[Stella]

The Case Shows a Real Affordability Problem—but the Numbers Need Context

Assuming that the $111 FHA mortgage insurance amount is monthly (not annual), the calculations do appear to be in the ballpark.

• The original housing payment was approximately $1,945 per month.
• Original front-end DTI was 38.4%
• Original back-end DTI was 52.3%
• Revised housing payment (after tax and insurance increases) was approximately $2,295 per month.
• Revised front-end DTI was 45.3%
• Revised back-end DTI was 59.2%

That represents a stark difference of $350 per month, or about $4,200 per year with no change to the principal-and-interest portion.

For retirees who primarily rely on Social Security, that payment change can turn a mortgage that looks affordable into an obligation that is definitely not.

Are the Tax and Insurance Increases Legally “Predatory”?

In Florida, they are not predatory by definition.

A perhaps more valid conclusion is that the transaction likely included a predictable tax-and-insurance payment shock, which was not sufficiently estimated, disclosed, or stress-tested before closing.

In this context, the distinction is significant.

Reasons for Possible Increase in Property Tax

There could be a variety of reasons as to why the tax figure was shown as $2,100. These could include:

• The previous owner had a protected assessment.
• The tax assessment is for vacant land.
• The taxes assessed for new construction are partially assessed.
• The tax assessment was for the home’s construction before it was completed.
• The tax assessment is a temporary estimate prepared prior to the post-sale tax reassessment.

In Florida, taxes are assessed on the fair market value after a sale. In Florida, assessments for most new construction, additions, or improvements are made after they are substantially complete. Therefore, the buyer should not assume that the tax assessment done for the seller will be the same assessment that applies to the buyer after the sale.

In this case, the tax assessment being done for construction that was not completed, land that was not fully improved, the prior owner’s assessment, or other temporary conditions could justify the increased tax assessment that was done for $4,600, as compared to $2,100.

If the builder, real estate professional, lender, or closing provider offered $2,100 as a reliable ongoing tax amount, knowing that the completed property would be reassessed, that would violate the law and should be reviewed for compliance.

Is There a Florida Property Tax Cap?

Save Our Homes Caps the Assessment—not Necessarily the Tax Bill.

The Save Our Homes mechanism in Florida restricts the yearly increase in the assessed value of a qualifying homestead to the lesser of the following amounts.

• 3%
• Change in the Consumer Price Index

However, that protection typically kicks in only after the first year the property is granted the Homestead Exemption and is assessed at Just Value. It does not stop the first reassessment after the sale, nor the first full assessment of new construction.

It also does not stop the total tax bill from increasing. The tax bill may still be impacted by:

• A change in the Millage rate
• Non-ad valorem assessments
• Taxpayer exemptions
• Additional assessments for new construction
• School and special district levies

For these reasons, Save Our Homes will likely protect future assessed Value increases; however, it likely will not prevent the initial jump from $2,100 to $4,600.

Standard Homestead Exemption

Florida residents are eligible for a standard homestead exemption for up to $50,000 in assessed value. The first $25,000 applies to all property taxes. All or some of the remaining exemptions are not applied to school taxes.

Additional Exemptions for Seniors

Counties and municipalities in Florida can provide additional exemptions for seniors aged 65 and older. They can offer a $50,000 exemption for seniors with an income of $50,000 or below. They can also provide a full exemption of the assessed value for seniors who have lived in a qualified property for at least 25 years and who meet the low-income and property-value tests.

The 2026 income cap for the senior exemption is $38,686 statewide. The senior exemption is also available only if a county or city has adopted it. Also, the senior property-tax exemption does not automatically apply to all taxing authorities. The exemption may be limited to the taxes of the participating county or city.

The Does have a gross income of $52,800 due to their combined Social Security. Senior exemptions and tax deferrals may be calculated by statutory income, which may be a form of federal adjusted gross income. The Does should have the Marion County Property Appraiser estimate their senior exemption and tax deferral eligibility because Social Security of $52,800 and the grossed-up FHA mortgage exemption of $60,720 will not control.

