There are two new developments that have come to light with FHA loans that you need to know about.
1) As of August 19th, FHA has lowered their loan limits nationwide. In the Denver Metro Area that means that loan limits are being reduced from $406,250 to $368,000. That means that you FHA buyers now have $38,250 less in buying power and sellers in that price range now have fewer buyers that their homes are available too.

2) I doubt if there are many buyers that want to buy a home that has a history of Meth use. But up to now an FHA loan could be used to by that home if it had been remediate. Universal Lending has learned that any home including HUD Repo’s which have any evidence of the use of meth or creation of meth or even if a police report has been issued stating meth was in use in a home is ineligible for FHA insurance.  Even if remediation has been done, they will not accept the property. 

Let me know if you have any questions or if I can help in any way.

Mark Afman

Senior Residential Mortgage Specialist

Universal Lending Corporation

6775 E Evans Ave, Denver, CO. 80224

NMLS # 299217ColoradoLic #100017652

 Direct: 303-759-7392, Cell: 303-905-2488, Fax: 866-896-9240

I’m honored to be selected as a Five Star Mortgage Professional by 5280 magazine.

 Apply online at www.mafman.ulchomeloans.com

 Please visit me at www.facebook.com/AfmanHomeLoans, or www.twitter.com/afmanhomeloans

 Check the license status of your mortgage loan originator at http://www.dora.state.co.us/real?estate/index.htm

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Everyone has the right to dispute an account on their credit report if they think that the account has been reported incorrectly or has an error on it. Part of the process is that when you dispute an account, the bureaus can’t use that derogatory information to lower your credit score until the issue is resolved. Well we humans have a natural tendency to take advantage of loopholes that are intended to help, so people started abusing the system by disputing any and all derogatory accounts regardless of the true or false nature of the reporting. The problem is that the “dispute” tag does not always get removed once the dispute has been settled. It is stuck to many accounts even ones that have been paid off and closed for years. Common sense says that an account that is paid and closed is not being disputed anymore, doesn’t it?

Now I don’t know about other industries, but the mortgage business decided that the abuse was too much of a risk so most Fannie Mae and Freddie Mac, conventional lenders have implemented a flat policy that they will not lend to a borrower that has ANY disputed accounts on their credit report. If you have a “dispute” tag on any of your accounts and you want to get a conventional loan, you have to get a letter from the original creditor that states that they will report to the credit bureaus that the account is no longer disputed. The letter itself is not good enough. So you can go about this one of two ways, you can wait the 30 to 60 days it takes for the creditor to report to the bureaus or you pay for a service that can get it reported in 3 to 4 days. Some companies call this Rescore Express and others call it Rapid Rescore. You send in the letter to a credit reporting company and they go to the bureuas and get the “dispute” tag taken off.

So you want to use a conventional loan (FHA loans do not have this “dispute” problem) and you find out you have a dispute on an account, so you call the creditor to get the letter. If the account is old and closed, the creditor does not have a huge motivation to send you that letter but let’s assume you get it.. You send it in for the quick rescore service and they send it in to the bureaus. Now the problem comes up that certain bureaus have to verify the letter with a phone call but your creditor has a policy that they do not give out that information over the phone. Now you have a problem. The bureau has to have a verification but your creditor won’t play well with others. I am currently working with a borrower that is going through this exact problem. They disputed an account 8 years ago and eventually paid it off but the dispute was never removed. They are a good credit risk. They have a good income and low debt  but they are stuck in this bureaucratic catch22.

So if you want a conventional loan and you have any disputes on your credit report please start the process of getting those removed or you will have to go with an FHA loan.

Let me know if you have any questions or if I can help.

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Where you come from makes the difference as to what a low ball offer is. I am currently working with a buyer that is relocating from Florida. He is very business savvy and we had a couple of good conversations about the difference between the Real Estate markets here versus Florida.  He has been trying to be very aggressive with his offers and have been getting a rather cold shoulder from the sellers. That could just be the seller that he was dealing with and his offers were not what I would call “low ball” but they were aggressive and he was asking for closing cost concessions. He talked to his Realtor and me about it and  he was just surprised that he could not offer what he thought was a fair price and also ask for closing costs. You might be able do that in parts of Florida but not here. I’m really not trying to pick on Florida but there have been some value issues in the past but I have heard that certain parts of Florida are recovering a little.

