance

Thu, 03 Feb 2022 01:48:40 GMT

For Loan Originators and Realtors:

My last article stated that mortgage loan originators needed to get over their worries about using down payment assistance 2 ^nd mortgages to stay competitive. But understanding the right connection between a first mortgage and a down payment assistance 2 ^nd mortgage is often easier said than done. As my business partner Tara and I investigate and use more DPA programs, we are detailing what to look for about DPA programs on a matrix. In the near future, we will make this document available.

Now is the best time to learn about adding down payment assistance (DPA) for qualified borrowers who have good ratios and decent credit but lack funds to purchase a home. There are more DPA programs available now for FHA, conventional, USDA and VA loan products than ever before. The best reason to know about these programs is that DPA funds can cover down payment and usually a good amount of the closing costs that sellers aren’t willing to pay in todays heated housing market. This makes buyers with DPA more competitive than buyers who need closing costs covered.

But DPA programs don’t come without challenges. Often, a DPA issue can arise during the processing of a loan and if the 2 ^nd mortgage for DPA funds cannot be approved, the only remedy to complete the deal may be a gift at the last minute.

Areas explored and some of what we discovered is laid out below.

In comparing FHA 96.5%LTV and conventional 97%LTV loan programs with DPA added, we found that when a borrower’s credit score is over 700, the combined conventional mortgage payment is usually lower than the combined FHA payment due to lower private mortgage insurance (PMI). The closing costs compared were just slightly higher for the conventional loan.
Borrowers who need DPA to help with home purchase costs need to have funds in the bank. For borrowers who have lower credit scores and are tight or slightly over on the front FHA ratio, one to two months of reserves is needed to get the loan approved through automated underwriting required for many programs. This is because the higher combined loan to value (CLTV) of the first and 2 ^nd DPA mortgage poses a greater risk. Run your clients through the Fannie Mae Desktop Originator or Freddie Mac Loan Product Advisor programs upfront.
Be careful to check the exact program income criteria for area median income (AMI) that clients need to qualify for with each DPA. Some programs require that only the income of the borrower applying for the loan should be analyzed, while other programs require household income for all members of the family to be used.
Know the geographic area a DPA program can provide funds for on a home purchase. Community Reinvestment Act (CRA) DPA funds are available for home purchases within a mapped area.
Check to see if there are program differences for different property types, such as a manufactured home versus a single-family residence (SFR). I recently found that a manual underwrite was available for SFR’s but not on a manufactured home.
On any DPA program, always ask UPFRONT if there are any overlays or unique underwriting criteria for the specific program.
Know upfront if the 2 ^nd mortgage payment will need to be included in ratios and what those maximum ratios are.
There are two different areas to insert the DPA program on the NEW URLA: 4b. and 4d. Make sure that you know if the DPA payment needs to be included in the ratio (4b.) or is considered a soft 2 ^nd that can be forgivable with specific criteria met, and may be considered a gift or grant (4d.) Check with the DPA lender for specific guidelines of where to insert the DPA into the NEW URLA in either 4b. or 4d.
Some DPA programs are originated at the first mortgage lender and the first mortgage and 2 ^nd DPA program are underwritten together. Other DPA programs require separate submissions, such as county SHIP loans, that piggyback with a first mortgage such as the Fannie Mae HomeReady and Freddie Mac Home Possible 97% first mortgages and FHA first mortgages.
The TWO BEST TOOLS to have in your toolbox when using DPA:
For a fee, sign up at Down Payment Connect within DownPaymentResources.com to promote that you provide DPA! Within Down Payment Connect, you get an incredibly detailed program overview of over 2000 county, city and state DPA programs and many proprietary programs across the U.S.
Find a HUD counselor at HUD.gov who can provide Pre-Purchase Counseling and Pre-purchase Homebuyer Education Workshops and send borrowers to them!

As you can see there are a lot of details to put in order. If you are a DPA provider, loan originator, realtor or HUD housing counselor who would like to help us expand this DPA matrix that provides details that can help our industry better utilize DPA programs, please contact us at clients2homeowners.com or call Pam Marron at 727-534-3445 .

A Stigma of Originating Loans with Down Payment Assistance (DPA) Exists.

Wed, 19 Jan 2022 21:33:43 GMT

Why Loan Originators Need to Get Over It.

Programs that work with down payment assistance (DPA) have been around for years, but DPA program availability has not been as plentiful as it is right now. Prior to 2021, funding for state and county DPA programs was minimal if any. But wholesale mortgage companies did have proprietary down payment assistance that didn’t depend on state and federal budgets, and because of this, these programs became very popular. Currently, most state and federal DPA programs are funded and the increased variety of these programs along with proprietary wholesale mortgage DPA programs are especially beneficial to licensed mortgage brokers who can use all of these programs.

Still, as I talk to loan originators, negative perceptions of DPA programs exist. Why are loan originators often adverse to originating loans that include down payment assistance? Here’s a list of reasons, and why these reasons can be overcome.

For mortgages that include DPA, there are often two sets of underwriting guidelines to know to qualify a client. One is for the first mortgage and one is for the DPA 2nd loan. This is a great deal of criteria to be aware of.

Combining the criteria for the 2nd DPA loan to the first is a matter of obtaining the DPA 2nd guidelines and assimilating them with the 1st mortgage guidelines. At Clients2Homeowners.com , this was started by providing the links for DPA programs in Florida. Loan Originators can go to DPA websites throughout the state and retrieve underwriting criteria to check client qualifications such as income eligibility, what kind of mortgage and house type the DPA is available with, minimum credit scores, and more. After locating eligible DPA, find the 1st mortgage programs you can originate that allow for a DPA loan to be included and get signed up with those DPA programs!

Downpaymentresource.com is a national database of almost all state and federal DPA programs and also includes many wholesalers and proprietary DPA programs. The site has a separate program for loan originators, real estate agents, and lenders that provides accessibility to clients looking for DPA through Down Payment Connect .

Most of the programs have an income cap that is perceived as being low resulting in a lesser selection of lower-priced homes to purchase. In today’s real estate market, many think the limit on income, (therefore sales price) puts consumers wanting or needing to use DPA programs out of the current highly competitive real estate market.

There is an income cap on most DPA programs. However, the maximum income is higher than you think! Go to these links for Area Median Income (AMI) Income caps per program requirements:

✓ Federal Housing Administration (FHA) Housing and Urban Development (HUD) income limits

✓ Fannie Mae Area Median Income Lookup Tool

✓ Freddie Mac Home Possible Income and Property Eligibility Tool

Please note that you may need to insert an address to pinpoint income. Some programs base income on total family size while others base income on the homebuyer qualifying for the mortgage.

Loan originator compensation is lower for programs that include a 1st mortgage and a 2nd DPA loan to worry about.

Often true. But many DPA programs underwrite the 1st and 2nd DPA loan with one underwrite! Also, the DPA available can be sizeable and can cover DPA and closing costs. In today’s sellers’ market, having another source for DPA and closing costs where no contribution for the seller is needed can put a borrower in the running for a home!

Loan originators need to be approved by the entity providing the DPA programs and may not be when the program is needed. Further, contract deadlines will need to be longer when these loans are originated.

DPA agencies usually require a one-time or once-a-year registration. And many of the DPA agencies will look at the DPA application parallel to submitting the first mortgage, and even as a credit-only submission.

Clients2Homeowners.com is a website that was made with the initial purpose of introducing loan originators, realtors and prospective homebuyers to the services of HUD-approved housing counselors who help clients who are getting “mortgage ready”, throughout the process of purchasing a home, and even with post-purchase issues. Resources to help prospective homebuyers include information about down payment assistance , credit help (NO, not credit repair! And YES, building credit and help with student loans!) home budgeting , and how to find a HUD approved counselor for what is needed.

