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ZILLOW, A Fact Check on FHA Mortgage Insurance

Clay Branch, "Georgia Loans"
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Clay Branch, "Georgia Loans"

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Zillow, LO's continue to quote 30 Yr FHA loans under 80% LTV, with no monthly MI. All FHA 30, 25, 20 Year Fixed, and 3/1, 5/1 and 7/1 Arms have monthly MI, REGARDLESS of LTV. All 15 Year Fixed over 90% LTV also have monthly MI. This link has 3 FHA quotes, all are missing the monthly MI charge, allowing for a much lower APR and lower monthly payment. In addition, you still have not accounted for the UFMIP in either the loan amt, which would accurately increase the monthly payment, or added into the fee calculation. Your column analysis for APR, True Costs, and Fees are way off because of junk in, junk out. Any LO's who believe there is no monthly MI at 80% or less, please post here.

3 FHA Quotes

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August 15 - Atlanta

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John Paunan, "John Paunan"
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John Paunan, "John Paunan"

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I wonder if there's been any thought in restricting quotes to only those parameters requested by the borrower? So no 15 year or arm quotes when someone specifically asks for a 30 year fixed. That would help a little, I think.

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August 15

Timothy Sutherland, "SunTrust"
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Zillow All-Star

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Those FHA loans will have mortgage insurance, called MMI, until the loan reaches 78LTV provided that it's been paid for at least 5 years.

consumers beware: the ex-subprime hacks quoting without the MMI are just putting a new spin to their old tricks. No more pick a pay MTA loans to throw at you so now they have to try a new trick, doing FHA loans without taking the trouble to learn the product.

remember: get a loan amortized greater than 15 years with FHA, YOU WILL HAVE MMI, regardless of how much you put down.

feel free to call HUD to verify this.

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August 15

Clay Branch, "Georgia Loans"
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Clay Branch, "Georgia Loans"

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Zillow, 3 lenders quoting FHA with no MMI, again. Since flagging the quotes has no affect I will keep posting them here. 1 of the 3 checked off " Lender Agrees to Pay Insurance Costs ". That's a first, LPMI FHA, HA!
Leaving Off MMI

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August 16

Clay Branch, "Georgia Loans"
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Clay Branch, "Georgia Loans"

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Zillow, why are you allowing this, here are 5 different lenders leaving off mortgage insurance again. And Ray, have you been doing this or just start since everyone else doing it?

5 Pro's

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August 17

Joe Cafiero, "jcaf1918"
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Ray Ray....Respect my authority!!!!!!

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August 17

Sherri Sherpy, "MN Mortgage Mom"
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Clay, Do you ever feel like you are screaming on deaf ears? At some point, Zillow's popularity is going to suffer, as consumers realize that this site is a big joke of clowns who quote only for the purpose of getting ranked #1 in quotes. As quick as Zillow climbed the ranks, they can fall just as fast. I continually flag quotes with no FHI MI...doesn't do much good. From a consumer standpoint, this is getting WAY too confusing. These quotes are not in the best interest of the consumer at all. They get MASSIVE quotes that are misleading or for products they are not even asking for. Who wants to try to understand that kind of mess??

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August 17

Ice L.
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All -

Thank you for reporting this.

We have followed up with the lenders regarding the MI on FHA quotes.

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August 17

Ray R. Stevens, "My Faith First"
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Ray R. Stevens, "My Faith First"

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Hello all,

Just had a nice conversation with Clay about this. Mind you, I don't visit threads much during the week.

The problem with MY QUOTES and the FHA MI < 80% was traced back to Zillow. That is right! I use LoanSifter autoquoting and they are about 99% accurate.

Someone sent me an email this morning named "Joe Smith" complaining about my FHA quotes without MI. I know I don't do that so I forwarded it to LoanSifter customer support who forwarded it to Zillow.

After some back and forth, below is Nida's message pasted. Jason is the rep at LoanSifter. I am not perfect, but on this one, I am innocent. I know there is MI on 30 yr FHA even under 80%.