Save Our Homes Portability

Some seniors who once had a homestead exemption in Florida can carry a portion of their previous Save Our Homes benefit to their new home. The previous homestead must have been vacated within three years of the application, and the homeowner must submit the portability application.

This should be looked into as soon as possible if the person previously had a primary residence in Florida.

Florida’s Homestead Property Tax Deferral

Florida offers a unique benefit that many seniors who own homes, as well as mortgage professionals, overlook.

Homeowners aged 65 and over with a homestead exemption can apply to defer property taxes and non-ad valorem assessments that rise above 3% of statutory household income. If the qualifying senior’s household income is below the threshold for the additional senior homestead exemption, then the senior may be able to defer the whole amount.

Deferring taxes is not the same as forgiving taxes. Deferred taxes:

• will become a lien on the property
• will or may accrue interest
• will or may become due and owing on the sale of the property, the loss of a homestead, or another event of deferring
• are subject to the mortgage and total-lien limit.

Deferring will generally not be allowed when the principal mortgage exceeds 70% of the property value or when the total liens and the deferred taxes exceed 85% of the property value. A denial of deferring may be appealed to the Value Adjustment Board.

The 70% mortgage limitation may preclude immediate use of the deferral for these buyers, as they likely utilized FHA financing with a high loan-to-value ratio, but the deferral should be considered as their equity increases.

Is There a Cap on Florida Homeowners Insurance?

As of now, Florida has no law that limits the premium a senior homeowner pays per year to a set percentage.

Insurers must submit their rates to the Florida Office of Insurance Regulation. The submitted rates may not be excessive, inadequate, or unfairly discriminatory. Insurers must justify proposed rate increases, and Florida may approve them if they are actuarially justified and comply with Florida statutes. (Online Sunshine)

This means there is some oversight, and there are no affordability caps based on:

• the insured person’s age
• the insured person’s status as retired
• the insured person’s status as a fixed-income person
• the insured person’s debt-to-income ratio
• the insured person’s ability to bear the financial increase

As a general example, the increase in cost from $800 to $2,500 should be investigated. This could be due to a change in insurance carrier, incorrect property information, errors in replacement cost estimation, loss of discounts, coverage changes, hurricane deductibles, territorial rating, prior insurance history, or an original estimate that was too low.

Things the Homeowner Should Do Immediately in this Situation1. Perform a Tax Estimate Analysis

Figure out what exactly the $2,100 would be in the following:

• Taxes on a completed home or vacant land.
• Taxes are based on either a builder’s estimate or an official estimate from the County.
• The seller’s protected tax bill.
• An amount based on the full $250,000 value.
• An amount based on the expected Homestead exemption.

Obtain the loan application, initial and final loan estimates, the closing disclosure, the appraisal, the tax certificate, the title documents, the escrow analysis, and any builder worksheets.

The main point is to determine whether the higher tax estimate was a reasonable expectation before the sale closing.

2. Review the Property Assessment

Check:

• Is the property description correct?
• Is the square footage, type of construction, and improvements correct?
• Is the just value supported?
• Was the homestead exemption filed?
• Was portability requested as appropriate?
• Was each available senior, disability, or veteran exemption considered?

Any property owner who disputes the value, classification, or denial of an exemption has the right to an informal review with the property appraiser and may, within the time limit, file a petition with the county Value Adjustment Board. A VAB appeal is recognized under Florida’s Save our Homes when an application is denied.

3. Undertake a Review of the Insurance Policy

The property owner or an agent should get the letter of explanation from the insurance carrier regarding the increase and confirm each of the following:

• Replacement cost of the dwelling
• Type of construction
• Age and material of the roof
• Wind mitigation and opening protection credits
• Credits for alarms, sprinklers, and a gated community
• Choice of deductible
• Optional coverages
• Past claims and insurance history
• Was the policy placed with an admitted carrier or a surplus lines carrier?