Especially now in this sellers’ market, utilizing down payment assistance can be a benefit for loan originators. There are even DPA programs that allow renovation. Call to find the right DPA for you, 727-534-3445 .

Visit our down payment assistance page to learn more about DPA and take the first step to homeownership.

Become Familiar with Unique Mortgage Program Benefits, Embrace Tech Used by Young Homebuyers and Investigate Services to Help More Buyers Purchase Homes

Wed, 22 Dec 2021 21:16:10 GMT

For Loan Originators and Realtors:

Loan originators have a toolbox of mortgage products that can assist clients purchase or refinance through these unusual times. When a challenge occurs, pay attention to services available and to acceptable methods that can ultimately assist purchasers. And make sure realtors know about these details!

Have you experienced a “hard to do” loan but the end result made you aware of new options that could help more clients? Don’t shy away from assisting Millennial and Gen Z potential homebuyers. Options they use can help you with other clients!

✓ Many younger buyers now use no frill, basic phone apps like “Chime” for banking that don’t require monthly costs. “Cash App” is used to transfer rent. Printouts from these apps to get common mortgage information needed can be tricky and may include other funds that need to be explained, but the basic “who the funds go to” and “how much” can be shown.

✓ Freddie Mac Home Possible just reduced the cost for purchasing multi-family 2-4 units to 95%LTV for owner occupied purchasers at or below 80% Area Median Income (AMI) . This makes these units often scooped up by investors more affordable to purchasers who don’t mind having their primary home attached to a tenant’s home. Young purchasers are more open to purchasing multi-family homes that are often older properties and sometimes in less-desirable areas. These buyers see these attached dwellings as income producers that can help with the mortgage payment, and they often improve common areas with shared amenities like a garden or space to relax.

✓ In the credit category, did you know that a credit report that uses Meridian Link can pinpoint exactly which credit bureau a Rapid Rescore needs to be directed at? Meridian Link can break down the payment history for each of the three credit bureaus, Trans Union, Equifax and Experian, for each creditor on a credit report. Finding out which credit bureau is providing negative information enables a quicker resolution with less cost.

✓ HUD approved housing counselors can provide specific credit help, whether just building credit or assisting with credit issues that need to be resolved. THIS IS NOT CREDIT REPAIR. HUD housing counselors can work with clients not yet ready to purchase and the cost is minimal. Seek out HUD counselors who have the expertise you need for clients and refer clients to them. The benefit comes when you have developed a pipeline of future clients who are prepared for a mortgage because of the attention provided by these HUD counselors. For more information visit our home budgeting page .

✓ Know what Down Payment Assistance (DPA) programs are available and what the criteria is for clients. More and more clients are needing help with funds because sellers don’t need to contribute funds in today’s competitive market. Qualify your clients upfront with DPA assistance and put them in the competitive mix for a home. For more information visit our down payment assistance page .

✓ Fannie Mae will allow student loans to be paid off with a refinance without charging loan level pricing adjustments (LLPA) for a cash-out! This is especially useful for homeowners with student loans coming out of forbearance.

Call for more details, 727-534-3445 .

Visit our getting mortgage ready page to start budgeting for a new home.

Freddie Mac Introduces Lower 95% LTV Home Possible Mortgage for 2-4 Unit Multi-Family Properties!

Wed, 17 Nov 2021 16:55:04 GMT

In their quest to make homes more affordable, Freddie Mac reduced the maximum loan to value (LTV) for multi-family units to 95%, a reduction of 10% down payment previously needed. Further, this financing will allow a total loan to value (TLTV) up to 105% with permitted secondary financing that is an Affordable Second.

Have you considered showing 2-4 unit properties to younger and older prospective homebuyers to live in as a primary residence? If yes, you might want to check your market for the availability of these properties that just got more affordable to purchase.

There is an income cap for this Home Possible loan of 80% Area Median Income (AMI) which can be found on the Freddie Mac Home Possible Income and Property Eligibility Tool. First-time homebuyers must complete a Homeownership course. The minimum credit score is noted as 620, and the Freddie Mac Loan Prospect Advisor must receive an approval.

If the homebuyer purchases the multi-family unit to owner-occupy one of the units, rental income of the other units can be used. Click here for details .

This program is especially beneficial in areas where multi-family units are more plentiful. This could boost younger buyers looking for a first home and don’t mind having their home attached to other dwellings that can also produce rental income. To qualify for this loan, you must occupy one of the units.

Multi-family units are often overlooked by families or are sold to investors. You may be surprised by the interest in multi-family dwellings by younger potential homebuyers and even retirees that want to be closer to neighbors.

Look into this updated Freddie Mac Home Possible program that just made purchasing a 2-4 unit property more affordable!

What's The Difference Between A Bank And A Mortgage Broker?

Wed, 27 Oct 2021 20:17:54 GMT

Getting Mortgage Ready

What's The Difference Between a Bank and A Mortgage Broker? This 2-minute video will explain everything.

Mortgage brokers are not part of a big corporation or a bank. They do not have multiple priorities or a variety of investments. Mortgage brokers do one thing, and they do it better than anybody else.

Mortgage brokers shop for great deals on mortgages!

Why do you need a broker to shop for you? Because you need an advocate on your side. You need choices, lots of choices. Choices set up competition, and that is good for you!

Banks can only offer you what they have to sell, but a broker can compare deals from hundreds of banks all over the country. They can organize the information based on your needs. Offering you the best terms and the best rate.

You can do it alone, but why take the risk of missing out on the best rate. Or worst, spending 100s of hours shopping for a mortgage when you could be shopping for a home.

Pamela M Marron, NMLS#246438

Innovative Mortgage Services, Inc, NMLS#250769

Both Fannie Mae and Freddie Mac GSE’s Offering Unique Loan Products to Boost Affordable Housing

Wed, 15 Sep 2021 20:00:38 GMT

Lower Interest Rates for Clients with 80% Area Median Income (AMI) limits are being offered by Fannie Mae now and Freddie Mac in August. Plus, Freddie Mac is offering lower down payment for 2-4 Unit Homes and Eased Manufactured Housing Guidelines on November 15th.

Fannie Mae’s RefiNow available as of June 5, 2021 and Freddie Mac’s Refi Possible available on August 30, 2021 will offer lower interest rates for refinancing Government Sponsored Enterprise (GSE) loans for homeowners that have income that is 80% AMI or less. Prior to these new loan programs, borrowers paid higher prices for lower loan amounts.

Changes to Lower Income Refinancing Programs

Common underwriting criteria for Fannie Mae REFINOW and Freddie Mac Refi Possible are:

Borrower cannot be more than 30 days delinquent in the last six months and no more than one 30-day delinquency in the last 12 months.
The property must be owner-occupied and property types include single family residences, condos and manufactured homes.
Minimum credit score of 620 is required.
Monthly Debt to Income (DTI) can go as high as 65%!!! THIS IS A BIG DEAL!
Pricing provides at least a 50 basis point (BP) reduction towards interest rate
Existing Private Mortgage Insurance (PMI) can also be reduced
Borrower can finance up to $5000 in closing costs and prepaids, but cash-out is limited to $250.
An appraisal waiver is possible at lower Loan to Values (LTV).
There is no maximum housing expense-to-income ratio. THIS IS ALSO A BIG DEAL!