So what is a “low ball” offer? 10% below asking price, 20% below?. I suppose it has something to do with the property and the location but I think most sellers in our area would consider an offer that is 10% lower then the listed price (especially if the buyer asks for closing costs on top of that) would be a low ball offer. The point I am trying to make is that the Denver Market is doing much better then some. For all the talk of how slow it is, I would hate to be working in parts of Florida or some other spots in the nation where 10% or 20% low offers are accepted. If you are looking to sell your home in the Denver / Front range area, it is a great time to do that. Prices are not being set by the buyers as much as in the recent past. If you are looking to buy a home now is a great time as well simply because rates are still in the low to mid 4% range. Down Payment help is still out there in the form of CHFA loans.

Let me know if I can answer any questions.

And here is todays posting of Then and Now:

This is the Asbury Methodist Episcopal Church at 32nd & Vallejo in 1882 in a photo taken by William Henry Jackson (courtesy of the Denver Public Library) There was not much around the Highland neighborhood at that time. In 2011, The church has not changed much and Highland is one of the most sought after neighborhood’s in the metro area. You can click on the Thumbnail photos here for a larger view.

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I just received this information and wanted to pass it on.

Here is some information on the Emergency Homeowner Loan Program (EHLP) that you may want to forward to your Realtor clients. The program is designed to assist homeowners who are currently 90 days or more delinquent on their first mortgage.  The program will offer a declining balance, deferred payment “bridge loan” (non-recourse, subordinate loan with zero interest) for up to $50,000 to assist eligible homeowners who have become unemployed or underemployed due to the economic downturn or a medical condition. 

Information about the program including eligibility requirements and the application can be found at www.findehlp.org  

The funds will be distributed through a state-wide lottery which will be held in early August.  If a homeowner is interested in getting into the lottery they must complete the application and send to Douglas County Housing by 5:00 p.m. on July 22, 2011.

Completed applications may be sent to Douglas County Housing Partnership as follows:

• Email to: ahugh@douglas.co.us
• US Postal: Douglas County Housing Partnership, c/o Ann Hugh, 9350 Heritage Hills Circle, Lone Tree, CO 80124
• Fax: 303-814-2966

So if you know of anyone that might benefit from this program, send them this information.

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My industry is changing, drastically. I have to spend more time shuffling papers, making sure that all the new documents are filled in exactly right for fear of losing my license. I have to spend more time explaining issues that used to not matter to underwriters, but now they might mean the difference between a young couple getting a new house or not. Realtors, buyers, and sellers are all getting frustrated with me because I am asking for things that I never had to ask for a couple years ago. Then just when you thought it was safe to go back in the water…I ask for another document of some kind. Even then, more and more deals are getting denied. Not a rosy picture

So I want to ask you a question. Are you the kind of person that likes things to stay the same? You have a routine and you don’t like it when it changes. You have  a certain way of doing your job. You come in at the same time, go to the same desk, and go home at the same time…every day. OR are you the kind of person that gets bored with the same routine? You need to be challenged. You like being away from the cubicle and y0u want to get out and look for new worlds to conquer.

I do believe that it takes both kinds to get things done. In my business, the stay-the-same folks are the ones that work behind the scenes to get the details worked out and are the steady force that you can rely on. The I-like-change people are the ones that are thinking of new ways to overcome problems and are looking for ways to grow but the kind of change that is happening now in my business is not the kind of change we like to see. So will buying a house get worse or will the pendulum start to swing back the other way to a little more sanity when you (the consumers) begin to realilze that you are paying more for the same product then you used to because we have to hire more lawyers and compliance officers and we pass that cost on to you?

The bottom line is that what I do is still as much fun as it used to be. How can I say that? Because it still is a joy to watch the face of a first time buyer when they get the keys after a closing. They may have lost their faith in all that is good in the world to get there, but they are still happy when they own a home. All I am asking is that you be understanding and patient with your lender. We are not trying to ruin your life. We are just trying to avoid being ruined by the government regulators.

Then And Now

This is the Leach house in Old Town Littleton. Besides the trees, not much has changed on this house. The old photo is from 1904 and the new one is from just a few weeks ago. This set of photos is dedicated to people like the late Bruce Wolf who loved the town of Littleton and to Stew Meagher who continues that tradition. Please click on these pictures to see a larger version.

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I recently had the privilege of attending the funeral service of the father of a good friend of mine. I never met his dad but I was just trying to support my friend. Why do I say “the privilege of attending”? That almost sounds as if it was a good thing that his father died so I could go. Obviously that is not the case. I say it because my friends father was a Veteran of the Navy and served for 4 years during the Second World War. He was buried at Fort Logan National Cemetery with full military honors.  I had never witnessed such a moving ceremony. It was a peaceful day in a part of the cemetery that is away from the roads. We were surrounded by rows and rows of white marble headstones, all perfectly placed with military precision to make a line, all equally spaced from the next. The headstones for higher ranking officers were not larger then the others. The lowliest private was laid alongside a commander.

