Georgia passed the Georgia Residential Mortgage Act to comply with the national S.A.F.E. Act, which regulates mortgage lenders and brokers. The GRMA states that Real Estate agents and Brokers are exempt, unless they are engaged in the mortgage business or are “negotiating loans.” Here is the exact wording from the act that talks about who is exempt: “A real estate broker or real estate salesperson not actively engaged in the business of negotiating mortgage loans; however, a real estate broker or real estate salesperson who directly or indirectly negotiates, places, or finds a mortgage for others, shall not be exempt from the provisions of this article.” It goes on to talk about how an unlicensed person in Georgia is committing a felony if they originate or negotiate a loan.

If you contact a lender on your sellers behalf you may be in violation of the act, or at least walking a fine line. Asking the lender to hold off on foreclosure because you think the home will sell, urging a lender to accept an offer on a short-sale, can be seen as negotiating. This is all regulated by the Georgia Department of Banking and Finance. If you are an agent or broker in Georgia, know the law and be careful when dealing with short-sales.

This will be a win-win all the way around, as long as there is no fraud that goes on. Preventing fraud was the whole purpose of the 90 day flipping rule to begin with. FHA has put a few rules in place to help prevent fraud with this new change. First of all, the transaction has to be arms length. That means there is no identity of interest between the borrower and seller. Secondly, if the sales price is over 20% of the acquisition cost that the investor paid, then the increase in value has to be justified. This may include but not be limited to, an additional appraisal or an inspection.

FHA also notated that if they find there is an increase fraud or defaults, the party is over. The change will take place on February 1st, 2010 and will be in place for 1 year.

So, what do you do? First of all, you need to check your pipeline. Do I have potential clients with marginal credit or credit problems? If so, you need to make them aware that this may be coming soon. Maybe with a since of urgency they will go ahead and buy one of the hundreds of homes they have been looking at for months and months.

If minimum scores do go to 640 and your buyer is below that, they may want to consider credit repair. Our company offers a state of the art credit simulator. Here is how it works: We run credit and say the FICO score is a 625. If we needed a 640 score, we tell the simulator we need to improve the credit score by 15 points. It will run an analysis on the buyers credit to see what would cause their score to go up. It may be something as simple as paying down their credit card balances or writing a letter to get erroneous information removed from their credit. The simulator is 96% accurate and well worth the money our company has invested in the technology. The simulator has helped me repair buyers credit that I otherwise would not have been able to help. The simulator works best when we are trying to bring a credit score up less than 30 points, so if your client has a 580 or below score, chances are we wont be able to help. In that case we can refer them to a professional credit repair counselor.

Hopefully minimum credit scores wont go up since the housing market is still in recovery mode, but we must be prepared if they do.

Switch to FHA
FHAs mortgage insurance does not have to be underwritten by mortgage insurance companies. The negatives are:

• Your rate may be slightly higher than a conventional loan
• You may have to get a new appraisal or have a supplement added to your appraisal
• It will take more time for the lender to convert your loan

Get a 2nd Mortgage
Most lenders do not have this option anymore, but at Academy Mortgage we have secured some 2nd mortgage money for A credit borrowers. The negatives are:

• High standards to qualify for this loan
• The delay in closing to set up the 2nd mortgage
• Rates on 2nd mortgages are comparatively high

If you need assistance recognizing and avoiding the pitfalls of the current mortgage industry, please contact me so we can work together to meet your mortgage financing needs.

The income restrictions on this program made it hard for people to qualify in the past, but on April, 20th 2009, that all changed. In Georgia, the income limit was raised to $70,750. When people think of rural housing, they typically think of farm land and livestock, but this is not always the case. In fact, one eligible area in Georgia has million dollar homes located in the qualifying area. This perception is another reason why this program has been so underutilized.

A couple of other items to consider with USDA:

• No maximum seller contribution
• Property must be in a USDA eligible area
• One time guarantee fee of 2.0% of loan amount
• No reserve requirements
• Primary residence ONLY - Must NOT own other real estate
• No credit scores
• Non-Occupant Co-borrowers or Co-signers not allowed
• Can be used to refinance current USDA loan

As one of the last mortgage loan programs to offer 100% financing, this government program should only increase in popularity in the near future. Interested homebuyers or even real estate agents who are wondering if their area qualifies for this program can use my website to verify their address or entire area in my GA USDA Rural Development section.

Since the environment has changed, I have to change. I want to be the one helping educate these future buyers. In the past I have depended on my referral partners to refer buyers to me. With the new environment, I can give back. I would have the ability to refer out preapproved buyers to top notch agents.

The logical choice for me was to create a website focused on the Georgia mortgage market. After a lot of thought and consideration, I figured out, not just any old website will do. I wanted something different, useful and informative. I wanted potential clients to have the ability to search for homes, ask questions and read about different products and changes in the mortgage industry. I located a great web designer/SEO that I trusted to coach me down the right path and got to work.

I felt it was important to join REW, since I am new to blogging, link building and websites in general. I have learned so much and wanted to thank all of you for your help! It is important to me to give back, so I have been doing my best to answer any mortgage related questions in the REW forum. I will continue to do so and look forward to learning more from everyone as well!