Changes To Multi Unit LTVs

On November 15th, Freddie Mac will lower down payment for 2- to 4-unit homes. In the past, maximum loan-to-value ratios were limited to 85% LTV for the 1st mortgage or up to 95% Combined Loan to Value (CLTV) with an acceptable 2nd mortgage. The change also increases the limit to as high as 105% CLTV for borrowers getting down payment assistance from a subsidized source. If the subsidized amount is not available, the borrower must contribute funds of their own for at least 3% of the loan amount for a maximum 95% LTV.

Changes To Manufactured Housing Loan Programs

Additionally, Freddie Mac will ease guidelines for manufactured housing loans. Also, multi-family units through the GSE’s required a higher LTV with down payment as high as 25% even when the property is owner-occupied.

All of these programs are being implemented by the current administration to boost affordable housing and increase owner-occupied homeownership.

If you are a client, loan originator or realtor who wants to learn more about these programs, contact us today or call 727-534-3445.

Pamela M Marron, NMLS#246438

Innovative Mortgage Services, Inc, NMLS#250769

Homeownership Education on Down Payment and Unique Mortgage Products Can Help Make Housing Attainable

Thu, 19 Aug 2021 19:55:27 GMT

U.S. Housing supply has become less affordable, and what is available is in short supply. Homeownership education can introduce prospective homebuyers to down payment assistance (DPA), unique mortgage programs and can give clients the ability to be competitive in today’s housing market.

In a recent study by Fannie Mae , 55% of future homebuyers believe that homeownership is out of reach for them financially. In the same study, future homebuyers were asked to demonstrate their knowledge of the mortgage process and the affordable options available. Among respondents,73% were unaware of lower down payment options that range from 3% to 5% of a home’s purchase price. This is an important realization, considering that 31% cited not being able to come up with a down payment as one of the key challenges holding them back from homeownership.

Fannie Mae research also found that 64% of future homebuyers said that they expect mortgage lenders to educate them on the process, and 63% said they want mortgage lenders to show them the right mortgage options for their needs.

Finding the right resources for your clients can be tricky. Some down payment assistance programs are stand alone 2nd mortgages that can be attached to FHA and conventional loans, while others are a one stop 1st and 2nd mortgage mortgage underwritten at one lender for both. Most have income and 1st time homebuyer limitations but a few don’t have a maximum income limit.

Because there are so many details when matching 1st mortgages with a DPA program, many loan originators don’t want to do this type of financing.

But the benefit for a buyer of having down payment assistance is there is little or no need for the seller to contribute towards closing costs.

At Clients2Homeowners.com , the Down Payment Assistance tab under Get Mortgage Ready introduces clients, loan originators and real estate agents to Down Payment Resource , a national down payment assistance database. The DPA Programs tab provides a searchable list of city, county SHIP and state DPA as well as proprietary wholesale programs. And the DPA FAQ’s tells you how to apply for down payment assistance.

For more information, go to the links provided above to get started. If you are a client, loan originator or realtor who wants to learn more about programs in your area, contact Pam today, www.closewithpam.com or call 727-534-3445.

Pamela M Marron, NMLS#246438

Innovative Mortgage Services, Inc, NMLS#250769

Down Payment Assistance (DPA) Options Have Never Been More Plentiful For Mortgage Brokers

Fri, 02 Apr 2021 19:42:00 GMT

See How DownpaymentResource.com Helps Loan Originators And Realtors Assist Clients Who Need DPA

One of the most needed resources for clients who wish to purchase a home is down payment assistance. But in 2020 when some federal and state funds were diverted to assist homeowners and renters to stay in homes during the height of the pandemic, the emergence of wholesale and some proprietary DPA programs came to the forefront. This not only expanded the availability of needed DPA funds but also provided awareness of the variety of programs with a slight advantage to mortgage brokers who can utilize wholesale DPA in addition to city, county SHIP, and most state programs.

Homebuyers who need closing costs assistance from the seller often compete with cash buyers and flippers who don’t. Any advantage for the homebuyer is sought and down payment assistance can provide that advantage by providing funds needed for down payment and/or closing costs through a DPA source rather than seller assistance.

Down Payment Assistance Resources

Down payment assistance has been available to consumers for a long time, but the variety of programs available now has not. For loan originators that wish to use as many of these sources as possible, , Downpaymentresource.com offers this variety state by state. The site is included on , Stellar MLS platforms for real estate agents to sift through for available DPA to refer to clients.

Loan originators can generate leads from this source as well (for a fee) on the , Down Payment Connect side with a personal landing page and website link promoting that the loan originator can provide DPA programs for interested clients. Customized selection of which programs a loan originator can provide that will show up for qualified clients is included.

Matching The 1st Mortgage To The Second DPA Loan

The biggest problem loan originators have with down payment assistance is matching the DPA guidelines with the 1st mortgage product. Many originators have had the experience where a client fits all of the criteria for the first mortgage, but the loan is denied for criteria not met with the down payment program. The best benefit of all (to me!) with , Down Payment Connect is the detailed description for ALL down payment programs on their own page, including who to contact and an updated status on funds availability at the top of each program description.

Blended Programs

Some DPA programs are offered by resources that provide a blended 1st and 2nd mortgage program so that client qualification criterion is easily matched. , Land Home Financial Services , a national wholesaler that provides a blend of the 1st and 2nd mortgage, offers an easy to follow yet comprehensive , DPA Program Comparison Matrix for the FHA and two conventional programs that their company offers.

DPA 2nd Mortgages

And, even if the DPA program that is offered is only a second mortgage that needs to be matched with a first mortgage, the Down Payment Connect DPA Directory provides a link to participating provider lender websites to check criteria.

Next Blog

The difference on how to input DPA grants and 2nd mortgages in the NEW URLA and Fannie Mae DO/DU correctly coming up!

Contact Clients2Homeowners today to learn more about DPA loan options for every type of buyer.

Start A System That Can Track Pre-Purchase Clients While They Get “Mortgage Ready”

Mon, 23 Nov 2020 03:47:00 GMT

Providing needed resources for clients who need pre-purchase assistance is a plan all loan originators should have available. Here’s how to start.

Covid 19 and the lack of housing inventory are not stopping many seeking to purchase a home. Often the reason cited is “it’s less expensive to own a home than to rent!” Loan originators and real estate agents who can corral these potential clients with a system that can keep track of referrals and client progress can realize consistent, ongoing business for the future!

My strategy to assist ALL clients who want to purchase a home started with a very sharp but new real estate agent, Derek Simonsen, with Remax Champions . I asked Derek to give me all of his past and currently turned down client referrals, and he did!

The first step was to set up a custom tracking template in my Calyx loan operating system under Prospects. This template generates a report that can be shared to keep track of the progress of clients.

I then signed up with Send Out Cards and picked the realtor campaign to keep in touch and encourage referred clients. Reminding myself when to “send out a card” was as simple as noting a date in the Contact Info tab of Calyx.

There are three areas that most often hamper a client from purchasing a home now:

Solita’s House is the HUD housing counseling agency(HCA) that I am working with now, but there are thousands of HCA’s across the United States that can be found at https://apps.hud.gov/offices/hsg/sfh/hcc/hcs.cfm . I am working with Solita’s House for a variety of reasons:

However, I am finding that many HCA’s are at full or near full capacity. Covid 19 has resulted in an avalanche of people trying to stay in homes they own or rent. Most housing counseling agencies are the first contact for affected consumers.

So I called my HUD Housing Counseling Federal Advisory Committee colleague Ellie Pepper with the National Housing Resource Center and asked where to find more availability of housing counselors for pre-purchase clients. She directed me to a powerhouse of a resource, and we are working together now for immediate help. Further, we are collaborating to make the bridge from HUD housing counselors to loan originators and real estate agents a working reality now.

