David 's Blog

You've been pre-qualified for a 3.5% down-payment, FHA home loan, to buy the house of your dreams in Scottsdale, Arizona.  You and your Realtor have searched for months and finally narrowed it down to one home.  It's a short-sale located in beautiful Scottsdale, AZ.  This is the ideal location; not too far from your office, great schools for the kids, plus terrific dining and night-life for you and your wife. 

Your Realtor is very sharp and has well over twelve years of experience selling high-end homes in Scottsdale.  You make it through the inspection period with no items needing repair.  Your Realtor gives your lender the go ahead to order the appraisal.  The FHA appraiser returns the completed appraisal with a value equal to the sales price.  You're feeling terrific because you've just locked in an incredibly low interest rate of 4.875%, which is fixed for 30 years, on an FHA home loan.

Everything seems to be moving along smoothly, until you get a call from your Loan Officer.  She sounds concerned and you immediately begin to panic.  She tells you that the lender has turned down your loan because the house has a shared well for water, which is connected to more than four homes.  You don't understand why your loan was declined?  Your Realtor doesn't understand either; he has sold many homes in this area without a problem, which were also financed.   

The reason some lenders cannot finance a home with a shared well connected to more than 4 homes, is that it doesn't fall within the standard FHA loan guidelines.  Prior to 2007, many of the homes in Scottsdale were financed with conventional financing.   Therefore, very few Realtors and Loan Officers ever experienced a problem with this specific circumstance.  Self-admitted, many industry professionals need to educate and enhance their knowledge of FHA guidelines.  It is possible for this home to be financed under FHA guidelines; however, it will require some additional documentation, more work from everyone involved, and maybe even a few sleepless nights.  Hopefully, you are working with educated professionals that will be able to alleviate many of those restless nights and extra stress!

This was an actual scenario we experienced with one of our referrals.  Luckily, we were able to fund this client's loan after he received a loan denial from another lender.  Although in order for this loan to work, there are a few specific requirements that need to be met.  First, the water must flow through a valve dwelling service line, so that water may be shut off to each served dwelling without interrupting service to other properties.  Secondly, the well must be connected directly to the pumping energy source (not a dwelling); and the energy being used for pumping must be separately metered.  Finally, the well must be covered by an acceptable well agreement through one of the five documents/entities listed below:

1. Control by Public Utility Commission
2. Trust Deed
3. Third Party Beneficiary Contract
4. Property Owners' Association
5. Franchises from Governmental Authority

The following identifies the additional documentation required in order to close this loan for our client.  These items do carry a few additional fees.      

• Documentation provided by a Septic Inspector stating that the well sits a minimum of 50 feet from the septic tank, 100 feet from the drain and 10 feet from the property line.
• Certified pumping test
• Potable water certification

Special thanks to Beeman Pump Company and A-American Septic Service are in order for making this transaction successful. 

If you're currently considering purchasing a home with a shared well connection to more than 4 homes and need some assistance, please contact David Krushinsky at 602-695-7575 or david.krushinsky@wjbradley.com.

Today, I had the pleasure of attending my daughter's 4th grade parent/teacher conference.  Her teacher told me that she is a great student, but she noticed that Kelli rushes through her work assignments quite frequently.  Kelli will quickly complete her assignments, often times with minor errors, and ask her teacher if she has something else she would like her to do.  My wife and I had also took notice to this recently too.  However, it also reminded me of myself when I was that age.  I often think to myself, am I grooming my daughter for a career in sales?  I think I may be doing just that.

This year has been a special year for Kelli and I.  We have really had a lot of fun as she is beginning to mature into a young woman.  She and I have formed a special father-daughter bond that will last for a lifetime.  I have always joked with her about growing up and becoming a "Mortgage Consultant" or a "Mortgage Broker".  This year I have started to actually think she is definitely cut out for sales.

