Deanna Valeo

Some county tax letters sent with wrong information September 8, 2009

Deanna and I read this last week after we had recieved a call from our customer outlining this issue exactly.

We thought you may want to know about this issue and make sure all your cleints are aware if this happens to them they should contact their mortgage company via the 1-800# and ask where to send their property tax bill. They will want to make sure this is done to avoid any late payemtents.

Explanation of some county mortgage letters listing tax service company

In late August, the Mecklenburg County Tax Office mailed 170,471 property tax notifications to taxpayers who have their local real estate taxes paid by a mortgage company. The notice informs taxpayers how much their bills are, and which mortgage companies have requested the bills.

In some instances, the taxpayer’s tax service company – rather than the mortgage company – was listed on the form. Tax service companies are contract vendors of the mortgage companies, and they work with hundreds of tax offices to obtain bills for the mortgage companies so they can pay taxes from mortgage escrow accounts. The exact number of mortgage letters listing tax service companies rather than a mortgage company is unknown.

"It is important to note that the tax data, including the value, tax amount due, and other critical information on these notices correctly reflect the tax records," said Neal Dixon, Mecklenburg County Tax Office director. "There was no error in calculating the tax bill itself."

The tax service companies in question were listed on the mortgage because they sent their electronic files requests in an incorrect format, Dixon said.

Many mortgage company customers don’t know the name of their tax service, and some taxpayers are concerned that their bills will not be paid from their escrow accounts. Although the tax service company was listed instead of the mortgage company, the bills will be supplied to the requesting mortgage company for payment.

Taxpayers are encouraged to contact their mortgage companies to ensure they have the tax information needed to pay their tax bills. In the meantime, the county is working to update the tax records to reflect the mortgage companies rather than the tax service companies that are employed by the mortgage companies.

(Source: South Charlotte Weekly)

Program summaries for First-Time Homebuyers September 11, 2009


FHA financing which allows for easier qualification, lower down payment and reduced mortgage insurance.

Available for 1 to 4 unit properties, as well as condominiums and manufactured homes

Max loan limit for Charlotte MSA is $303,750 for a single family home
Fixed rates and ARMs available

Down payments can be as low as 3.5%
Less stringent qualifying requirements

Gifts for down payments and closing costs are allowed

Will allow a home purchase two years after a bankruptcy and three years after a foreclosure




USDA loans to help low-income individuals or households purchase homes in rural areas.

100% Financing with no Mortgage Insurance

No Loan Limit

Property and borrower's income must meet program guidelines

May be used for new or existing properties

Areas in and around the Charlotte MSA are eligible



NC Housing's FirstHome Mortgage

North Carolina Housing Finance Agency offers the FirstHome Mortgage program to help qualified First-Time Homebuyers obtain an interest rate that are below or competitive with market rates.?

Must meet income requirements, sales price, and first-time home buyer guidelines

FirstHome Mortgage can be used with 30-year, fixed-rate FHA, VA, USDA, and conventional mortgage programs

A 1% decrease in the interest rate could increase the purchasing power by approximately $15,000



NC Housing's Down Payment Assistance

Cunningham & Company through NCHFA's DPA program offers up to $8,000 in down payment assistance to qualified homebuyers in the form of interest-free, deferred second mortgages.

Must meet income requirements, sales price, and first-time home buyer guidelines

Borrower pays $1,000 from his/her own funds, and the loan pays up to $8000 towards the loan or closing costs

Homes built before January 1, 1978 and homes that are tenant-occupied are not eligible

For homebuyers who have higher incomes than the maximum limits required under the $8,000 DPA program, there is a $4,000 DPA program


NC Housing's Assistance for Foreclosed Properties

Cunningham & Company along with NCHFA offers up to $14,900 in down payment/closing cost assistance for borrowers purchasing an eligible foreclosed property.

