real estate news

HUD/FHA reform press release Feb. 11,2011

2011-02-14T12:35:00.002-05:00

http://portal.hud.gov/hudportal/HUD?src=/press/press_releases_media_advisories/2011/HUDNo.2011-02-11

2010-09-22T16:25:00.000-04:00

September 22, 2010

Current Market Conditions

Rates are starting to climb slowly. The good news is that they are still at very low levels (4.375% 30Yr/ 3.75% 15Yr) and mortgages are still a bargain. The 7/1 IO ARM product. A lot of people are considering this loan for refinancing since it gives them a break from high housing expenses while they wait for their houses value to recover. Not a bad thought actually considering the fact that a $200K loan amount taken at 3.75% IO would give you a monthly payment of $625.00. Can you pay toward your principal? Of course. YOU decide how much your monthly payment will be.

On a larger scale….has anyone notices that Wall Street is nearing record levels again? Last I checked, the DOW was sitting at 10,720. Not too far off the 12,000 levels before the crash.

Quick Note On Investor Loans

· You can get 80% investor loan financing. Rates are much better however on 75% LTV loans.
· Seller contribution is limited to 2%
· You cannot use gift funds from any source for down payment on an investment property.
· Know that the taxes will be higher since there will not be homestead exemption.

Big FHA Changes October 4th

Beginning October 4th, FHA upfront MIP drops from 2.25% down to 1% BUT the monthly MIP rises from .55% to .90%. This change equals to a net rise in payment on a $100K loan of about $24.00. Just what we needed HUD. Thanks!

2010-09-22T15:28:00.000-04:00

September 22, 2010 Legislation to Encourage Short Sales Introduced in Congress -

A bipartisan pair of Congressmen introduced legislation last week that would require lenders and servicers to speed up the process of approving or disapproving a short title or short sale. U.S. Representatives Robert Andrews (D-N.J.) and Tom Rooney (R-Fla.) submitted H.R. 6133, the Prompt Decision for Qualification of Short Sale Act of 2010.

The legislation is designed to assist homeowners who are underwater on their mortgages, i.e. owe more on the loan than the current value of the house, and have a buyer reader to purchase the house at a price which will net less than the current payoff of that mortgage. The legislation addresses only the timing of the decision, not the lenders criteria for approving or disapproving the request.

The bill, introduced as an amendment to the Truth in Lending Act, says in part; "...if the mortgagor under a residential mortgage loan submits to the servicer of the mortgage loan a written request for a short sale of the dwelling or residential real property that is subject to the mortgage, deed of trust, or other security interest that secures the mortgage loan, and all information required by the servicer in connection with such a request (including a copy of an executed contract between the owner of the dwelling or property and the prospective buyer that is subject to approval by the servicer), and the mortgagor does not receive from the servicer, before the expiration of the 45-day period beginning upon receipt by the servicer of such request and information, a written notification of whether such request has been approved, that such request has been approved subject to specified changes, or that additional information is required for such a determination, such request shall be considered to have been approved by the servicer."

Many real estate agents and mortgage originators have been outspoken about the difficulties of obtaining approval from mortgage lenders for short sales. A number of real estate and mortgage professionals have told MND they were advising customers not to plan on claiming the tax credit if they were buying a foreclosed property or short sale because of the delays involved in the process. Servicers claim it can be difficult to determine who actually owns the loan and obtaining signatures approving the sale and, as is the case with loan modifications, owners and servicers accuse each other of failing to submit required documentation or losing or mishandling the information when it is received..

According to the National Association of Realtors® (NAR,) the number of potential short sale properties is rising across the country. In Nevada, California, Florida and Arizona in the second quarter of 2010 significant shares of all properties on the market were potential short sales: 32 percent, 28 percent, 27 percent and 24 percent, respectively.

In strongly endorsing the legislation, NAR President Vicki Cox Golder said "As the leading advocate for homeownership issues, NAR believes that quicker attention to the short sales process is vital to help homeowners who are underwater and their communities, as well as the nation's economy.