If you need help starting your system or finding a HUD Housing Counselor contact us or call Pam Marron at 727-534-3445.

These Tools Help You Get “Mortgage Ready” And Qualify For Home Mortgages. See What You Need To Do.

Wed, 14 Oct 2020 20:06:00 GMT

Financial health is key when preparing to buy your home. Figure out the specifics of what you need to do next.

Neighborhood Home Solutions said it best… “If we don’t watch what we eat and don’t exercise we become unhealthy, often overweight and are more susceptible to disease. Right? Well, think about your finances. If you’re not taking care of how and where you spend your money your financial health is at great risk!”

Clients2Homeowners couldn’t agree more.Our goal is to help you achieve homeownership by improving your financial health. We support you in correcting your credit, improving your credit scores and building your credit. We also assist you with down payment assistance where available and are always looking for more resources. Home budgeting is critical especially now with layoffs, cutbacks of hours and new employment options.

We will introduce you to specific credit tools such as CreditXpert, Wayfinder, and What If Simulator. We will let you know about available down payment assistance programs and new mortgage programs. Best of all, with Clients2Homeowners you have an advocate on your side, and an experienced mortgage professional that can answer your questions to prepare you for homeownership.

To learn more, contact us or call 727-534-3445.

How to Make Change in Fannie Mae DO/DU When Past Short Sale Credit Shows Up As a Foreclosure

Wed, 30 Sep 2020 10:29:00 GMT

Running into the credit issue where past short sale credit appears as a foreclosure and results in a Fannie Mae Refer Denial? Follow these steps to do the workaround in the Fannie Mae Desktop Automated system.

Do you still run into the issue where your borrower receives a DO/DU Refer/Caution when past short sale credit appears as a foreclosure in the Fannie Mae automated underwriting system (AUS)? Fannie Mae developed a workaround to correct this within their system. Retrieve this document: Fannie Mae Prior Derogatory Credit Event: Borrower Eligibility Fact Sheet and follow the steps in this video to input the correct information to change a Refer/Caution to an Approve/Eligible within the Fannie Mae DO or DU AUS if this is the only reason that is causing the loan denial.

Steps to follow within Fannie Mae DO/DU upon receiving Refer/Caution:

IMPORTANT:

If you need any additional help or have questions, contact us today.

Variety of Down Payment Assistance Options for Clients

Tue, 01 Sep 2020 14:35:00 GMT

More prospective homebuyers are inquiring about down payment assistance availability. As a mortgage broker, we can provide the greatest variety of options for your clients.

Prospective homebuyers are needing down payment assistance more and more. We can offer county DPA funds and many city programs. But as a mortgage broker, we also have wholesale DPA programs that offer expanded eligibility such as:

For more information contact us today or call 727-534-3445!

Teaching loan originators and realtors how to help mortgage challenged clients become homeowners!

Fri, 31 Jul 2020 20:00:00 GMT

Loan originators and realtors no longer have to tell mortgage clients to go elsewhere to “get it fixed”.

Clients2Homeowners.com assists clients with most needed issues like credit help, getting downpayment to buy a home and home budgeting is what our website offers.

Loan originators and realtors can help otherwise unqualified borrowers qualify for mortgages and go from a renter to a homeowner.

Clients2Homerowners.com means you never have to tell a client no. You never have to say I can’t help you. You now have resources to help unqualified clients qualify for mortgages.

By helping unqualified borrowers, loan officers and real estate agents can close more deals. More people can prepare for the home of their dreams.

Learn more by watching our prerecorded webinar .

One Simple Introduction That Can Make Anyone Mortgage Ready

Fri, 12 Jun 2020 20:50:00 GMT

Learn How a Housing Counselor Can Help Challenged Clients, Save Real Estate Deals, and Grow Your Business

Your client is excited. They’ve made the decision to become homeowners. They’ve been all over Zillow, Realtor.com, and Trulia looking for the perfect house. They finally reached out to you, only to have their heartbroken because they aren’t mortgage-ready?

What if they were? What if you could tell them that you had a solution even if they didn’t have a downpayment ready. Even if they don’t have the greatest credit.

Let me introduce you to Clients2Homeowners.com. We show you how to match housing counselors with challenged clients so everyone can enjoy homeownership.

To learn more watch our webinar, and get more deals back on track.

https://youtu.be/16d7uRvg1aE

A realization, facts, keeping watch on credit… and a new resource just in time

Thu, 28 May 2020 08:00:00 GMT

By Pamela Marron | May 2020 | National Mortgage Professional Magazine

Realization

Clients NEED mortgages now, whether for a purchase or refinance. Even though uncertainty about COVID 19 looms, many are still cautiously purchasing homes or refinancing. Need is the driving force in spite of COVID 19. For purchasers, the need is a deadline date… that their lease is ending, or their existing home is closing, or their landlord is selling the home they rent. For those that refinance, cashing out on some of their existing equity for reserves or reducing payments for tighter budgets is the reason.

Know the facts

Know facts of mortgage options for those who may temporarily struggle to pay. You are going to need this information when you can provide these same clients with a mortgage as soon as they get back on their feet.

A massive number of job losses have occurred. Many homeowners are still employed but hours may have been drastically cut. Both Fannie Mae [1] and Freddie Mac [2] came out with a forbearance policy that allows a temporary suspension or reduction of mortgage payments and FHA provided similar policy with a partial claim option [3] . Initial talk speculated that the full amount of mortgage payments not made during the 60 to 90 day forbearance period would be due at the end of the forbearance timeframe and there are some references out there that support that thought. But both Fannie Mae [4] and Freddie Mac [5] as well as FHA have now stated publicly that per the Cares Act [6] , there will not be a requirement to pay missed payments all at once unless you can.

Keeping watch on credit

Verbiage in the Cares Act states under HR748-(pg)209 (credit) (ii) REPORTING.- Except as provided in clause (iii), if a furnisher makes an accommodation with respect to 1 or more payments on a credit obligation or account of a consumer, and the consumer makes the payments or is not required to make 1 or more payments pursuant to the accommodation, the furnisher shall— ‘‘(I) report the credit obligation or account as current; [6]

Additionally, a forbearance approval letter from PennyMac obtained from a client states under Credit Reporting: “By entering into this forbearance plan, we will report your account to the credit bureaus as current under the forbearance plan.”

I asked Terry Clemans, director of the National Consumer Reporting Association (NCRAinc.org) how we could trust that delinquency during the forbearance period would be reported correctly. My concern was due to a credit issue during the housing crisis where foreclosure credit code showed up on past short sale credit when mortgage delinquencies were past 120 days. Though not the same issue, this code problem stalled or halted conventional financing for 3 additional years.

Mr. Clemans reminded me that there was no national emergency proclaimed during the housing crisis. A national emergency proclamation was issued effective March 1st, 2020 and prior to the forbearance directives. There is specific Metro 2 credit code for accounts affected by a natural or declared disaster. As long as loan servicers apply code correctly, borrower credit should not be negatively affected during publicly stated forbearance periods.

Those that can qualify to refinance on the other side of this pandemic will most likely NEED a refinance, and urgently. There will be changes as issues arise, but many of us are keeping a close watch on what credit looks like after the forbearance.

A new resource just in time

During my time on the HUD Housing Counseling Federal Advisory Committee (HCFAC) from 2016-2019, I learned a great deal about how much HUD housing counselors and certified credit counselors could do to help challenged clients – both pre-purchase and post-purchase.

