Do's of Mortgage Fraud Prevention

Escondido HomeYesterday, we discussed tips to prevent mortage fraud when buying Escondido real estate.  We focused on the “don’ts.”   Again, when you are in the market to buy Escondido real estate, the first thing you should do is to get pre-qualified with a lender.  I recommend HomeServices Lending.  During the process of buying your Escondido home and getting a loan here are some  “Do’s” that can help avoid mortgage fraud.

  • Do provide your confidential financial and personal info to your trusted mortgage lender.  Gary Harmon, your Escondid0 Realtor, has been in the Escondido real estate business locally and can help you choose a trusted lender.
  • Do always be totally honest when completing the Escondido home loan application.
  • Do request and keep copies of everything you provide to the lenders and everything you are ask to sign.  If you feel uncomfortable, call Gary Harmon, your Escondido Realtor for advice.
  • Do review the Good Faith Estimate of Closing Cost carefully.
  • Do ask about any parties being paid if you are unfamiliar with their names.
  • Do ask about any fees that you may not understand.
  • Do lock in your interest rate as soon as you get a rate you like.
  • Do read everything presented to you before you sign.  Don’t let anyone rush you.

Follow the do’s and don’ts of these last post for a better Escondido home loan experience.   For more information, call Gary Harmon, your Escondido Realtor.

Tips to Prevent Mortgage Fraud

Escondido home loan

HomeServices Lending

When you are in the market to buy Escondido real estate, the first thing you should do is to get pre-qualified with a lender.  I recommend HomeServices Lending and Charla Rueda at Bank of America.  During the process of buying your Escondido home and getting a loan here are some  “Don’ts” that can help avoid mortgage fraud.

When getting your Escondido home mortgage:

  • Don’t provide false information about your job, income, credit or bank accounts.
  • Don’t lend your credit info or social security # to anyone so they can take out a loan in your name.
  • Don’t close on any loan on an Escondido house that has any false of misleading information.
  • Don’t use appraisals that have incorrect or inflated values on the Escondido home.
  • Don’t use down payment or earnest money that did not come from you.
  • Don’t pay your good faith deposit to anyone except Gary Harmon, your Escondido Realtor or directly to the escrow company you are using for the Escondido home purchase.
  • Don’t let anyone sign anything for you during the Escondido real estate purchase.
  • Don’t expect to get “paid” for purchasing a home.  You will need to bring a certified check to escrow prior to closing on your Escondido property.
  • Don’t pay anyone any additional fees or cost for the loan after it closes.  When in doubt, check with Gary Harmon, your Escondido Realtor.

The Do’s of mortgage fraud prevention tips will be listed in a p0st to follow.  For Escondido real estate information that you can trust, contact Gary Harmon, your top Escondido Realtor.

Say Goodbye to Closing Cost Surprises

RESPA Reform on Escondido Home Purchases

The government is stepping in once again under a RESPA reform to try to protect the Escondido home buyer.  The problem has been where the lenders upfront “good-faith estimate” is way off from what the actual charges are on the Escondido real estate purchase at close of escrow. This has been especially true in title insurance and settlement charges. Starting January 1, 2010, there will be three categories of charges; Escondido home fees that cannot increase from upfront estimates, fees that have a 10% wiggle factor, and fees that can increase without limit.

Zero Increase Category

  • Escondido home loan origination fees
  • Points for a specific interest rate
  • San Diego County transfer taxes
  • Processing and underwriting charges

Basicially, if the lender has total control, they must be totally accurate.

10% Increase Category

Charges in this category apply to the total of all charges and not to any individual charge.

  • Title services and the lender’s title insurance policy when the lender requires you to use their preferred services
  • San Diego County recording charges
  • Other services selected by the lender such as the appraiser, credit report, or upfront MIP

Note, the above charges are charges the lender has some control over, but not total control.  The government gives them 10% wiggle room.

Charges That Can Change Without Limit

These are charges totally selected by the Escondido buyer and the lender does not have any control.

  • Initial escrow deposit
  • Daily interest charges
  • Escondido real estate homeowner’s insurance
  • Borrower chosen Escondido home title insurance
  • Escondido purchaser escorw charges where buyer chose escrow

Hopefully, these new RESPA guidelines will stop surprises at the closing of your Escondido home.   Questions about these charges, please contact Gary Harmon, your Escondido Realtor, or Joyce Nathan at HomeServices Lending.

18 Questions to Ask Your Lender

When buying Escondido real estate, it is important to find the right home with Gary Harmon, your Escondido Realtor, but it is also important to select the correct lender. After working with many lenders over a 20 year period, Gary has selected Home Services Lending for his winning team. Whether you choose Joyce Nathan at Home Services Lending or select a lender on your own, you should the lender the following important questions.

  1. Will you provide local in person services.  Sometimes Internet lenders are hard to work with?
  2. Are you a licensed mortgage broker or mortgage banker.  Mortgage broker’s, like Joyce Nathan at Home Services Lending, usually have access to a larger variety of lenders?
  3. Once I get a loan approval, is the approval guaranteed?
  4. Do you provide a Good Faith Estimate to me and my Escondido Realtor, Gary Harmon?
  5. Will you let me know up front what fees that you expect me to pay out of pocket?
  6. How long does getting a loan from Home Services Lending take?
  7. At what point in the process can we lock the rate on my Escondido home.
  8. Is Home Services Lending available nights and weekends if I need to lock a rate or if I need to get answers to questions reguarding my loan?
  9. What kind of loan conditions are there ( gift letters, proof or funds, bank statements, etc.)?Do you have a quick automatic underwriting process for my Escondido home loan?
  10. Can Home Services Lending guide me in selecting the right loan program?
  11. When do we get the Escondido real estate I  am buying appraised?
  12. How far in advance of close of escrow on my Escondido property does the mortgage package go out?
  13. Do I have to pay mortgage insurance and what determines how much?
  14. Can you guarantee that you will meet my commitment date ?
  15. Does Home Services Lending guarantee closing dates?
  16. Do you review the final Hud-1 Settlement Statement before closing?
  17. Do you do wire fund transfers?
  18. Will you be available to answers even after closing on my Esocondido home?