Florida’s My Safe Florida Home Program provides free wind mitigation inspections and grants up to $10,000 for qualifying properties, though applicability criteria exist, and a newly built home may not qualify per the current construction-date criteria.

4. Submit an Insurance Complaint When the Rating Appears to be Incorrect

A complaint is justified when the property owner believes any of the following to be the case:

• There is an incorrect rating.
• Required discounts are missing.
• Underwriting is improper
• An unapproved premium was charged.
• Agent fraud
• Lack of explanation for the rate hike
• Cancellation or Nonrenewal violations

The first recommendation from the Florida Department of Financial Services is for the consumer to contact the insurer directly, describe the issue in detail, and, if the problem remains unresolved, seek help afterward.

While a complaint will not overturn a properly sanctioned actuarial hike, it may do so in the event of a rate misalignment, a failure to issue credits, or a faulty rate application.

5. Escrow Review

The analysis of escrow by the mortgage servicer should include the following:

• Tax hike
• Insurance hike
• Escrow Shortage
• Escrow Shortage Repayment
• Adjusted Monthly Deposit

It is possible for a mortgage payment to increase more than what would be expected by the annual tax payment and insurance premium, due to the servicer collecting both the new payment and repayment of the existing shortage.

What meaningful legislative reform would protect seniors?

The most effective reform would be legislation that addresses both taxation and catastrophic insurance, rather than simply defining every rate hike as predatory.

1. Pre-Closing Tax-and-Insurance Stress Test

For newly constructed or recently purchased residences in Florida, lenders and/or builders may have to provide:

• Completed the residence’s estimated assessed value with taxes
• Insurance quote
• Stressed insurance figure reflecting a reasonable potential increase
• Projected payment after homestead exemptions.
• A projected payment with a fixed income is offered instead of a grossed-up payment.
• Resulting Front and Back-end D/T ratios

In the Doe case, the stressed payment would have revealed a front D/T ratio exceeding 45% and a Back-end D/T ratio of approximately 59% prior to closing.

1. Vacant Land or Prior Owner Taxes CANNOT Serve as Primary Estimate

There may be a law preventing those involved in the transaction from qualifying buyers primarily based on:

• Vacant land taxes
• Taxes on partially completed construction
• Builder’s temporary taxes
• Prior owner’s Save Our Homes protected tax bill.

The estimate should be the fully completed and fully reassessed construction for the first year.

1. Senior Property Tax Circuit Breaker

Florida would provide a credit allowing the total tax burden on property to equal a percentage of the qualifying senior’s household income.

This would be targeted tax relief rather than a broad tax freeze.

1. Enhance Current Tax-Deferral Program

Currently, the 70% mortgage-to-value restriction means that most recent FHA borrowers cannot defer taxes. These are the borrowers most likely to experience payment shock.

Legislation may:

• Allow raising the 70% threshold for income-qualified seniors.
• Allow partial deferral at higher loan-to-value ratios.
• Implement a state guarantee for local tax authorities.
• Set a maximum for interest on deferred senior taxes.
• Mandate clear counseling on the lien and future payments.

1. Senior Insurance Affordability Credit

Florida may create a means-tested insurance credit for primary-residence homeowners who are:

• At least 65
• Below a defined income
• Current on their mortgage
• Have required coverage
• Have a modestly valued homestead.

This benefit may be funded through general revenue, catastrophe-related assessments, federal mitigation funds, or an insurer-supported affordability pool.

1. Phase In Extreme Renewal Increases

A law may limit the speed at which an approved increase is passed on to income-qualified seniors to a two- or three-renewal-period phase-in. The insurer may be compensated through a state catastrophe or affordability fund.

A pure premium cap may limit the speed at which the approved funding is released. Phase-in with a reinsurance program would be the best option.

1. Create a Fixed-Income Homeowner Rescue Program

A state or county program may be created to provide temporary assistance when taxes and insurance premiums increase by a specified percentage within a year.