That realization is what started a path to connect loan originators and realtors to housing and credit counselors to get challenged clients “mortgage ready”.

On May 28th, a webinar that shows loan originators and real estate agents how to make this connection and the benefits of doing so will be presented through the National Mortgage Professional Magazine. A website, www.Clients2Homeowners.com , was developed to house steps to connect and resources for credit help, downpayment assistance and budgeting for clients. Industry professionals will be on the call. Loan originators, real estate agents and housing counselors, this is open to all of you!

Remember to say “Thank You!” to invaluable frontline workers everywhere.

Stay tuned.

[1] Fannie Mae | Forbearance: https://www.knowyouroptions.com/options-to-stay-in-your-home/overview/forbearance [2] Freddie Mac Forbearance: http://www.freddiemac.com/about/covid-19.html [3] HUD Mortgagee Letter 2020-06 | April 1, 2020: https://www.hud.gov/sites/dfiles/OCHCO/documents/20-06hsngml.pdf [4] Fannie Mae | April 27, 2020: Understand Your COVID-19 Mortgage Options | Fannie Mae reminds homeowners they are not required to repay missed payments all at once: https://www.fanniemae.com/portal/media/corporate-news/2020/covid-19-mortgage-options-7010.html [5] Freddie Mac: Lump Sum Repayment is Not Required in Forbearance | April 27, 2020: https://freddiemac.gcs-web.com/news-releases/news-release-details/freddie-mac-lump-sum-repayment-not-required-forbearance?_ga=2.141393010.1330337281.1588780547-2108693110.1588422977 [6] Coronavirus Aid, Relief, and Economic Security Act (CARES Act): https://www.congress.gov/116/bills/hr748/BILLS-116hr748enr.pdf

Fannie Mae: Forbearance Definition

Wed, 20 May 2020 11:12:00 GMT

What is a Forbearance?

With this option, you and your mortgage company agree to temporarily suspend or reduce your monthly mortgage payments for a specific period of time. This option lets you deal with your short-term financial problems by giving you time to get back on your feet and bring your mortgage current.

Forbearance may be an option if you are:

Black Knight: Half of 4.75M homeowners in forbearance made payments in April

Tue, 19 May 2020 10:47:00 GMT

By Amilda | May 26, 2020 | NEXT

As of May 19, 2020, 4.75 million homeowners, or 9% of all active mortgages had entered into COVID-19 mortgage forbearance plan, and nearly half of them made mortgage payments in April, according to the McDas

h Flash Forbearance Tracker report by Black Knight, Inc.

These mortgages account for a little over $1 trillion in unpaid principal, the report notes, of which an estimated 7.1% of all Fannie Mae and Freddie Mac backed loans and 12.6% are FHA/VA mortgages currently in forbearance.

By the end of April, 4.25 million homeowners were in active forbearance but 46% of them still made their April mortgage payment, while 54% did not, said Black Knight CEO Anthony Jabbour.

Over the second week of May, active forbearance volumes increased by just 93,000 marking a decline of more than 70% from 325,000 in the first week of May, and 93% from the first week of April, when the number of active forbearance plans increased by nearly 1.4 million in a single week.

This slowdown suggests that volumes “may be beginning to flatten, warranting a shift in servicer focus from forbearance pipeline growth,” said Jabbour, “to managing not only the forbearance period, but the millions of loan workouts and modifications” that are bound to follow.

As of May 19, 2020 however, just 21% of borrowers in forbearance had made their May payments. Which means, the approximately, 1.4 million homeowners in forbearance who had made April payments currently are at risk of becoming past due in May.

If that happens, there will be a sharp increase in the national delinquency rate, according to the report, which tracks loan-level forbearance and performance data daily, to monitor the impact of the pandemic on the U.S. mortgage market.

“Shifting to the management of such a large pipeline of homeowners in forbearance plans,” added Jabbour, will mark the beginning of an entirely new challenge for mortgage servicers.

Freddie Mac: Lump Sum Repayment is Not Required in Forbearance

Mon, 27 Apr 2020 04:00:00 GMT

Freddie Mac reiterates repayment policies in the wake of COVID-19

MCLEAN, Va., April 27, 2020 (GLOBE NEWSWIRE) -- Freddie Mac (OTCQB: FMCC) today reiterated that borrowers in forbearance living in homes owned by the company have many options to repay missed payments and are never required to choose doing so in one lump sum.

Freddie Mac CEO David Brickman made the following statement:

“Simply put, if you are a homeowner seeking forbearance and Freddie Mac owns your loan, you are never required to make up missed payments in a lump sum. Our policies offer a number of options to bring borrowers current, including repayment plans, resuming normal payments or lowering your monthly payment through a modification. We encourage homeowners facing hardship to work with their servicer to identify the plan that’s appropriate for their unique situation.”

In March, Freddie Mac announced it was taking a number of actions to assist homeowners facing financial hardship due to COVID-19. These include forbearance , during which a borrower’s payments are reduced or suspended. While borrowers in forbearance must repay the missed payments, full repayment immediately following forbearance is just one of many options, and they are never required to do so.

Owners facing a hardship are entitled to up to 12 months of forbearance. Servicers will start with a shorter plan and reassess to see if an extension for up to 12 months is necessary. Once the hardship has been resolved, there are several options for borrowers to repay the money owed, including:

Loan servicers will reach out about 30 days before the initial forbearance plan is scheduled to end to determine which assistance program is best or if additional forbearance is needed. Borrowers who believe they are not being offered proper repayment options can reach out to the Consumer Financial Protection Bureau .

Consumers looking for additional resources can visit MyHome® by Freddie Mac .

Freddie Mac makes home possible for millions of families and individuals by providing mortgage capital to lenders. Since our creation by Congress in 1970, we’ve made housing more accessible and affordable for homebuyers and renters in communities nationwide. We are building a better housing finance system for homebuyers, renters, lenders, and taxpayers. Learn more at FreddieMac.com , Twitter @ FreddieMac , and Freddie Mac’s blog FreddieMac.com/blog .

CONTACT: Chad Wandler 703-903-2446 Chad_Wandler@FreddieMac.com

New Site Launched for Client Referral to Housing/Credit Counselors

Mon, 06 Apr 2020 08:43:00 GMT

National Mortgage Professional Magazine | April 6, 2020

The first seminar for a pilot program that connects loan originators with housing counselors to assist challenged clients was presented on Jan. 23. The message from attendees: Provide simple steps for the referral process and explain the resources provided. The finishing touches are being put on a Web site, Clients2Homeowners.com , made to do just that.

The “ About the Site ” section explains the three areas of help clients commonly need and how HUD credit and housing counselors can be the referral source to assist these clients for loan originators and real estate agents. Not all housing counseling agencies have the same services, but a great deal of time and work has been spent with one housing counseling agency (HCA), Neighborhood Home Solutions in St. Petersburg, Fla. with the focus on the top three areas of need that loan originators and real estate agents most encounter that prevent a client from purchasing a home:

1. Credit (and NOT credit repair)

2. Downpayment Assistance (DPA)

3. Home Budgeting

4. Added: Student Loan Debt Relief

Top on the list is assisting clients with credit issues

The correction of erroneous credit, the building of credit, improving credit scores and restructuring student loan repayments are all common issues that impede clients from getting a home. All HUD housing counselors are trained to assist clients with basic credit issues, but certified credit counselors are trained for in-depth credit counseling and debt management (not credit repair and debt settlement). Credit counselors can talk directly with credit reporting agencies and creditors with clients. They can also use credit tools that can determine how to improve credit scores, show what can be done to build credit and zero in on where a credit error exists.

