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2017 in Review

Gifts That Keep On Giving, Version 2017

By Scott Drescher, Highlands Residential Mortgage and 2017 Chairman, CCAR’s REALTOR®/Lender Committee

2017 was a positive year, despite individual struggles that some of us may have endured. The CCAR REALTOR®/Lender Committee can point to improvements in the mortgage landscape practically every year, even those that were marred by over-regulation after the market crash. However, this year we received gifts, from Fannie Mae in particular, that will keep on giving throughout 2018, as well as some improvements in other parts of the industry. Setbacks? Sure, there are always a few setbacks, too, but the positives outweighed the negatives. In case you missed any, here are some of the ones we believe stood out.

At the beginning 2017 (and it seems soooooo long ago now), FHA was poised to lower the mortgage insurance premium for new mortgages, but it was quashed. That was a disappointing start to the year, but it turned out not to portend a bad year for home buyers.

Mid-year, Freddie Mac explicitly shut down 1% down payment mortgages that were the 3% down payment mortgages with lenders rebating 2% of the sale price to go toward the down payment. The problem for both agencies is that lenders were not following their guidelines, particularly when it came to not charging a higher rate to use premium pricing to pay for the rebate. Since lenders only net less than .60% (according to the 2016 report from Mortgage Bankers Association), it would mean that lenders who follow the rules would have to pay over three times the profit from other loans to fund the losses from just one, 1% loan – a bad idea for any business.

Qualifying buyers for North Texas’ ever higher sale prices is an ongoing challenge since prices began to rise after the recession. The Agencies (Fannie Mae and Freddie Mac) made it a little easier in 2017 in four ways. First and the most important by far, they raised the maximum debt ratio 50% for down payments less than 20%. Second, the Agencies both will allow one year’s tax return for self-employed borrowers when the borrowers have owned their business for at least five years. Third, non-mortgage debts paid by others will not be counted in the debt ratio of borrowers even if the payer is not a borrower on the debt. Fourth, Fannie Mae will allow more flexibility in using a lower payment for student loan payments than old way of using 1% of the balance that was calculated prior. These changes could all allow for substantially higher sale prices than before.

Another improvement that may occasionally create some headaches or even busted closings is the removal of liens and judgments from credit reports. This puts greater emphasis on the fraud guard reports lenders use because they are designed to pick up public records. Similarly, the title commitment may have them, too. Lenders who don’t order the reports early in the process are just asking for trouble.

As for double-edged swords, the news that the Agencies expanded appraisal-free mortgages to purchase loans could help avoid both value and condition potential problems. However, your REALTOR®/Lender Committee was quick to point out that it would preclude allowing a home buyer to renegotiate the purchase price due to a low appraisal (that he might have been counting on getting) or lender-required repairs (that he was hoping to require). The value of a REALTOR® as the option arises is never more evident than when a buyer needs the wise counsel regarding saving the appraisal fee or not.

In further automation upgrade news, Fannie Mae rolled out Day 1 Certainty. This allows lenders who use it to retrieve income and asset documentation from institutions who participate, eliminating the need for income and asset documentation that comply from being hunted down by buyers. Not only has this shortened the turn times in processing slightly, but it has also allowed for fewer questions and problems that arise when underwriters unintentionally see things that were better left unseen.

Probably the best news for REALTORS® in markets with rapid appreciation is that loan limits increase along with prices. For our area, the new conforming single family limit is $453,100, and the FHA single family limit is $386,400. This humble writer started in real estate when the conforming SFR limit was $191,250.

Of course, the biggest news of the year (testing to see whether anybody is really paying attention), was when Beyoncé and Jay-Z took out a $52 million mortgage to buy a house in 2017. As the highest paid celebrity couple, it’s unlikely they cannot afford the mortgage payment.  Although it is probably not a 30-year fixed, guessing at the payment using that as a guide puts the monthly at $263,476, but you should not have fear for the wealthy couple – they must have an interest-only adjustable rate mortgage because the payment was reported to be under $150,000 per month, making it much easier to pay, I’m quite sure.

Onward and upward, friends!