Assistance could comprise:

• Temporary escrow grants
• Deferred payment loans
• Insurance mitigation grants
• Property tax deferral assistance
• Legal Assessment Review
• Pre-delinquency housing counseling
• Pre-foreclosure servicer contact

FINDING

More worryingly, Florida allows both tax and insurance burdens to increase, and an application from a senior household, with a grossed-up qualifying income of $5,060, may be approved, even if that household receives only $4,400 per month. Assuming that the burdens of taxes and insurance reflect estimates made for the first full year of ownership, and under the new burdens:

• Housing payment: $2,295
• Other debt payments: $700
• Total payment: $2,995
• Social Security: $4,400
• Amount Available: $1,405

Before accounting for food, utilities, medical, transportation, and maintenance costs, this represents the primary policy concern. While the mortgage will pass underwriting, it will be predatory for a senior household with no disposable income.

The best protection would consist of realistic estimates of taxes and insurance after closing, advanced senior exemptions, and improved services of insurance affordability, tax deferral, and pre-delinquency intervention.

[4]: https://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0100-0199%2F0197%2F0197.html “Statutes & Constitution

leg.state.fl.us

Statutes & Constitution :View Statutes : Online Sunshine

Statutes & Constitution :View Statutes : Online Sunshine

[Stella]

HUD Approval, FHA Correspondent Lending, and W-2 vs 1099 MLO Compensation: Separating Fact from Forum Myth

A frequently debated question within the mortgage industry is whether a company can serve as an FHA correspondent lender while compensating some loan officers as W-2 employees and others as 1099 independent contractors.

The answer is yes. However, misconceptions remain about whether HUD correspondent lenders can employ 1099 mortgage loan originators (MLOs), often confusing separate regulatory and policy issues. This article clarifies these points for mortgage company owners, compliance officers, and MLOs.

There Is No Such Thing As a “HUD-Approved Mini-Correspondent” Anymore

Before discussing compensation, it is important to clarify a terminology issue that often causes confusion in the industry.

Previously, HUD maintained a distinct approval category for Loan Correspondents, informally referred to as “Mini-Eagles,” separate from full Mortgagees, or “Full-Eagles.” This correspondent approval category has been eliminated.

Currently, a HUD-approved mortgage broker does not require additional approval and must originate loans underwritten and approved by its sponsor, a HUD-approved Direct Endorsement (DE) mortgagee.

The term “mini correspondent,” although commonly used in the industry, is not an official HUD designation. It refers to companies approved as Non-Supervised Mortgagees with Title II Direct Endorsement authority, enabling them to originate, underwrite, close, and endorse FHA loans in their own name. These companies typically sell loans soon after closing and do not retain substantial servicing portfolios, unlike traditional mortgage bankers.

The key question is whether a company can obtain HUD approval as a Non-Supervised Mortgagee with Direct Endorsement authority while compensating some MLOs as 1099 independent contractors and others as W-2 employees.

HUD Does Not Ban 1099 Payments to Loan OriginatorsCurrently, Neither Federal Law nor HUD Regulation Explicitly Prohibits Compensating Mortgage Loan Originators Through 1099 Payments.

• Under the CFPB’s Loan Originator Compensation Rule, Regulation Z (12 CFR Part 1026) refers to W-2 wages and 1099 reportable income as both valid forms of loan originator compensation.
• The Nationwide Multistate Licensing System (NMLS) provides an option to classify sponsored loan originator relationships as either W-2 or 1099.
• The existence of this infrastructure indicates that no blanket prohibition applies to either classification.
• Although HUD Handbook 4000.1 (SAFE Act Compliance, Employee Compensation, Staffing) contains references to “employee” status, its primary focus is on ensuring that Mortgagees properly sponsor and supervise originators under the SAFE Act, rather than specifying tax classification.

Industry evidence supports this view. Many active HUD-approved correspondent lenders use a mixed W-2 and 1099 compensation model for MLOs. If a blanket prohibition existed, these models would not be sustainable.

Where HUD’s “Employee” Language Actually Matters

However, HUD’s stricter employee standards apply in two specific cases, not to loan originators in general:

Direct Endorsement Underwriters. HUD has required for some time that the DE underwriter be a direct employee of the Mortgagee. Underwriting authority to bind FHA mortgage insurance is considered a non-delegable essential function that cannot be contracted.