Downpayment assistance program knowledge is second greatest need for clients and LOs

Keeping track of available downpayment assistance (DPA) programs, different underwriting criteria between the first mortgage and the second DPA mortgage, and a variety of other details that must be focused on can be daunting to most LOs.

Additionally, national mortgage wholesalers have realized the need for DPA programs for the independent LO side of business and have begun rolling out their own programs in the last few years. Wholesaler DPA programs are highly competitive with the existing city, county and state programs, offering DPA funds all year round.

In Florida, to streamline all DPA programs available, a matrix is being developed that will include the wholesaler, city, county and state programs and will start with city and county programs in Tampa Bay, Fla., expanding from there. Three wholesalers that provide proprietary DPA programs and a page that lists wholesalers that use Chenoa Funds will be included on the Web site and matrix spreadsheet. This spreadsheet provides specific information that LOs need, like maximum ratios, extra costs, income limits, etc. As more programs become available, they will be added. This document is being provided to ensure that all DPA options are available with pertinent information at-a-glance to assist LOs, real estate agents and housing counselors in determining what DPA a client might be eligible for in a particular area.

Home budgeting is third in client need

Many, especially Millennials, have never been taught how to properly budget for a home. Having a third-party look at your spending habits and put you on track for a home in your future provides hope for many who thought homeownership out of the realm of possibility. At an HCA event attended, a comment was made by a client receiving home budgeting education to their counselor that they were taking what was learned home to their parents who had never had budgeting education either!

To make the referral process as easy as possible, auto-fill forms to complete are located at Clients2Homeowners.com. Auto-fill documents, along with supporting documentation (if available), are needed to complete the handoff of a referral from a loan originator to the housing counselor.

If the documents are not completed and sent to the credit or housing counselor by the referring LO, there is nothing that connects you to the client to insure that your client is referred back to you when they are deemed “Mortgage Ready.”

Whether your client needs help with one or all three of the issues noted, Neighborhood Home Solutions can accommodate clients in Florida for services of this pilot program. There is a $275 Fee for Service and credit report cost of $20.18/single or $40.36/joint that must be paid upfront. Beverly Malina, credit and housing counselor, can be reached by phone at (727) 209-0131 or e-mail Beverly.Malina@NHSFL.org . For more information or help outside of Florida, contact Pam Marron directly at (727) 375-8986 or e-mail Pam.M.Marron@gmail.com .

Stay tuned.

Pam Marron (NMLS#: 246438) is senior loan originator with Innovative Mortgage Services Inc. (NMLS#: 250769) in Tampa Bay, Fla. She may be reached by phone at (727) 375-8986, e-mail PMarron@InnovativeMortgage.onmicrosoft.com or www.CloseWithPam.com

FHA’s Loss Mitigation Options for Single Family Borrowers Affected by COVID 19

Wed, 01 Apr 2020 04:00:00 GMT

April 1, 2020 | Mortgagee Letter 2020-06

FHA’s Loss Mitigation Options for Single Family Borrowers Affected by the Presidentially-Declared COVID-19 National Emergency in Accordance with the CARES Act

The purpose of this Mortgagee Letter (ML) is to inform mortgagees of special Loss Mitigation Home Retention Options available to Single Family borrowers, as well as an extension period for Home Equity Conversion Mortgages (HECM), affected by the COVID-19 Presidentially-Declared National Emergency in accordance with the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). Furthermore, this ML supersedes FHA’s Presidentially-Declared Major Disaster Areas (PDMDA) guidance listed in SF Handbook 4000.1 for Borrowers impacted by the COVID-19 National Emergency.

Click here for more...

Pilot Program Connecting MLOs and Real Estate Agents to Housing Counselors

Tue, 24 Mar 2020 18:45:00 GMT

National Mortgage Professional Magazine | March 24, 2020

Prior to being selected for the U.S. Department of Housing & Urban Development’s (HUD) Housing Counseling Federal Advisory Committee (HCFAC) , my knowledge of what HUD-approved housing counselors could do to assist clients was very little. From the very first meeting during my three-year term from 2016 through 2019, so many areas of help for challenged clients were discovered.

WHY Clients2Homeowners.com was developed.

By 2019, a pilot program that connects mortgage loan originators and real estate agents to HUD-approved housing counselors to assist challenged clients had begun.

The pilot program focuses on three top needs of potential homebuyers: 1. Help with credit issues and building credit 2. Assessing for available downpayment assistance 3. Budgeting for a home purchase

4. Student Loan Debt Relief added. Housing Counseling professionals worked with us on the rollout for the last year. Details such as cost, multiple revisions of a document called a “ Memorandum of Understanding (MOU) ,” how client progress would be communicated back to the referring party, and using the Fee for Service Model to construct a method of payment that is tied to a credit for the client towards closing costs on their mortgage were hammered out.

While being on the HUD Housing Counseling Federal Advisory Committee, I continually checked to make sure that each step of this effort was being done correctly. And on Sept. 10, 2019, the CFPB issued a No-Action Letter (NAL) that states … the Bureau will not take supervisory or enforcement action under RESPA against HUD-certified Housing Counseling Agencies (HCAs) that have entered into certain fee-for-service arrangements with lenders for pre-purchase housing counseling services. This helped immensely with clarity needed for the MOU.

The method of payment to Housing Counseling Agencies (HCA) that this pilot is using is called a Fee for Service. Referred clients pay a pre-determined fee upfront to the housing counseling agency. That fee is credited back to the client closing costs on their home purchase by the referring mortgage loan originator or realtor who signs the MOU.

Using the Fee for Service model allows two benefits: 1. Encourages clients above Low- to Moderate-Income (LMI) levels to utilize housing counseling services. Historically, HCA services have been geared to LMI income levels and below.

2. Provides a funding mechanism for independent loan originators to utilize housing counseling services with an incentive for the client if they return to same referring loan originator who signed the MOU.

Why important? Bank loan originators often form partnerships with housing counseling agencies through their institutions that can pay for housing counseling services by using Community Reinvestment Act (CRA) funds. Independent loan originators do not have CRA funds. A few extra points:

1. The client is not required to return to the referring loan originator or real estate agent. However, the credit is only available from the signor of the MOU.

2. Real estate agents can also sign an MOU and provide a credit towards the home closing. This MOU is being developed now.

3. Businesses can utilize this pilot program as well. Recently, I spoke with a forward-thinking entrepreneur who thought this program could be helpful to his employees who work at his franchise locations. Kudos to business people who realize the benefit of assisting employees into homeownership!

4. A downpayment assistance (DPA) matrix that includes wholesaler DPA programs is being developed now and will be available to HCA’s to assess clients for all available DPA programs.

5. Millennials often need help building credit and budgeting for a home purchase. Their excitement when they see the end of the tunnel is inspiring!

Thanks to my colleagues on the HUD HCFAC and especially to Sarah Gerecke who has inspired me more than you know. Thank you to the Tampa Bay CDC … Wanda and Beverly … who have worked so hard to make this pilot a reality. And thank you to National Mortgage Professional Magazine for allowing the reported progress of this effort to be chronicled in your monthly publication.

Stay tuned!

