Working Together
Real Estate Agent & Mortgage Originator,
Creating a Successful Real Estate Transaction
Presented By Mike Elwell
All American Title Company
Working Together

The Role of the Mortgage Originator and
Realtor®
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The Past
Low Credit Scores / O % Down payment
Stated / No Doc
Appraisal Standards
Traditional owner / seller
Routine / Cookie Cutter PA
Working Together

The Role of the Mortgage Originator and
Realtor®
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The Present
Changes, Changes, Changes.
But…
By working together, the Real Estate process
today can be manageable.
The Origination Landscape has Changed!
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August 1st 2007 New Laws went into effect
for Mortgage Originators in Minnesota
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Reasonable Ability to Pay
Agency
Tangible Net Benefit
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Churning
Escrow Disclosure
27 Standards of Conduct
The Origination Landscape has Changed!
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Appraisal Requirements
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Underwriting Guidelines
 Change on a weekly or daily basis!
 Have questions? Check with your mortgage
professional.
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Private Mortgage Insurance
 Changes the type of transactions we can do
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Products & Programs – Back to the Basics
The Origination Landscape has Changed!
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HVCC - Home Value Code of Conduct
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Effective May 1st 2009 (Excludes FHA)
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Appraiser independence, valuation protections, and
enhance the overall integrity of the valuation process.
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The lender shall ensure that the borrower is provided, free of
charge, a copy of any appraisal report concerning the borrower’s
subject property immediately upon completion, and in any event
no less than three days prior to the closing of the loan. The
borrower may waive this three-day requirement. The lender may
require the borrower to reimburse the lender for the cost of the
appraisal.
Realtor can have contact and communicate with the appraiser
Rescission period does not count as 3 business days.
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The Origination Landscape has Changed!
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HOEPA- Home Ownership and Equity Protection Act
HERA- Housing and Economic Recovery Act
 MDIA- Mortgage Disclosure Improvement Act (Effective
July 30th )
 No more quick closings!
 7 business days for disclosures.
 Collection of fees up front.
 Regulation Z: changes to Truth in Lending
 .125% Change to initial APR, must re-disclose
 Homebuyer must receive Truth in Lending
disclosure 3 business days before closing.
4 Steps to Creating A Successful
Real Estate Transaction
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Pre-qualification
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Full Application
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Processing and Underwriting
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Closing the Transaction
Pre-qualifying Home Buyers - Step #1
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Communication

Realtor ® and Loan Originator
working for the common goal!
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Building a Plan and a Strategy
that best fit the needs for the
client. Over Communicate and
Allow sufficient time!
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Working together. Efficiency.
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Gathering all the information!!!!
When in doubt, check it out!
Pre-qualifying home buyers - Step #1
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The Four C’s: The Foundation of Prequalifying
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First C: CHARACTER – Defined through the
credit history, business status, employment
history, and reputation of the applicant‘s
The credit history helps assess the applicant's
financial obligation, current and past as well as
the applicant's willingness to pay.
Pre-qualifying Home Buyers - Step #1
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Credit Scores and how they effect the
mortgage transaction today.
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Credit scores range from 300 – 850
Ideal score today is 740 + for conventional
mortgage transactions.
FHA / Lenders now have a minimum credit score.
Not like the old days of lending.
Watch out for the pit falls of credit.

BK, Judgments, Liens, Collections, Etc……
Pre-qualifying home buyers - Step #1
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The Four C’s
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Second C: CAPACITY – The ability to earn a
living. This is based on the applicant's education
received, field of study, reputation and
professional training & skills.
Can the applicant's generate enough income to be
able to support the debt over a period of time?
Will the applicant's professional training & skills
provide a job that will allow them to support the
debt over a period of time?
Pre-qualifying home buyers - Step #1