Handbook 4000.1, Section I.A.6.j, allows Mortgagees to use contractors for support functions like processing, administration, legal, and quality control.

However, contractors cannot participate in core origination or underwriting decisions. A 1099 MLO focused solely on loan origination is subject to different compliance requirements than a 1099 contractor providing back-office support. These roles must be clearly distinguished.

The former “Dual Employment” provision in Handbook 4000.1, which required Mortgagee employees to have only one employment, has been eliminated by a new HUD Mortgagee Letter. Relying on this provision to oppose mixed-compensation models is based on outdated guidance.

The Real Danger: Individual Misclassification, Not Company-Wide Mix

The main risk to companies arises from worker classification, regardless of FHA approval status. In one case, the IRS investigated a mortgage brokerage for misclassifying employees and independent contractors, not for tax evasion.

The IRS found that a single worker cannot be classified by the same employer as both an employee and an independent contractor under the common-law control test.

As a result, the brokerage was liable for back taxes and significant penalties. This was a worker misclassification issue involving the IRS and Department of Labor, not an FHA or HUD approval matter. While both relate to MLO compensation, they are legally distinct and should not be confused.

The Real Landmine: Individual Misclassification, Not Company-Level Mix Here is Where Companies Actually Get Hurt, and it Has Nothing to do with FHA Approval Status.

In a documented case, a mortgage brokerage was audited by the IRS — not for unpaid taxes, but specifically for worker classification.

The IRS found that certain individuals were being paid simultaneously as W-2 employees and 1099 independent contractors — for example, performing operational or processing duties as a W-2 employee while also originating loans and receiving 1099 income from the same company.

The IRS determined that a single individual cannot be classified as both an employee and an independent contractor for the same employer under common-law control standards, and the company incurred significant penalties and back liabilities as a result. This is a worker misclassification issue governed by the IRS and Department of Labor, not an FHA or HUD approval issue. It gets conflated with the HUD question because both come up in the same conversation about MLO compensation, but they are legally distinct problems:

NMLS Sponsorship Has to Match Reality

A common risk occurs when NMLS sponsorship records show W-2 or 1099 status, but actual compensation does not match. Examiners, auditors, and the IRS can easily identify these inconsistencies. Companies using a mixed-compensation model must regularly verify that NMLS sponsorship records accurately reflect compensation classifications.

State Law is the Greater Practical LimitationFor Multi-State Brokerages or Correspondent Lenders, State Licensing Laws Pose a More Significant Risk Than HUD Regulations.

• Some states, like New Jersey, require MLOs to be compensated as W-2 employees because of their mortgage licensing laws.
• In states like Florida, licensed loan originators can comply with local requirements.
• However, compliance in one state may lead to licensing violations in another, regardless of HUD guidance.
• Companies using a mixed W-2/1099 compensation model across multiple states must ensure the model is fully documented and compliant in each state.
• For example, a mortgage company would be denied HUD Non-Supervised Mortgagee or Direct Endorsement approval solely because it compensates some MLOs as W-2 employees and others as 1099 independent contractors.
• The primary risk areas are more limited and specific.

It Would Be a Violation for Any One MLO to be Classified as Both a W-2 Employee and a 1099 Independent Contractor of the Same Company.

• MLOs must be properly classified, and their sponsorship must be reflected in the NMLS.
• W-2 employees must be contracted to act as Direct Endorsement underwriters.
• The licensing laws of the state in which the company operates must be evaluated in regard to 1099 independent contractor arrangements before those arrangements are implemented.

Before implementing a mixed compensation structure for an FHA correspondent approval application, companies should consult mortgage regulatory counsel and employment tax advisers. The compensation structure must comply with HUD Handbook 4000.1 and all relevant state licensing laws. Misclassification risk is significant and costly, but it is an operational and compliance issue, not an absolute barrier to FHA correspondent lender approval.