Every week Kelli has an assignment to select a news article of interest to her.  She has to read through the article, highlight the most important facts from the article, and answer ten questions.  The assignment is called "Tuesday Newsday", which has to be about an event that occurred in the previous week, but it is also due on Tuesday morning.  Kelli and I usually sit down on Saturday morning, although she always tries to wait until Monday night, to select the article she is going to write about.  We always find the article together. 

A few weeks ago she found an article titled, NASA Satellite To Intentionally Slam Moon, by Anne Ryman.  The article was about a satellite slamming into the moon, at an extremely high speed, to create a large hole in search for water.  It was a very informative article that had every last detail explained. The type of article an Engineer would love.  

The last question on the homework assignment is, "Using your own words, summarize the most important facts from this article in 3-5 sentences".  Being that Kelli is destined for sales, of course she always writes 3 sentences.   We all know that sales people typically do the minimum amount of work required.  The following paragraph is a break-down of her response.

The first sentence reads, "A 2 ton piece of equipment will put a 13 foot hole into the moon".  Nothing wrong here, just her explaining what will happen when the satellite slams into the moon.  The next sentence reads, "To see it you will need a 10-inch telescope".  Here's where the sales mode officially kicks in gear.  In order to see the 2-ton piece of equipment put a 13-foot hole in the moon you will have to go out and purchase a telescope with a 10-inch lens.  Kelli's last sentence reads, "This is your only opportunity to see it crash into the moon".  The last sentence is the limited time offer, which will cause you to buy the telescope that starts at $599.      

When I read this paragraph I began to laugh.  It sounded like the perfect telescope ad.  Keep in mind, no where in this article were any of these sentences written.  I guess I am molding my little salesperson more than I thought. 

Do you have any good sales stories to share about your kids?  Please feel free to share them with us.

I would be a disappointment to Kelli if I didn't mention; if you're considering purchasing a home or refinancing, please contact the Krushinsky Team.  David can be reached at 602-695-7575 or david.krushinsky@wjbradley.com.  This is your only opportunity.

Future questions will most likely be answered directly by Kelli Krushinsky - "Mortgage Consultant In Training".

FREE CONTINUING EDUCATION CLASSES FOR ARIZONA REALTORS

You are invited to attend the continuing education seminar " Answers To Tough Questions About Credit In Today's Market" on Wednesday, November 18th from 2:00 pm - 5:00 pm.  This event is FREE and provides (3) three Accredited General Hours towards your continuing education requirements.
 
David Krushinsky, a Certified Mortgage Planning Specialist, will address those tough questions regarding your clients credit in today's real estate industry.  The following are a few key topics that will be discussed:

   -Is it better for your client to file bankruptcy or to foreclose?
    -What is a short sale and how can it affect your clients credit?
    -What about a Deed-In-Lieu of Foreclosure?
    -Foreclosure vs. Short Sale
    -What should my clients do???
    -Many more items to cover!!!

 
Don't miss out on this opportunity to learn about new and changing information and get your questions answered by a mortgage professional. 

The Seminar will be held at the Foothills Recreation & Aquatic Center 5600 West Union Hills Drive, Glendale, AZ 85308 on Wednesday, November 18th from 2:00pm - 5:00pm.
 
Please RSVP to reserve your seat.  For any questions or to RSVP, please contact David Krushinsky at 623-594-7600 or email david.krushinsky@wjbradley.com 
 
Hope to see you there!
 
Accredited by C. David McVay School - 3412 E. Dunlap Ave., Phoenix, AZ 85028
602-749-2098 Email: dmcvay@cdavidmcvayschool.com ; www.cdavidmcvayschool.com

Are you purchasing a home in Phoenix?  Is the house bank-owned, does it need some TLC, or would you just like to paint, carpet and put in some new appliances?  The FHA 203k Streamline loan is the perfect solution.  Click here for a more detailed guide for specifics on how the 203k loan works. 

