The bank filed a foreclosure suit, won, took title, and sold the property to an independent third party. Now imagine that you are the third party purchaser – you bought a home from a bank that obtained title via foreclosure. You move into and live in the house you purchased from the bank at a foreclosure auction.  Then suddenly, the original homeowner, who owned the property before the bank foreclosed, has convinced a court that she still owns the property.  Incredibly, in light of the bank’s failure to correctly prosecute the foreclosure lawsuit, the homeowner is right –  she still owns the house.

The problem is created through a break in the chain of mortgage ownership. Until the 1980’s, most mortgages were loans between the homeowner and a bank, who lent the money directly.  More recently, the mortgage financing system transformed into an international system of securitization, with mortgage lenders packaging their loans into securities, bought and sold by investors like stocks. These transactions even split individual mortgages into sections, where each loan could have parts owned by different investment banks.

The transfer of ownership in these mortgage backed securities (MBS) was done with contracts on the balance sheets of Wall Street investment banks, such as Morgan Stanley and Goldman Sachs. The company who originally appeared to make the loan was normally a retail lending company such as Countrywide or Lending Tree, who typically acted as a sales company, and sometimes remained contracted to service the loan.

In the event that the loan goes into foreclosure at a later date, the then-current owner of the loan files the foreclosure and sells the property to a new owner, often at auction. The land records would show a deed of transfer from the investment bank to the new owner. This creates a break in the chain of ownership of the mortgage rights. In many cases, the transfer of ownership of the mortgage loan has gone from the original lender, through several owners, and then to the foreclosing bank, none of which is recorded on the property title history. Technically, the foreclosing bank has no recorded title rights to foreclose in the first place.

MERS announced it changed its procedures to require that an assignment of mortgage be filed prior to the start of any foreclosure suit. Typically, a mortgage is recorded in the public records with MERS as nominee for ABC Corporation. Invariably, when the foreclosure lawsuit is filed, it is not filed in the name of ABC Corporation it is filed in the name of Bank of America, JP Morgan Chase or some securitized trust – an entity with no relationship to ABC Corporation.

In most foreclosure cases, banks’ lawyers argue the plaintiff has standing if it is the “holder” of the Note (i.e. if it possesses the original note with a special endorsement in blank.) Many judges accept this position, no questions asked and thus, an assignment of mortgage is often viewed as irrelevant and superfluous.

Even if Bank of America, JP Morgan Chase, or the securitized trust has standing without an Assignment of Mortgage in the public record, ABC Corporation is still the mortgage holder of record. This means that even if Bank of America, JP Morgan, or whoever prevails in the foreclosure is the high bidder at the auction, acquires title, and sells the property to a third party, ABC Corporation is still the mortgage holder of record. What does that mean? Essentially, the entire foreclosure case was like a wild deed – it took place, but ABC Corporation can still institute a foreclosure lawsuit in its own name, as it would have priority over the bona fide purchaser who acquired title from the bank.

If ABC Corporation is the mortgage holder of record, and it is not named as a party in the mortgage foreclosure suit, and there is no Assignment of Mortgage, then the mortgage in favor of ABC Corporation still exists, even after the foreclosure, even after the auction, and even after the sale to the third party. The foreclosure happened, but as far as ABC Corporation is concerned, the foreclosure is irrelevant – it still has the mortgage.

To sum it all up, when purchasing your next Tampa home, especially in the case of foreclosure, it is very important to seek the advice of a real estate attorney and if possible, purchase title insurance when you purchase a property.

With rates still at their all time low, many clients are interested in refinancing their home, or purchasing a home. The question of what their home is worth comes up almost immediately. It usually becomes a long conversation. Although, I am not an appraiser, I do give a few suggestions to my clients if they are concerned with value:

1)  If you are refinancing it may be a good idea to contact your Realtor that assisted you when you purchased the home. Your agent can provide you with a current updated market analysis.
2)  If you are purchasing a home your lender will require an appraisal, should there be a concern with a value up front, I also suggest having the seller pay for an initial appraisal. Your lender will not be able to use the same appraisal, however your agents can provide this to the lenders appraiser so they have additional information to consider.
3)  Also keep in mind if you are going to your local tax authority website, the market value that is reflected on that site typically is not a true market value of the property.

The best way to go about refinancing or purchasing is to utilize your local Realtors when you are inquiring about the value of your current Tampa home or a new home. We are also here as a lender to assist you with qualifying and determining the perfect and most comfortable financing options available to you.

