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7 Tips for Improving Your Credit

By: G. M. Filisko

Here’s how to clean up your credit so you get the least-expensive home loan possible.

Getting the loan that suits your situation at the best possible price and terms makes homebuying easier and more affordable. Here are seven ways to boost your credit score so you can do just that.

1. Know your credit score
Credit scores range from 300 to 850, and the higher, the better. They’re based on whether you’ve paid personal loans, car loans, credit cards, and other debt in full and on time in the past. You’ll need a score of at least 620 to qualify for a home loan and 740 to get the best interest rates and terms.
You’re entitled to a free copy of your credit report annually from each of the major credit-reporting bureaus, Equifax (http://www.equifax.com), Experian (http://www.experian.com), and TransUnion (http://www.transunion.com). Access all three versions of your credit report at www.annualcreditreport.com (http://www.annualcreditreport.com). Review them to ensure the information is accurate.

2. Correct errors on your credit report
If you find mistakes on your credit report, write a letter to the credit-reporting agency explaining why you believe there’s an error. Send documents that support your case, and ask that the error be corrected or removed. Also write to the company, or debt collector, that reported the incorrect information to dispute the information, and ask to be copied on any materials sent to credit-reporting agencies.

3. Pay every bill on time
You may be surprised at the damage even a few late payments will have on your credit score. The easiest way to make a big difference in your credit score without altering your spending habits is to diligently pay all your bills on time. You’ll also save money because you’ll keep the money you’ve been spending on late fees. Credit card or mortgage companies probably won’t report minor late payments, those less than 30 days overdue, but you’ll still have to pay late fees.

4. Use credit carefully
Another good way to boost your credit score is to pay your credit card bills in full every month. If you can’t do that, pay as much over your required minimum payment as possible to begin whittling away the debt. Stop using your credit cards to keep your balances from increasing, and transfer balances from high-interest credit cards to lower-interest cards.

5. Take care with the length of your credit
Credit rating agencies also consider the length of your credit history. If you’ve had a credit card for a long time and managed it responsibly, that works in your favor. However, opening several new credit cards at once can lower the average age of your accounts, which pushes down your score. Likewise, closing credit card accounts lowers your available credit, so keep credit cards open even if you’re not using them.

6. Don’t use all the credit you’re offered
Credit scores are also based on how much credit you use compared with how much you’re offered. Using $1,000 of available credit will give you a lower score than having $1,000 of available credit and using $100 of it. Occasionally opening new lines of credit can boost your available credit, which also affects your score positively.

7. Be patient
It can take time for your credit score to climb once you’ve begun working to improve it. Keep at it because the more distance you put between your spotty payment history and your current good payment record, the less damage you’ll do to your credit score.

Other web resources
How FICO scores are calculated (http://www.myfico.com/CreditEducation/WhatsInYourScore.aspx)

Answers to frequently asked credit report questions (https://www.annualcreditreport.com/cra/helpfaq)

G.M. Filisko is an attorney and award-winning writer who keeps a close eye on her credit scores. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.

Visit houselogic.com for more articles like this. Reprinted from HouseLogic with permission of the NATIONAL ASSOCIATION OF REALTORS
Copyright 2010. All rights reserved.

Funding And Closing A Short Sale

The Trustee is the owner of the property, not the Trust itself.
The Beneficiary has the power to direct the Trustee to deal with the title and proceeds of the property. They also have the right to manage, possess, use, control, sell, rent or mortgage the property. The beneficiary has an economic interest in the property.
When a homeowner puts a property into a land trust they convey fee simple absolute ownership to the Trustee. The land trust will state that legal and equitable title is vested soley in the Trustee with the homeowner named as the beneficiary.
The beneficiary can direct the Trustee to manage the property. Any liens remain in place but do not get paid off at this time. The land trust protects the property from other creditors by making sure no more liens are placed; this is good information for the short sale lender to know.
The homeowner will also sign a purchase agreement with the investors company as the buyer. The trustee is not named as the buyer. Once the trustee owns the property, a purchase agreement can be signed with the Trustee as Seller. Once the contract is accepted, the buyers lender will order a title search and find that the Trustee is the owner of the property and has the right to sell. This is the part of the process that typically stops the transaction. It all boils down to how the underwriter interprets the FHA guidelines.
Lenders (notably FHA and nonconforming) instituted an underwriting requirement that title must be seasoned for varying lengths of time (3 months etc). The rationale is based upon an observation that where properties were sold multiple times, within a short period of time, the loans had a higher default rate and tended to have artificially inflated appraisals and various other forms of loan fraud. Thus, the seasoning requirement was born. Note the key term “sold”, not transferred. The transfer of the property from the Seller to the Trustee is without consideration and constitutes a mere change of identity and therefore, does not reset the title seasoning clock.
Transferring the ownership of the Land Trust is akin to a corporation selling its shares to someone else, while selling some property that it holds title to – it has no bearing on the transaction contemplated between the Trust itself and the bona fide purchaser for value. Nor is there any reason why a personal transaction, that does not affect title to the premises, would be presented to the purchaser’s Lender. Again, it is the Trustee who holds legal and equitable title and is empowered to convey the premises not the beneficiaries who merely have a beneficial interest in the land trust – personally not realty. New York State, for instance, considered such interest to be an economic interest in real property thereby creating a blend of the two interests – a quasi real estate interest that does not rise to a fee simple interest – so that it may collect transfer taxes upon the transfer of such interest.
Once financing is in place, a qualified real estate attorney can help you proceed to purchase the beneficial interest in the property. Beneficiaries have economic interest in real property; therefore, transfer tax returns must be filed and transfer taxes paid when the interest is transferred to a new beneficiary.
This type of closing should always be performed by a real estate attorney who is familiar with land trusts. He will prepare the HUD-1 as if you were purchasing the property; the short sale lender is paid off at this time. The land trust stays in place; the trustee remains the same. Now the property can be sold to an end buyer with no problems.
The process can vary slightly from state to state and should only be done with a qualified real estate attorney who is familiar with the process. Proper structure with attention to the treatment of the beneficial ownership of the land trust is critical.
Due to the increase in real estate fraud and scams, many states have enacted stringent legislation concerning distressed assets. A qualified real estate attorney who has experience with short sales and land trusts will know what you can and cannot do concerning pre-foreclosed homes.
Jodi Funke is the founder of http://www.cashforshortsales.com a company who specializes in short sale transactions. Jodi is a transactional lender who provides funding for the investor to purchase a property on a short sale and sell the property for a profit the same day. Their team of real estate professionals, attorneys and title companies are experienced at handling these transactions while working at the highest level of integrity.