"Unfortunately, homeowners who need to execute a short sale are severely hampered because lenders (loan servicers) are unable to decide whether to approve a short sale within a reasonable amount of time. Potential homebuyers are walking away from purchasing short sale property because the lender has taken many months and still not responded to their request for an approval of a proposed short sale price. Many consumers, Golder said, "have mentioned that the delay in short sale price approval exceeds 90 days, and in many cases never arrives."

The bill has been referred to the House Financial Services Committee for consideration.

Filed under: short sales, Short Sale Act, HR 6133

Enhanced VA Mortgage Options Now Available for Veterans

2010-02-09T16:18:00.000-05:00

Enhanced VA Mortgage Options Now Available for Veterans
Of Potential Benefit to Those in Financial Distress

WASHINGTON-- Veterans with conventional home loans now have new options for refinancing to a Department of Veterans Affairs (VA) guaranteed home loan. These new options are available as a result of the Veterans' Benefits Improvement Act of 2008, which the President signed into law on October 10, 2008

"These changes will allow VA to assist a substantial number of veterans with subprime mortgages refinance into a safer, more affordable, VA guaranteed loan," said Secretary of Veterans Affairs Dr. James B. Peake. "Veterans in financial distress due to high rate subprime mortgages are potentially the greatest beneficiaries."

VA has never guaranteed subprime loans. However, as a result of the new law VA can now help many more veterans who currently have subprime loans.

The new law makes changes to VA's home loan refinancing program. Veterans who wish to refinance their subprime or conventional mortgage may now do so for up to 100 percent of the value of the property. These types of loans were previously limited to 90 percent of the value.

Additionally, Congress raised VA's maximum loan amount for these types of refinancing loans. Previously, these refinancing loans were capped at $144,000. With the new legislation, such loans may be made up to $729,750 depending on where the property is located.

Increasing the loan-to-value ratio and raising the maximum loan amount will allow more qualified veterans to refinance through VA, allowing for savings on interest costs or even potentially avoiding foreclosure.

Enhanced VA Mortgage Options 2/2/2/2

Originally set to expire at the end of this month, VA's authority to guaranty Adjustable Rate Mortgages (ARMs) and Hybrid ARMs was also extended under this new law through September 30, 2012. Unlike conventional ARMs and hybrid ARMs, VA limits interest rate increases on these loans from year to year, as well as over the life of the loans.

Since 1944, when home loan guaranties were offered with the original GI Bill, VA has guaranteed more than 18 million home loans worth over $911 billion. This year, about 180,000 veterans, active duty servicemembers, and survivors received loans valued at about $36 billion.

For more information, or to obtain help from a VA Loan Specialist, veterans may call VA at 1-877-827-3702 or visit www.homeloans.va.gov.

2010-01-30T10:30:00.000-05:00

Rumors are being circulated about the possibility of FHA allowing the $8,000 tax credit to be used for downpayment monies.
I will post more info as soon as it is verified.
This will need to be addressed by the IRS before FHA can act.

2010-01-21T13:17:00.000-05:00

New FHA Changes (So Far)

Well.. it ain’t so bad. There were three basic changes that should be in place the beginning of February. The first will be an increase in up-front MIP from the current 1.5% to 2.25%. Anyone who has been in the business for more than two years knows that this was what the UFMIP was previously so this isn’t a biggie. On a $125K loan, this will add a little over $900.00 to the loan amount resulting in a $5.00 monthly increase in payment. No sweat. The second provision is HUD is requiring a 10% downpayment for borrowers with less than a 580 credit score. Since 90% of lenders are not accepting deals with under 580 scores, this is a non-issue. The largest impact will come from the third change. HUD is cutting the allowable seller contributions from 6% down to 3%. You will find that this will impact the lower cost deals since there are numerous fixed costs that represent a larger percentage for smaller deals. It is not uncommon for deals under $100K to have fixed closing costs that exceed 3%. Lenders also would use additional sellers contributions to pay for a borrowers pre-paid expenses. Buyers now will need at least a net of their down payment and pre-paids. Their bottom line should rise by an additional $1000.00 in most cases which will have a tangible impact on our business. I haven’t heard of any other changes being implemented by HUD in the foreseeable future and these current changes aren’t as bad as they could have been. If HUD decided borrowers could no longer finance their up front MIP…Game Over.

