Today's Mortgage Rates

When choosing a loan officer to work with, many times it can be confusing. There are the larger lenders who all operate slightly differently, the mortgage banks and the mortgage brokers. Depending on where the loan officer works, they will have access to different tools that will help make the loan process smoother (or more difficult).

In a perfect world, you would probably want your loan officer to have as much local decision making on your file as possible – because in my experience anytime decisions are made on your file that aren’t right next to the loan officer (as in right down the hallway), it adds time and sometimes complexity to the loan process.

Here are five simple questions that you can ask your loan officer to see if they have “local decision making” on your file:

1. Do you have in-house processing?
2. Do you have in-house underwriting?
3. Do you have in-house closing doc drawers?
4. Do you have in-house funding?
5. If there is a problem with my file, who makes the final decision as to whether or not I get a loan?

The answers to these questions will tell you quite a bit about how much influence your loan officer has over your file. If the question to many of the questions is “yes, they are right next to me in another office” then chances are that that particular loan officer has quite a bit of influence on your file and can get your loan done quickly.

If the answers to the questions are “no, those are all done in our operations center” then chances are that your loan officer ends up taking a number and waiting in line regarding your file. It will probably take longer to get done and if there are any problems on your file that need special attention, it will be more difficult to get done.

So remember – when it comes to getting your loan done…

Local decision making is better.

It has been my experience in life that before something goes mainstream and everyone knows about it, people usually work on it behind the scenes for a long time.

I suspect the HEFI program (explained to me by Equidebt Solutions recently) is no different — it is complex enough that I bet someone has been working on this solution for a long time — and I just heard about it.

What’s A HEFI?

HEFI stands for Home Equity Fractional Interest and it may end up being just the solution to lead us all out of the housing crisis. Or, at least – it is possible that it could help make a major dent in the problem.

The HEFI program is designed to help three different groups of homeowners:

1. Homeowners who owe more on their mortgage than their home is now worth. For people who owe on their mortgage than their property is now worth, a HEFI Agreement could be utilized to reduce the principal balance of the loan in exchange for a passive equity interest in the property to the Lender / Servicer who agrees to reduce the size of the loan to make it affordable for the homeowner.

2. Homeowners who currently have equity in their home and want to convert some of the equity into cash. For homeowners with equity in their home and who want to convert some of that equity into cash, a HEFI Agreement could be used rather than a second mortgage or a HELOC. A HEFI is not a debt instrument – it is an equity instrument.

3. People who are not yet homeowners, but want to be homeowners. For people who are not yet homeowners, a HEFI Agreement could be provided by a builder, developer or municipality where the HEFI Agreement would facilitate down payment support by a third party to reduce the overall cost of a new home purchase.

Just my opinion, but if the HEFI program can really help all three groups of people, it seems like a much better solution than some of those I have seen coming out of Washington lately.

I wonder if anyone has told them about it yet.

More Information:

It wasn’t all that long ago that a busboy could walk into a mortgage lender, say he made $100,000 per year and get a home loan based on that number.

The loan programs that were available had all different kinds of names, but they all pretty much did the same thing — allow people to get qualified for a mortgage without proof that they could qualify.

Fast forward to today’s mortgage market. Guidelines are tighter than they have been in years, loans are tougher to get and people are generally less apt to go out on a limb when financing their home.

And stated income loans are virtually non existent.

Who is hurt by the fact that stated income loan options do not exist?

Generally speaking, I would say that the small business person is hurt by not having stated income loans available. And what is even worse – now that virtually every lender requires that you allow them to verify your tax returns with the IRS, I suspect that there isn’t a stated income loan program anywhere on the immediate time horizon.

So if you are a small business owner and you have an accountant who helps make sure that you are minimizing your tax liability to the IRS, if you didn’t already know that this was impacting your ability to get a home loan — now you know.

One of the unexpected victims of the elimination of the stated income loan program appears who they were designed for in the first place:

The small business owner.