Article Source: http://www.articlesnatch.com

About the Author:
Jodi Funke is a transactional lender who understands this dilemma. “Lack of funds is the number one reason most real estate investors cannot close a short sale deal,” said Jodi. “We provide one-day funding for the investor to buy the property and our nationwide team of closing professionals, attorneys and title companies are experienced in doing back-to-back transactions so the investor can fund the deal and resell the property the same day. It”‘s a win-win deal for all parties involved.” Learn more about wholesale funding at http://www.cashforshortsales.com

Read more: http://www.articlesnatch.com/Article/Funding-And-Closing-A-Short-Sale-/747172#ixzz1hJXXUSXX
Under Creative Commons License: Attribution No Derivatives

How to Read the Good Faith Estimate (GFE)

Good Faith Estimate (GFE)

You can grab the Full 49 Page HUD’s new settlement cost booklet (updated 1/6/2010 with corrections of minor detail)

The GFE is a three page form designed to encourage you to shop for a mortgage loan and settlement services so you can determine which mortgage is best for you.  It shows the loan terms and the settlement charges you will pay if you decide to go forward with the loan process and are approved for the loan.  It explains which charges can change before your settlement and which charges must remain the same.  It contains a shopping chart allowing you to easily compare multiple mortgage loans and settlement costs, making it easier for you to shop for the best loan. The GFE may be provided by a mortgage broker or the lender.  Until they give you a GFE loan originators are only permitted to charge you for the cost of a credit report.

In the loan application process, the loan originator will need your name, Social Security number, gross monthly income, property address, estimate of the value of the property, and the amount of the mortgage loan you want to determine the GFE.  Your Social Security number is used to obtain a credit report showing your credit history, including past and present debts and the timeliness of repayment.

Your GFE Step-by-Step

Page 1 of the GFE

Now let’s go through the GFE step-by-step. The top of page 1 of the GFE shows the property address, your name and contact information and your loan originator’s contact information.

Important Dates

The Important Dates section of the GFE includes key dates of which you should be aware.

Line 1 discloses the date and time the interest rate offer is good through.

Line 2 discloses the date “All Other Settlement Charges” is good through. This date must be open for at least 10 business days from the date the GFE was issued to allow you to shop for the best loan for you.

Line 3 discloses the interest rate lock time period, such as 30, 45 or 60 days, that the GFE was based on. It does not mean that your interest rate is locked.

Line 4 discloses the number of days prior to going to settlement that you must lock your interest rate.

Note: “Locking in” your rate and points at the time of application or during the processing of your loan will keep the interest rate and points from changing until the rate lock period expires.

Summary of Your Loan

The Summary of Your Loan Terms discloses your loan amount, loan term, the initial interest rate and the principal, interest and mortgage insurance portion of your monthly mortgage payment.  It also informs you if your interest rate can increase, if your loan balance can rise, whether your mortgage payment can rise and if there is a prepayment penalty or balloon payment.

In the example above, the loan amount is $200,000 which will be paid over 30 years. The initial interest rate is 5 percent and the initial monthly mortgage payment is $1,173 which includes mortgage insurance, but does not include any amounts to pay for property taxes and homeowner’s insurances if required by the lender.

In our example, the loan has an adjustable interest rate.  Since the interest rate can rise, the ‘yes’ box was checked, and the loan originator disclosed that the initial interest rate of 5 percent could rise as high as 10 percent.  The first time your interest rate could rise is 6 months after settlement which could increase your payments to $1,290. Over the life of your loan your monthly payments could increase from $1,173 to $1,842.

This example does not contain a balloon payment or a prepayment penalty.

