HUD, Florida Explore Credit Program For Stalled Loans

HUD, Florida Explore Credit Program For Stalled Loans

BY PAMELA M. MARRON | CONTRIBUTING WRITER, NATIONAL MORTGAGE PROFESSIONAL

Much has been learned after listening to real estate agents and mortgage loan originators (MLO) on four priority issues that continue to stall pre-purchase clients from obtaining a mortgage.

Within the last month, an effort to get specific resources lined up to assist pre-purchase clients who have encountered roadblocks to obtaining a mortgage has been ramped up. Prospective homebuyers often lose contract bids on limited homes for sale to cash buyers and flippers who don’t ask for seller concessions and can close quickly.

To combat this, a pilot program that connects HUD housing counselors to MLOs and real estate agents to assist challenged clients needing pre-purchase help gained speed and changed course. Instead of seeking agencies that have all or most of the needed services at one organization, locating and promoting specific agency programs that assist clients in the four areas of help needed is the goal. The four areas of assistance needed are:

· Credit help

· Student loan debt refinancing

· Down payment assistance

· Budgeting A

Zoom call was initiated by colleague Ellie Pepper, Relationships and Innovations Director at the National Housing Resource Center and organized with Michele Hartson, Executive Director of the Florida Housing Counseling Network and included seven HUD housing counseling agencies (HCA) and two MLOs.

CREDIT HELP IS PRIMARY CLIENT NEED

Dealing with multiple credit issues that require attention to detail to get fixed as well as help interacting with creditors are primary needs of prepurchase clients that are halted from purchasing a home. Loan originators and real estate agents have long voiced that having a person-to-person resource available that can assist these pre-purchase clients to stay on top of required tasks and provide this assistance for a reasonable cost is greatly needed. Too often, clients are directed to credit repair companies that dispute negative credit that returns when those disputes are required to be deleted during a mortgage process. Most MLOs have access to credit tools such as CreditXpert Wayfinder and What If Simulator but don’t know how to use tools to their full capacity or don’t have the time.

So, Russell Graves, Executive Director of HUD HCA’s Consumer Credit and Budget Counseling and National Foundation for Debt Management spearheaded Homebuyercred.org, a deep dive credit improvement program to obtain home ownership. HUD certified counselors or certified debt management professionals work with pre-purchase clients to resolve credit issues and build better credit. These counselors follow up with the client every 30 days until the client reaches their desired score. This service has a referral feature where the referring real estate agent or loan originator can keep track of the client’s progress with the client’s permission. There is a fee for this service of $179, but loan originators can provide a credit back to the client for this fee at the loan closing.

STUDENT LOAN DEBT REFINANCING

This service will address refinancing existing student loan debt to payments commensurate with current income and to refinance defaulted student loans. A few resources have been provided and are being investigated.

DOWN PAYMENT ASSISTANCE (DPA)

DPA help with down payment, closing costs and prepaids can make prospective home purchasers competitive on a contract because then seller assistance with these funds is not needed. Knowing details about 1) all available DPA programs and 2) DPA differences from 1st mortgage underwriting criteria is a struggle for MLOs. DownPaymentResource.com is a paid resource that houses incredible detail about all U.S. DPA programs including popular county SHIP programs and city and state programs. But because of COVID, funds for some state, county and city programs have dwindled or have been diverted to other areas of need making some of these programs unavailable at present. So, Downpaymentresource.com started adding wholesaler DPA programs that are available to mortgage brokers and include Land Home Financial Services programs and Chenoa Fund partners such as Orion Lending.

BUDGETING FOR A HOME

All HUD HCA’s have home budgeting help built into the DNA of their organizations. This seems like an area that most prospective homebuyers should know, but this area of help is greatly needed for younger home purchasers. A word about millennial purchasers…. many of them see homeownership as a far-off dream and are willing and relieved to receive education! Their hopefulness when they are provided options to obtain homeownership is inspiring!

Pamela M. Marron is a senior loan originator with Innovative Mortgage Services Inc.