Melissa Hailey

Q & A with Melissa Hailey, 2018 CCAR President

Melissa Hailey, the founder of North Texas Top Team, REALTORS®, Inc., will be installed as the 2018 President of the Collin County Association of REALTORS® (CCAR) on Nov. 9, 2017. An active member of CCAR since 2006, Hailey has served as the Chairperson for several committees, and she currently instructs various educational classes. She chats with us about her introduction into the real estate industry, her history with CCAR, and the vision she has as the next President.

Q: Since becoming a member of CCAR, what roles have you held within the Association?

A: “I started attending the Wylie Business Development Meetings in 2006. After attending these meetings for a year, someone asked me if I would help schedule the topics/speakers for the next year. After serving as the Vice Chair and then the Chair the next year, I learned about other ways to get involved at CCAR. I have served as past-Chair of CCAR’s Wylie BDM, Technology Committee, and Budget & Finance Committee. I also attend the meetings of the  Professional Development Committee, Government Affairs Committee, and TREPAC Committee, but I have not served as the Chair of these committees.”

Q: What do you enjoy most about the work you do? 

A: “I truly love what I do. I love helping people and being paid to do so. Over the years, I have found that helping clients is fulfilling, but now that I am an Independent Broker, I find that helping my agents so that they can help their clients is even more rewarding. Additionally, I love teaching for TAR and CCAR. One of my passions is to raise the bar in real estate by teaching other REALTORS® to assist their clients and build their businesses.”

Q: What has been the most beneficial part of being a member and President-Elect, prior to fulfilling your upcoming role as President?

A: “As part of the Executive Team, I find that my involvement with, and being on the Board of Directors for, TAR and NAR has been very beneficial. I now have so many connections with REALTORS® from across the country that my referral network has grown tremendously. I have also learned so much about different ways that REALTOR® Associations function across the country. One of the most eye-opening things was learning about other MLS’s and understanding how blessed we are to be a part of NTREIS.”

Q: As the incoming President, what is your vision for CCAR, and what initiatives do you have lined-up to achieve those visions?

A: “I am very passionate about educating REALTORS®. One of the things we are working on is a partnership with other area associations to host some education classes focused on fair housing. Additionally, we have moved our Technology Committee to become a part of our Education Committee so that they can work together to bring additional technology classes to our members. Another thing that is important to me is that we are reaching all of our members, regardless of where they live and work. I want all of our members to have the educational opportunities they need, as well as other member services more readily available to them in their local communities.”

Q: What surprises you most about the local real estate industry?

A: “I don’t necessarily know that anything surprises me. One of the things I am most excited about is the fact that we have had such tremendous growth in our area. With all of the corporate relocation in the Collin County area and our immediate surrounding communities, the need for housing is great, and our members are here to assist people who are moving to our area. I think that this growth will somewhat insulate our area from any potential downturns in the real estate market across the rest of the country.”

Dish on MHailey

 

1. She has a thing for cars.

While she was in high school, Hailey raced cars every weekend at Texas Raceway Drag Races in Kennedale, Texas. While her need for speed has subsided today, there is one thing car-related still on her bucket list. “My dream car is a 1976 Corvette: classic white exterior and red leather interior with a T-Top,” she said.

2. Before she became a REALTOR®, she worked at a radio station (where she met her husband), attended over 400 concerts and rubbed elbows with noted artists including Dan Aykroyd, Brad Paisley, Clint Black, Willie Nelson, Ted Nugent, Blake Shelton, Sara Evans, Tanya Tucker, Gary Allen, and John Goodman.

“My first concert ever was the “Van Halen 1984” tour,” Hailey said. While she enjoyed working for a host of radio stations—99.5 The Wolf, 570 KLIF, 1310 The Ticket, and Hot 93.3FM, to be exact—and meeting renowned musicians, she also feared losing her job. “They were consolidating,” she explained.” There was a possibility that I could be laid-off, so I was considering what I might want to do in that event.” Her husband suggested getting a real estate license, and although she was hesitant as first, his confidence in her inspired her to do so.”I am so thankful that he convinced me to become a REALTOR®.  It is one of the best decisions I have ever made.”

