Author Archive for Carl Pruitt

Originating FHA Loans: Why HUD May Stop Your Loan Closing

Published
by
Carl Pruitt
on July 18, 2008
in Mortgage
. 0 Comments
by Carl Pruitt

A few years ago, during the real estate boom, an unforeseen problem began occurring regularly that created quite a problem for mortgage lenders when they had to foreclose on a home. Everybody who had ever stayed up late watching TV suddenly wanted to become a real estate investor. A “house flipper”.

There is such a thing as a legitimate “house flipper”. This type of investor uses their own money and credit to buy up foreclosures and other distressed real estate, repair the property and then sell it at a profit. This provides an important function in the economy. Unfortunately, the investors flooding the market over the last couple of years never quite matched that description. These master television trained real estate investors would make an offer on a property even though they had no financing of their own. Then they would go in and sweep it up and mop a little. At the same time, they would find some poor uninformed dreamer who didn’t really understand what was going on, agree to pay all the loan closing costs and down payment assistance, and get them preapproved for an FHA loan. They would then set up back to back closings so they could buy the property and sell it to the new buyer at the same time without ever having put up a dime of their own money. They would frequently sell the home at double the price they paid originally.

Of course these “sellers” would offer such easy terms (at a time when it was a seller’s market and others weren’t making such concessions) that they would have a boatload of potential prospective homeowners to choose from. Unfortunately after this had been going on for a few years, some of these new home owners began to default on their mortgages and HUD would have to pay off the lender from the FHA insurance fund. This is the source of all the HUD houses you see advertised in the weekend papers. Trouble is, when HUD was trying to sell these houses they kept having to take a big loss, endangering the very existence of the FHA program.

Thus several years ago, HUD implemented their “anti-flipping” rule. Now any house that had changed owners within the previous 90 days was absolutely ineligible for any FHA financing. The goal of this rule was to make sure that homes were being sold by legitimate investors who were taking the time to actually bring the property value up before selling it and making a killing.

Of course in HUD’s usual inimitable governmental style they overlooked one tiny factor that created a big problem in the marketplace. They failed to create an exemption for homes that had been foreclosed upon and were being sold by the lender. This excluded a large segment of the potential buyers from the picture and caused lenders to take a big hit in the prices foreclosed property would bring. So in 2006, HUD amended the rule to exclude homes being sold by government sponsored enterprises and federally chartered financial institutions. However, they left the rule in place for all other sellers.

Now we arrive at the present. The subprime market has crashed. Foreclosures are setting records every month. Thousands and thousands are losing their homes. But at least, we think, many potential new first time home buyers can now take advantage of this drop in home prices while FHA interest rates are low.

Smart real estate agents and mortgage originators who are up to date on guidelines release these nervous potential home owners out into the market. As they visit these foreclosed properties, they always ask whether the present owner is eligible for that financial institution exception. The lender’s real estate agent will say honestly that this home is definitely still owned by the bank and the bank is an exempt institution. Everyone completes the negotiations and gets all the right signatures to put the buyer’s mortgage in process. Everything is wonderful up to this point. As normally happens, the title examination results are faxed over to the processor and look fine at first glance. Then while double checking the details, the mortgage processor notices that the owner named on the title policy doesn’t exactly match the contract. Very similar, but not an exact match. So a call is made to the attorney/title company’s office and the processor finds out that now a subsidiary company of the foreclosing now owns the property. A fairly common practice lenders employ in managing their real estate owned portfolio.

These subsidiaries of the lenders often obtain title to the property many months after completion of the original foreclosure. The trouble is, they are not exempt from the anti flipping rule and have usually owned the property a month or less. No one in the lender’s office, or the attorney’s office every tried to mislead the buyer, but now that buyer who must move out of an apartment in a few days, must wait 60 more days to close on and move into their new house.

Loan officers must be sure to warn real estate agents and potential new home owners, about this rule. Be sure that everyone goes far above and beyond the call of duty asking questions about the chain of title of the home before setting any dates on the sales contract. This situation doesn’t cause much difficulty if caught at the beginning and planned for, but can be absolutely devastating if this detail is missed.