Must meet income requirements, sales price, and first-time home buyer guidelines

The 5-year, 0% interest deferred loans may be forgiven for 20% per year for each full year the borrower owns and lives in the property. At the end of 60 months, the borrower must be current on the mortgage to qualify for forgiveness of the loan

To be used in conjunction with NCHFA's FirstHome Mortgage program

Borrower must complete 8 hours of classroom or in-person home buyer counseling

Homes must be foreclosed and for sale by a bank, bank holding company, government agency, or authorized REO designated entity

Eligible properties include single family residences, condominiums, and townhomes

Properties must not have structural damage or deferred maintenance issues, per the home inspection, and all repairs must be made prior to loan closing

Sales price cannot exceed $210,000 and all properties must be purchase at least 1% below the appraised value (appraisal dated within 60 days of sales contract)

Property must be located in one of the 23 counties included in this program



NC Housing's Mortgage Credit Certificate

NCHFA offers the Mortgage Credit Certificate program to help qualified homebuyers obtain a federal tax credit.

Must meet income requirements, sales price, and first-time home buyer guidelines

MCC can be used with almost any type of mortgage, including adjustable rate mortgages. However, it cannot be used with the Agency's FirstHome Mortgage.

Eligible buyers can claim 20% of their mortgage interest (up to $2000)


House Charlotte

Participation in the House Charlotte program provides assistance of up to $10,000 in challenged neighborhoods and up to $7,500 in transitioning and selected stable neighborhoods

Borrower must complete 6-8 hours of pre-purchase homebuyer education program

Families must have 85% or less of the local median income

Must not exceed maximum sales price of $147,000

Must be a family's primary residence, located in any of 87 designated neighborhoods

Employed police officers who purchase homes in designated neighborhoods are eligible for assistance up to $15,000

Funds are provided through at 10 year deferred and forgivable loan

Funds can be used for one or any combination of the following: down payment assistance, closing costs, credit repair or counseling, interest rate buy down, up to $3,000 of the funds can be used to pay medical bills on credit report

Only 53 Business Days Left to get closed by November 30th September 14, 2009

Deanna and I Read an article in the Real Estate Section of the Charlotte Observer in the article it states that there is no indication that the $8000 tax credit will be extended.  Furthermore it stated that if a new home buyer is getting ready to buy they should have their prequalification done by the end of September. 

The Thanksgiving Holiday is right before the end of the Month in November this year and this will impede the flow of mortgages getting processed and out the door to meet the demand for a November 30th closing. 

There are only 53 Business Days Left to get closed by November 30th.

Strong auction results, particularly for the 30-yr Treasuries, helped mortgage rates move lower last week. September 21, 2009

Strong auction results, particularly for the 30-yr Treasuries, helped mortgage rates move lower last week.

In recent months, mortgage rates have been heavily influenced by concerns about the enormous amount of debt the government needs to issue to fund the budget deficit. While recent Treasury auctions have seen stronger than average demand, investors remained cautious ahead of this week's large supply of government debt. The risk is that investors will require higher yields to continue purchasing an expanding supply of bonds. Longer-term Treasuries are comparable investments to mortgage-backed securities (MBS), which largely determine mortgage rates, so the results from 10-yr and 30-yr auctions are particularly important. Strong demand from both domestic and foreign investors at this week's Treasury auctions eased the concerns.

For now all looks good for rates.

Please remember that the $8000 tax credit is counting down we have less than 50 business days before the deadline (this includes days gone for the holidays between now and November 30th). 

You must close and record by November 30th to get the credit.  As of now there are no indications that the program will be extended.

FYI - the credit does not apply for home bought from a realtive. 


Know Your Credit - How Does It Work September 27, 2009

Your credit score will determine what your mortgage rate will be, can determine what your home owner's insurance rate will be and can affect the purchase of your next car. 

A lower credit score and higher car payment may be the difference between qualifying for your new home and not quite being there. 

How your score is calculated may seem mysterious, but it's essential to know your number and how to make it work for you.

Q: What Is a Credit Score?

A:You Credit score reflects your credit worthiness and therefore is a good indicator on how likely you are to pay back your loan.  For lending we use Fair Isaac Corporation (better known as FICO) this has three major reporters Equifax, Experian and Trans Union.