3. She is always up for an adventure.

Besides her love for roller coasters and visiting theme parks, Hailey also enjoys traveling. “For the past 16 years, I have taken at least one vacation trip per year and never visited the same place twice,” she says. Among her most memorable occurred in the late 1990s, when she went to the observatory at the top of the World Trade Center.

bridge loan

The Advantages and Disadvantages of Bridge Loans

By Alexandra Swann, GenEquity Mortgage and Member, CCAR’s REALTOR®/Lender Committee

With the summer home buying season drawing to a close, more and more buyers and their agents inquire about bridge loans. Sellers faced with multiple offers do not want to take an offer with a contingency to sell an existing home, and buyers often do not want to be faced with making two house payments. A bridge loan sounds like a great alternative—and for the right buyer, it can be.

How does a bridge loan work?

The term “bridge loan” can mean a couple of different things in the industry, so when talking to a loan originator, you need to be specific on exactly what you want. A bridge loan is a type of financing that eliminates the need for a contingent offer, making it easier to win a competitive bid. Since there is no contingency, bridge financing can help with shorter closing times.

Types of Bridge Loans

There are currently two popular uses of the term “bridge loan,” as well as a new third type—each with its own advantages and disadvantages.

 Short-Term Home Equity Line of Credit

The first type of bridge loan is a short-term home equity line of credit against the equity in an existing home, which can then be used as the down payment on the new house. This is most common when the prospective buyer has a home with a lot of equity and a small first-lien balance or no balance at all. The new bridge loan is attached behind any existing first, and the buyer suddenly has access to the equity in the house.

Advantages:

This type of bridge loan can solve the problem of not having sufficient down payment because the funds to close on the new home are tied up in the current home. Home equity loans in Texas have no prepayment penalties, so when the house is sold, any first lien and the bridge loan are both paid in full. The only real expenses to the homeowner are any closing costs and the interest paid on the bridge loan during the months until the original primary sells. Also, the buyer is getting a permanent loan on the new primary immediately.

Disadvantages:

The buyer is making two house payments until the original home sells, which can deplete assets and strain income. In Texas, home equity loans are capped at 80% of the value of the property, so the borrower will not be able to access all of the equity. Most importantly, Texas cash-out loans are for primary residences only, so for a borrower to take out a home equity loan knowing that he/she is planning to immediately buy a new primary is dishonest.

Portfolio Loan

The second type of bridge loan is a portfolio loan which is offered by several of the smaller regional banks. In this type of loan, there is no dishonesty because the lender understands that the loan is for the purpose of purchasing a new house. The lender qualifies the borrower and then orders two appraisals—one on the current primary and one on the new purchase.

Advantages:

Like the home equity loan above, this type of bridge loan can solve the problem of not having sufficient down payment because the funds to close on the new home are tied up in the current home. It is set up to have no prepayment penalties; when the house is sold, any first lien and the bridge loan are both paid in full. As before, the only real expenses to the homeowner are any closing costs and the interest paid on the bridge loan during the months until the original primary sells. Furthermore, the buyer is getting a permanent loan on the new primary immediately.

Disadvantages:

As with a home equity loan, the buyer is making two house payments until the original home sells, which can deplete assets and strain income. Most lenders of this type of bridge loan also cap the loan at 80% of the value of the property, but in some cases, the lender may go as high as 90%. This is very rare, however. Regardless, the borrower will not be able to access all of the equity.

The New Bridge Loan: A Short-Term Loan on the New Primary

The new, third type of bridge loan is not really a bridge loan, but because it is being sold to REALTORS® as a bridge loan, the REALTOR®/Lender committee felt we should include it here.

With this loan, the lender assesses the equity in the current home as the future down payment on the new primary and then makes a short-term loan on the new primary at 100% of the purchase price. The borrower does not have any payments on the new home for a set period of time—usually six months—while he/she is waiting to sell the prior home. The borrower is responsible for six months of interest payments, but these are generally “rolled” into the costs for the prior home. So when that home sells, the bank is paid, the lien is released, and the current home is refinanced into a new, permanent, fixed-rate mortgage.