Good Faith Estimate Changes
We are now using the three page Good Faith Estimates and three page HUD-1 Settlement forms. As they say, an elephant is a mouse designed by the government. The new GFE’s in my opinion are causing more questions rather than simplifying the process. But, here we are. The biggest cause for concern is the first section of the GFE that puts one single figure for the lenders origination fee. This fee will look huge and it seems that the lender is now charging 2% origination fee versus the customary 1%. Not true! The fee that is reflected as “origination fee” is really a combination of the 1% origination fee PLUS underwriting, processing, and admin fees.
Secondly, all lenders are pressing the attorneys for a standardized list for their fees so our GFE’s don’t get out of whack at the closing table. Traditionally, attorneys would tell you that their fee was around $400.00. But in reality, most attorneys add numerous fees (much like the lenders admin, processing, and underwriting fees to be fair) that drove the total cost to almost $1000.00. If it has the attorneys name or title company’s name next to it… it is an attorneys fee. According to most of the fee schedules we have been getting, most of our closing brethren are charging a net fee of between $675.00 to $800.00.
My major gripe with the new GFE is that it does not give the borrower a monthly payment nor does it break down the individual charges for them to compare. Sure, being able to have one number to compare lender to lender seems like a good idea. But when is more information a bad thing? Oh well. It’s a really really big government and I’m a really really small loan officer. Kinda pointless for me to whine.

Reprinted from:
Dan Aiken

Sr Loan Officer
SunTrust Mortgage, Inc.
770-683-5381
Cell 404-791-3492
dan.aiken@suntrust.com

2010-01-21T11:01:00.000-05:00

The top 9 most common reverse mortgage myths include:

Myth: If I take out a reverse mortgage the lender will own my home.

Fact: False. Homeowners still retain title and ownership to their homes during the life of the loan, and can choose to sell the home at any time. As long as the house is maintained and property taxes and homeowners insurance are paid, the loan cannot be called due.

Myth: My children will be responsible for the repayment of the loan.

Fact: False. Reverse mortgages are non-recourse loans. That means, if the property is sold to pay-off the loan when the homeowner passes away or decides to leave the home for other reasons, there will be no mortgage debt for the family and heirs to repay. The maximum amount owed is the current market value of the house. If the homeowner’s heirs want to keep the home, they would pay the balance in-full to the reverse mortgage lender.

Myth: I can’t get a reverse mortgage if I have an existing mortgage.

Fact: False. With enough equity, you may be able to pay off your existing mortgage or other debt with the reverse mortgage. The reverse mortgage must be in a first lien position, so any existing mortgage must be paid off. Seniors who take out reverse mortgages are free to do anything they want with their reverse mortgage proceeds. Paying off an existing mortgage is the number one reason most seniors take out a reverse mortgage.

Myth: Only low-income seniors get reverse mortgages.

Fact: False. Although some seniors may have a greater need than others for the monthly proceeds or lump sum funds reverse mortgages offer, most simply prefer to be free of monthly mortgage payments. Without monthly mortgage payments, many homeowners find they can maintain their existing quality of life and build their savings to help with future expenses. A growing number of people who have no immediate need are taking out these loans so that they have a financial cushion for future expenses.

Myth: If I outlive my life expectancy, the lender will evict me.

Fact: False. Reverse mortgage lenders put no time limit on how long seniors can stay in their homes. Since homeowners still own the property, lenders cannot evict them, provided they follow the program guidelines.

