How the shutdown will affect your loan application

 Mortgage Process, Residential Mortgage  Comments Off on How the shutdown will affect your loan application
Dec 272018

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By G. Steven Bray

If you’re in the middle of the homebuying process, you may have some concerns about the government shutdown. Even though it’s only a partial shutdown, the parts of the government that are closed are kind of important to the mortgage world. However, the potential impact on your application depends on the type of loan you’re using.

If you’re using a conventional (Fannie Mae or Freddie Mac) loan, the shutdown probably won’t affect you at all. Fannie and Freddie operate independently of the government budget.

I see mixed impacts on FHA borrowers. Most borrowers will be unaffected as most FHA systems are automated, and those system remain online. However, if your situation requires human intervention, you may experience delayed processing. Additionally, FHA will not insure any reverse mortgages during the shutdown.

The VA is fully funded, and I don’t expect any impact on most VA loans.

The USDA, on the other hand, is shut down. USDA will not issue commitments during the shutdown, which means most lenders will not fund USDA loans.

If your loan requires a new flood insurance policy, expect a delay. Even though the National Flood Insurance Program is funded through May, FEMA is disallowing the issuance of new or renewal flood insurance policies during the shutdown.

Many lenders require verifications from the IRS or Social Security Administration as part of the loan process. Neither agency will process requests during the shutdown. Check with your lender as to whether this will impact your loan. Some lenders are temporarily suspending the verifications unless there’s an issue of data integrity, such as an unconfirmed Social Security number.

Finally, if you’re a government employee, and your agency is shut down, expect a delay as your lender won’t be able to verify your employment during the shutdown.

Getting a mortgage without leaving your bedroom

 Mortgage Process  Comments Off on Getting a mortgage without leaving your bedroom
Jul 232018

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By G. Steven Bray

The real estate and mortgage industries historically have been paper intensive. Getting a mortgage typically involved signing lots of paper documents. That is changing, and many companies now allow you to apply for a mortgage online, but a truly paperless mortgage process has been elusive. Documents signed at closing require a notary seal, and Texas law required a notary to be physically present when a borrower signed the closing documents.

That changed this summer with the implementation of HB 1217, which introduced online notarization to Texas. To understand why it took so long for this to become a reality, you have to consider a notary’s functions.

The concept of a notary public dates backs to at least ancient Rome, and today’s notary public still operates as an officer of the State. A notary’s primary duty is to show that a disinterested party has notified the signer of a document as to the significance of that document and has ascertained that the signer’s identity, signature, and reasons for signing the document are genuine. That was difficult to do in the past without the signer physically appearing before the notary.

HB 1217 has allowed us to ease our way into the 21st century by redefining “personal appearance” to include the use of two-way audio-video communications. With this, Texas becomes the third state to allow notarization of documents this way.

Being an online notary requires a special commission, and online notaries have extra record-keeping responsibilities, so it may take a while before online notarization becomes common. The state also allow online notaries to charge a small fee for the service.

I understand the first online mortgage closing in TX occurred a couple weeks ago, and it may not be too long until you can buy a home start to finish without getting out of your pajamas.