Advantages:

The advantages of this type of financing are obvious. The buyer is able to purchase a new home without first selling the former home, without the financial pressure of two house payments, and without having to qualify with two house payments.

Disadvantages:

If for any reason the borrower’s prior home does not sell during the period set by the bank, he/she is going to be making two house payments plus interest. This could be a huge issue for a borrower who really does not have the financial resources to make both payments. Although we are accustomed to a red-hot housing market in most of DFW, remember that we have buyers coming in from all parts of the country, and those housing markets may be much cooler than ours. If the house being sold has not been priced or marketed properly, the buyer with the bridge loan may find themselves in a financially disastrous situation. Another major concern is that the qualifying situation may change during the period between the home purchase and the refinance of the new home. There are no guarantees that the buyer will qualify for the refinance, and the terms after the initial period can be quite onerous. The last major issue is that the buyer is not locking in the rate and terms of the permanent mortgage when buying the new primary residence. If rates rise or values decline, which are not unprecedented, it could be terribly painful for the buyer at the time of the refinance.

Determining if Bridge Loan is a Good Option

Bridge loans are simply tools; they are not inherently good or bad. Like most mortgage products, they are highly appropriate for some buyers and extremely inappropriate for others. No borrower should ever take a bridge loan if he/she really cannot afford to make two payments. If the buyer really does not have strong cash reserves or the income to support two house payments, that buyer needs to sell his/her house before buying a new one. Better to miss out on the perfect home today than to buy that home and be unable to make the payments nine months later. It’s always better to be safe than sorry. 

For these and other questions about lending, contact the REALTOR®/Lender Committee at RealtorLender@ccar.net.

From Little House of Horror to Conceivable Contender

Anyone who has ever gone house hunting has encountered at least one of these in their search: A house of horror. If it isn’t written on their faces the moment they pull into the driveway, it will be by the time you turn the knob and invite potential buyers inside.

It is understandable if an undesirable home is being sought out by an investor skilled at transforming an ugly house into a profitable gem. The situation is also ideal for DIY enthusiasts who don’t mind rolling up their sleeves. Or, individuals who buy fixer uppers only to tear them down to acquire the land from which to build their dream house. Then, there are the rest of us—traditional buyers who prefer to walk into houses and envision how we can transform them with minor touches. We shouldn’t be tempted to strike a match, throw it, and run out.

If your seller places a buyer-repellant house on the market, we can only imagine what you, the REALTOR® in charge of selling that home, must contend with. The open houses are unfruitful, the ridiculous offers don’t even warrant a response, and yes, the excruciating wait and marketing efforts don’t yield the result you or the homeowners envision.

Hope, however, is not lost. Here are several simple solutions that the sellers can implement to sale their home faster and for a higher price tag.

Turn a once terrible reveal into a great deal.

Quick fixes like pressure washing the exterior of the house and landscaping the yard can make a property attractive to home buyers.
Quick fixes like pressure washing the exterior of the house and landscaping the yard can make a property attractive to home buyers.

It is one thing to not have enough bedrooms or bathrooms, a generous backyard, an updated kitchen, and the three-car garage that makes buying the house a deal breaker. However, it is another if the house in question meets all requirements but appears to be in a questionable state, even if nothing is structurally wrong with it.

Sometimes what a buyer can and cannot see causes red flags to emerge. Does the abundance of pet hair or pet smells have them concerned about the cleanliness and the air quality of the home? Are the dingy walls or orange carpeting drawing away from otherwise coveted features like coffered ceiling beams, crown moldings, or original hardwood floors? Does the sight of an overgrown jungle-like backyard and slanted storage shed have them envisioning weekend days spent slaving away just to access the space?

While the age of a home can explain stains and cracks a buyer sees, those details are oftentimes attributed to a lack of proper maintenance. It can be hard for the seller to see and think like the buyer. Since they are accustomed to their way of life, they might not notice the saturated scent of cigarette smoke that lingers on buyers’ clothes even after they emerged from the property hours prior. Although the seller fixed water damage, they might be oblivious to how potential buyers view visible stains and patches as out-of-pocket expenses they will accrue to remedy the situation.