Myth: There are no objective advisors available to seniors trying to decide if a reverse mortgage suits their needs.

Fact: False. Borrowers are required to work with independent, third party counselors approved by the U.S. Department of Housing and Urban Development (HUD) in their local communities. This educational session helps them make the right decision for their unique situations.

Myth: There are restrictions on how reverse mortgage proceeds may be used.

Fact: False. There are no restrictions. The cash proceeds from the reverse mortgage can be used for virtually any purpose and borrowers should be cautious of lenders attempting to cross sell other products. Many seniors have used reverse mortgages to pay off debt, help their kids, make ends meet or to have a financial reserve.

Myth: Reverse mortgage lenders take advantage of seniors.

Fact: False. Seniors who have been victims of reverse mortgage lending schemes are extreme exceptions and typically victims of unsavory lenders. As a consumer, you should only work with lenders who are Better Business Bureau and National Reverse Mortgage Lenders Association (NRMLA) members and adhere to those organizations’ strict Code of Ethics and Standards for Trust.

Myth: I’ve heard I won’t qualify for a reverse mortgage because of my limited income.

Fact: Unlike a traditional mortgage where mortgage payments must be made each month, a reverse mortgage pays you. Because of this, many seniors who do not qualify for traditional financing are eligible for a reverse mortgage.

Reprint from RISmedia

2010-01-08T11:39:00.000-05:00

January 8, 2010

FHA “proposed” changes:

HUD is about to make major changes when it comes to the reforms HUD Secretary Donovan has proposed in order to shore up the losses HUD has taken over the past few years.

The changes are dramatic and will directly impact the way homes will be financed. These changes are not yet official so take this information as a warning of what might come.

1.) Raise downpayment from 3.5% currently to 5%

2.) Reduce seller contribution from 6% to 3%

3.) Raise FICO credit scores up to possibly a 680 floor.

4.) Raise up-front MIP from 1.75% currently to 2.25%

5.) Raise annual premiums from .55% currently to .75%

In addition to these program changes, HUD is also leveling their guns at “mom and pop” mortgage shops. They will be doing away with correspondent lending entirely. In short, the lender who orders the FHA case number will have to be the lender who closes the deal. Currently, HUD has 13,800 approved lenders. After these changes there will probably be under 1000 left standing. You may not notice a difference since most of your favorite local lenders are probably on this short list but virtually all of the basement mortgage operations will be history.

To see what this will look like, let’s take a scenario where a first time homebuyer is purchasing a $100K home. Their cash to close will increase by $1500.00 to $2000.00 depending on what their closing costs are due to the increased down payment and capped sellers contributions. Their payment will rise by around $10.00 due to the monthly MIP increase. The big issue will be getting potential homebuyers to start saving their pennies and work on their credit. These weren’t priorities in the days of Nehemiah and 580 credit scores. But it’s a priority now!

As with everything, this too shall pass. Some of these proposed changes will eventually go away while some may stick around for the long term. The additional MIP proposals are designed to inject money quickly into FHA’s coffers. These will be the first to go away. The credit scores may ease off once the market shows sure signs of stabilizing. But as we will soon find out, nothing is ever going to be the same. Remember: Luck Favors The Prepared!

Reprinted with permission from:
Dan Aiken
Sr Loan Officer
SunTrust Mortgage, Inc.
770-683-5381
Cell 404-791-3492
dan.aiken@suntrust.com

My suggestion is to start the loan process EARLY and work with a loan officer to improve your credit score. This can take 90 days or more. Also save as much as possible.
You will always need cash to close.

2010-01-08T09:17:00.000-05:00

Hello,
I am starting this blog to help keep people informed with the latest real estate news as I find new items of interest to potential buyers and sellers.
Please visit my website for Metro Atlanta real estate at http://www.pcanavan.com and stay tuned for the latest real estate information.
You responses would be appreciated.
Thank You,
Pete Canavan