It was good for me to be there because the Memorial day weekend is usually something that I consider just another day off. The thousands of marble headstones reminded me ?, on this Mewmorial Day weekend, that many have served this country in the Armed Forces. The Veterans of Worlda War Two are leaving us at the rate of thousands per day. Many of these headstones showed that there were some that did not have the chance to get old and die like my friends father did. They died while serving. I doubt if any of them wanted to die for their country but they were willing to, and that makes all the difference.

Should we be beating our swords into plowshares? Yea probably, If there was no other human being that wanted to gather an army and take away the rights and priveleges of others. If there were not people willing to kill other people to get what they want. If there was not humans that were willing to kill as many people as they can because of religious fanatacism, then we would not need our swords. But as long as there are those people in the world, I will be thankful that there are those that are willing to die for their country and the freedom of others.

Go to Fort Logan Cemetery on Sheridan Blvd just south of Hampden Ave in Denver somtime and be reminded that there are those who feel that what we have here is good enough to stand up for and even die for.

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In a post dated April 28, John Rebchook, of www.InsideRealEstateNews.com, stated that rental rates are up. I think that renters are getting sick of it and they want to buy a home. I have had 3 people call in the last week to get pre-qualified for a home loan because their rent was going up and they could buy a better home with a lower payment then the rent they were paying. “But Mark, people can’t qualify for a loan anymore, the underwriting is too strict.” There is some (but not that much) truth to that idea. Lenders are running scared because of the heavy government regulations and they don’t want to anything come back on them so they are they are putting their own restrictions on the underwriting (called overlays), over and above the guidelines of the program.

So loans are harder to get done and I have to ask my clients for documents they probably didn’t even know that had but loans are getting done. Even people with lower credit scores can get an FHA loan from sources like CHFA. Rates are still in the high 4% to low 5% range and many times a house payment is equal or lower then rent payments. So if a friend complains about their rent going up, have them get pre-qualifed with a good mortgage banker (by the way, I happen to be a mortgage banker, just in case…) But now is the time to buy a house.

Let me know if you have any comments or questions.

Then and Now: These two photos show the old Morrison School Building. It was built in 1875. Morrison was a mining town that started in the early 1870′s. It mostly mined gypsum and stone building blocks. There was a spur of the Denver, South Park, & Pacific railroad that ran up bear creek to haul the quarried stones to Denver. A small community soon built up around there and they needed a school. Now the school building has been remade into a personal residence. You can click on the pictures to see a larger version.

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A few years ago you could get a mortgage pretty easy, even if you were self employed. It was called a “stated income”

loan. All you had to do was prove that you worked, had good credit, and you just told the lender how much you made. No tax returns, no 1099′s, just tell us what you make and we will believe you. Those days are long gone. If you are self employed and you want to get a loan to buy a home, there are some things you need to know. First you have to prove that you have been self employed for at least two years in the same line of work. You have to show, through tax returns, that you have consistently increased your income or at least held is steady. Then, you have to resist the temptation to have “a good accountant” who can use the current laws to help you write off everything and show that you make a very small income, or worse, a loss, just so that you don’t pay much in taxes. When you show a small income to the IRS, you show a small income to your lender and you may have a problem with your debt to income ratio.

Now as if that is not bad enough, there is a new wrinkle for self employed borrowers. Now the lender is required to verify that you not only filed your most recent taxes but that they have already been processed and through the IRS system. The form we use to do this is called a 4506-T. Many times self employed borrowers will be granted an extension so that they don’t have to file their taxes until later. The problem with that is that we have to submit the 4506-T to find out if you filed your taxes and if you get an extension then we can’t do that and we can’t use the income from that year. It not good enough anymore to just get a copy of your taxes stamped by the IRS, They have to be filed and fully processed in order for us to use that income. So if you are self employed and thinking about applying for a mortgage, get your 2010 taxes filed now.

Let me know if you have any questions or comments. Mark Afman

Then and Now. Everything around Daniles Park has changed. In 1925, the city was many miles to the north and all the roads were dirt, Now, suburbia is within a few hundred feet of it, they have completely changed the roads to get there and there is a private golf course down below the ridge. But at least in these pictures you can see that some of the view has not changed that much. You can click on the images to see a larger version.