Take care all and thanks for sharing your wisdom and opinions.

Hi Jason, Thanks for being so patient with this. We did more research and there is nothing else you would need to do for this. We apologize for any inconvenience and are working to fix this on our end. I will contact Ray to let him know to disregard those emails. Thanks, Nida MakeinCustomer Support Lead

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August 17

Ray R. Stevens, "My Faith First"
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Ray R. Stevens, "My Faith First"

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Zillow All-Star

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By the way, there are so many "A" personalities amounst Zillow lenders, I pay to meet you all at a Zillow lender convention some day. That would be some funny convention!

Peace!

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August 17

David Gibbons, "DavidG"
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David Gibbons, "DavidG"

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Our mistake!

That's right ... this is totally our mistake. We have code that removes PMI payments from loans where LTV < 80% and that logic is incorrectly being applied to FHA loans. Thanks to Ray and a few other regulars here we've figured out the problem and are working to correct it. I don't have an ETA yet but hope to have this resolved within the next week or two. As far as we can tell, the pricing engines are all quoting these loans correctly and so all that remains is for Zillow to fix the bug in the annual MI - you can stop flagging these quotes for now.

Thanks.

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August 17

Joe Cafiero, "jcaf1918"
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David...What about the ridiculousnees of quoting a FHA loan in the first place with a LTV under 80%. 99 out of a 100 of these quotes have no business of being made in the first place

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August 17

Lindsey M. Bishop
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Zillow All-Star

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At times it seems robo quoting causes more problems then it is worth

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August 17

David Gibbons, "DavidG"
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David Gibbons, "DavidG"

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Joe,

You make a great point and it's something we've been asking lenders. The one valid scenario appears to be that FHA accomodates borrowers with far lower credit scores.

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August 17

greg knox, "Greg Knox"
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Zillow All-Star

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If they click the FHA button and leave out the MI, they clearly should not be allowed to post. Period.

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August 17

Greg Darlin, "Greg Darlin"
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It's called, "The Washington Two-Step . . ."

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August 17

Greg Darlin, "Greg Darlin"
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Vin Diesel,
What you don't understand is that anything under 80% LTV doesn't help a borrower going FHA no matter what the credit score.
Figure out the Fannie, Freddie delivery fees of a rather lower score for Conventional compared to FHA. FHA isn't worth it with a LTV below 80%. Can you please take a class on mortgage lending 101?
Dig that shaved head and glasses. Class act for a head of ZMM.

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August 17

Martin Wareing, "Martin Wareing"
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GD,

Still enjoy reading you, tossing a couple of Molatov Cocktails over the bow.. We can form a new mortgage entity:

MORTGAGE.......

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August 17

Sherri Sherpy, "MN Mortgage Mom"
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David, I believe Zillow has more issues with FHA...not just the annual MI...not just the FHA quotes under 80% LTV...not just the elimination of MI all together. Zillow ALSO pulls in .50% monthly MI when auto quoting. Maybe not all the time, but once is too much. On FHA 30 year, 20 year the monthly MI is .55%. I started using LS today and my first FHA quote came over with monthly MI at .50%. This is not the way I do business...I need to be able to quote accurately!

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August 17

Ray R. Stevens, "My Faith First"
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Ray R. Stevens, "My Faith First"

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Zillow All-Star

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I will throw this out there for those that don't think FHA should be used under 80%. What about a jumbo scenario that cannot fit conventional guidelines?

664 middle (conf jumbo starts at 719 cashout)
paying off 2nd not used to purchase the home
started at 74% LTV
$700k loan amount, combined
present rate is around 7%
second lien is crazy at 9%; payment is morthan 1st lien

There are no conventional programs for my client, period.

I can do this loan in an FHA Jumbo at 5.25%. Client is saving over $1500 a month even with the MI included. They started at 74% LTV and now including some high rate cards and are up to 83%. ROI is 15 months.

This is one of the rare scenarios where FHA financing <80% works.