About the Author:
FHA training and an expert understanding of FHA guidelines is necessary to avoid being left behind in the mortgage industry today. Mortgage originators will earn more money and really help more borrowers by mastering FHA.

Bad Credit Mortgages: Overcome Bad Credit Using FHA Loans

Published
by
Carl Pruitt
on June 13, 2008
in Mortgage
. 0 Comments
by Carl Pruitt

If you have been contemplating buying a home, but you have experienced credit problems, recent changes in the guidelines for FHA loans may provide the answer to your problems. FHA is not actually a new program, but the guidelines have been revised so much in the last couple of years that the real estate agent or seller you are trying to work with will probably not recognize the program anymore.

“FHA” is short for Federal Housing Administration. The Federal Housing Administration is a part of the huge Housing and Urban Development or “HUD” bureaucracy. You have probably seen HUD homes advertised for sale. HUD homes are foreclosures which were insured by the FHA mortgage program.

The FHA program was set up in 1934 with the adoption of the National Housing Act. FHA’s mission is to provide credit and a chance for home ownership to borrowers who may have past credit problems, or a thin credit history, or a higher than average percentage of their total income going out for bills.

The FHA program accomplishes this goal by providing insurance which will pay off the loan if the borrower defaults. Because of the guarantee of FHA mortgage insurance, the lender can take more risk approving mortgages for borrowers who don’t fit into conventional loan programs.

The FHA mortgage insurance guidelines were set up around the requirements of the first time home buyer, however the program is available to any borrower with no other outstanding FHA loan guarantee. FHA is not available on non-owner occupied investment properties.

Many real estate agents and sellers are hesitant to recommend that anyone use an FHA loan because they have heard horror stories about the red tape involved. In the past, the FHA guidelines were much stricter on the property and caused the seller to have to pay higher fees than a conventional loan. Using an FHA insured loan often caused the closing to have to be delayed while arguing over seemingly silly red tape issues. However, this red tape has been almost completely unraveled over the last couple of years.

If your real estate agent, or potential home seller, is balking at accepting your purchase offer with FHA financing, here are 8 reasons they should reconsider:

1. Easy down payment requirements. Typically 3% or less of the property sales price and this can be entirely comprised of gift funds from a family member or an approved not-profit foundation.

2. The seller can pay up to 6% of the total sales price for closing costs and prepaid expenses. This allows a buyer to negotiate an agreement which results in having to bring absolutely no cash to the closing!

3. With an FHA loan, the home buyer is not required to have any financial reserves. Someone with absolutely no money in checking or savings is still eligible for financing.

4. FHA has reformed the appraisal guidelines to get rid of the need for minor repairs that must be completed prior to closing. HUD now allows as-is appraisals. Expensive termite, well and septic inspections are no longer automatically required before closing. Such requirements were the type problems that often delayed closings and angered home sellers in the past.

5. No minimum credit score. There is an automated underwriting system called FHA Total Scorecard. If this system approves your loan, there are no further requirements to explain bad credit, pay off collections accounts or meet a set debt to income ratio.

6. If the automated underwriting system does not approve your loan, the underwriter is given discretion to use common sense in the decision to approve the loan manually. The underwriter often is not given such discretion on conventional loans.

8. Never any prepayment penalties. Many loans borrowers with credit problems have been getting including significant penalties if the loan is paid off within the first 3-5 years. Such prepayment penalties inhibit refinancing for a lower rate or to lower debt payments. FHA loans have no such prepayment penalties. FHA loans even allow for “streamlined refinancing” As long as a borrower has made mortgage payments on time, there is no requirement to produce all of the qualifying documentation again in order to refinance.

FHA loans provide extensive benefits for both buyers and home sellers. There would be many fewer potential buyers in the market without the program. FHA allows borrowers with past credit difficulties to get the same mortgage rates as perfect credit borrowers with no money out of pocket to buy the home.

About the Author:
Mortgage originators today need to become masters on FHA guidelines in order to survive in today’s mortgage market. An FHA mortgage is the ideal method to profit by helping credit challenged borrowers own a home with low fixed rates.

