Mortgage News and Notes

Today I had a 30-minute informational call with a woman in the early stages of a marital separation. We went over the basics, equity buyouts, mortgage payments, and the qualifying process. At the end of the call she told me that she felt so much better knowing not only what her future mortgage payments could look like, but also that she could afford to keep the house if that is what they decide. Then she asked me how much she owed me for the call. Of course the answer was nothing at all.

 

As a mortgage originator, I am not permitted to collect an hourly fee. I only get paid if and when someone does their mortgage with me. A simple fact, but the conversation reminded me that not everyone knows that! So, I am reminding you today that I am here to help your clients with mortgage solutions for FREE, and without any obligation. 

 

Considering the fact that getting a divorce is very often an expensive process, I find that my clients appreciate that I can offer them advice based on my years of experience without charge, and that I am always happy to help.

 

Margie Hofberg, President

Residential Mortgage Center

Posted by Steven Hofberg on January 16th, 2020 9:59 AM

As many of you who work with me have learned, underwriting a mortgage is an art, not an exact science. Our job is to set the client up for success by making their separation agreement fit into underwriting guidelines.

 

This month I ran into a somewhat amusing underwriting problem on a Maryland loan. The underwriter told me that since there was an unsigned notary page attached to the agreement, the separation agreement needed to be notarized to be legal. I patiently explained to her that separation agreements in Maryland do not have to be notarized to be legal and binding. She then told me that she went on the internet and found something that said that Maryland separation agreements had to be notarized. When I asked her for the site she just said that she “Googled” it. After further discussion, she finally agreed that Google is not necessarily a reliable source for that information and backed down.  

 

So, the moral of the story is that if your clients are not planning on getting their signatures notarized, leave out the notary page! It will lead to fewer questions and concerns from underwriters. And don’t believe everything you read on the internet.

 

Have a great week!

 

Margie Hofberg, President

Residential Mortgage Center Inc

Posted by Steven Hofberg on October 16th, 2019 12:43 PM

This month's question is one I hear often. If you have a client facing a similar scenario as part of their separation agreement, I would be happy to speak to you or your client. Please feel free to contact me.

 

Margie Hofberg, President

Residential Mortgage Center

 

I am refinancing to take my spouse off the deed and mortgage. Per our agreement, I have to give her $60,000 for her share of the equity in the marital home. My parents have offered to give me the $60,000 so that I don’t have to increase my loan amount to cover it. Can I do that and, if yes, how would it need to be structured to ensure that I can get my refinance approved?

 

Yes! If the separation agreement specifies that you need to give your spouse $60,000 as part of the refinance/equity buyout, we have to verify the source of funds for the buyout. If the funds are coming from your parents as a gift, they would have to sign a gift letter stating that there is no expectation of repayment. In other words, that it is not a loan. We would also verify that they have the money to give you, and document the transfer of the funds them to either you or the settlement agent.

Posted by Steven Hofberg on August 27th, 2019 1:44 PM

Another in a series that we provide for those who are going through a separation or divorce.

This month's question is one I hear often. If you have a client facing a similar scenario as part of their divorce, I would be happy to speak to you or your client. Please feel free to contact me.

Margie Hofberg, President
Residential Mortgage Center

Question: I am getting divorced and I really want to keep my house. I am finishing my Master’s degree and will get a better paying job this winter. However, my current income is not enough to qualify to refinance the mortgage. My parents have offered to cosign the loan. Is that possible? Do they have to be on title too?

Answer: Your parents can be non-occupant co-borrowers. Their income and debts are combined with yours and the combination is used for qualifying for a mortgage. They do not have to be added to the title to the house.

Posted in:Divorce and tagged: DivorceRefinance
Posted by Steven Hofberg on July 28th, 2019 1:15 PM

Divorce FAQ is a periodic newsletter by RMC with answers to specific questions on mortgages for separating or divorcing couples.

This month’s question is about the difference between an equity buyout and a cash-out refinance. If you have a client with similar questions, I would be happy to speak to you or your client. Please feel free to contact me.

 

Margie Hofberg, President

Residential Mortgage Center

 

 

 

What is the difference between an equity buyout and a cash-out refinance - and why does it matter?

 

An equity buyout is a refinance where all the proceeds of the new mortgage go to paying off the existing mortgage, closing costs, and money to the leaving spouse as specified in a separation agreement or court order. None of the proceeds can go to the borrower. This is very important since a cash-out refinance can be priced from one-eighth to a half of a percent higher in rate, depending on credit score and loan-to-value ratio. For this reason, structuring the separation agreement to reflect the equity buyout can be extremely helpful to the client who will be taking on a refinance.

Posted in:Divorce and tagged: DivorceFAQEquitybuyout
Posted by Steven Hofberg on May 31st, 2019 1:33 PM

If you are using alimony or child support income income to obtain a mortgage, there are a few updates to the requirements that you should know. In order to use support payments as qualifying income, you will need:

1.  Separation Agreement

  • A signed Separation Agreement or Court Order is required.
  • The Agreement must be complete and fully executed.
  • It must reference the exact amount of support and timeframe of payments.
  • The amount of support must be a specific number and not a percentage of payor’s income.

2.  Documentation of Support History

  • The client must have at least 6 months history of support in order to close the loan. Some programs require as many as 12 month’s history.
  • The support money needs to come from an account in paying spouse’s name only.
  • The support money needs to be deposited into an account in receiving spouse’s name only.
  • Each support payment should be deposited separately from other checks.
  • Support can begin before the Agreement is signed as long as the payments are not less than the support per the agreement.

3.  Documentation of Continued Support

  • Support must continue for at least 3 years from the mortgage application date.
  • If different amounts will be paid during the 3 years, the lowest amount will be used to qualify
  • Support must be in the form of a monthly payment. It cannot be a lump sum payment or annual payments to use as qualifying income.
  • Child support can be grossed up by 125% for qualifying purposes.
Posted by Steven Hofberg on May 12th, 2015 11:08 AM

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