NOTE:  A prepayment penalty is a charge that is assessed if you pay off the loan within a specified time period, such as three years.  A balloon payment is due on a mortgage that usually offers a low monthly payment for an initial period of time.  After that period of time elapses, the balance must be paid by the borrower, or the amount must be refinanced.  You should think carefully before agreeing to these kinds of mortgage loans.  If you are unable to refinance or pay the balance of the loan, you could put your home at risk.

Escrow Account Information

The GFE also includes a separate section referred to as ”Escrow account information,” which indicates whether or not an escrow account is required. This account holds funds needed to pay property taxes, homeowner’s insurance, flood insurance (if required by your lender) or other property-related charges.

If the GFE specifies that you will have an escrow account, you will probably have to pay an initial amount at settlement to start the account and an additional amount with each month’s regular payment.  If you wish to pay your property taxes and insurance directly, some lenders will give you a higher interest rate or charge you a fee.  If your lender does not require an escrow account, you must pay these items directly when they are due.

Summary of Your Settlement Charges

The final section on page 1 of the GFE contains the adjusted origination charges and the total estimated charges for other settlement services which are detailed on page 2.  You should compare the “Total Estimated Settlement Charges” on several GFEs.

Page 2 of the GFE

The price of a home mortgage loan is stated in terms of an interest rate and settlement costs.   Often, you can pay lower total settlement costs in exchange for a higher interest rate and vice versa.  Ask your loan originator about different interest rates and settlement costs options.

Your Adjusted Origination Charges, Block A

Block 1, “Our origination charge” contains the lender’s and the mortgage broker’s charges and point(s) for originating your loan.

Block 2, “Your credit or charge point(s) for the specific interest rate chosen.”

  • If box 1 is checked, the credit or charge for the interest rate is part of the origination charge shown in Block 1.
  • If box 2 is checked, you will pay a higher interest rate and receive a credit to reduce your adjusted origination charge and other settlement charges.
  • If box 3 is checked, you will be paying point(s) to reduce your interest rate and, therefore, will pay higher adjusted origination charges.

Note: A point is equal to one percent of your loan amount.

After adding or subtracting Block 2 from Block 1, “Your Adjusted Origination Charge” is shown in Block A.

In the example shown, the origination charge is $6,750.  No points were paid to reduce the interest rate. Instead, because of the interest rate chosen, the offer contains a $3,000 credit that reduces the adjusted origination charge to $3,750.

Your Charges for All Other Settlement Services, Blocks 3 through 11

In addition to the charges to originate your loan, there are other charges for services that will be required to get your mortgage.  For some of the services, the loan originator will choose the company that performs the service (Block 3). The loan originator usually permits you to select the settlement service provider for “Title services and lender’s title insurance” (Block 4).  “Owner’s title insurance” is also disclosed (Block 5).  Other required services that you may shop for are included in “Required services that you can shop for” (Block 6).

Block 3 contains charges for required services for which the loan originator selects the settlement service provider. These are not “shoppable” services and often include items such as the property appraisal, credit report, flood certification, tax service and any required mortgage insurance.

Block 4 contains the charge for title services, the Lender’s title insurance policy and the services of a title, settlement or escrow agent to conduct your settlement.

Block 5 contains the charge for an Owner’s title insurance policy that protects your interests.

NOTE: Under RESPA, the seller may not require you, as a condition of the sale, to purchase title insurance from any particular title company.

Block 6 contains charges for required services for which you may shop for the provider.  Some of these items may include a survey or pest inspection.

Block 7 contains charges by governmental entities to record the deed and documents related to the loan.

Block 8 contains charges by state and local governments for taxes related to the mortgage and transferring title to the property.

Block 9 contains the initial amount you will pay at settlement to start the escrow account, if required by the lender.

Block 10 contains the charge for the daily interest on the loan from the day of settlement to the first day of the following month.

Block 11 contains the annual charge for any insurance the lender requires to protect the property such as homeowner’s insurance and flood insurance.

Total Estimated Settlement Charges

“Your charges for All Other Settlement Services”, Blocks 3 through 11, are totaled in Block B.  Blocks A and B are added together resulting in the total estimated settlement charges associated with getting the loan. These Blocks are carried forward to the bottom of page 1 of the GFE.

Page 3 of the GFE

Page 3 of the GFE contains important instructions and information that will help you shop for the best loan for you.

Understanding which charges can change at settlement

There are three different categories of charges that you will pay at closing: charges that cannot increase at settlement; charges that cannot increase in total more than 10%; and charges that can increase at settlement.  You can use this as a guide to understand which charges can or cannot change.  Compare your GFE to the actual charges listed on the HUD-1 Settlement Statement to ensure that your lender is not charging you more than permitted.

Written list of settlement service providers

A written list will be given to you with your GFE that includes all settlement services that you are required to have, and that you are allowed to shop for. You may select a provider from this list or you can choose your own qualified provider.  If you choose a name from the written list provided, that charge is within the 10% tolerance category.  If you select your own service provider, the 10% tolerance will not apply.

Even though you may find a better deal by selecting your own provider, you should choose the provider carefully as those charges could increase at settlement.  If your loan originator fails to provide a list of settlement service providers, the 10% tolerance automatically applies.