Can Mortgage Loan Originators Be Paid By 1099 and W2 – GCA Mortgage Forums

[Stella]

Great news on Punch Kun!!! Punch is making friends finally. Punch is a national sensation. https://youtu.be/BICu0qTFhzY?si=fU85Z02DcpiEvvom

[Stella]

Looked at GCA Mortgage Forums BUSINESS DIRECTORY and looks great. Thanks for the add.

https://gustancho.com/great-community-authority-forums/

[Stella]

Trish Regan has the news on rumors about Elon Musk buying MSNBC. Plus, while he’s at it, any chance Elon Musk might buy Disney? Or, at least ABC? Trish has the intel.

Plus, can MSNBC hang onto top talent? Rachel Maddow has reportedly already agreed to a pay cut. Trish Regan says there will be other key anchors facing similar scenarios – meanwhile, Joy Reid may just be flat-out fired.

And, Pam Bondi is IN – Matt Gaetz is out. Was this President Trump’s plan all along? Trish discusses.

And finally, the so-called “hush” money trial is finally at its end. The judge just granted a motion to dismiss. So, what does this mean for Letitia James as the Court of Appeals prepares to toss her case?

https://www.youtube.com/live/yhpukJgom4Y?si=v35i4VETZc0eEn36

[Stella]

Here is the story of Indiana Sheriff Jamey Noel:

https://youtu.be/JumOoDDTZZc?si=T7yvgfxytoQk4r-T

[Stella]

Biden white house aid to confess to the auto pen. She now lawyers up. The Democrat party is broke and on verge of bankruptcy. Joe Rogan asks Senator Bernie Sanders some simple but thought provoking questions. Sanders panders and tries to change the subject.

We know the first person from Biden’s white house controlling the auto pen. Bernie Sanders admits several huge issues on the joe rogan podcast. The democrat party is going broke. And much more.

Sage Steele Former ESPN Sports Host. Now Host of The Sage Steele Show on YouTube.

The democrat party just voted to remove the Vice President of the DNC for being a white male. They said they need blacks and women and LGBTQ2SA+ people. They also announced they are going broke and might have to borrow money. Thoughts on this and has Trump bankrupted the Democrats or did their horrible policies do this or both?

Did you see the Joe Rogan, Bernie Sanders interview? (not needed I’ll guide the discussion)
Instant Regret Hits Bernie Sanders as Joe Rogan Interview Backfires Spectacularly

You say Democrats need more tax money to run the government and help people but why should I hand my money over to a corrupt government?

Senator Sanders also said The Government has known Big Food is poisoning kids, making us fat and sick, but he doesn’t support RFK or Trump’s health changes and has taken almost $2 million from Big pharma.

No wonder Kamala refused to do Joe Rogan

Whoopi Goldberg on The View recently said Its as hard for Black people to live in America as life is in Iran. Do you think there is any truth to that?

ESPN America Great retraction

Auto pen
Neera Tanden Admits Under Oath That She Controlled Joe Biden’s Autopen

Jamie Metzel on Trump’s courage and defense of America. Kamala Harris fan that admits she would have been easier but not courage to keep us safe. Show twitter post.

https://youtu.be/otF0VV3gPJA?si=yScwdbTMMtmylMVf

[Stella]

A young woman was handcuffed by a retired NYPD detective working private security for New York Attorney General Letitia James, after allegedly clipping his car in Manhattan. Now the AG’s office claims it’s “reviewing the matter.” But where’s the accountability?

Should this retired officer face charges?

And, was this a clear case of overreach?

Let me know in the comments.https://youtu.be/NTJ6rRsjpFc?si=pIW6_hdo1hiMTydh

[Stella]

Federal Judge Brian Murphy defies the Supreme Court, while President Trump is Not Happy over recent Iran-Israel strikes. ICE arrests 11 Iranians, including a known terrorist, and a California official urges gangs to fight ICE.

https://youtu.be/WP5KvbcViuI?si=Q60LKE_z9kuzOXtv