Have you ever found yourself debating refinancing?  What are some of the questions you would like to see answered by our Mortgage Team?

– Since the company does not have any other lines of businesses, unlike most banks or insurance companies, it can focus all of its resources to residential mortgage financing.
– New Penn Financial has a local operation in the Greater Tampa Bay area with processors, underwriters, managers and regional executives located in our office to provide fast decisions and closing turn times. Smith & Associates Real Estate can now routinely close loans within 21 days or less while our competitors struggle to close loans in 30-45 days!
– Aligning themselves with local experts, they have created a nominated appraisal panel that comprises of the most adept, professional, and knowledgeable appraisers in the area. You never have to lose another deal due to a sub-par or out of area appraiser!
– By working with one of the Smith & Associates/New Penn Financial Mortgage brokers, clients have program options such as Super Jumbo, Asset for Income Qualification, High Debt to Income Qualification, Foreign National, Investors, & Non-Warrantable Condos.

So…What does all of this mean??  More qualified homebuyers achieving the dream of homeownership!

Smith & Associates Real Estate is equipped to assist in the entire home buying experience from the initial search with a Realtor, attaining a lender all the way to having Smith Title at your closing (which we will talk about next week!)  Now to meet our fabulous Mortgage Brokers that make all of this possible:

Bobbie Nader
Smith & Associates’ Tampa Office

With over 20 years experience in the banking Real Estate Industry, consisting of operations, underwriting, closing, marketing, and originating loans, Bobbie Nader is well versed to say the least!  She is a great asset to Smith & Associates and has been recognized as a Top Producer in the field. When asking Bobbie how she feels about her job, she said “I enjoy helping clients with their home financing needs. I love what I do, and meeting wonderful people in the process. I am also excited to work along David Donaldson, my future husband.”

David Donaldson
Smith & Associates’ South Tampa Office

After working with First Union for over 10 years, Dave Donaldson came to Smith & Associates and took over the mortgage department. Not long after, he moved to the Bank of Tampa for 12 years, then eventually ended up partnering with soon to be wife, Bobbie Nader back at Smith. They have happily landed that partnership back where they first met.  A little inside scoop on Dave according to Bobbie, “David loves to cook, plan our vacations (a year in advance!), and spend time with the family.”

Steve Stapleton
Smith & Associates’ Downtown St. Pete Office

Florida licensed mortgage broker, Steve Stapleton has been a loan officer for the past 14 years and is well known throughout the Tampa Bay real estate & lending community as an honest and reputable mortgage banker. Steve has worked hand in hand with his borrowers, lenders, realtors and title companies to make sure all his transactions run smoothly and all those involved are completely satisfied.  He has lived in Tampa Bay area since 1990 & enjoys all the pleasures of the Gulf Coast, including boating, fishing, golfing, and of course…home ownership. He is very active within the community and served four years in the United States Air Force before being honorably discharged as a Senior Airman.

Amanda Stapleton
Smith & Associates’ Belleair Bluffs Office

Amanda L Stapleton is a Licensed Mortgage Broker that has been in the mortgage industry since 2001.  Starting her career as a Mortgage Processor then progressing to Processing Manager and Operations Manager Amanda knows the mortgage process from start to finish.  On her free time you may find her spending time with her husband Steve Stapleton & their dogs or volunteering for the Susan G Komen Race for the Cure!

Whether you are looking for Tampa Real Estate, a new St. Pete home or a Belleair home for sale, Smith & Associates has you covered!

Have you ever worked with our Mortgage team?  Which office did you visit and hat did you think?

8 Ways To Accidentally “Un-Approve” Your Mortgage from Steve Stapleton.
Pass this along to your potential buyers…very useful information.
While Waiting For An Approval, Time Is Your Enemy

It could take up to 60 days for fixed mortgage or 6 months to get to the closing table on a short sale or foreclosure depending on the speed of home appraisal, the amount of time required for bank sign-off, and other random factors (i.e. vacation time, furlough, miscommunications).

During those 6 months, a lot can happen.

You could lose your job, you could get sick, and your home could be damaged by a storm. These are things beyond your control, but within the realm of possibility. Each could negate your mortgage approval, thereby kyboshing your deal and, potentially, resulting in the forfeiture of your earnest money.

The longer it takes to close, the more chance for catastrophe, of course. It’s one of the reasons why buying bank-owned homes can be risky.

But beyond the things you can’t control, there are things you can control. Mortgage approvals are fragile, living things and nothing’s done until it’s done.  Good behavior matters.