Using the tradeoff table

The “tradeoff table” on page 3 will help you understand how your loan payments can change if you pay more settlement charges and receive a lower interest rate or if you pay lower settlement charges and receive a higher interest rate.

The loan originator must complete the first column with information contained in the GFE.  If the loan originator has the same loan product available with a higher or lower interest rate, the loan originator may choose to complete the remaining columns. If the second and third columns are not filled in, ask your loan originator if they have the same loan product with different interest rates.

Using the shopping chart

You can use this chart to compare similar loans offered by different loan originators.  Fill in each column with the information shown in the “Summary of your loan” section from the first page of all the GFEs you receive.  Compare each offer and select the best loan for you.

After You Choose the Best Loan for You

After comparing several GFEs, select the best loan for you and notify the loan originator that you would like to proceed with the loan. Keep your Good Faith Estimate so you can compare it with the final settlement costs stated on your HUD-1 Settlement Statement.  Ask the lender and settlement agent if there are any changes in fees between your GFE and your HUD-1 Settlement Statement. Some charges cannot be increased, and your lender must reimburse you if those charges were illegally increased.

New Home Purchases

If you are purchasing a new home that is being built or has not been built yet, your GFE could change.  If the GFE can change, the loan originator must notify you that the GFE may be revised at any time up to 60 days before settlement.  If you get a revised GFE, look at it to determine if the loan and settlement costs it discloses are the best for you.

Changed Circumstances

If there are changes involving your credit, the loan amount, the property value, or other information that was relied on in issuing the original GFE, a revised GFE may be issued.  Only the charges affected by the changed circumstance may be revised.

CalHFA Homeownership Programs Divison

The CalHFA Homeownership Programs Divison provides affordable housing opportunities by offering below-market interest rate mortgage loans to very low-to-moderate income first-time homebuyers. The Program strives to achieve availability of mortgage funds 365 days a year, an equitable geographic distribution of its loans throughout the state, and an equal balance between newly constructed and resale homes. There are several unique features and programs offered which may fit the need of the prospective buyer.

CalHFA establishes partnerships with lenders, local housing agencies, builder/developers, real estate professionals, and other intermediaries in order to develop and deliver its programs. This collaborative approach helps expand homeownership opportunities by maximizing the collective financial resources available to borrowers.

The Homeownership Programs division offers information on:


  • Programs (CalHFA and Prop. 46 Programs)

Mortgage Loan Programs:

  • Homeownership Mortgage Loan Program
  • Builder-Lock (BLOCK) Program
  • Energy Efficient Mortgages
  • HomeChoice Program Information
  • Mortgage Insurance
  • Partnership with Southern California Home Financing Authority (SCHFA)
  • Self-Help Builder Assistance Program
  • Single Loan (SL) Process

Down Payment Assistance Programs:

  • Affordable Housing Partnership Program (AHPP)
  • California Homebuyer’s Downpayment Assistance Program (CHDAP)
  • CalHFA Housing Assistance Program (CHAP)
  • Extra Credit Teacher Home Purchase Program (ECTP)
  • High Cost Area Home Purchase Assistance Program (HiCAP)
  • Homeownership In Revitalization Areas Program (HIRAP)
  • Oakland Teacher Program
  • School Facility Fee Down Payment Assistance Program (SFF)

If you are interested in a partnership with the Homeownership Division, call 916.324.8088, 800.789.2432 or visit their website www.calhfa.ca.gov.


5 Factors That Decide Your Credit Score.

Credit scores range between 200 and 800, with scores above 620 considered desirable for obtaining a mortgage.

The following factors affect your score:

1. Your payment history. Did you pay your credit card obligations on time If they were late, then how late Bankruptcy filing, liens, and collection activity also impact your history.

2. How much you owe. If you owe a great deal of money on numerous accounts, it can indicate that you are overextended. However, it s a good thing if you have a good proportion of balances to total credit limits.

3. The length of your credit history. In general, the longer you have had accounts opened, the better. The average consumer’s oldest obligation is 14 years old, indicating that he or she has been managing credit for some time, according to Fair Isaac Corp., and only one in 20 consumers have credit histories shorter than 2 years.

4. How much new credit you have. New credit, either installment payments or new credit cards, are considered more risky, even if you pay them promptly.

5. The types of credit you use. Generally, it s desirable to have more than one type of credit  installment loans, credit cards, and a mortgage, for example.

For more on evaluating and understanding your credit score, visit www.myfico.com.

Reprinted from REALTOR magazine (REALTOR.org/realtormag) with permission of the NATIONAL ASSOCIATION OF REALTORS .
Copyright 2008. All rights reserved.

Accessing Funds for Rental Assistance Programs

To access funds for rental assistance programs, Housing Authorities respond to Notices of Funding Availability (NOFAs) published in the Federal Register. Each NOFA identifies allocation areas, amounts of funds available per area, and the selection criteria for rating and ranking applications.