FHA's Streamline 203(k) mortgage program allows Phoenix homebuyers to finance up to an additional $35,000 into their mortgage, to improve or upgrade their home before they move-in.  Phoenix homebuyers can use this type of loan to pay for property repairs, such as those identified by a home inspector or FHA appraiser.  These improvements are not just limited to repairs and can also be cosmetic upgrades to the existing property.

Now that you have gone through the whole financing process and you have reached your closing date, what happens next?   Rehabilitation construction should begin within 30 days after closing, and all work must be completed within six (6) months from the closing date.

How does your General Contractor get paid?  After the closing, your loan is typically sold to a servicing company, like Bank of America.  This process normally takes 7-10 days, but is currently taking approximately 21 days.  This is due to an influx of new loans being purchased from the recent closure of various mortgage lenders.  After the loan is sold, 50 percent of the rehabilitation funds are disbursed immediately to the borrower and/or contractor.  Included with the initial disbursement is an instruction letter that explains how the final disbursement will be made upon completion and provides the necessary contact information.  The balance is disbursed upon completion of all work. If the cost of the renovation is over $15,000, an inspection by the original appraiser is required.

For borrowers working with a contractor, a W-9 must be provided to set up the contractor, and a two-party check is made out to the borrower and the contractor and sent to the borrower.  If multiple contractors are being used, 50 percent of the cost of the repairs for each contractor is disbursed up front.  For borrowers performing work themselves, a self-help agreement must be signed before the funds are disbursed. The check is then made out directly to the borrower.  A borrower is typically only allowed to perform work themselves if they have experience in that line of work.

Who handles all of the disbursements and other requirements during the rehabilitation process?  The servicing company handles all rehabilitation disbursements and project inspections.  The amount designated for repairs and improvements, including the contingency reserve, holdback, and PITI, if applicable, are deposited into an interest-bearing repair escrow account, insured by the Federal Deposit Insurance Corporation (FDIC). 

What happens if your repairs have unexpected costs?  The contingency reserve is required to cover unexpected repairs.  The reserve is usually only required if the repairs exceed $7,500 and is typically 10 percent of the total repair amount.  The contingency reserve can only be used on those changes that affect the borrowers health and safety, or is due to an increase in cost for an item of necessity.  If a change order results in a decrease in costs, the amount will be added to the contingency reserve.  Additional improvements that do not affect the health and safety, or an increase in cost due to a necessity item, must be paid for directly by the borrower and not paid out of the contingency reserve fund.  The remaining balance in the contingency fund, after all work has been completed, will be used to pay down the principal balance of your loan.

Congratulations!  It's time relax and enjoy yourself.

If you're considering purchasing a home that may need some cosmetic upgrades or repairs, please contact the David Krushinsky Team to get pre-approved.  David can be reached at 602-695-7575 or david.krushinsky@wjbradley.com. 

* These are guidelines for loans funded by W.J. Bradley Mortgage Capital Corporation and may not be the same as other lenders.  You should consult your mortgage company to see if the same rules apply.

You've searched for the perfect home for what seems like an eternity.  Your Real Estate Agent has shown you so many homes, in Phoenix, that you lost count.  She calls you up and says, "I found the perfect home; it has a big backyard, 3 car garage, 5 bedrooms and the location is exactly where you want to be."  You're so excited you grab the kids, jump in the car, and drive over.  

It's absolutely perfect!!  The family loves it, the kids are running around the backyard, your wife can picture her clothes in the master closet, and you see yourself working on your toys in the 3 car garage.  You rush to write an offer on the home because you know, in Phoenix, there are multiple offers on everything in this price range.  It's so perfect that you're even willing to pay more than the list price just to secure the home.  The seller accepts your offer, calls your Realtor, and gives them the bad news.  Wait!!! The bad news???  The seller bought this home only 7 days ago, and has now re-listed it for $29,000 more than he paid for it.  The property is what is known as a "flipped house" in the Phoenix real estate market.  He tells your Realtor that you need to make sure your lender can secure a mortgage on the property, since he just bought it.  No problem, right?