The Four C’s
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Third C: CAPITAL - The financial scenario at this time
and financial history for the past 2 years of the applicant's.
Cash on hand, what is available for down payments,
closing cost and the ability to make payments to be
incurred?
Assets vs. Liabilities? What type of assets are they? Are
they quality, stable, and liquid?
Stocks, Bonds, Checking and Savings Accounts, 401K,
Life Insurance, Owe vs. Own.
Pre-qualifying Home Buyers - Step #1
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The Four C’s
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Fourth C: Collateral – The valuable property of
the applicant's and the value of the property to be
purchased.
Value of the property vs. loan amount to secure
the loan. Does the property meet the lender’s
standards and those of the secondary market.
Loan To Value
Pre-qualifying Home Buyers - Step #1
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Floor of
Prequalification
FHA
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Fannie & Freddie
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31% / 43%
28% / 36%
Budget
Pre-qualifying Home Buyers - Step #1
Pre qualification Results
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Communicate borrower needs.
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Property type
Minimum down payment
Down payment assistance
FHA
Seller Paid Closing Cost
Now Let’s go Shopping!
Pre-qualifying Home Buyers - Step #1
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Mortgage Programs
 Fixed Rates Mortgages
 Adjustable Rate
Mortgages
 Interest Only
 Government Programs
 FHA & VA
 Specialty Programs
 USDA Rural
Programs
 MHFA
 CASA
Back by Popular Demand: FHA!
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3.5% Down Payment
1.75% Up Front Mortgage Insurance
Safe & Secure
Low Monthly Mortgage Insurance
Gift Money
HOP Program Administered Through MHFA
FHA Excluded from HVCC
Conventional Appraisal Standards
Seller Paid Closing Costs – 6%
Back by Popular Demand: FHA!
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When in Doubt, Ask your mortgage
Professional
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203K Program.
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Do I need a “Certificate of Occupancy?”
FHA Anti-flipping Statutes.
Good Neighbor Next Door Program-GNND
Collateral: Is a town home really a condo?
Credit Standards for FHA: lender driven
Non occupant co borrower.
Conventional Mortgage
Freddie Mac or Fannie Mae
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Underwriting guidelines are strict.
Comply under HOPEA, HERA etc…
HVCC compliance
Larger Down Payment
Private Mortgage Insurance
Allow Enough Time
Pre-Qualification to Pre-Approval

What is the difference between Pre-Qualification and
Pre-Approval??
 The
Subject Property
Pre-Qualification to Pre-Approval
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Pre-Approval Letter
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Pre-Approval letter is
good as the Loan
Originator writing it!
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Ask for Credentials.
Full Application – Step #2
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Purchase Agreement : what we
need to know!
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Earnest Money
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Subject Property
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Purchase Price
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Closing Date
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Financing Contingency
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Seller Paid Closing costs
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Buyers Financial Disclosure
Statement
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Great Tip: Proof of Funds!
Full Application – Step #2
Full Application: Gather all the information
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Uniform Residential Loan Application
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Disclosures
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Good Faith Estimate & Truth In Lending
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Who we are
What we do
What we cannot do
RESPA Reform!! Effective January 1st 2010!
Collect ALL documentation.
Processing / Underwriting – Step #3
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How we get the Approval
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Desktop Underwriter
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Loan Prospector
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Back to Manual Underwriting!
Processing / Underwriting – Step #3
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Role of the Title Company
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Quarterbacking the Transaction
Coordinating & Scheduling
Being Proactive and Managing
the Closing Process
Communication
Efficiency
REO & Short Sales
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Managing both sides of the
transaction!
Processing / Underwriting – Step #3
Maintaining Communication
Throughout the Transaction.
Processing / Underwriting – Step #3
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Appraisal Process
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Include the Purchase
Agreement
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HVCC- Allow enough
time!
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Meet the appraiser at
the home!
Processing / Underwriting – Step #3
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Clear to close.
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Full Underwriting
approval!
Closing the Transaction – Step #4
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10 office Locations
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New Hudson Office
Direct Connect
Full Production Center
Flexibility
Value Added Services
Experience
Leadership
Active Ownership
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Partnering in Your Success!
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Value Added Services and Seminars
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“The Eight Hundred Pound Gorilla in the Room” A
Workshop on Short Sales, Potential Realtor Liability,
and Developing listings
“1031” Exchanges”
“Commercial Real Estate 101”
“RESPA Reform”
And more………