With that in mind, here are 8 things you should absolutely not do between the date of application and the date of funding.  I’ve been doing this long enough that I can say with certainty: Ignore these rules at your own peril.

Bad Mortgage Behavior, Defined

1.   Don’t buy a new car or trade-up to a bigger lease

2.   Don’t quit your job to change industries or start a new company

3.   Don’t switch from a salaried job to a heavily-commissioned job

4.   Don’t transfer large sums of money between bank accounts

5.   Don’t forget to pay your bills — even the ones in dispute

6.   Don’t open new credit cards — even if you’re getting 20% off

7.   Don’t accept a cash gift without filing the proper “gift” paperwork

8.   Don’t make random, undocumented deposits into your bank account

Now, it may be impractical to follow every rule to the letter.  I know that.  For example, if your car lease is expiring, you have to do what you have to do.  But before renewing the lease, check with your loan officer to see if renting a car for the short-term might be a more mortgage-friendly solution instead.

The same goes for accepting cash gifts from parents.  There’s a right way and a wrong way to accept a cash gift and, if you do it the “wrong way”, you may not get to use the gift as part of your down payment funds.

There are a bevy of “gotchas” in Mortgageland and you can’t expect to know them all. These 8 rules, however, are a good start.

You can contact Steve Stapleton ate FBC Mortgage for more information on this article or other mortgage services.

So – if you are focused on the purchase price and hoping to see the price reduced over the next six months, you should consider the actual COST of this purchase due to the rising interest rates.   Tampa real estate has never been the bargain that it is today  –  the purchase price combined with historic low interest rates make it a prime time to purchase.   This scenario will not likely repeat itself in your lifetime.     It is time to get “off the fence” and start looking for your piece of the Tampa real estate market!!

For a comparable scenario showing the difference in  monthly payment between current interest rates and projected interest rates, please contact Susie Timmerman, Sr. Mortgage Consultant for FBC Mortgage LLC at stimmerman@fbchomeloans.com, or by calling her office direct at 813.200.8322.  You can also apply online at www.fbchomeloanstampa.com. FBC Mortgage LLC is a full service Direct Mortgage Lender offering expertise in every area of residential lending.  I look forward to working with you to provide the mortgage product to enable you to become a proud homeowner of Tampa real estate!!

FHA 203k is a little known program that has been in existence since 1978 and enables the Buyer to borrow monies to cover the purchase AND any repairs/renovations needed.  This Federal Housing Administration loan is federally-insured and allows the costs of the needed repairs to be included in the original loan amount.  With the many historic homes in the Tampa real estate market, this program could be beneficial to prospective buyers.

The renovations/repairs with a  FHA203k need to be completed within a six month period after the escrow closing.   These loans can be used to pay for new appliances, room additions, remodeled bathrooms and kitchens, in addition to necessary repairs such as doors, windows, roof, etc..  The FHA203k allows Buyers to purchase a home in an “as is” situation and complete the renovation before they move in.

An example of how the program can benefit a Buyer:

Last year, John Williams was looking for Tampa real estate when he found a home in the Hyde Park area that was priced  as a short sale and was listed as an “as is” sale.  Being an old bungalow, it was in need of wood replacement, new roof, window repairs, etc. – but being in the location of other higher priced homes, the home would be well worth the completed project.  The FHA203k enabled him to purchase the home for $ 150,000 and roll another $ 100,000. into the property renovations.  John was able to buy the property, renovate it to be structurally sound and update the electric, plumbing, kitchen appliances and bathroom fixtures.

With the reduced prices, interest rates at historic lows, and the substantial Tampa real estate inventory available combined with programs like the FHA203k, it is the most advantageous time in recent history to become a home owner.

FHA will increase the “up-front insurance premium” from 1.75% to 2.25% of the loan amount. Because these fees are added into the loan amount without affecting the LTV, the amount of monies that a Buyer needs for the purchase will not be affected.

Under current FHA guidelines, the Seller can contribute up to 6% of the sales price toward the Buyer’s closing costs/pre-paids, etc – this amount will decrease to 3% contribution under the new FHA policies.

To further strengthen and protect insurance reserves, FHA will require a larger down payment for Buyer’s with low credit scores. For borrowers with below a 580 credit score, they will now need a 10% down payment instead of the 3.5% for borrowers with higher credit scores. Since there are few lenders, if any, that will loan to borrowers with a credit score below 580, this is inconsequential to the present housing sales of FHA properties.

These FHA changes will be implemented over the next several months. If you should have any questions, please contact me at FBC Mortgage LLC, stimmerman@fbchomeloans.com.

