Posted by Ali/IL on 12/3/10 3:30pm
Msg #363818

Super streamlined loan

Borrowers are so often confused by this one. Since there are supposed to be no closing costs.Yet they question it. One was told that difference would be returned later. Left them wondering.

Reply by Riley/FL on 12/3/10 4:17pm
Msg #363822

I have found that they believe everything their Broker or Lender has told them, even if it makes no sense. I wish they would look closer at the HUD and do the math. They get to skip a payment and that makes them happy, but why not take that money and pay your taxes or deposit it in escrow rather than rolling it into your loan and paying interest on it? The biggest life purchase one will make and no one seems to care to take the time and do some research.

Reply by MW/VA on 12/3/10 8:16pm
Msg #363841

Streamline refi's are not "out of pocket costs". Many are confused & think there are no costs.
Truth be told, IMO any lender could do a refi for an existing customer with no costs. They will make plenty of money over the life of the loan. They want all the $$$$ refi brings in.

Reply by CF on 12/4/10 7:09am
Msg #363882

I agree....I see this all time and the borrowers say there are no costs and there are, generally, a couple of thousand dollars. Same old situation....you cant save people from themselves. It is clear that there are costs-they sign anyway.


I will say that I am seeing a lot of lender credit these days that account for the costs expect the per diem interest.

Reply by Art_MD on 12/4/10 9:43am
Msg #363889

Re: long explaination of Super streamlined loan

Chase does these at no cost. Even though the loan amount goes up.

Here is an explaination for what it's worth.

real numbers from a closing


old load payoff 240,418
closing costs 3,145
line 120 243,564

new loan amount 242,729

so, it looks like the mortgage went up 2,311

but, heres what is the actual payoff calcs.

balance 11-1-10 240,688
interest 11-1 to 11-27 1,1228
net escrow (1,528)
fee 30

net payoff 240,418

800 section of hud

tax service 45
900 section

interest 11-30 to 12-1 31

100 section

escrow 1154

1100 section
title work 686

1200 section total of 105

additional

december tax bill 1126


Total of 3145 for 700-1300s

BUT,

The taxes would have to be paid either on hud or thru escrow.
New escrow is not a cost - if old escrow could have been put into new escrow, with nothing is section 1000, then existing loan payoff would be higher by that amount.

interest in section 900.

Most people don't know that when you make a mortgage payment, you are paying the previous months interest and this months principle. By collecting the interest that would be made in the Dec payment, there is no Dec payment. So the borrower is making Dec payment (P&I and escrow) atthe closing. He doesn't make the 1,626 dec payment. This more than covers interest in 900 and escrow in 1000.

Finally, the lender gives a credit on line 204 for cost in sections 800, 1100, and 1200.

So, if you look at it this way -
loan went up 2,311.
no december payment 1626

net cost 685


existing escrow applied to loan payoff 1,528

payoff of taxes 1,126
new escrow 1,153

total escrow 2,279

escrow went up 751 net cost 685-751 = -66


Somehow it shows a $66 savings ... minor math error somewhere on my part.

I hope this helps someone understand how a loan can go up 2300 and it still be a no closing cost refi.

Art

Reply by Art_MD on 12/4/10 9:52am
Msg #363890

Re: long explaination of Super streamlined loan

found $ 61 of $66 30 in 900 section, 30 in fee of payoff. $5 due to rounding.

Art

Reply by Lavergne Manuel on 12/4/10 11:39am
Msg #363907

Re: long explaination of Super streamlined loan

Any time I do a Chase Streamline Loan I go to page 2 of the HUD and explain everything to them so when I go to page 1 I just show them the credits and I usually don't even get a comment because by then they know they haven't been lied to.

Reply by ReneeK_MI on 12/5/10 6:45am
Msg #363982

Couple things don't add up for me, Art ...

*note - I wasn't scrutinizing YOU, this is just the kind of thing my brain loves to dive into over morning coffee. Yes, I might be nuts!

The payoff is calculated through 11/27, but the interest adjustment begins 11/30 - that math doesn't work. The int adj would begin on the date of funding - and the p/o would need to be calculated at LEAST to that same date, or it will be short. Normally a couple/3 days of interest are added to the p/o (from funding date) to ensure the amount is sufficient.

The interest adjustment is the interest from the date of funding to the last day of the month before the month before the month of the first payment. LOL - easier:

Funding date: Nov 30
First payment date: Jan 01
Month BEFORE first payment: Dec
Int Adj: Nov 30 (the day you get their money) - Nov 30 (day before Dec 1, which is the month before the first pymt month)

Here's where the misnomer raises it's head: The interest of each payment is for the 30 days prior, so when the Dec payment is "skipped", it is ONLY the principle. The first payment on Jan 01 will include Dec's interest.

This is a favorite of L.O.'s - "You're saving $xxx because you won't make a payment in Dec." Incorrect! Foul, I cry! If the full pymt is $1626, then ballpark (since I don't have the terms) using 30 years/5.5% is an amortization of $590 in principle (the ONLY "skipped" portion) and $1036 in interest which WILL be paid in the Jan pymt. You can't deduct the entire amount as any sort of "saved" dollar amount.

In this example, it shows int from 11/30 through 12/01. We'll assume it really means up TO 12/01 because it would be a double-charge of interest for 12/01 otherwise.

Then we get to the escrows - math doesn't work there, either. He had an escrow acct, it would've had the funds to pay Dec taxes. He's paying Dec taxes up-front, got it. What happened to the funds for Dec taxes in his existing escrow - OR, is the Dec tax BOTH calculated into the new escrow AND being paid up-front (looks like, to me).

My math, with regard to "no costs" disregards tax pymts & escrows (both sides), because they are not loan "costs". IMO they shouldn't be subtracted from the p/o in the 'no costs' calculations, nor should they be an added factor.

Payoff = 241,846 (using their own date Nov 27)
New Loan = 242,729
Increase = 883

Fees shown= 867 (diff of 16, could you have missed a Flood Cert fee?)

Int adjustment included in fees - in keeping with interest being included in pay/off.

Dec - skipped principle = est. 590

Difference between the loan amount increase and the skipped principle is 293 - and none of this factors in the fact that 883 MORE dollars than before, will be accruing interest.

Bottom line - there are no free lunches, and I'm certifiably insane because I actually had fun doing this. =)

Reply by Michael Dooley on 12/5/10 11:51am
Msg #364010

all due respect to everyone who posted on this subject. it is amazing some of you all even have jobs because you all have no F'N idea what you are talking about. art that does not include you.

superstream line loans say very specifically at the very beginning of the documents what they do and do not pay for. have any of you all geniuses ever closed a super streamline that did not have an escrow account? all closing costs are paid except whatever is left in interest for the rest of the month. and also to start a new escrow account, (do you all really think the lender is going to pay someones taxes and insurance for them?) there is a cost for that. if anyone cant see the difference between the start of an escrow account and closing costs they should be out of this business.

just so you all know chase pays for all of the closing costs over the lifetime of the loan by padding the interest rate above par somewhere between .25 and .5 of a point.

Reply by ReneeK_MI on 12/6/10 6:38am
Msg #364095

How does one use "respect" and the f-bomb in one sentence?

I would certainly appreciate any constructive criticism you might have, but since I was saying what you so graciously pointed out, I suspect you didn't bother reading?