When you meet with your seller to discuss placing the home on the market, be honest with them. Discuss what improvements they can make to not only get top value for their home, but also make someone walk in and fall in love with it so much they are tempted to buy it. They can avoid unnecessary scares with a few smart repairs. The wall patches, dull walls, and dated cabinetry can be livened with fresh paint. The gutters can easily be reattached. The shrubbery can be manicured for curb appeal. The low water pressure can be solved by a skilled plumber. The bathroom tiles can be caulked. If it helps, invite them to see other  comparables in their area to see how their house stacks up with one that is nicely presented.

Unclutter the clutter.

Sometimes, it isn’t the house itself that is the problem. As stable as a structure can be, buyers can get the illusion that something is amiss. They instantly chalk any imperfection with unforeseen problems that diminishes their interest in the house or results in a lowball offer. No one wants to feel as if they are standing in a construction site, a hoarder’s haven, or a childcare center gone awry.

Crowded kitchen counters and bathroom vanities tend to signal lack of storage space. This is also true for messy, overpacked closets and cluttered children’s room. Simply put, when a house is listed on the market, it shouldn’t look like it would have belonged in an episode of Clean House.

Time is a commodity, so it is understandable if your sellers are busy people. However, if they are motivated to sell the house, they should also be open to your suggestions. Suggest hiring a home staging professional who can help par down excess items or an experienced organizer who will transform their chaos into an organized system. If space is still an issue, the seller can pack up items not used on a daily basis and relocate any excess furniture into a storage unit while the home is on the market.

While bringing in professionals may be required in some situations, most homeowners would prefer to not spend an arm and a leg each time they turn around. More than likely, your seller will balk at the thought of spending any more money on a property they hope to relinquish themselves from soon. Motivate them with this obvious fact: They can sell faster and for a larger amount if the buyers don’t walk in immediately adding up what they must spend out-of-pocket to bring that property to their livable standards.

Approving Buyers Just Got Easier

By Jake Perry, Fairway Independent Mortgage Corporation and Member, CCAR’s REALTOR®/Lender Committee

Fannie Mae just made it easier to qualify borrowers by making it less challenging to exclude debts they are not paying. As many of you know, one of the most common problems lenders face is overcoming high debt to income ratios (DTI).

Along with credit, capacity as it relates to DTI very commonly causes a loan to not be approved. Capacity is defined by Freddie Mac as “Lenders look at your income, employment history, savings, and monthly debt payments, such as credit card charges and other financial obligations, to make sure that you have the means to take on a mortgage comfortably.”

Often, the cause of the high DTI is not even the borrower’s debt. It’s simply debt for which they cosigned for someone else.

How many of us have had clients that we could not approve because they co-signed for a car, a credit card, or a student loan? In a lot of cases, the buyers didn’t even co-sign; they were borrowers for their adult child or relatives, but they don’t make the payments. Good lenders ask detailed questions up front about these debt obligations. If a debt is reliably paid by somebody else, it seems only fair that a lender would ignore that debt. Until now, Fannie Mae required that the debt be counted unless it was co-signed, not when the debt did not include the third party on the debt.

Fannie Mae recently made changes to enable lenders to exclude debts that the borrower does not pay. This includes non-mortgage debts like installment loans, student loans, and some other monthly debt,- as defined by Fannie Mae.

Documentation must be provided that the debt has been paid by another party for the previous 12 months. The other party does not have to be obligated on the debt as it was in the past.

This change to DTI is a tremendous shift. It means that some of your buyers will have more opportunities to buy the house that they want. They no longer have to settle for a less expensive house that they really didn’t want or, in some cases, be a buyer instead of a renter.

