Mortgage Newbie Question
I just started as a loan officer.
I found a bank that offers loans based on the 3 month CD rate. They give the CD rate (1.113) + a very low interest rate. (The rate sheet gives an example of 2.95%).
I am looking at offering a stated loan to an investor for 4.67% and a flat fee. There are a few other rules and techincalities like 75% LTV for NOO and I can do it in an LLC.
There are a lot of creative advantages here like using them for quasi- HML loans.
Has anyone heard of this? Is there anything to watchout for here?
I am a bit weary of this idea as I don't want to end up with my first deal landing me in jail.
- Charlie
Charlie,
As a loan officier you are allowed to charge what you and the customer agree to. You can not go in section 32, you can not bait and switch. You must disclose all applicable fees to the customer and the terms of the loan. I think you need to talk to your office manager regarding what is acceptable and not acceptable.
These loans have been around for over 20 years. Since the rates have already peaked at their lowest last spring, lenders are looking to "creative solutions" for giving people money. I have a 4.375% fixed rate. There isn't a loan out there that can touch it. Except the 2.95% start rate you sre talking about. I am not looking to free up any money, but the program is for people that are looking to free up money.
This loan takes the average of checking, savings, and cd's and comes up with the "COST OF SAVINGS INDEX" or COSI.
I am working on one right now in VA.
Well good luck
Lori
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