Public Housing Authorities are given at least 30 days to submit applications. Interested households apply for assistance through their PHA. A federal program of interest is HUD’s HOME program. It provides grants to state and local governments, which may use them to offer rental assistance. The program’s flexibility allows States and local governments to use HOME funds for grants, direct loans, loan guarantees or other forms of credit enhancement, or rental assistance or security deposits. Visit the HOME Investment Partnership Program page for further information.

Proposition 46 The State of California approved a $2.1 billion dollar bond measure that provides funds for the construction, rehabilitation and preservation of affordable rental housing, emergency shelters and homeless facilities. Proposition 46 has five rental programs. See Table 1.

There are two programs that directly help tenants become homeowners. REALTORS should be aware of these because they constitute valuable tools that renters can use to achieve the dream of homeownership.

Section 8 Public housing vouchers for homeownership: Homeownership vouchers can be used to assist first-time homeowners with their monthly homeownership expenses. Families must meet certain income and employment requirements of eligibility. These vouchers are a solid step to help public housing voucher recipients to become homeowners.

Pay Rent Build Credit: This is a new national credit bureau that tracks rent payments and helps renters build a credit score, thereby overcoming one of the most common obstacles that many renters face: the lack of credit.

REALTORS can participate in any rental assistance program in different capacities:

  • Direct Provider  Develops, administers and manages the program. Activities such as fundraising, publicity, recruiting both tenants and landlords, and screening are part of the daily job. In other words, it requires the creation of a formal rental assistance non-profit organization. This is a time-consuming process that requires a long-term financial and organizational commitment.
  • Partnership with an existing organization  Raising public awareness, fundraising, interviewing, education, financial sponsorship and publicity are some of the forms in which REALTORS can help an existing organization in its efforts to either set-up a new program in the community or support its on-going labor. This has the advantage that limited resources can be used towards a worthy cause.
  • Government Programs Advocate  Championing the use of existing resources towards rental assistance programs and specially those that lead to homeownership. Local officials and housing advocates should be aware of existing financial resources to help renters and use them.

Finally, once the level of participation is decided, REALTORS need to contact any of the following for information, advice or for establishing a partnership:

  • Local shelter organizations. Local groups such as the apartment association, church charities or other housing and homeless support groups.
  • Local housing authority. The city or county housing authority. A very good source for finding the local housing non-profit organizations. They are also the primary source for finding government funds.
  • Local business community. They might be interested in echoing the efforts of a rental assistance program.
  • Local rental organization. Many of these organizations have educational programs.


How to Read Your Settlement and HUD-1

Your Settlement and HUD-1

You can grab the Full 49 Page HUD’s new settlement cost booklet (updated 1/6/2010 with corrections of minor detail)

You have determined what you can afford, found the right house and shopped for the best loan for you. After all the hard work, it is time to go to settlement, but don’t forget to bring your GFE to compare with the charges listed on the HUD-1 Settlement Statement. It is a good idea to review your HUD-1 before your settlement.  Let your settlement agent and lender know that you want to receive a completed HUD-1 at least one day prior to your settlement.


Your settlement may be conducted by your lender or your title insurance company, an escrow company, your attorney or the seller’s attorney.  Regardless of who performs the settlement, there will be many important documents that you will need to sign.  Make sure you carefully read and understand all the documents before you sign them.  Do not be afraid to ask the lender any questions you have about your loan documents.

HUD-1 Settlement Statement

The HUD-1 Settlement Statement (HUD-1) is a form that lists all charges and credits to the borrower and seller in a transaction. You have the right under RESPA to inspect the HUD-1 Settlement Statement before settlement occurs.  When you receive a copy of the HUD-1, compare it to your GFE.  Ask the lender questions about any changes in fees between your GFE and the HUD-1.  Your lender must reimburse you if a closing cost tolerance was violated.

Page 1 of the HUD-1

100 – 300 Series, Summary of Borrower’s Transactions

The first page of the HUD-1 summarizes all of the charges and credits to the buyer and seller.

  • Line 101 is the contract sales price.
  • Line 103 is the total settlement charges from page 2.
  • Lines 106 to 112 lists items you are reimbursing the seller for that were already paid for by the seller, such as property taxes or homeowner association dues.
  • Line 120 is the total of the 100 series section and is the total amount you owe.
  • Lines 200 to 209 contain credits for items paid by you, such as the earnest money deposit and other credits from the seller and other parties.
  • Lines 210 to 219 are credits from the seller for items owed by the seller that are due after settlement.
  • Line 220 is the total of all credits from Lines 201 to 219.  Subtract the amount on Line 220 from the amount on Line 120.
  • Line 303 is the amount you must bring to settlement or the amount you will receive.

Page 2 of the HUD-1

700 Series, Total Real Estate Broker Fees

This section of the settlement statement shows the commissions paid to the real estate agents. There are no corresponding lines on the GFE because the lender does not require this service before you get your loan.