Daniels Park looking west 1925

Daniles Park looking west 2011

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This post has nothing to do with Real Estate or Mortgages. This is a story that seems to have been forgotten over the years even though there is huge memorial to the man at the center of it. The problem is that this memorial is on a little used dirt road in Jefferson County. County Road 96 is a road that runs from Buffalo Creek east to the convergence of the north and south forks of the Platte river. It is a road that really is used for recreation only as it follow the north fork. It no longer connects any towns or cities and I dare say that most folks in the Denver area don’t even know it is there. But that hides the fact that at one time, this was one of the most important railway roads from Denver to the gold and silver towns of the mountains. It was also a way for tourists to get up to see the sights. The South Platte Hotel was a stop for overnighters at the fork of the two rivers along with a few shops and a train station.

South Platte Hotel 2011

South Platte Hotel 1899-1937

Dome Rock is a little collection of 3 or 4 beat up cabins now but there was a time that people would travel many miles to ride the railroad up to see that huge, round chunk of granite. It had it’s own train station and a big picnic area. Many tourists would go even further up to see some of the other beautiful areas of Colorado. So where does the story of courage and dedication fit in? After one of those tourist trips into the mountains in 1898, a steam engine was pulling around 400 passengers down from Pine Grove, past Buffalo Creek and following that same road heading east toward Dome Rock and on into Denver.

This train had an engineer by the name of William “Billy” Westall and as he came around one of the many curves he could see that there was a bunch of sand and rocks across the tracks. He did all he could to slow the train down but the engine did crash and roll over and he would end up underneath part of the engine. Because he stuck with the train all the way to the crash, he was credited with saving the lives of the 400+ passengers. He later died of his wounds back in Buffalo Creek but he is said to have told his friend as he died “Tell my wife I died thinking of her”. A year later, a rather large crowd of friends, fellow train company employees, and crash survivors went up to the place of the crash which was just west of Dome Rock. A huge, engraved granite memorial was dedicated and placed on a pedestal so that his bravery would not be forgotten.

Crash site and memorial 2011

Only known photo of the Billy Westall crash site 1898

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You need something and someone else has that something and that someone wants something in return (that you have) for providing what you need. So you enter into a transaction to  exchange the one thing for the other. It can get more complicated then that but that is the core of how an economy works. To me the question is this. Is the transaction  a battle where there is a winner and a loser or do both parties walk away happy because they worked together to come to satisfactory conclusion? An old real estate agent once told me that anytime two parties are trying to get a transaction done “one is selling and the other is being sold…just make sure that you are doing the selling.” I could not disagree more. The sales transaction does not have to be an adversarial one but rather a cooperative effort to get both parties what they need or want. I do understand that the buyer has to “beware” and many times the seller is doing the “selling” and the buyer is getting a bad deal. But I do firmly believe that if a buyer does some research and a little due diligence, they can find someone that will work with them to get them what they want or need and still come away with a fair profit for themselves. Ask for referrals from someone you trust. Ask for references from the party you are thinking of working with. Do some internet research on that person or company that you are thinking of using for a product or service. Even after doing all that, at some point you will have to have some trust in that person or company.

When I meet with a potential client, they usually sit on one side of the deak and I sit on the other side. It would be nice if the image of that relationship were one where we are all on the same side of the desk working together to get to a closing. It would be a little crowded with my desk but still image is what I’m shooting for here.  I don’t have any problem with a buyer asking questions about my rates, costs, or how I do things. In fact, I encourage that. I want the borrower to be comfortable with me and the loan that I am providing. But when it gets to the point where I am thought of as the enemy or, worse, my integrity is being questioned, then either I have not done my job or that borrower needs to find another lender. 

Your whole life is filled with transactions, don’t make all of them a battle. There is no way you can do that and live a happy life.

I welcome your comments and, as always, feel free to contact me if I can answer any questions or help you with a home loan.

Then and Now: The Denver Natural History Museum or The Denver Museum of Nature and Science…depending on how long you have lived here.

The Denver Natural History Museum was built in 1900 at the east end of City Park with an incredible view of the skyline. At the time it was near the very eastern boundary of the city. Now, the Museum of Nature and Science is housed in a building that wraps around the original. This “then” photo was taken in 1917 showing the original building and the granite sculptured entrance that is still there today but the museum takes up a lot more space. I can remember going there as a little boy marveling at the skeletons of dinosaurs and whales and seeing the dioramas of life as it once was.

Click on the photo for a larger version.

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