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Issue 039 October 2010

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Full 1004 Single Family See “Page 7” for Details

America’s Fastest Growing AMC!

An Appraisal Partner That Helps You Create More Successful Closings!


the 10 Revisiting FHA 203(K) Want to talk about a Niche product?

18 What is Stopping


Loan Modifications? Foreclosures continue to grow.

33 Techspot

Credit Monitoring & The Counsel of a Loan Officer.

up 54 Bringing the Rear: Treasury Secretary Timothy Geithner

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Issue 039

October 2010



What is Stopping Loan Modifications?

pg 45 pg 45 pg 46 pg 46 pg 47


Foreclosures continue to grow.

William Matz



Revisiting the FHA 203(K)


David Zuckerman branch manager weststar mortgage, inc. Want to talk about a Niche product?


30 42

9 Steps to Landing Agent Referrals

Bringing up the Rear Martin Andelman mandelman matters Treasury Secretary Timothy Geithner.


molly dowdy evp of marketing a la mode, MORTGAGE SOLUTIONS DIV. Target real estate agents, but be picky.


from the editor's desk


Frank & BRian speak

Online Lead Generation



Dennis Yu ceo Help! My Facebook got Banned!







Center Stage with eMagic The Niche Report



October 2010

ACCOUNTING MANAGER Shawna Ingram Advertising Director Jessica Grizzle Advertising sales Heather Bopp Production Manager Henry Suchman Production Assistant Dawn Exner COLUMNISTS & Contributing Authors Martin Andelman Karen Deis Molly Dowdy Frank Garay William Matz Stewart Mednick Rick Roque Brian Stevens Dennis Yu David Zuckerman

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With mid-term elections on the horizon, the TV airwaves are abundant with negative campaign ads smattered with economy references. Each candidate for congress, governor, or even city council is focusing on the economy as this election’s hot button. President Obama even addressed the union stating that the economy is now the main focus of his administration … too little too late? With grateful appreciation to our soldiers who fought in support of Operation Iraqi Freedom, President Obama, in the wake of the last combatant unit, the Fourth Stryker Unit of the Second Infantry, pulling out of Iraq, claimed the end of over eight years of battle, but was very careful to not repeat the mistake of claiming, “mission accomplished,” because it is not. Over four thousand American soldiers, airmen, marines and sailors gave the ultimate sacrifice for freedom and democracy. Freedom and democracy define this great country, but also are used to tear it apart. The freedoms used by banks and other Wall Street oriented financial institutions over the last five years have caused a significant influence to the current state of the recession. Ben Bernanke, the Chairman of the Federal Reserve, has struggled with rate reductions, social security funding and medicare equality issues; all topics contributing to the heightened sense of urgency the American public has expressed. This month, loan modifications, or the lack there of, is a topic of the featured article. William Matz explores and enlightens the reader on the subject of foreclosures and why lenders have not been willing or able to help modify existing loans in lieu of foreclosure. If you are outraged by the government and financial sector handling of foreclosures, or the creation of them, then this article is for you. I do not want to overshadow the usual fantastic line-up of monthly columns and articles presented in this issue, I just want to bring present that the recession is rolling down hill faster everyday. Some say it is a “second dip.” I say the dip never ‘undipped’ it is just dipping at an increasing rate. This election can be pivotal to the long term financial condition of this country. Matz writes about congressional influence and how government agencies have not created a system that works…yet. Perhaps soon.

Stuart Mednick Official



Revisiting the FHA 203(K) Want to talk about a Niche Product!? by David zuckerman


n estimated one third of today’s existing home sales are some form of distressed sale. Whether a short sale or foreclosure, these homes often suffer from functional obsolescence, deferred maintenance, vandalism, and outright theft. The result is that the property fails to meet the perspective homebuyer’s expectations and the lenders underwriting guidelines for the minimum required condition of the subject property. This new reality presents a unique niche for today’s Loan Officers currently originating, or wanting to learn how to originate, FHA 203(k) rehabilitation loans. Unlike the traditional FHA 203(b) or 203(c) programs, the 203(k) program is used to rehabilitate and repair one to four unit single family properties. The Department of Housing and Urban Development’s (HUD) end goal with the 203(k) loan is to expand homeownership opportunities and to revitalize neighborhoods. In layman’s terms, the 203(k) program is a rehab loan. For Loan Officers currently originating traditional FHA loans incorporating the 203(k) into their product mix merits consideration, especially if the Loan Officer’s business model is purchase and Real Estate Agent centric. If you operate a Realtor referral base business model, reflect back on the transactions in which you receive the appraisal report and there are more pictures of deficiencies than pictures of the homes used as comparable sales. While the Realtors work through the bureaucracy of dealing with an asset manager to determine whether or not the bank will even pay for repairs, the appraisal report is being torn apart by the Underwriter who manifests each deficiency into another loan condition requiring inspection, certification, remediation, and testing. By offering the 203(k) program you avoid these types of issues. The traditional FHA loan requires that the 10

October 2010

subject property meet standards for health and safety prior to settlement. The 203(k) program allows for repairs, to be made after settlement, in order to bring the house up to HUD standards. Further, the homeowner’s personal wants and desires can be included into the rehab project. HUD is fairly liberal on the realm of remodeling a new homeowner is allowed, provided the repairs are not considered to be a “luxury.” For example, you cannot place a hot tub on the deck, but you can place a Jacuzzi bath in a bathroom. If the homebuyer wants to replace the current kitchen countertops with granite, even if the current countertops are perfectly functional, that should not be a problem with the Underwriter. At settlement a repair escrow account is created, as part of the new mortgage, to facilitate the payment to the contractors for their work to the subject property. The repair escrow account includes funds to make predetermined repairs and improvements to the property, a contingency reserve for cost overruns; inspection and title update fees and a few other miscellaneous items. A key benefit to the homebuyer is having just one mortgage loan and payment to cover both the purchase of the house and to fund the improvements from the repair escrow account. No longer do homebuyers have to utilize savings or highinterest credit cards to make home improvements. To implement these repairs and improvements HUD requires that work start within 30 days of settlement and finished no later than six months after settlement. To determine the base loan amount for a 203(k) loan, add the purchase price to the repair escrow amount and reduce by the minimum down payment of 3.5 percent or more. For a standard FHA loan the appraised value must equal or exceed the purchase price to avoid having the borrower make up the difference or having to have the

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for $19.99* (reg. $47.95) per year! The first 5,000 subscribers will receive the following:

• The Niche Report Magazine Receive each month thru 2010 & all of 2011! This is up to over12 issues!

• Act Now! Or before Jan. 1st 2011 After Jan 1st 2011 our discount code will expire. The subscription rate will then be $47.95 (12 issues/12 months)

• A Facebook Business Page by Blitzlocal ($199 value) Attract Realtor partners or potential local borrowers to fan your page. We’ll be providing Facebook ad dollars later in the year! First 5,000 subscribers only.

• The Super Star Audio Interviews ($47 per month value) ALL subscribers get access to interviews of high performing loan officers by Mortgage Marketing Animals marketing guru Carl White.

* Use discount code tnr1999 to receive discount.

October 2010  

The Niche Report - October 2010

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