FHA is Going Away?

What’s the Problem?

Fannie Mae and Freddie Mac making reckless loans with low or no down payments have got us in one of the largest financial recessions in history.  Escondido sellers have definitely felt the pain.  Trillions are being spent to try to fix the problem, but is history just repeating itself in a different form.  This year FHA has been the financing resource that cash strapped Escondido buyers have looked to to buy Escondido real estate.  The problem in a nut-shell is that the buyers using FHA finaning have very little “skin in the game.”  These Escondido home buyers have been able to get loans with only 3.5% down.  The minute a Escondido home closes escrow the owner is already upside down if they needed to sell the home.  (It takes about 7.5% in commissions and cost to sell a home so if someone only put down 3%, they are already 4.5% in the hole when they close escrow.)   This just leads to less committment by buyers and more Escondido real estate foreclosures or short sales.  These problems cause the FHA financial problems.

An independent actuarial study has found that the FHA’s insurance fund reserves are far below where they should be and far below the congressionally mandated minimums.  Althought FHA won’t be going away, they must find ways to increase their reserves and to become more financially stable.

Higher Down Payments

One of the ways the FHA could improve their position is to require higher down payments than the current requirement of 3.5 %.    Fannie Mae’s chief credit officer in the 80’s who is now a mortgage industry consultant recommends 10%.    The new requirement will probably end up at closer to 5% which borders on more irresponsible lending.

Higher Mortgage Insurance

FHA currently charges 1.75% of the loan amount for mortgage insurance premiums.  These are paid through escrow and are paid upfront.  Most Escondido home buyers would just roll that into their loan.  In addition to the upfront mortgage insurance payment, FHA charges an annual premium, paid in monthly installments, of .5 to .55 percent depending on the down payment amount.  FHA is considering an upfront of 2% and and annual increase to .6 %. 

Cutting Escondido Home Seller Concessions

On of the attractive features of the FHA financing is that the agency has allowed seller concessions of up to 6% of the purchase price to go towards loan cost and closing cost.  Once again this encourages buyers to have little or no “skin in the game.”  Many in congress would like to see this decreased to around 2 %. 

Tighter Credit Standards

FHA is by far the easiest and most flexible player when evaluating a buyers creditworthiness.  It doesn’t even have a minimum FICO score requirement.  FHA is also more tolerant of Escondido buyers credit history than other lenders.  FHA tends to give everyone the benefit of the doubt.  For example, I just had a buyer that could not get a conventional loan even with 47% down and FHA approved the same buyer’s loan with only minimum down.

It is clear that the FHA needs to improve and tighten up its practices .  Is FHA going away? No!  If your are considering buying Escondido real estate in the near future and are thinking of going FHA, you might want to get that Escondido home purchased before the FHA changes and tightens the rules.

Where to start when buying Escondido real estate.

Buying Escondido Real Estate

Where to Start

In todays tough Escondido real estate market you have to be ready to make an offer on Escondido homes the minute the homes hits the market.  Many Escondido homes are short sales or bank owned properties (REO’s).  This type of Escondido real estate often sells the first weekend it hits the San Diego North County mls.  You can find these homes by using Escondido homes for Sale mls search.  

Pre-Approval from a Lender

Finding Escondido homes isn’t enough.  To be ready to buy you home you must already have a pre-approval from a good lender.  Gary Harmon has chosen Home Services Lenders ( a Wells Fargo affiliate) as a member of Gary’s Winning Team.  Joyce Nathan and Gary can guide you through all the steps of getting the right loan.  If you prefer an outside lender, Gary has gotten great results with Charla Rueda of Bank of America.

Write the Best Escondido Real Estate Offer

You now must write an offer to get the best possible deal on your Escondido home purchase.  A good agent like Gary Harmon will go over some of the things you might want to consider or include in your offer or counter offer.  Some of these things may make the difference in your ability to purchase.  Call Gary today at 760-745-1220 and get started buying your Escondido dream home. 


First-time Home Buyer Tax Credit, See Video!

First-Time Home Buyer Tax Credit has been Extended!

What are the Main Terms of the Tax Credit?

  1. Escondido real estate before May 1 and close before July 1, 2010.
  2. Escondido homes must be purchased by a First-Time Home Buyer.
  3. The maximum credit is $8,000 or 10% of the Escondido Real Estate, whichever is less. 
  4. Escondido first-time buyers who are claimed as dependents by other taxpayers or who are under age 18 are not qualified for the tax credit program.
  5. The maximum allowed Escondido home purchase price is now $800,000.
  6. Single taxpayers may now earn up to $125,000 and married taxpayers filing jointly may earn up to $225,000
The First-Time Home Buyer Tax Credit is for first-time buyers of Escondido real estate (either spouse if filing jointly) who have NOT owned a principle residence during the 3 year period prior to the purchase.   
Call Gary Harmon, your Escondido Realtor, to find out more about the first-time home buyer tax credit.