AboutMeg Ritchey Expertise I can answer questions regarding approval and qualification requirements for FHA, VA, USDA and conventional,(FNMA/FHLMC) residential mortgage loans. I also can answer questions regarding credit scores and rebuilding credit. I cannot answer questions regarding Fed., State or local taxes or tax implications of mortgage financing. I also cannot answer those questions which require special licensing for financial investment in depository accounts, stock accounts or insurance products. Similarly, I cannot answer any real estate questions which require a specific license.
Experience I am a Mortgage Banker. I have been a Residential Loan Officer since 1995. I have successfully assisted more than 1000 people finance home purchases. I specialize in assisting people to buy their first homes. I also enjoy working with those who have experienced some kind of catastrophic event, like loss of job, bankruptcy, foreclosure, death of spouse, catastrophic health issues or divorce and who want to work to strategically position themselves for mortgage loan approval.
Organizations I am currently a member of the Ohio Mortgage Bankers Association. I have periodically volunteered for community groups/events including those involving issues of affordable housing, battered womens outreach, rape crisis intervention and have worked on various boards for nonprofit womens organizations. I also have developed a network of professional contacts within key organizations for referring people who come to me with issues regarding foreclosure, loan modification, bankruptcy resources, credit repair, support for elderly/house bound, estate, tax and divorce advocacy.
Education/Credentials B.A., The Ohio State University
Question Hi,
Myhusband and i bought our condo in 2007. we have a 5yr adjustable at 5.85%. we pay both priciple and interest. our balance is $242k and as of now is assessed @ $250,200. Our bank will not refinance (i get it that they will lose a few bucks) and says probably no one else will as we dont own enough equity in our home. does no one want our money? we have great credit and never missed or late with apayment. i know theyve tightened the rules but someone must be willing to take our money? am i missing the boat on this? what do we need to do?
thanks
Answer Dear Jessica,
I understand your frustration. This is a common malaise in this restricted environment for mortgage financing, particularly for those who want to refinance or purchase a condo. The problem is that so many foreclosures over the last two years, were on condos. Lenders and private mortgage insurance companies took huge loses due to those bad loans. While you may maintain a perfect payment history, your property type is viewed as being in a greater risk category as a result of those foreclosures.
If you currently have an FHA loan, contact an experienced Mortgage Banker in your area. You may be eligible for a streamline refinance of your mortgage. Because those guidelines are changing as we speak, it is important that you go to a good company and speak to someone who really knows these programs. However, not all condo associations are approved for FHA financing, so please make sure that the person with whom you meet also has FNMA and/or FHLMC programs available with several different mortgage insurance companies as well.
Often the restricted guidelines are not just from the lender, they may also be from the mortgage insurance company. Typically, mortgage insurance is required for all loans which demonstrate less than a 20% equity position after the new mortgage amount is calculated, relative to the new appraised value. This insurance is required by the lender to pay for their increased risk on loans with an equity position less than 20%. What many people don't realize is that not only is your new lender going to be performing an underwriting review of your application, frequently your loan will also be underwritten by the mortgage insurance company using their own set of criteria. In this environment, the mortgage insurance criteria is often even more stringent than the lender's criteria. If it is not a problem with your credit, income or equity position with either the lender or the mortgage insurance company, it may be a problem with the Homeowner's Association.
There are also specific underwriting criteria for the Homeowner's Association. So, while your credit, income and equity position may meet the lender and the mortgage insurance guidelines, the Homeowner's Association may not. Your Loan Officer should be able to give you a comprehensive look at all aspects of your situation and tell you where there are challenges and offer possible solutions.
Finally, if you are unable to obtain loan approval at this time, don't panic. Fortunately, you have a 5/1 ARM. That means that your interest rate won't adjust until 2012. That gives you time to address and to correct the issues with your file. If it is simply a matter of needing a greater equity position, you may ask your Loan Officer; If you make your payments as scheduled, when will you have enough equity to be approved for a new loan? Perhaps if you can't pay down the balance of your mortgage now, you may be able to make additional payments over the next couple of years to make refinancing possible. If it is a matter of the Association not meeting underwriting guidelines, you have time to get on the Condo Board and get active in making changes that will not only make refinancing possible for you, but also make homes in your development more attractive for new buyers.
I have been in this crazy business for many years and the only thing for which I am certain is that it will continue to change. I have seen several rounds of tightening guidelines then the guidelines are later relaxed, depending on the needs of the business environment. So, if you can't get your loan done now, be patient, do you homework and be proactive. Sooner or later, you will prevail.