Collin County TREPAC-Supported Runoff Candidates

Each year, the Collin County Association of REALTORS®, in accord with the Texas Association of REALTORS®, interviews local candidates seeking election to public office across Collin County. This year, REALTORS® interviewed over 45 candidates seeking office.  The questions asked by our REALTOR® volunteers during the interviews ranged from taxes to immediate real estate issues and heavily emphasized private property rights and home ownership. The Texas Association of REALTORS® Political Action Committee (TREPAC) supports the following candidates for the June 10 Municipal Runoff Elections as recommended by your local REALTOR® volunteers:

ALLEN

Carl Clemencich, Seat 2

A resident of Allen since 1994, Clemencich is a Certified Public Accountant with over 30 years experience in Accounting and Corporate Finance. He has a long history of volunteering for both Allen ISD and the Allen community as a whole and has served on several city boards like the Economic Development Corporation, Park & Rec, and the Allen Community Development Board.

“I will continue to focus on keeping our community safe for those that live, work, shop and play in Allen.  As such, we must ensure our first responders have the best training and equipment in order to perform their responsibilities effectively and safely.  In addition, I will continue to involve the community in education and volunteer opportunities including the Citizens Police & Fire Academies, Citizens on Patrol, CERT and other types of educational programs.”

Community Involvement:

  • Allen ISD School Board Trustee, Place 2
  • Member: Allen Citizens Emergency Response Team
  • Habitat for Humanity
  • “Citizens on Patrol” Volunteer for the Allen Police Department

FRISCO

Brian Livingston

Brian Livingston, Seat 6

Named the 2016 Entrepreneur of the Year by the Frisco Chamber of Commerce, Livingston and his wife have been credited with providing approximately 125 jobs through their businesses. They operate the 6 unit Celebrity Café & Bakery brand, Texadelphia Frisco and Texadelphia Plano restaurants, and Strivant Health.

Livingston is an advocate and fundraiser for pancreatic cancer research. He is also a community leader who supports various local charities including Frisco Family Services, Frisco Fast Pacs, and Junior League of Collin County.

“The future of Frisco depends on the strength of our infrastructure; our roads, water, power as well as our police and fire departments. We have seen tremendous growth in our population over the last decade. It is imperative that we prepare the core of our city for the future.  The city needs to ensure that our citizens continue to receive the quality services from the city that they are used to receiving.”

Community Involvement:

  • Vice Chairman, Frisco Board of Adjustment/Construction Board of Appeals
  • Carroll Elementary PTA
  • Watch D.O.G.S.
  • Boys & Girls Club of Collin County
  • Americas Defenders
  • Frisco Education Foundation

PLANO

David DownsDavid Downs, Plano City Council Place 8

Downs has lived in Plano at various times since 1972 and for a total of 24 years. He has personally fundraised for various agencies and organizations over the years during his terms of service on boards or as part of programs to benefit those less fortunate or suffering from illness. In 2004 he was diagnosed with an aggressive malignant form of Melanoma and caught it early enough to eliminate it.  The experience led him to work with the Leukemia & Lymphoma Society and raise tens of thousands of dollars through various endurance events.  Eventually this led to the completion of an Ironman Triathlon, which helped solidify his belief in preparation and perseverance.

“It’s been truly an honor to serve the City of Plano residents these past 3 1/2 years.  We’ve accomplished so much to improve our City in areas of need and re-establish Plano as the place to live, work and play.  Each year the accolades continue to roll in, reaffirming the vision as well as the decisions being made to implement that vision.”

Community Involvement:

  • Leukemia & Lymphoma Society
  • Plano Youth Leadership
  • Leadership Plano
  • CASA of Collin County
  • Art Centre of Plano
  • Parks & Recreation Board
  • Planning & Zoning Comission
  • Collin College Education Foundation
  • Collin County Healthcare Foundation
  • District Chair for Northern Lights District BSA
  • Children’s Advocacy Centre

McKinney

Scott Elliott, Seat 3

Scott has served as a former Chairman for the McKinney Community Development Corporation and Campaign Chairman for United Way, as well as former board members of
Center for Children & Families and Society of Information Management. A graduate of Leadership McKinney, he is an Investor and Account Executive of Financial Gravity and the COO of Alagar Inc.

“McKinney has provided everything important to us as a family: a place to exercise our faith, deep friendships, a safe city, recreation, and opportunities to serve. Our citizens deserve a strong leader who is transparent and accessible, will listen to the people in the district, and has a demonstrated ability to work with others.”

