Curtis Price

Why Are Mortgages For GOOD Borrowers Going to Get More Expensive??

2011-03-16T12:47:00.000-06:00

If you are going to buy a house or refinance your own home, or if you know someone who is going to buy or refinance (I think we all fit into one of these 2 categories)... The rules going into effect April 1st are actually going to affect EVERY ONE.

FHA Loans Get Expensive

2011-02-17T11:28:00.000-07:00

One of the benefits of FHA loans over the years was the low monthly mortgage insurance premiums required. Well, that's changing yet again. The monthly Mortgage Insurace was raised last year from 0.55% to 0.9% and starting with case #'s pulled in April of 2011 it will go up again to 1.15%

What does this mean for someone buying a home?
Say you want a home for $250,000 - FHA requires a down payment of 3.5% and the monthly mortgage insurance will go up from $184.64 per month (at 0.90% factor) to $231.20 (at a 1.15% factor)per month.

The net result is that borrowers will pay $46.56 more per month for the same loan.

I'm not arguing that the premium shouldn't be higher. After all, FHA is the only institution that provides the kind of financing they do at the low rates they offer. If these loans made sense, banks would already be doing them. The fact of the matter is they don't make sense - therefore, the government is the only "bank" doing them.

What I find frustrating is that the government is simultaneously claiming to do all they can to fix the housing mess, but they raise the mortgage insurance on FHA loans which comprise a LARGE part of all lons being closed these days.

Why don't they get to work and fix the "loan modification" scham that's funneled billions from government coffers and produced minimal results.

Please post any comments below!!

Frank Dodd Legislation

2011-02-08T12:52:00.000-07:00

Everything changes in the mortgage industry on April 1st… AGAIN!!!

1) Loan Officers will be under contract to make the same amount on every loan.
(i.e. they will make 1%, or 2.5% or 3% or whatever they agree to on EVERY loan).

2) Will not have the ability to give Lender Credits at closing… but as Branch Managers we can.

3) Compensation can only come from either Borrower or Lender... not both (most of the time the compensation will come from the lender… so either you will have lower closing costs and higher rates, or lower rates and higher closing costs).

This could become a BIG issue at closing. Let's say a loan officer is purchasing a home with a loan of $100,000 and he is one a 1% contract for his compensation ($100,000 x 1% = $1,000).

Now, suppose the borrower is planning on bringing in $5,000 at closing. They have an emergency and only have $4,500 available when they go to close on their new home. Under normal circumstances a loan officer could just give them a credit for $500 to get the loan to go through, so their agent can be paid and they can make a little.

Since the loan officer is under contract to make 1%, the company he works for is required by contract to still pay him 1% or $1,000 on that transaction even though he would be fine only making $500. He still must make $1,000 or his company is violating the new Dodd-Frank law.

They are such geniuses, all this will do is increase costs passed on to the consumer because the lenders are going to pad their profits for contingencies like this and pass it along to the consumer. I guess the real winner in all this are the banks... oh, and Frank and Dodd. You may have heard of Senator Dodd's "sweetheart" loan he got with Countrywide (huge lobby group). He lost all his paperwork and so did Countrywide, so no one really knows how he got the loan from them.

Politics at it's lowest. Brace yourselves because the housing recovery is now going to take a bit longer to recover from thanks to these 2 Yahoo's!!

What is "Split M.I.?"

2011-02-08T12:47:00.000-07:00

All loans above a 80% Loan to Value have some kind of Mortgage Insurance. FHA loans charge 1% up front, and then 0.9% each year ($200,000 loan would be $1,800 or $150 per month). The only wait to avoide this with FHA is to put down at least 10% and do a 15 year loan, then you’d save the $150 per month but still be charged up front.

Conventional Loans have more options: Monthly / Split / All Up Front (a.k.a. Single Premium)

Let’s say a borrower is purchasing a home for $250,000 and they can put down 5% and has a 680 credit score and DU requirement of 30% Coverage. They have 3 different options for Mortgage Insurance:

As you can see borrowers have many choices when it comes to Mortgage Insurance options. As trusted mortgage professionals, Ben and I can help navegate them through the confusing options to help them find the best solution at the lowest cost.

Non-Arm's Length Transaction

2011-02-08T12:39:00.000-07:00

An identity of interest transaction is a sales transaction between parties with family or business relationships.

The maximum LTV factor for identity of interest transactions on principal residences is restricted to 85 percent.

1) A family member purchases another family member's home as a principal residence. If the property is sold from one family member to another and is the seller's investment property, the maximum mortgage is the lesser of sales price or appraised value.

2) An employee of a builder purchases one of the builder's new homes or models as a principal residence.

3) A current tenant, including a family member tenant, purchases the property where he/she has rented for at least six months immediately predating the sales contract.

4) A corporation
a. transfers an employee to another location
b. purchases the employee's home, and
c. sells the home to another employee.

How we BUMP up your Credit Scores!!

2010-08-31T14:31:00.000-06:00

Here's the latest video from our YouTube Channel for buyer's. Feel free to share the link on Facebook or embed the video on yoursite. - CP

You can also direct them here to my YouTube Channel. I will be making several videos over the next few weeks on important topics your buyer's may find useful. Let me know if you have any suggestions.

New Housing Drops - 2 Builder Stocks Increase... HUH??

2010-08-25T15:44:00.000-06:00

It's a strange reaction to say the least. The broad market is down because of more gloomy housing data. But the companies that are most directly tied to the health of the housing market are up?

