This article discusses a few political issues in the mortgage industry and covers the topics of CLTV, LP, and DU.
Every election year I have to listen to each of our Presidential Candidates run down the economy over and over again, not caring that it is their hype that is pulling it down. This year, to make matters worse, we have to hear about all the finger pointing, investigations, and blaming in the mortgage market.
Unfortunately people with very busy lives hear and read all of this and begin to think it is true. We have all heard this: "If you tell a lie often enough people will believe it is true". There you go!
Is our economy a little slow right now? Yes, but it is not in the dumpster.
Are independent mortgage brokers and appraisers the cause of the mortgage scandals? Absolutely NOT. In fact, it is their integrity and concern for their client's well being that helped to fulfill the American Dream.
The real scoundrels are the large corporations, and giant lenders. Don't let me forget to mention the politicians like the New York Attorney General, Andrew Cuomo, who is using the situation to his benefit by "saving the consumer" with new laws that will only hurt the consumer by putting the independent appraiser and broker out of business. But of course he is making a name for himself. What does he care. Guess who wants to run for president in 2012?
Well, enough of that! I received a very simple question yesterday and I am writing about it here for a few reasons I think you will understand afterwards.
The question I was asked is: "What is CLTV and LP?"
The answer is CLTV stands for Combined Loan To Value. This term refers to when there is more than one loan on a property. As an example, if the first mortgage is 80% of the appraised value and there is a 2nd loan of 15% of the value, the CLTV is 95%. In the industry we call these Combination Loans.
LP is a term for Loan Prospector. Loan Prospector is a computerised program that reviews and approves or disapproves an FHA, VA, or Freddie Mac loan. DU, DeskTop Underwriting, is a similar program used for Fannie Mae, FHA, or VA loans. When an application is put through these programs, basically, ... sort of, the live underwriter then only has to verify the documentation because the computer has given an approval. If a loan isn't approved because of an unusual circumstance, a lender can chose to do a manual underwriting in which case the loan may still be approved.
My first reason for writing about this is to let you know that Lenders ARE lending money. The mortgage industry is alive and well in spite of the media and presidential candidates.
As a consumer you should take full advantage of these unbelievably low interest rates. Refinancing to lower your interest rate will save you a ton of money.
In the case above, combining a 1st and 2nd mortgage is a very smart financial move and will also lower your payments.
If you are thinking about buying a home there is no better time than now. I really mean like, ... NOW. As soon as a new president is elected, and it doesn't matter which one, the rates will go back up. I promise you this will happen. It happens EVERY election year.
Just make sure you go to a reputable broker and don't buy more house than you can afford.
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