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EMD stands for Earnest Money Deposit in real estate. It’s the good faith deposit a buyer puts up when signing an agreement to buy a house. It shows the seller the buyer is earnest in buying the home so the seller will take it off the market.

When the buyer goes for a mortgage, they are told to supply paperwork proving the money they put up when they agreed to buy the house was theirs, or from a source acceptable to a lender — mom & dad, etc. Mainly this is a requirement placed on lenders to police money movement…

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On 4/8/2021, Fannie Mae and Freddie Mac, the two biggest players in the US mortgage market, who buy most of the mortgages originated announced that all mortgage applications with a date of 6/30/2021 or beyond must conform to the revised qualified mortgage (QM) rules. They will no longer accept loans under the current QM patch rules.

This flies in the face of recent CFPB proposals to delay implementation of the revised QM rules until 10/1/2022.

What is QM?

In the aftermath of the global financial crisis, many new regulations were implemented designed to ensure that mortgage lenders made a reasonable…

Two hands with a notepad, charts and a calcultor
Two hands with a notepad, charts and a calcultor
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Loan level pricing adjustments are set by the Government Sponsored Entities (GSE) — Fannie Mae and Freddie Mac — or their regulator — the Federal Housing Finance Agency (FHFA) at the loan level. This are charged to the lender when the loan is delivered to the GSE for purchase and often, if not always, passed onto the borrower.

Many factors are calculated into your mortgage interest rate, some are fairly straightforward -the loan to value, loan amount, your credit score. …

A couple with papers and a calculator in the kitchen figuring out the numbers.
A couple with papers and a calculator in the kitchen figuring out the numbers.
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On page 2 of the Loan Estimate, where it breaks down all the various costs and fees for your home loan, on the right side in Section F, there are prepaids.
There are a few things a lender will require you to pay in advance. What you would normally pay anyway in due time, the lender wants you to pay upfront so they are paid up to the next due date. These are mortgage interest, property taxes and homeowner’s insurance.

A couple looking at a laptop
A couple looking at a laptop
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When you apply for a mortgage, lenders are required to send you a Loan Estimate with three days. The Loan Estimate will show you all costs associated with your mortgage. Review the Loan Estimate carefully and go over it with your mortgage consultant or Loan Officer.

Here we will focus on Section A. Origination Charges.

“Welcome to Our Home” brown print on white, worn wood with dark letters.
“Welcome to Our Home” brown print on white, worn wood with dark letters.
Photo by Pixabay on

What is it?

Lender’s title insurance is indemnity insurance protecting the lender of your home loan against problems with the title of your home. Lender’s title insurance only protects the lender. You should purchase owner’s title insurance to protect yourself against the same types of claims.

What problems can come up?

A clear title, free of any defects, is necessary for any real estate transaction. The title companies do a search before they will sell the insurance to double check there are no outstanding issues.

Typical problems that can arise are outstanding liens that pop up after you own the…

When you apply for a mortgage, the lender must send you the Notice to Applicant — Credit Score Information Disclosure (a/k/a the “H-3. Model form for credit score disclosure exception for loans secured by one to four units of residential real property”).

What is this thing all about? Let’s dig in.

The form looks like this.

Notice to the Home Loan Applicant from

You are signing this because lenders are required to provide you with the credit score & credit history used when determining your eligibility for the loan and what rate they can offer. …

Man signing a form while at work
Man signing a form while at work
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When you apply for a mortgage, you will be asked to sign this form. It will come with the initial disclosures required to be signed before the lender can work on your home loan request.

WTF is the Anti-Steering Loan Options Disclosure?

The Anti-Steering Loan Options Disclosure is required by Regulation Z: Loan Originator Compensation and Steering. Reg Z “prohibits certain practices relating to payments made to compensate mortgage brokers and other loan originators. The goal of the amendments is to protect consumers in the mortgage market from unfair practices involving compensation paid to loan originators.” Regulation Z implemented the Truth in Lending Act (TILA).

The rule does not allow a lender to pay an originator based on the mortgage transaction’s terms or conditions except the loan amount. …

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One of the many outcomes of the Great Financial Crisis on mortgage lending as an amendment of the Equal Credit Opportunity Act (Regulation B) that requires lenders to provide a free copy of all appraisals and written valuations done during the mortgage process.

A copy must be mailed to you a minimum of three days before your loan can close. If there are last minute changes to the appraisal, or you are trying to close quickly, this can cause a delay.

Most lenders will email you a copy as soon as they receive the report so waiting for a paper…

Jeffrey Loyd

Mortgage Broker licensed in CA, CO & FL.

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