Community Involvement:

  • Board Member of Global Sports Partners

Dusttin PearsonDusttin Pearson, Seat 1

Pearson is a native Texan who credits his parents, who were small business owners, for instilling the importance of personal responsibility. His career as a Healthcare IT Project Manager requires him to adapt critical thinking and an analytical mindset to finding solutions.

“I believe I should not simply be a member of the community but utilize my skill set to assist in influencing the community which I live, in a positive manner. My campaign is built upon a foundation of conservative principles to address complex issues currently facing McKinney.”

Derek Baker, At Large

An 8th generation Texas, Baker is a licensed realtor with Keller Williams. Prior to that, he was a conservative political activist for 25 years, worked in Congress for members of the U.S. Senate and House including Mike Pence (R-IN), Senator Phil Gramm (R-TX), and Representative Jeb Hensarling (R-TX), and the U.S. House Republican Study Committee. He also served as the Director of Federal Affairs for Americans for Limited Government. Among his community service, he was appointed to serve on the Collin County Child Protective Services Board in 2012 and was reappointed in 2016. He currently serves as a board member for Foster Friends, a local charity that assists those affected by the foster care system. A sports fanatic and amateur athlete, Baker has competed in over 100 5k and 10k races, as well as marathons and triathlons.

McKinney has a well established reputation across Collin County as a city that’s difficult to do business with, whether we like it or not or agree with that assessment. While I believe this reputation is starting to change and improvements have already been made by the current council and new city manager, I do not want to be complacent and assume all our issues are resolved. I will advocate for a complete top to bottom review of our policies, procedures, and ordinances as they relate to McKinney’s ability to quickly respond to current and future development opportunities. It is ultimately the responsibility of the city council to attract and retain new business.

Community Involvement:

  • Assistant Treasurer of Collin County Child Protective Services
  • Board member of Foster Friends
  • Assistant Treasurer of Collin County Conservative Republicans Club
  • Member of Collin County Association of REALTORS Government Affairs Committee
  • Republican Precinct Chair, Precinct 131 in McKinney
  • Chairman & Founding Board Member of Texans for Freedom & Liberty

New Credit Reporting Changes To Impact Real Estate Closings Positively and Negatively

By Alexandra Swann, GenEquity Mortgage and Member, CCAR’s REALTOR®/Lender Committee

On July 1, the three major credit reporting agencies—Transunion, Experian, and Equifax—are going to implement some major changes to the way they report judgments and tax liens on individual credit reports. As with many new rules, this one has both positive and negative ramifications for your borrowers.

So what are these changes? In accordance with the National Consumer Assistance Plan, the three major bureaus will no longer be able to report public records—specifically civil judgments and tax liens—without verifying three pieces of consumer Personal Identifying Information (PII). These three items are:

  1. Name of consumer
  2. Address of consumer
  3. Social Security number and/or date of birth

Civil judgments and tax liens not containing all three elements must be deleted from consumer credit reports.

Additionally, the new standards require that the three agencies must update their records every 90 days with the courthouse. This means that changes to public records—such as a paid judgment—will show up sooner than they have in the past.

What does this mean for you and your clients?

The Good:

In the short term, it should mean that virtually all civil judgments (the official statement from the Consumer Data Industry Association says “a vast majority”) and about 50% of tax liens will be removed from credit files on July 1. Since public records have a negative impact on credit scores, the immediate result should be improved credit scores for borrowers who are plagued with public records.

Since the rule requires that public record reporting be updated every 90 days, we should also see paid judgments updating more quickly on credit reports. This can help scores to improve dramatically, and it can also allow more borrowers to get approved.

Going forward, John and Mary Smith should not have public records and tax liens from 10 other John and Mary Smiths reporting erroneously on their credit reports. The new requirements should eliminate some of the errors today that occur among people with common names and should help to protect the innocent from having their credit ruined just because they share a name with someone with credit problems.