Your lender originally prequalified you for an FHA loan with a low 3.5% down payment.  You call your lender and he tells you, "I'm sorry we can't do an FHA loan because of the 90-day rule."  Your confused.  What is the 90-day rule?  You look on the Internet and find that HUD's 90-day rule states any re-sales occurring 90 days or less following the acquisition will not be eligible for a mortgage to be insured by FHA. FHA's analysis disclosed that among the most egregious examples of predatory lending was on "flips" that occurred within a very brief time span, often within a matter of days. Thus, the "quick flips" were eliminated for at least 90 days.  No FHA loan for you.

Your not worried because your lender is a very smart guy, he's a Senior Loan Officer.  He says, "Don't worry, we will just do a conventional loan."  Since you have enough to put down 10% for a conventional loan, you think your problem is solved.  Your lender is a genius.  You start packing all of your belongings into boxes, ordering utilties for the new house and getting ready for the "big" move. 

A few weeks go by and your lender calls you and says, "We have a major problem."  Your loan was declined because the mortgage insurance company won't issue a mortgage insurance certificate because the property is being "flipped."  Oh and by the way, even if you can put down 20% to avoid mortgage insurance we still can't do your loan.  You say, "Huh???"  "You can't do the loan?"  That's right, he can't do the loan because of new guidelines by most major lenders that won't allow financing on flipped properties.  What are you going to do now?? 

Your Realtor is very sharp, experienced and is determined to get this home for you.  She has called four different mortgage companies.  Luckily, one of the lenders she talks to also has a good network and he refers her to a company called WJ Bradley Mortgage.  WJ Bradley Mortgage can still do your loan with conventional financing, even if the property is "flipped".  There is no specific time frame required for conforming conventional seasoning on a purchase transaction.  However, the appraiser must provide a 12-month listing history for the property. Frequent listings and/or sales also require explanation on each occurrence or listing and should include the data source(s), offering prices, date(s), and any further evaluation as they may indicate "flipping".

Closing day comes and you finally get the keys to your house.  You're so excited that you tell everyone you know, who is looking to purchase a home in Phoenix, to call your Realtor and their new "preferred" Mortgage Consultant.  Life is good.

If you, or someone you know, has recently placed an offer on a flipped home in the Phoenix market and is unable to locate financing for their new home, please have them contact The Krushinsky Team at 602-695-7575 or david.krushinsky@wjbradley.com.  We can still lend on homes that have been owned for less than 90 days.  We can also offer rate/term refinances using current appraised value on conventional loans for properties owned less than 6-months.

FREE CONTINUING EDUCATION CLASSES FOR ARIZONA REALTORS

You are invited to attend the continuing education seminar " Answers To Tough Questions About Credit In Today's Market" on Wednesday, October 28th from 9:00 am - 12:00pm.  This event is FREE and provides (3) three Accredited General Hours towards your continuing education requirements.
 
David Krushinsky, a Certified Mortgage Planning Specialist, will address those tough questions regarding your clients credit in today's real estate industry.  The following are a few key topics that will be discussed:

   -Is it better for your client to file bankruptcy or to foreclose?
    -What is a short sale and how can it affect your clients credit?
    -What about a Deed-In-Lieu of Foreclosre?
    -Foreclosure vs. Short Sale
    -What should my clients do???
    -Many more items to cover!!!

 
Don't miss out on this opportunity to learn about new and changing information and get your questions answered by a mortgage professional. 

The Seminar will be held at the Foothills Recreation & Aquatic Center 5600 West Union Hills Drive, Glendale, AZ 85308 on Wednesday, October 28th from 9:00am - 12:00pm.
 
Please RSVP to reserve your seat.  For any questions or to RSVP, please contact David Krushinsky at 623-594-7600 or email david.krushinsky@wjbradley.com 
 
Hope to see you there!
 
Accredited by C. David McVay School - 3412 E. Dunlap Ave., Phoenix, AZ 85028
602-749-2098 Email: dmcvay@cdavidmcvayschool.com ; www.cdavidmcvayschool.com