Long-term mortgages rates moved lower again this week, hitting the lowest level in five weeks.

Freddie Mac‘s weekly report says the average 30-year fixed-rate mortgage was 4.91 percent in the week ending Nov. 12, down from 4.98 percent last week. Rates on 30-year mortgages have been below 5 percent for five of the last seven weeks.

A year ago, 30-year mortgages were averaging 6.14 percent.

A 15-year fixed-rate mortgage averaged 4.36 percent this week, remaining below one-year adjustable rate mortgages, which now average 4.46 percent.

“Mortgage rates eased further over the week, helping to promote an affordable home-purchase market and stimulate refinance,” said Freddie Mac (NYSE: FRE) chief economist Frank Nothaft. “This comes at a time when house price declines are moderating and consumer demand for prime mortgages at commercial banks has picked up.”

The National Association of Realtors this week said third quarter housing prices were down an average of 11.2 percent from a year ago, but 20 percent of the top metropolitan ares saw positive annual growth.

Sales continue to rise, with third quarter existing home sales up 11 percent from a year ago.

Tampa Bay Business Journal – by Jeff Clabaugh Washington Business Journal

Rates for a 30-year, fixed-rate mortgage averaged 5.04 percent, with points averaging 0.7 for the week ended Sept. 17. That is down from previous week, when it averaged 5.07 percent, according to Freddie Mac (NYSE: FRE).

Last year at this time, the 30-year, fixed-rate mortgage averaged 5.78 percent.

The 15-year, fixed-rate mortgage this week averaged 4.47 percent, with points averaging 0.6, down from the previous week, when it averaged 4.5 percent. A year ago at this time, the 15-year, fixed-rate mortgage averaged 5.35 percent. This is the lowest it has been since the McLean, Va.-based lender started tracking it in 1991.

“Interest rates for fixed-rate mortgages eased for the third consecutive week and remained at three-month lows,” said Frank Nothaft, Freddie Mac VP and chief economist, in a news release.

On Wednesday, the Mortgage Bankers Association reported that loan applications fell by a seasonally adjusted 8.6 percent, the result of the Labor Day holiday.

Smith & Associates Real Estate’s preferred Mortgage Consultants will be happy to discuss available loan programs with you.  For more information, please visit the website.

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Freddie Mac: Mortgage rates fall

With new incentives throughout the real estate industry, there are buyers in the marketplace that are new to the process of residential mortgages.  With the FHA program, the required down payment is only 3.5%  and this down payment can be a gift from a relative.  In addition, the Seller can contribute up to 6% of the purchase price of the home towards the Buyer’s closing costs and prepaid items.    When you combine these two features of the FHA product, a Buyer can come to the closing table with no money out of his/her pocket.  This has enabled many people to purchase homes that do not have the 20% down payment required by most conventional lenders.

The FHA mortgage loan limit in the Tampa Bay Area is $ 292,500.00 – with the 3.5% down payment, the maximum purchase price would be $ 303,105.00 .   An FHA loan does have standards for the home to qualify.  Basically, the home needs to be in sound structural condition including roof, windows, doors, etc..   Minor cosmetic repairs are permitted under the FHA mortgage loan guidelines.   FHA does allow the purchase of multi-unit properties up to 4 units as long as the Buyer lives in the property as a primary residence.   Smith and Associates’ realtors are aware of these standards and work closely with us to ensure a seamless process.

FHA loans are also available to refinance your present mortgage to a lower interest rate.  Homes can be refinanced up to 96.5% of today’s market value.  This can be significant if you presently have a high interest rate and/or have an ARM loan that will be adjusting within the next couple of years.  Contact us to evaluate your present mortgage to determine if you would benefit from a FHA loan.

USDA – No Down Payment

USDA is a program through the Federal Government that allows up to 100% mortgage financing in rural areas.  The home has to be within a certain rural area which is determined by population concentration.   Tampa Bay area locations include Land O Lakes, Wesley Chapel, southern Hillsborough County, east Hillsborough County, etc.

As with  FHA loans, the Seller can contribute up to 6% of the closing costs/prepaid items, the Buyer can receive gift monies from relatives, etc.   Additional criteria to qualify for this loan program include income limitations for the Buyer(s) which vary according to the area of the country and the number of people that will be living in the home.

Smith & Associates Real Estate’s preferred Mortgage Consultants will be happy to look up properties and evaluate your situation to determine if you are eligible for this loan program.  For more information, please visit the website.