800 Series, Items Payable in Connection with Loan

  • Line 801, “Our origination charge,” lists the lender’s and mortgage broker’s charge for getting you the loan and references GFE Block 1.  In this example, Line 801 designates an origination point of $2,000 for possible tax deductibility.
  • Line 802 lists either the charge for the interest rate (points) or a credit and references GFE Block 2.
  • Line 803 lists “Your adjusted origination charges.”  This amount is the sum of Lines 801 and 802 and references Block A on the GFE.
  • Line 804 is the charge for the appraisal report prepared by an appraiser.
  • Line 805 is the fee for a credit report showing your credit history.
  • Line 806 is the fee paid to a tax service provider for information on the real estate property taxes.
  • Line 807 is the fee paid to the service providing information on whether the property is in a flood zone.
  • Lines 804, 805, 806 and 807 usually reference GFE Block 3.
  • Lines 808 and any additional lines are used to list other third party services required by your lender, including FHA or VA fees.

900 Series, Items Required by Lender to be Paid in Advance

These are charges which the lender requires to be prepaid at settlement.

  • Line 901 lists the daily interest charges collected for the period between the date of your settlement and the first day of the next month.  This charge is disclosed in Block 10 of your GFE.  In this example, the loan closed on 1/31/10, and the interest on the GFE was calculated with a 1/31/10 closing date so the charges are the same on both.  This amount on Line 901 may differ from the amount on the GFE if the settlement date changes.
  • Line 902 lists the charge for any up-front mortgage insurance premium payment due at settlement.  This is one of the charges disclosed in GFE Block 3 of your GFE.  In this example, there is no payment due.
  • Line 903 is the charge for the homeowner’s insurance policy and is one of the charges disclosed in Block 11 of your GFE. In the example, the homeowner’s insurance was paid prior to the day of settlement so the charge is listed as “P.O.C. by borrower”. P.O.C. stands for “Paid Outside of Closing”.  You typically have to bring a pre-paid insurance policy to your settlement.

1000 Series, Reserves Deposited with Lender

This series of the HUD-1 lists the amounts collected by the lender to be placed in your escrow account for future payments of items such as homeowner’s insurance, mortgage insurance and property taxes.  Line 1007 is an adjustment to make sure lenders are only collecting the maximum amount allowed by law.  In this example, even though the first year’s homeowner’s insurance premium has already been paid, the lender has started escrowing money to pay the next bill.

1100 Series, Title Charges

  • Line 1101 lists the charge for all title services and the lender’s title insurance policy.  Title services includes any service involved with providing title insurance, such as title examination, preparing the title commitment, clearing the title to the property, preparing and issuing the title policies and conducting the settlement.  These charges correspond to GFE Block 4.
  • Line 1102 is the amount of the settlement or closing fee if performed by a company different from the one providing title insurance. This charge is part of the charge listed in Line 1101.
  • Line 1103 lists the charge for the Owner’s title insurance policy, if you decided to buy one.  It corresponds to Block 5 of the GFE.
  • Line 1104 lists the charge for the Lender’s title insurance policy which is part of the charge listed in Line 1101.
  • Line 1105 is the Lender’s title policy limit. It often is lower than the value of the property because it only covers the amount of your lender’s lien on your property.
  • Line 1106 lists the Owner’s title policy limit. The liability limit of the owner’s policy is typically the purchase price paid for the property.
  • Line 1107 lists the portion of the title insurance premiums retained by the title insurance agent.
  • Line 1108 lists the portion of the title insurance premiums retained by the underwriter.

1200 Series, Government Recording and Transfer Charges

Government recording charges listed in the 1200 series on the HUD-1 are charges paid to state and local governmental agencies to record important documents such as the deed and mortgage or deed of trust and transfer taxes to legally transfer property.

  • Line 1201 lists all government recording charges and corresponds to Block 7 of your GFE. This represents the cumulative amount the borrower is paying for government recording charges.
  • Line 1202 itemizes specific recording charges for the deed, the mortgage, and any releases of prior liens against your property shown in Line 1201. When the seller pays for an item, such as a release, the charge is listed in the seller’s column.
  • Line 1203 lists the charge for transfer taxes.  Transfer taxes are charged by state or local government to transfer real property or place a new lien (mortgage or deed of trust) on a property. This charge is listed in Block 8 of your GFE.
  • Lines 1204 and 1205 itemize the charges for transfer taxes listed in Line 1203.
  • Line 1206 can be used to list additional items related to recording or transfer charges.

Series 1300, Additional Settlement Charges

Line 1301 is the total of lender required services for which you chose the provider (other than title services). These services are itemized in the lines below 1301. These charges are listed in Block 6 of your GFE.

In addition to services the loan originator required there may be additional services that you chose. In our example, Line 1304 lists a homeowner’s warranty to provide protection for your home’s mechanical systems and appliances. A charge for a pest inspection or survey will appear as a line item in the 1300 series of the HUD-1, if the borrower elected to obtain an inspection or survey that was not a condition of the loan or required by the lender.

Line 1400 is the total of all charges listed in page 2 on the HUD-1 for the seller and you, the buyer.  These totals are also listed on page 1 of the HUD-1.  Your charges appear in Section J, Summary of the Borrower’s Transaction, on Line 103.  The seller’s charges are listed in Section J, Summary of Seller’s Transaction, on Line 502.