Finding Your Niche In Information Marketing

Published
by
Carl Pruitt
on June 11, 2008
in Internet Marketing
. 0 Comments
by Carl Pruitt

Before beginning to sell information products online, make sure that you are targeting a niche that will be profitable in the short-term as well as in the future. Your niche is simply a different way of saying your target audience.

Some niches, as you’ll discover, aren’t as profitable as others. You need to look at your audience and see if they’re willing (and able) to spend money for the solutions they’re seeking.

For example, golfers have proven they have deep pockets since playing golf is a very expensive past time. Golfers are typically rabid fans of their game and would do anything to improve their score or beat their competitors.

But another niche, such as single moms on a budget may not be willing to pay $67 for an information product showing them how to get organized. Sometimes it depends on the solution itself. Targeting this same niche of single moms, you may find some are willing to pay $47 for an eBook that shows them how to make more money working from home than they do in their regular 9-5 jobs.

One excellent place to begin is with checking out online groups and forums. You can visit iVillage, or Yahoo groups, Google groups, or Boardtracker and determine what sort of groups garner the most posts. Men’s groups such as AskMen might provide some insight into which types of information products this segment of the population might need which you can provide at a handsome profit.

You’re not just looking for a broad group of people to cater to - you’re looking for those with a lot of problems. When you start creating your information products, you’ll want to build an empire of products that all focus on the same niche, allowing you to market to existing, loyal customers who buy from you time and time again.

In some instances, you’ll find a large niche market and then realize you need to develop your information product line around a more targeted, narrow section of that niche. For example, parents are a group with plenty of problems you could potentially address. Raising intelligent kids, saving money, preventing drug and dealing with discipline, use might be a few.

You can then narrow things down further to moms or dads and it is no stretch to dig even deeper and focus on something like parents of multiples or parents raising kids with physical ailments. Remember - your information product isn’t really a product at all. It’s a solution, and it needs to be marketed as something that will improve lives

About the Author:
Here’s a totally free, ridiculously simple business model you can implement today to earn real money right away. You can learn more here about simple, inexpensive or free ways to build an internet business.

What Is An Autoresponder

Published
by
Carl Pruitt
on April 24, 2008
in Internet Business
. 0 Comments
by Carl Pruitt

If you’ve ever asked for information online about a product or service, or signed up for an email list or a group membership on the Internet, or you have received a nearly instantaneous response when you email someone from a website, an autoresponder program was responsible for delivering the reply.

Simply put, autoresponders are e-mail programs that send out a preset message in response to every incoming e-mail received or in response to a form submitted on a website. Some autoresponders, like sign-up services for e-groups and forums, are one-shot deals: a single response for every message received. Just about every Internet-based company uses autoresponders for a variety of purposes, from automating tasks that would otherwise take up hundreds of man-hours to building customer lists and tracking prospective leads.

The autoresponder can be programmed to send a series of emails on a timed basis to the person who filled out and submitted the form. For example, this type of multiple autoresponder can shoot out an instant response, followed by another email the next day, another 3 days later, another the next week and so on for as long as the owner wishes the messages to keep going out. This can be set up for whatever intervals best suit the goals of the owner.

Autoresponders are considered to be one of the most powerful marketing tools available to set up a home internet business. The systems are easy to master and once set up they duplicate their creators original work over and over again as new subscribers sign up. They are there to handle the work 24 hours a day 7 days a week. A good autoresponder series can really help a struggling internet business take off.

What can I do to make money with an autoresponder service?

There are very few businesses - online or off - that can’t benefit from using autoresponders. As a matter of fact, a brand new home internet business can be built up around an autoresponder program. All you need is a product to sell and a series of autoresponder messages to follow up for you and you can have your own business up and running within hours.

Your autoresponder is your golden goose: the marketing tool that will sell your well-developed product far more effectively than any other form of advertising. Few sales are made by impulse buyers, particularly on the internet. But if you are able to get your message out repeatedly to people who are already interested in what you have to offer, you will see an explosive sales response.

About the Author:
Find out all about what you can do to get up so you can running in affiliate marketing without becoming a victim. Get a free subscription to “Affiliate Marketing for Beginners” so you can get a home business started right now.