Remove Tax Lien for possible Mortgage Approval

Many times, new home buyers in Texas or current home owners wishing to refinance in Texas apply for mortgage financing only to discover that they have an IRS Tax Lien reporting on their credit report that has negatively impacted their credit scores to a point that they cannot qualify for a mortgage. Is there a way to remove a tax lien for possible mortgage approval?

In all cases, Fannie Mae and Freddie Mac will require the Federal Tax Lien to be paid off at or prior to funding — and this is assuming that the Federal Tax Lien has not significantly devastated the credit scores of a borrower to qualify for a mortgage in the first place to get Lender Approval. A repayment plan is not acceptable.

For FHA and VA financing (assuming qualifying credit scores), a person is not eligible for a mortgage until:
• The delinquent account is brought current, paid, or otherwise satisfied, or
• A satisfactory repayment plan is established between the borrower and the Federal agency owed, which is verified in writing.

Tax liens (in this case) may remain unpaid provided the lien holder subordinates the tax lien to the Government-insured mortgage. Of course, all this is subject to Underwriting approval and possibly additional Lender “overlay” requirements.

Having a Tax Lien on a credit report can not only ruin one’s credit scores needed to qualify for mortgage financing — but it can devastate one’s dream of home ownership by not being able to qualify for a mortgage to purchase a new home or qualify to refinance a current mortgage.

There is hope! If you are aware of a Tax Lien reporting on your credit report, you are now empowered with knowledge on a way to increase your credit worthiness for possible mortgage approval if you take action as soon as possible. Read on….

The IRS may now issue a withdrawal of a filed Notice of Federal Tax Lien after the lien has been released. If you wish to have the Notice of Federal Tax Lien withdrawn, you must request the withdrawal in writing.

If you are a qualifying taxpayer and meet the eligibility requirements, you may have your tax lien withdrawn after entering into a Direct Debit Installment Agreement (DDIA). If you are currently on a regular installment payment agreement, you may convert to a DDIA. As mentioned, your request for lien withdrawal must be in writing.

It is important to know that a withdrawal of a federal tax lien is a lot more beneficial than a release as a withdrawal expunges the lien immediately from the debtor’s records and it is as if the lien had never been filed.

Upon further review of the IRS eligibility requirements, a huge benefit in relationship to mortgage financing (I believe) is that you can ask for a lien withdrawal with the IRS even if you haven’t fully repaid the debt, as long as the amount that you currently owe to the IRS doesn’t exceed $25,000.00. Wow – this is big! You also must agree to pay off the rest via monthly debits from your bank account. The IRS won’t withdraw the lien until at least three (3) consecutive debits to your bank account has been made.

This may be “key” to possibly qualifying for mortgage financing on a new home purchase for buyers in Texas or a refinance for existing home owners. If the Tax Lien no longer reports on the credit report, the credit scores should increase enough to qualify for mortgage financing sooner than later.

In practicality, this means someone who has an IRS tax lien can improve their creditworthiness to a Mortgage Lender by opting to go into the DDIA and eventually having the IRS withdraw their tax lien. It doesn’t guarantee that someone who couldn’t get mortgage approval in the State of Texas before will now be approved, but it is a huge step in the right direction as it should help improve credit scores for qualification purposes – and the hope of home ownership sooner than later.

If you or anyone you know has a federal tax lien, please share this with them by posting to their social media site below. If you are visiting my blog for the first time, please subscribe. If you are in need of any additional mortgage related information for your new home purchase in Texas or to refinance your home mortgage in Texas, please call our office at (713) 528-0333. You can also visit our website.

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Great news for our U.S. Veterans – Affordable Home Mortgages!

Great News for our Veteran’s Home Loans effective October 1, 2011. The VA Funding Fee is dropping! If you are a Veteran and looking to purchase a home in the Houstonarea and throughout the great State of Texas, now is the time to buy!

Not only does a Veteran qualify for 100% mortgage financing with NO money down, effective October 1, 2011 the VA Funding Fee is dropping! Add to this that current interest rates are extremely favorable makes now the Time to Buy in Texas!

Currently, a first time Use of Entitlement for a Veteran on a purchase is 2.15% and will drop to 1.40%. The Subsequest Use of Entitlement is currently 3.3% and will drop to 2.8%.

If you are a Veteran and you are putting 5% down on a purchase, the first time Use of Entitlement is 1.5% but will be cut in half to 0.75%. The Subsequent Use will also be cut in half from current 1.5% to 0.75%.

If a Veteran is putting 10% down on a purchase, the first time Use of Entitlement along with the Subsequent Use of Entitlement is 1.25% and will drop to 0.50%!

This is great new for our U.S. Veterans. Fairway Mortgage in Houston is a VA approved residential mortgage Lender. We Underwrite and Fund all VA mortgage transactions to include both purchase and refinance residential mortgages.

Fairway Mortgage is also a proud sponsor of the Boot Campaign. We support our U.S. Troops and wounded warriors. The Motto of the Boot Campaign is “When they come back – We give back“! Get YOUR Boots on and please join in supporting our troops. Please visit the “link” to the Boot Campaign above. You will be glad you did!

If you are a Veteran looking to purchase a new home or refinance your existing home in the State of Texas and/or throughout the Houston area, please call the office of Fairway Mortgage at (713) 528-0333.