Page 3 of the HUD-1

The third page of the HUD-1 is made up of two sections: the Comparison Chart and the Loan Terms. The Comparison Chart will help you compare the charges disclosed on your GFE and the actual charges listed on page 2 of the HUD-1.  The Loan Terms section can assure you that the loan you applied for is the loan you received at settlement.  This section should compare with the “Summary of Your Loan” on page 1 of the GFE.

Comparison Chart

There are three categories in the Comparison Chart: charges that could not increase at settlement, charges that in total could not increase more than 10% and charges that could change.  Compare the charges listed in the GFE column with the charges in the HUD-1 column.  If the charges that cannot increase have increased or the total of the charges that cannot increase more than 10% have exceeded the 10% increase limit, the lender must reimburse you at settlement or within thirty (30) days after settlement.

In the example above, the “Charges That In Total Cannot Increase More Than 10%” were only increased by $70 or 4% and did not exceed the 10% tolerance. For the category “Charges That Can Change” in this example the borrower selected a pest inspection and survey provider that were not on the written list.

Loan Terms

The last section on the HUD-1 clearly sets forth the terms of your loan, including the loan amount, your interest rate and your monthly payments.  It will also disclose the monthly escrow payment account information.  It lets you know whether your interest rate, your loan balance or your monthly payments can increase and whether your loan has a prepayment penalty or a balloon payment. Look at this information carefully and make sure that you are getting the loan and the terms that were set forth in your GFE.

If the loan terms do not match the loan terms on your GFE or if you have questions, contact your lender before signing any documents.

CalPATH – California State Teachers Retirement System (CalSTRS)

CalPATH is a program available exclusively to Mountain West Financial clients and is designed to benefit those that serve our local communities.

To qualify, you must be a member of one of the following:

  • California State Teachers Retirement System (CalSTRS)
  • California Public Employees Retirement System (CalPERS)
  • Legislators Retirement System (LRS)
  • Judges Retirement System (JRS)

With no additional qualifying, benefits of the a CalPATH home loan include:

  • Reduced processing and underwriting fees
  • FHA or Conventional loan options available
  • Can be used with other downpayment assistance programs
  • Available for high balance loans
  • 15 or 30 year terms available
  • No additional qualifying follows FHA & Conventional standard guidelines
  • One free float down during the first 30 days after the rate is locked, if rates become lower you can “float down” to that new lower rate

Redevelopment Agencies Set-Asides

To accomplish revitalization of blighted areas Redevelopment Agencies (RAs): make loans to small businesses and non-profit incubators; alter, improve, modernize, reconstruct, or rehabilitate existing structures (commercial, residential, industrial and retail); and engage in other activities geared to the preservation of affordable housing, such as the creation or rehabilitation of affordable and market rate housing. The tax increment is the financial backbone of the redevelopment agency.

As projects are developed and property values increase, the agency retains all of the resulting increase in property tax revenues. Other local governments (e.g., counties, cities, school districts and special districts), whose jurisdictions overlap, receive property tax revenues based on the property values existing before the redevelopment agency was created. The RA takes the tax increment revenue and spends it on infrastructure and other public improvements that facilitate additional redevelopment projects.

State law requires all redevelopment agencies to set aside 20 percent of their tax increment dollars to be spent on programs that increase, improve and preserve the supply of housing for very low-, low- and moderate-income households. If no project is provided within a redevelopment project area, then the funds must be used to build twice that amount elsewhere. Possibilities include financial assistance to upgrade existing units, the construction of new housing, and improvements to public facilities and infrastructure that service low- and moderate-income neighborhoods.

Examples of Affordable Housing Programs offered by RAs:

  • Acquisition, Rehabilitation and Donation of Real Property
  • First-time Buyer Program
  • Post-Buying Counseling
  • Rental Housing
  • Mobile Home Parks
  • Transitional Housing
  • New Construction for Owners and SELF-HELP Organizations
  • New Construction for Rental Families and Seniors
  • Rehabilitation for Owners and Renters
  • Remediation of Soil Contamination
  • Financing insurance premiums during construction or rehabilitation

Development of plans, payment of principal, interest, financing or carrying costs on bonds, loans, advances or other indebtedness to finance low- and moderate-income housing

Although not common, it is possible for RAs to declare exemptions.  Exemptions refer to tax increment agencies allowed an excuse from deposit to the Low-Moderate Housing Fund under specific conditions. Before taking an exemption, the jurisdiction must have an adopted housing element that HCD determined complies with State housing element law.

Also, agencies must annually adopt a resolution making one of the following findings:

  • Community has no need to increase, improve or preserve the supply of affordable housing
  • Less than the required minimum set-aside (20%) is sufficient to meet the community s need
  • Community is making a substantial effort to meet its affordable housing need that is equivalent in value to the set-aside amount (only applies if obligations were incurred before May 1991).

RAs can determine autonomously the housing situation in the community and act accordingly. An agency s resolution, unlike the jurisdiction s housing element, is not submitted to HCD for a determination of compliance. 1

Homebuyer Assistance

RAs have been highly involved in creating small communities of affordable housing. One way to do so is by making land offers to developers who are interested in building multi-unit complexes. The developer must set aside a percentage of the units for affordable housing. Some units will be restricted to either low or moderate-income buyers. If the units are rentals, the holding percentage will be for those who earn less than 100 percent of the median area income.