For the record, I figured her MI even when she was talking 74% LTV.

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August 17

Timothy Sutherland, "SunTrust"
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Zillow All-Star

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there is no such product available now called conforming Jumbo, it was temporary in 2008. The similar product now is Conforming High Balance. Fannie Mae doesn't even consider it a product; it' s an enhancement to the standard agency products.

for cash out on this enhancement you need a 700 score.

beyond that, no argument. just my 2 cents.

ps: consider FHA 15 fixed; no MMI and lower rate, the payment won't be much different than the 30 year with MMI.

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August 17

Ray R. Stevens, "My Faith First"
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Ray R. Stevens, "My Faith First"

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Zillow All-Star

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Who does cash out hi balance down to 700?

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August 17

Gregorio Denny, "Gregorio Denny"
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Gregorio Denny, "Gregorio Denny"

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I have cash out on high balance from a 660 with a 1.25 adjustment, 1.0 adjustment from 680 up.

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August 18

Ray R. Stevens, "My Faith First"
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Ray R. Stevens, "My Faith First"

Miramar, FL

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Guidelines say cashout hi balance minimum score is 719. Who is doing it at 700?

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August 18

David Gibbons, "DavidG"
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David Gibbons, "DavidG"

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Sherri

For LTV < 95, the FHA annual MI is 0.50% (it's 0.55% when LTV is > 95.) I took a look at a bunch of your quotes and do believe that LS is quoting this accurately for you.

Greg

As I mentioned, FHA quotes below 80 LTV have been confusing us too (even before your most useful suggestion that I go to mortgage school - thanks for that.) We are asking lenders and the pricing engines about it. One logical explanation we are hearing is that FHA offers loans at credit scores lower than they can get from their usual investors but I'm interested in more feedback on this issue so keep it coming.

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August 18

Greg Darlin, "Greg Darlin"
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David,
I was just joking . . sort of. :-)
It gets pretty irritating to see lenders who don't know the rules, or do, and choose not to play by them.
My suggestion is that ZMM really needs to reach out to the lenders who have a lot of knowledge if anything is in question. To make sure that quotes are following guidelines, just order the latest editions of FHA, VA, Fannie and Freddie Manuals. Breeze through them when a lender is trying to snow-ball you.
Still like that look you have going on. :-)

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August 18

Ken Kopper
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Greg, whats frustrating is that I brought this to their attention about 4 or 5 months when I noticed that alot of the auto quoters were quoting FHA on anything with a pulse and its JUST being addressed Thanks to Clay starting multiple threads regarding the issue.

I like David's look as well although I think he would look even tougher if he went with the Mohawk.

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August 18

Gregorio Denny, "Gregorio Denny"
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Most irritating for me are people that quote conventional on what can only be done FHA. Purchases at 96.5% in california are being quoted as conventional. Not every now and then, rather on every single quote above 95%. I have even seen 100% purchases quoted as conventional. Then there is the set that quotes zero fees ... no appraisal, no nothing. With hundreds of quotes they know that no one is looking anymore and the barn door has been flung wide open!

Exhibit A Sort by conventional, then sort by fees.

How is this possible?

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August 18

Hamp Yonce
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Hamp Yonce

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The current Zillow Mortgage Marketplace is becoming the old Lending Tree, without the telemarketing din. Good thing there is a new Lending Tree. What would you bet it's an online bazaar of bizarre and meaningless quotes designed to make consumers telemarket LO's.

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August 18

Gregorio Denny, "Gregorio Denny"
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Gregorio Denny, "Gregorio Denny"

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Anyone have this product?

He also says in his quote ... and I quote:

"Be assured that I will respond promptly, treat your inquiry with discretion and work diligently to address your questions and concerns."

Anyone ever heard that anywhere before? Look here!

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August 18

Clay Branch, "Georgia Loans"
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Zillow All-Star

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GVD, I think I will steal it too since I know nothing will happen and it sounds really good.

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August 18

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ZILLOW, A Fact Check on FHA Mortgage Insurance

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