The FICO scale ranges from a low 300 to a high 850. The higher your score, the more likely you will qualify for the lowest interest rates.  One important thing we have notices is that scores can vary from report to report.  Some past transgressions may only report on one score provider.  When evaluating mortgages we look at the middle score to determine our rate and discount points needed.

Q: How Is Your Score Calculated?

A:Your score reflects how well you've managed your debt. Late payments remain on your record for seven years. (For some forms of bankruptcy, it's ten years.)   Some Judgments can last for up to 14 years and Federal Tax Liens never go away.  It's best to stay on top of your score and the factors that make up your score.

What goes into your FICO score?

The facts: The bureaus factor in when you last paid an account late, how often you pay late, and by how many days.  It is one of the major components in determining your new mortgage rate.

So what factors go into determining your score?

Total Debt (30 percent)

The facts: In general, higher debt loads work against you.

The strategy: Lenders look at your "usage ratio" -- how much debt you owe on your credit cards compared with the total amount you could borrow. To keep your ratio low, don't max out your cards, and don't cancel cards you don't use.

Basically take all the used credit lines and divide by the available credit lines - ideally this will be below 50%.  It's important to know that credit reports reflect a snap shot in time.  So your score can vary depending on the balances at the time of the credit pull and your credit line reporting to the agencies.  This is especially true for professionals that use personal cards to travel on business. 

The lower the ratio of used credit to available credit is the better your score.  For those who travel often or charge expense for their company on a card it is a good idea to have other credit cards open to keep the ratio in check.

Duration (15 percent)

The facts: The longer you've had an account, the better. A late payment on a two-year-old account will hurt your score more than if you'd had the card for two decades.

The strategy: Many of us have had credit card companies closing our accounts or changing the terms of our accounts as we move closer to the beginning of next year and the changes that will take place in the credit card industry.  It is important to monitor the status of your cards and the credit lines of cards that you may have had for year.  It is best that you use cards to keep them active.  If you have a card canceled you may need to apply for a new card to keep your debt ratio in balance (see "Total Debt" above).

New credit (10 percent)

The facts:Part of your FICO score comes from credit inquires.

The strategy:When you apply for credit this is called an inquiry.  The more inquires you have on your credit report during the year the higher the risk you are seen to be.  The thought is "change is taking place" and with change comes risk.

The good news is that the three reporting agencies do understand the importance of shopping for major purchases such as cars and home loans.  Inquires made at different companies during a 45-day period all count as one inquiry for major purchase items.  This is called "de-duping".

While the FICO companies do "de-dupe" major purchases, credit card, department store cards and finance company inquires all count as one inquiry for each card or credit line applied for - if you are shopping for a new home be careful when you think about saving that extra 10% by opening that new store card.  It may make a difference.

Types of Credit (10 percent)

The facts: FICO looks at the number and "quality" of each type of account.

The strategy:  Credit cards issues from banks are seen as more difficult to get than department store cards or finance company lines of credit.  Loans from finance companies may actually hurt your score as they are seen as a high cost type of credit.  This is important to know especially since most zero down and "no payments for 12-months" deals are facilitated by finance companies.  You need to be careful about how your finance your new acquisitions.

Speaking of aquisitions - never buy furnature, new applicances or a new car when you are beginning to shop for a new home.  Simply delay these purchases until you have closed on your new home.  If you are a first time home buyer the fact you have a mortage loan may actually boost your credit score.  This may lead to a lower cost and price for all your new purchases.

Get the Real Free Credit Report

Check all three of your credit reports at, the only site authorized by federal law.

Check for Mistakes

We have helped many of our client's improve their score by using satisfaction information they have provided to get their score up and allowed them to qualify for a loan.  A "rapid re-score." This will ensure that the lender sees you at your best, but it costs about $30 to $90 per account.

Better Score, Cheaper House (From Reader's Digest Story this Month)

If a family put a 3.5% down payment on a $172,900 four-bedroom house in Greenville, South Carolina, they would take out a loan for $166,850. Here's what their true bottom line would look like.