A Simple, Targeted Program Can Grow Your Future Mortgage Business

Wed, 11 Mar 2020 18:45:00 GMT

National Mortgage Professional Magazine | March 11, 2020

In 1990, five years into my career in the mortgage business, I learned something from a successful new construction salesman that stuck with me for the last 30 years. The salesman’s name was Ed and he was the highest producing salesperson for a major builder. What was Ed’s secret? He listened to every prospect that came to his model center. If they weren’t ready to purchase a home yet, Ed would find out why and discuss the timeframe before they could purchase. After the prospect left, Ed would write conversation details on a card and file it in a small box that was always with him. It was not uncommon to see Ed pull out the “ready clients” to follow up with. It was also common for the builder to get notes that praised Ed’s follow-up as the reason that the prospect finally purchased a home! Ed simply determined an approximate time a client would be ready to purchase and then faithfully followed up to get their business.

From 2016 through 2019, I was on a U.S. Department of Housing & Urban Development (HUD) committee called the “ Housing Counseling Federal Advisory Committee (HCFAC) ”. While serving, I learned a great deal about what HUD-approved housing counselors could do to get clients ready for a home purchase. Housing counselors can help clients to correct, build and consolidate credit. Many counselors know about downpayment assistance programs, often more than my mortgage colleagues. And housing counselors educate clients on the proper budgeting needed to own a home. They are aware of the reasons that keep clients from purchasing a home … but work with these clients to get them ready for homeownership.

How many of us try ourselves to assist challenged clients … until business picks up and needed attention becomes scarce? What if there was a valid resource to send these clients to for detailed help to get “mortgage ready?” That resource is a HUD-approved housing counselor.

So I and others on the HUD HCFAC worked with housing counselors to develop a simple, structured path for loan originators to refer challenged clients to HUD-approved housing counselors. Similar issues that prevent a home purchase were narrowed to three specific areas of greatest need:

► Credit: Whether negative credit, no credit or too much debt (and NOT credit repair!)

► Downpayment assistance: Including wholesaler programs available to independent mortgage professionals!

► Budgeting: Saving for a home purchase

► Student Loan Debt Relief added

Utilizing housing counseling agencies (HCAs) is already done by banks who consistently send challenged clients to HCAs and pay for services with Community Reinvestment Act (CRA) funds. But independent mortgage loan originators don’t have CRA funds to pay for services and most are not even aware of what housing counselors can do to assist clients.

To make this path possible, a memorandum of understanding (MOU) was created to serve as an agreement between the challenged client and the loan originator and is provided to the HUD housing counseling agency. The MOU states that the (pre-determined) cost for housing counseling services paid upfront by the client will be credited back towards closing costs on a future mortgage by the referring loan originator (the MOU can also be used with real estate agents). The MOU outlines services and credit to be provided and was developed with direction from the HUD Model Funding Agreements and Fee Structures Manual .

This provides multiple benefits to mortgage loan originators. The structure allows for:

►An MOU for credit towards closing costs on a future mortgage from the referring loan originator if the client returns to that originator for their mortgage.

►A bank loan originator who already uses housing counseling services that are paid for by CRA funds from their institution to continue using housing counseling services with the MOU agreement for credit if they migrate to the independent loan originator side of business.

►A partnership with a HUD housing counselor who is trained to take care of client issues and will notify the loan originator when the client is “mortgage ready.”

►Continued communication between a loan originator and a real estate agent about a referred client who is getting “mortgage ready.”

►Never saying “no” to a client! Provide the option for help with a HUD housing counselor.Consistent communication between the loan originator and the HUD housing counselor provides your “approximate date of follow-up” to update your “future client cards” in your own box. I know, because it’s working for me.

Stay tuned.

Skepticism as an Obstacle to Connecting Housing Counselors and Independent LOs

Wed, 26 Feb 2020 19:45:00 GMT

National Mortgage Professional Magazine | February 26, 2020

The idea of independent loan originators partnering with housing counselors to assist challenged clients was surrounded by skepticism from day one. Initial conversations with housing counselors about past experiences of working with independent loan originators often included negative stories where help favored the loan originator more than the client. I also found that many in my own mortgage industry were not aware of help that housing counselors could provide to our challenged clients.

Forming the relationship between independent loan originators and housing counselors was a bigger obstacle than getting the pilot program off the ground. The key was to show the economic value of working together … not only to the loan originator and housing counselor, but to the client and the real estate agent.

When chronic issues exist, one of two things occur. Either we figure out a way to deal with it, or we hire a service that knows how to fix it. Loan originators who deal with challenged clients have varying degrees of success and when originating business increases, time to deal with client issues dissipates.

Because I served on the HUD Housing Counseling Federal Advisory Committee (HCFAC), I learned firsthand how housing counselors can assist challenged clients. I specifically focused on how housing counselors can assist clients in three main areas:

►Help with credit issues;

►Assessing for available downpayment assistance; and

►Budgeting to buy a home.

► Student Loan Debt Relief added

To make this partnership program work, there needed to be the “service that knows how to fix it” for specific and consistently encountered mortgage client needs.

Another area of detail was how client help could be paid for. Housing counseling agencies (HCA) historically work with banks and credit unions who can provide Community Reinvestment Act (CRA) funds upfront to pay for services. Independent loan originators do not have CRA funds, so a pre-set Fee-for-Service Plan was put in place where clients pay for needed services upfront, but then receive a credit back towards closing costs at their mortgage closing.

A Memorandum of Understanding (MOU) was developed that specified the credit to the client from the referring loan originator. Great care was taken to ensure that anti-steering laws were abided by. Another positive point that resulted was the fact that the Fee-For-Service model provided a valid source for above low- to moderate-income (LMI) clients to utilize housing counseling services.

Connections developed and buy-in

Fast-forward to August of 2018 …

The pilot was started in Tampa Bay, Fla. that connects loan originators to housing counselors to assist challenged clients.

What are the benefits to independent loan originators when working with HUD-approved housing counseling agencies? 1. Provides option to assist real estate agents with all challenged clients. Provides continued communication between the housing counselor and loan originator, and the loan originator to client and real estate agent on progress towards the clients’ eventual home purchase. 2. Provides trained professionals who can assist challenged clients through issues to get them mortgage ready. 3. Provides valid fee-for-service method of payment and an option for assistance for all income levels.

What are the benefits to HUD-approved housing counselors when working with independent loan originators?

1. An increased client base serving independent loan originators ( 511,000-plus licensed mortgage loan originators in the U.S. ) with specific method for partnership developed to fit within existing housing counseling guidelines. 2. Expansion of services to above low- to moderate-income (LMI) clients through the Fee-for-Service model.

Continued skepticism drives effort forward while successes grow

We continue to face skepticism. Recording clients who have made it to homeownership and time to prove the pilot can work is needed to overcome past negative perceptions and gain awareness of how independent loan originators partnered with housing counselors can work.

Who is interested in this pilot has been interesting … an entrepreneur who sees the value in assisting employees into homeownership, a real estate agent who wants to work directly with the housing counseling agency, a mortgage company CEO who wants housing counseling to be an integral part of his company. My own surprise came when a client was ready to purchase a home sooner than expected and was helped to that point by someone other than me. This continues, this will grow … spread the word.

Stay tuned.

Facing Negative Challenges Often Results in Unexpected Solutions

Thu, 26 Sep 2019 10:03:00 GMT

National Mortgage Professional Magazine | September 26, 2019

The mortgage market is changing, and some negative challenges will occur. Many of us don’t talk with each other about problems because they may seem too complicated, perceived as negative, or out of fear of hurting our business. Instead, think through problems and collaborate with others on a solution, especially when you’ve been through the problem before. Confidence comes from getting in front of it.

For the past 10 years, my mortgage efforts have focused on assisting clients with issues that arose out of the housing crisis. Some of the problems were complex where proof was not visible and had to be dug for. Taking these problems to agencies and people who could help was usually met initially with negative skepticism until proof and research could be shown.