The Bad:

The new law will also shield the guilty—at least for a while, and that may be very problematic. Although tax liens and civil judgments may be initially removed for a time, the attorneys and government entities can refile with proper information. That may result in a time lag between initial pre-qualification and final loan approval, where a judgment or tax lien that was initially removed has now reappeared on the credit report complete with all identifying information. Since lenders have to recheck credit as late as 48 hours before closing, this could cause serious issues for underwriting.

Also, even though the reporting requirements have changed with regard to tax liens and civil judgments, underwriting standards have not. No government agency or government-sponsored enterprise will make a loan to a consumer with an open tax lien or judgment. As part of the mortgage application process, the consumer is asked whether he or she has either tax liens or judgments against him or her. If a consumer is less than truthful, the loan originator may not know that there is a problem, since in the past, lenders have relied heavily on credit reporting information to fill in gaps in consumers’ memories, so the judgment or tax lien may not be discovered until well into the underwriting process. This could potentially kill some transactions that looked great at the point of pre-qualification.

How to Protect Yourself:

Whether you are a buyer’s agent or a listing agent, talk to the loan originator. Make sure he or she is asking the right questions. If the loan is a government loan—VA, FHA or USDA, ask if the loan originator has run the borrower information through CAIVRS—HUD’s Credit Alert System—prior to issuing a pre-qualification letter. This system catches many hidden issues that torpedo files.

Finally, recognize that the title company is going to be an increasingly important partner in the loan transaction. The title company can search for public records, liens and judgments and can help identify hidden issues.

For more information on this or any lending issues, please contact your REALTOR®/Lender Committee at realtorlender@ccar.net.

McKinney Residents Now Eligible for SETH 5 Star Texas Advantage Program

Courtesy of the City of McKinney

The City of McKinney Housing & Community Development Department has announced the city has been added to the Southeast Texas Housing Finance Corporation (SETH) 5 Star Texas Advantage Program.

The SETH 5 Star Program makes homeownership possible for families and individuals wanting to purchase a home in McKinney by providing support for down payment and closing costs. The program provides qualified buyers a grant for up to 6 percent of the total loan amount. The grant can be used toward a buyer’s down payment and closing costs. Mortgage options include 30-year fixed rate FHA, VA, USDA, and conventional financing. The program is intended to assist a broad range of families that include middle- and low-income households.

With this program, there is no first time homebuyer requirement. All borrowers on the mortgage loan must complete the SETH on-line Homebuyer Education Course. The program can be used for the purchase of single-family homes, townhomes, condominiums, and owner-occupied properties containing up to four units. Interested homebuyers can find more information about the program here.

home foundation

10 Steps for Maintaining Your Home’s Foundation

By Jessica Barker, Arch Foundation Repair and Member, CCAR’s Affiliate Committee

Happy Spring! As warm weather moves into North Texas, it is important that your clients understand the essentials required to maintain a home’s foundation. Here are 10 tips to keep their foundation in good shape:

1. Make sure that the soil around the foundation is graded so that water flows away from it. The soil should drop 4–6 inches, every 4–6 feet.

2. Avoid trapping water against the foundation. Water can be trapped against the building by sidewalks, raised flower beds, metal edging or other borders that do not have openings to allow water to escape.

3. Place soaker hoses around the foundation to keep soil damp during dry periods. Soaker hoses should be placed 6–12 inches away from the home. In addition, hoses should be replaced every couple of years.

4. Keep the majority of shrubs around the house under 3-feet tall. Large plants need large amounts of water, which can cause foundation problems.

5. If there are large trees around the house, consider installing root barriers to keep them from pulling water out from under the foundation.

6. Use downspout extensions or splash blocks on all down spouts to move excess rain water away from the foundation.

7. Make sure that all paved surfaces that border the foundation slope away from it—this is particularly important for pool decks.

8. Keep the soil around the foundation between 2–4 inches below the brick line or edge of a house’s siding. The soil helps to hold the water in the ground and reduces seasonal settlement.

9. If the sewer becomes blocked or backed up, have it tested for leaks. Many times, sewer blockages are caused by roots, which mean there are openings in the sewer.

10. Leaking sprinkler lines and pool circulating systems cause foundation problems. Have the systems tested for leaks every 2–3 years.