Score          Rate            Payment          Cost    
760+          4.981%       $893.75         $326,900
700-759     5.203          $916.50         $335,090
680-699     5.380          $934.83         $341,689
660-679     5.594          $957.22         $349,749
640-659     6.024          $1,002.93      $366,205
620-639     6.570          $1,062.30      $387,578

Less than 620: It will be tough to get a loan at all.

Better Score, Cheaper Car
A buyer puts $3,000 down on a $25,605 2009 Honda Accord EX-L sedan and finances the rest over 60 months. Here's his true bottom line.

Score           Rate             Payment   Cost   
720+          6.42%         $441.45     $29,487
690–719     7.88            $457.05     $30,423
660–689     9.86            $478.73     $31,724
620–659     12.79          $511.91     $33,715
590–619     17.64          $569.60     $37,176
500–589     18.43          $579.32     $37,759

Less than 500: It will be tough to get a loan at all.

Condo Update September 29, 2009

FHA announced they are extending the deadline for spot approvals to October 31, 2009 - all case numbers must be assigned by Oct 31, 2009 to qualify.

Just a quick reminders of FHA Spot approval needs:

  • 3.5% down payment
  • 51% Owner Occupied
  • 90% of all units sold and closed
  • No single entity may own 10% of all the units
  • No more than 25% of the total square footage can be commercial
  • Adequate insurance is required (see below)
  • No more than 10% of the units (if 30 or less units then = 20%) may have FHA financing - please remember that most closing prior to 2008 would not be FHA typically
  • There are no special assessments pending
  • No law suites against the HOA
  • HOA must have adequate reserves for the condo and the project must have no deferred maintenance


For Non-FHA buyers Fannie Mae has a spot approval process for qualified borrowers.  They must have above a 680 score typically and this is for established projects only.

 *for conventional conforming loans*
Available for Established Projects Only
AUS DU Approve/Eligible Only
Established Project Definition
·        All units and common areas in the project are 100% complete; and
·        The project is not subject to additional phasing or additions; and
·        At least 90% of the total units in the project have been conveyed (sold and closed) to unit purchasers other than the developer; and
·        The unit owners control the homeowners association.
If your project fits the definition of an established project-proceed to the next step.

·        DU findings must allow for Limited Review Process
·        Project must meet the definition of an established project
·        Primary residence maximum LTV is 90%
·        Second home maximum LTV is 75%
·        No investment properties
·        Project is not part of a manufactured home project
·        Project is not an ineligible project per FNMA
·        Project must meet the insurance requirements for Hazard, Liability, Flood and Fidelity Bond. (see below)
If all of the above requirements are met, the condominium project will be reflected as Limited Review Type Q-Established Project
**Important** Fannie Mae limited review for Established Projects cannot be utilized when the Lender has targeted the project with specific marketing efforts or is named as the preferred lender by either the developer or the project’s homeowner’s association.
Additional requirements for a project consisting of 2-4 Units
·        No single entity may own more than one unit within the project;
·        All units, common elements, and facilities within the project must be 100% complete;
·        All but one unit in the project must have been conveyed to owner-occupant principal residence or second home purchasers; and
·        The units in the project must be owned in fee simple, and the unit owners must be the sole owners of, and have rights to the use of, the project’s facilities, common elements, and limited common elements.
Insurance Requirements:
(1) Hazard: blanket all risk policy with 100% replacement, deductible not to exceed 5% of policy face amount

(2) Liability: coverage must be $1 Million per occurrence

(3) Flood Insurance: lesser of 100% of insurable value or maximum coverage allowed per NFIP ;coverage of each unit should be the lesser of $250,000 or the amount of its replacement cost (I.e., the replacement cost of all units combined or the number of units x $250,000);deductible not to exceed $25,000 per building located in the flood zone

(4) Fidelity Bond: required for projects with over 20 units, coverage must be In amount sufficient to cover three months of HOA dues or meets requirements of state law.

Condominium project insurance master or blanket policies containing either of the following are prohibited: 
·         A blanket policy that covers multiple unaffiliated condominium associations or projects, or
·         A self Insurance arrangement whereby the owners' association is self insured or has banded together with other unaffiliated associations to self Insure all of the general / and limited common elements of the various associations.