I have learned where to take my problems, but still face skepticism. Having a solution that can be built on is the best plan to get help. When others know that you’re not dropping an issue in their lap to totally solve and that their help is needed with a solution in progress where groundwork has already been done, the walls come down. Know the objections upfront and make sure potential corrections are presented.

For years, I have taken issues to the mortgage industry for their support to troubleshoot and advocate for solutions. But if the problem does not affect enough clients, or is misunderstood or perceived as negative, it is not taken up.

When I became a member of the HUD Housing Counseling Federal Advisory Committee (HCFAC), a 12-person group that consisted of folks from the mortgage, real estate and housing counseling industries as well as three consumers, it became evident that solving issues at the housing counseling level where clients can get the pre-purchase help first could be more productive.

So why did I think that mortgage professionals were the place to go to for help in the first place? I recalled faithfully attending “Bagels and Brokers” during the housing crisis, a monthly casual think-tank of a consortium of mortgage loan originators, wholesalers and mortgage affiliates who gathered and discussed mortgage issues and where to go for the solution. I came to realize that, though mortgage professionals may bring up a problem, their strength is in applying the correct solutions. Stepping back a few paces to see where to get a problem solved is necessary when your first option does not work.

A pilot program that connects housing counselors and loan originators to assist clients that need pre-purchase help was started in Tampa Bay, Fla. Successful client assistance is being experienced but news of what Tampa Bay CDC can do for clients has been slow to get out. After doing a presentation with Tampa Bay CDC at People Places LLC about what housing counselors could do to get clients “mortgage ready,” a successful business owner contacted me regarding how the pilot could assist his employees in gaining homeownership in the area. He told me success stories of how he and the employees benefited when they purchased homes and contributed to the local economy. Also, his brother owns a large real estate franchise in Tampa Bay and he wanted to know how the pilot program was different from the help already being provided to the real estate franchise for clients. I was able to tell him that the pilot concentrates on three areas: 1. Assisting clients with credit correction and credit building; 2. Assessing clients for all downpayment assistance available, including programs from mortgage wholesalers; and 3. Budgeting.

4. Student loan debt relief added. Prior to this call, I was targeting promotion towards mortgage professionals and real estate agents to begin the pilot. Now I am adding businesses.

There are times in the mortgage business where client needs become more prevalent than client desires. Client needs during a tighter market requires full attention to solutions and patience with moving parts. This is the time that mortgage loan originators need to have fine-tuned knowledge of mortgage products and know specific differences between Fannie Mae and Freddie Mac automated systems. Some loan originators may think of this as a negative because more attention needs to be paid to tedious detail to make a deal work. When times are good and property inventory is not as tight as it is right now, anyone can survive in the mortgage business. Count it as a positive when a real estate agent with a challenged client calls you, even if they referred the client to another loan originator first.

Stay tuned. Pam Marron (NMLS#: 246438) is senior loan originator with Innovative Mortgage Services Inc. (NMLS#: 250769) in Tampa Bay, Fla. She may be reached by phone at (727) 375-8986, e-mail PMarron@InnovativeMortgage.onmicrosoft.com or visit CloseWithPam.com .

Housing Counselors Assisting MLOs Pilot Program Finding Success

Wed, 11 Sep 2019 10:25:00 GMT

National Mortgage Professional Magazine | September 11, 2019

A pilot program that connects mortgage loan originators with housing counselors to assist clients that aren’t yet mortgage ready is now underway in Tampa Bay, Fla. Initial assistance is focused on three areas of support most needed for clients:

►Correcting credit issues (not credit repair)

►Assessing for downpayment assistance (DPA), including wholesale programs

►Budgeting

► Student Loan Debt Relief added.

The Tampa Bay Community Development Corporation ( TampaBayCDC.org ) is the U.S. Department of Housing & Urban Development (HUD)-approved housing counseling agency that the pilot program has been started with. The goal is to make this program “loan originator- and real estate agent-friendly” and be a referral source for clients who need assistance with issues that are preventing them from purchasing a home. Tampa Bay CDC was selected because of their in-depth experience with credit issues and their willingness to learn about and include wholesaler DPA programs available to independent loan originators.

Positive points experienced so far

1. Prospective homebuyers with issues that need to be resolved can be referred to professionals who can assess the problem and provide a time frame that the client can become “mortgage ready.” Loan originators often try to assist clients with varying degrees of success. But when business picks up, attention to these clients diminishes. Housing counselors focus on client issues and can communicate to the mortgage loan originator on the client’s progress. These clients who are working on becoming “mortgage ready” become a pipeline of future clients for mortgage loan originators and real estate agents.

2. I was pleasantly surprised that an initial client that I’d determined would take approximately five months to get “mortgage ready” took only one month! But the client was not happy with the amount of home that he could purchase due to his debt-to-income (DTI). The only way this client could get a larger mortgage was to have less debt. Because this client’s initial readiness timeframe was so short, this encouraged him to vigorously work on paying down his debt!

3. CIC Credit, the credit reporting agency being used by Tampa Bay CDC and myself, provides the Meridian Link platform that allows all three credit bureaus (TransUnion, Equifax and Experian) to be viewed individually to see which bureau(s) in a credit report is showing the issue. Additionally, CIC Credit provides tools such as the “What If Simulator” and “WayFinder” that shows how scores can change when specific credit is cleared up, the percentage of credit balance usage that results in a higher credit score and what happens when new credit is added. With these tools, the housing counselor worked on my client’s credit and showed him on her computer screen exactly how different options could work to improve his credit. This extra step was the “Eureka!” moment where the client could visually see how his work to improve credit could help him in the long run.

4. Bank mortgage loan originators are aware of benefits of working with housing counselors because banks often provide Community Reinvestment Act (CRA) funds to pay for housing counseling services and encourage their loan originators to work with Housing Counseling Agencies (HCA). But independent loan originators at mortgage companies don’t have CRA funds to pay for housing counseling services upfront. Therefore, a method was needed and developed so that independent loan originators could provide a financial benefit for clients who need housing counseling.

The payment method is called a “Fee for Service.” The client pays a pre-set fee upfront for determined services outlined on a Memorandum of Understanding (MOU) that is signed by the loan originator and the housing counseling agency. The MOU is an agreement that if the client returns to the loan originator/signor, they will receive a credit for upfront housing counseling fees towards closing costs on their mortgage. This ensures that payment of housing counseling services for a client is available whether the client works with a bank loan originator with CRA funds or through a “Fee for Service” method with an independent loan originator where upfront costs are credited towards closing costs at their mortgage closing. This method is already available to clients who have income that is above low to moderate income (LMI) and can encourage more above LMI clients to utilize housing counseling services.

5. Having professional housing counseling services available to assist clients in areas that need more attention than I can give or have experience with has enabled me to provide an option for almost every client I speak with. It has also increased communication with referring real estate agents who are interested in the clients’ progress.

As we find more areas of client need from loan originators, this can be considered as an additional focus of support. The current goal is to provide a step-by-step method that introduces not only the independent mortgage loan originator industry, but the real estate agent industry to upfront assistance that housing counseling can provide for clients with issues and who need assistance to become “Mortgage Ready.”

Stay tuned!

Pam Marron (NMLS#: 246438) is senior loan originator with Innovative Mortgage Services Inc. (NMLS#: 250769) in Tampa Bay, Fla. She may be reached by phone at (727) 375-8986, e-mail PMarron@InnovativeMortgage.onmicrosoft.com or CloseWithPam.com .

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By Pamela Marron, NMLS#246438 : Innovative Mortgage Services, Inc. NMLS#250769

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