Real Estate Agents and the MLS: How YOU Impact the New Appraisal Standards!

Big Changes in Appraisal Standards Begin Today – Sept 1 2011:

Appraisals continue to be a challenge in many real estate transactions. If you live in Texas and have ever had value come in low, then you know how frustrating it can be to look at the comparable sales and try to make sense of how the Certified Appraiser came up with that value.

Underwriters and Lending Investors throughout the country struggle to make sense of the Appraiser’s commentary and adjustments on appraisals as  well.

In an attempt to provide consistency and accuracy to the appraisal process, Fanniemae and Freddiemac have implemented the UMDP (Uniform Mortgage Data Program) and — ready or not, it rolls out on all appraisals completed on or after September 1,
2011 (today)! Appraisal Spotlight on Housing

FHA has issued guidance that they will follow suit shortly thereafter.

So what does this mean?

The MLS is the most common source Appraisers use for their information gathering on comparable sales and currently, it MAY OR MAY NOT provide all of the data the Appraiser will be required to report.

Therefore, they will have to call you (the Realtor) to get the information if you’re the Listing Agent and have not accurately
input the information into the MLS to begin with. This will slow things down somewhat — and your timely response will assist in
keeping the desired turn times on appraisals to a minimum.

Fortunately for the Appraiser members to the Houston Association of Realtors (HAR) MLS, the HAR system is quite comprehensive which will hopefully expedite the new UAD (Uniform Appraisal Dataset) requirements and eliminate any potential delays to the mortgage financing process for all parties involved in a transaction.

It is up to all HAR MLS members and Realtor partners responsible for inputting the property data into the MLS to be
sure they are detailed from the beginning — and (just as important) that they keep up with any updates and changes to the status of the property from listing to closing.

Here are some of the significant data changes taking affect September 1, 2011:

Days On the Market: Days on market (DOM) is now defined as the total number of continuous days. DOM is required for the
subject and the comparables.  So, even if it is taken off the market for a short while and then relisted, the appraiser will have to count all of the days it has been listed.

Offering Price: The original offering price and history of all price changes must be reported.

Sale Type: Sale type must now be reported and the allowable choices are:

1. REO sale

2. Short sale

3. Court ordered sale

4. Estate sale

5. Relocation sale

6. Non-arms length sale

7. Arms length sale

Financial Assistance: All financial assistance must be reported.

Site Area: Sites and parcels with less than one acre must be reported in square footage. Sites over 1 acre are reported in acres.

Property View: A view rating and view factor must be assigned to all sites. The allowed rating choices are: Neutral, Beneficial or
Adverse. There are 12 established view factors which include water view, golf course view, industrial view, power lines, etc.

Property Style: Appraisers must use appropriate architectural design type indicators such as “Ranch”, “Colonial”, “Rambler”,
“Farmhouse”, etc. Descriptions such as 1 story, 1 1/2 story and 2 stories are no longer acceptable.

Condition of the subject property: An overall condition rating must be assigned from the predefined condition categories provided. The appraiser must also report any “material work” done to the kitchen and bathrooms in the last 15 years. The work must be categorized as “not updated”, “updated” or “renovated”.

Sale Date of Comps: The appraiser must now report the contract date as well as the closing date of all comps.

Quality of Construction: This is one of the most significant changes being made!

The appraiser must report a quality of construction rating if the subject and all comps from a list of 6 predefined quality levels.

AMC Reporting: The appraiser is now required to report the name of the Appraisal Management Company involved in the assignment.

In closing, Big Changes in Appraisal Standards begin September 1, 2011.  Despite all of these changes, nothing takes the place of the Underwriter’s review in the process. It is ultimately the Underwriter who is held responsible for insuring that the appraisal is acceptable and supports the value of the property.

There is an internal process that takes place once the appraisal is reviewed in underwriting that tests the Appraiser’s valuation result against an Automated Valuation Model for QC purposes. In the Fairway Mortgage (Houston) “internal ops” system known as Fraudguard – if this QC process detects that there are other, potentially closer or more recent comparable sales, it will  “red flag” the appraisal data and the Underwriter may have to further investigate value through the use of a review appraisal or by getting additional  information from the current Appraiser.

So, as you can see — it’s never over these days until we have a firm  commitment from the Underwriter. Let’s hope that all parties involved in a real estate transaction from the Appraisers, to the Realtors that input and maintain the relevant data into the MLS system, provide the most complete and accurate data in order to provide an appraisal that results in Fair Market Value.

Together – we are better! Let’s all work to be Better Together!

Who’s Your Browser?

According to the “psychometric consultancy’ outfit AptiQuant, users of Internet Explorer have a lower than average IQ. Based on what?

Who really believes this stuff?

AptiQuant sent online IQ tests to more than 100,000 people and, based on the responses it got, came to the fascinating conclusion that users of the Internet Explorer browser are likely to have a lower than average IQ.

Those that use Firefox had the highest IQ and Chrome and Safari fell in between. The study supposedly had the same results when it was administered five years ago!

On its website AptiQuant say it “provides tools to corporations to help them measure the mental ability of existing or potential employees.” Ahh….okay!

So the question is: Who’s your Browser?

Things that make you go hmmm??