RAs acquire the land and sell the titles to developers at very reasonable prices so it can replenish its funds to maintain the program. Some of the money from the sale will be set aside to help first-time buyers with silent second loans. RAs also stay very involved in the plan and design of the units to ensure that the complex enhances the area.

Many redevelopment agencies have made good use of their set-aside dollars and have partnered with local housing non-profits to deliver services to the community. The previous list is an example how RAs can put their affordable housing set-aside money to good use. It represents a highlight of the variety of programs to which redevelopment agencies can apply their money.

REALTORS can approach their local redevelopment agency by presenting a concrete housing project. There is no mechanism for joint-participation, so REALTORS would have to approach any staff member and ask him/her for directions on who to contact to make possible the project. This lack of mechanism means that the parts involved have room to work on the project s objectives and delivery, giving opportunity to novel ideas and joint partnerships.

Important Links:

  • List of Redevelopment Agencies
  • Status of Low and Moderate Income Housing Fund: information about redevelopment resources available in your area.
  • Department of Housing and Community Development, Redevelopment Housing Activities in California Fiscal Year 2000/2001, Executive Summary, p. 4.


Wells Fargo and NeighborWorks America Help 1,600 Successfully Buy Homes with Down Payment Assistance

Wells Fargo, one of America’s leading financial services companies, and NeighborWorks America, a national non-profit organization which creates opportunities for people to live in affordable homes and improve their lives, today marked the one-year anniversary of their NeighborhoodLIFTSM and CityLIFTSM programs by announcing the efforts have helped 1,624 moderate income buyers purchase homes with the help of homebuyer education training and $27 million of down payment assistance grants. In addition, 460 applicants have a contract to purchase a home through the programs with the help of nearly $8 million for down payment assistance. More than $64 million remains available for down payment assistance grants through LIFT programs in participating housing markets.
The $170 million initiative created by Wells Fargo and NeighborWorks America has sought to keep the dream of homeownership within reach for prospective homebuyers facing down payment challenges in cities deeply affected by the housing crisis. The programs – first launched in February 2012 in Los Angeles and Atlanta – have made down payment assistance grants ranging from $15,000 to $30,000 per homebuyer depending on the housing market.
Pre-qualified applicants must meet certain criteria including annual income not exceeding 120 percent of the median income for the area; complete required homebuyer education training administered by HUD-approved housing counselors such as NeighborWorks America affiliates; and earn their down payment assistance grants when they buy and reside in an eligible home for five years. Mortgages available through the program are not exclusively offered through Wells Fargo, America’s largest mortgage lender, and the down payment grants, while funded byWells Fargo, are administered by NeighborWorks America’s network of non-profit affiliates.
“NeighborWorks America and Wells Fargo have reached an important milestone in helping more than 1,600 families achieve the dream of homeownership through the LIFT programs,” said NeighborWorks America CEO Eileen Fitzgerald. “These programs contribute to community stabilization because they promote successful, sustainable homeownership that’s grounded in making responsible buying choices.”
“At Wells Fargo, we believe in programs like LIFT because they provide community-based solutions that deliver real help to families,” said Jon Campbell, Wells Fargo’s executive vice president and head of Government and Community Relations. “These programs encourage the kind of collaboration that needs to keep happening between the private sector, the non-profit sector and elected and public officials.”
Since the inception of the programs, more than 14,000 potential home buyers have attended NeighborhoodLIFTSM and CityLIFTSM events in the following cities: Los Angeles, Atlanta, Phoenix, Las Vegas, Houston, Miami, Tampa, Orlando, Jacksonville, Minneapolis/St. Paul, Philadelphia, Washington, DC, Chicago, Sacramento, and Oakland. The next CityLIFTSM program homebuyer event is scheduled April 5-6 in Baltimore. Visitwww.nhsbaltimore.org for more information about the CityLIFTSM program in Baltimore.
For more information about LIFT programs, go to www.neighborhoodlift.org. For more information about NeighborWorks America, go to nw.org.
About NeighborhoodLIFTSM 
The NeighborhoodLIFTSM program is collaboration between Wells Fargo Bank, N.A., the Wells Fargo Foundation, NeighborWorks America, an independent non-profit organization, and local non-profit organizations. The NeighborhoodLIFTSM program is designed to provide sustainable homeownership initiatives in cities affected by the housing crisis. A video about the NeighborhoodLIFTSM program is posted atwww.youtube.com/wellsfargo.
About CityLIFTSM 
The CityLIFTSM program is designed to provide down payment assistance and homebuyer education programs in areas most impacted by the financial crisis. The program was developed in connection with the 2012 settlement with the U.S. Department of Justice, and is a collaboration between Wells Fargo Bank N.A. and NeighborWorks America.
About NeighborWorks America 
For 35 years, NeighborWorks America has created opportunities for people to improve their lives and strengthen their communities by providing access to homeownership and to safe and affordable rental housing. In the last five years, NeighborWorks organizations have generated more than $19.5 billion in reinvestment in these communities. NeighborWorks America is the nation’s leading trainer of community development and affordable housing professionals.
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