It doesn't make a heck of a lot of sense. It may be a case of traders betting for the umpteenth time that this is finally a bottom for housing.

That's a mistake. Now that the tax credit for homebuyers has expired, it's difficult to imagine what can juice the real estate market again in the near-term.

So traders may be banking on the fact that the worst is really over for housing. But one fund manager who owns shares of Pulte said he's holding the stock for the long haul, not because he expects immediate improvement on the horizon.

Property Tax Notice

2010-08-05T13:55:00.000-06:00

Utah County has started sending out property tax notices this past weekend. These notices can create confusion, and many property owners have questions about where these numbers come from and what this information means.

You may be confused at how your property value might go down, but your taxes stay the same (or even go up). The property taxes are calculated using a certified tax rate and the taxable value of each home and property. The tax rate is calculated based on adopted budgets of the various entities, while the property value is determined by a review of the property and current market data.

Between now and the last valuation period home prices have declined typically 5 to 9 percent. Owners should not be surprised if they notice a drop in value with no corresponding drop in taxes, given the process of how the tax rate is calculated.

Each tax entity (city) determines its own tax rate, and the Utah County Assessor’s Office determines property value. The Assessor's office has worked hard to consider valuation changes in neighborhoods and communities for the upcoming year, but residents should also be aware of the process to appeal their valuation notice.

Property owners who wish to appeal their notices must contact the Utah County Board of Equalization within 45 days from the date of their notice (click here for details). Owners will set an appointment for a hearing in an informal setting with a County real estate appraiser to reevaluate the property value.

I hope this helps!!!

Condo Approvals

2010-07-28T15:10:00.001-06:00

Ben Bernanke's Comments Help Rates Improve

2010-07-22T12:02:00.000-06:00

Strategic Foreclosures

2010-07-20T07:57:00.001-06:00

(trend of 30-yr Bond)

Did you know 1/3 of all foreclosures are strategic defaults: where the borrowers can afford to make their payment, but chose to abandon the property in search of greener pastures? Fannie Mae announced plans to get tough with strategic defaults. Fannie said that borrowers who default when they are able to pay won’t be able to get another Fannie Mae loan for seven years. The current wait is five years. While that might sound like an empty threat, in an environment where Fannie Mae and Freddie Mac are providing most home financing, it may have some teeth.

Fannie also threatened to sue home owners who walk away from their home loans in states where such deficiency judgments are legal (and YES they are legal in Utah). The announcement attracted some criticism because of Fannie Mae's refusal so far to allow hard-pressed borrowers to negotiate a lowering of their principal amount, which is something lenders are now agreeing to after prodding by the federal government. Critics contend the company should try principal write-downs before it penalizes borrowers for choosing to walk away.

FICO Inc update

2010-07-14T12:44:00.001-06:00

HUD REO $100 Down Loan

2010-06-29T06:35:00.000-06:00

Con 30-yr Fixed - 4.5%
FHA 30-yr Fixed - 4.5%

HUD REO sales with $100 down payment incentive: HUD properties with the $100 down payment incentive will be permitted as follows:

1. The maximum loan amount after adding UFMIP may exceed 100% of the lower of the sales price or appraised value.

2. The maximum LTV with the inclusion of Repair Escrow is 110%.

3. Repair escrows are permitted (line 4 of sales contract indicates 203b with Repair Escrow).

4. The maximum amount of allowable repairs is $5000.

5. Maximum DTI 45% (DTI > 45% must have compensating factors plus a 2nd signatu e) regardless of AUS approval.

6. Where a discount on the sales price is being provided, the mortgage amount must be based on the lesser of the “as-is” value or the discounted sales price, not the contract sales price.

7. Follow 4155 guidance and HUD requirements.

8. Standard program only, fixed rate. ARMS not permitted.

$5,000 for down payment

2010-06-22T05:43:00.000-06:00

Today’s Rates = Conventional: 4.625 % FHA: 4.50%

You may or may not know of a Utah County Grant program called Housing Services of Utah County. Their loan to own program has been very helpful for us over the years when funds are available. Here are details to help you know what your clients can and can't qualify for.

#1 Funds are limited: check http://housingservicesut.org/loantoown/ to see if funds are available.

Who Qualifies?
1. First Time Home Buyers
2. With Credit Score > 700, then DTI is 35% / 45%
3. With Credit Score > 650, then DTI is 33% / 43%
4. There can be no co-signers involved.
5. Borrowers must complete a Community Action Pre-Purchase Counseling Class ( which is free)

Income Limits

Family Size / Income Limit

1 / $35,200
2 / $40,250
3 / $45,250
4 / $50,300
5 / $54,300
6 / $58,350
7 / $62,350
8+ / $66,400

1. The client’s debt to income ratios meet HSUV guidelines (which is in the application packet)

Property Limits

1.Single Family Residence (single homes, condo’s, twinhomes etc. but no accessory apartments)
2.The purchase price of the home cannot exceed $ 232,305
3.Eligible Cities:
Orem
Lehi
Lindon
Payson
Pleasant Grove
Spanish Fork
Springville
Unincorporated Utah County (Rural farmland, not in an incorporated City)

4.If the home is NEWER than 30 years the client is eligible for $ 5,000 toward 2 the required down payment and the one time closing costs (does not include pre-paid items or reserves).
5.If the home is OLDER than 30 years the client is eligible for $ 15,000 which will pay for the one time closing costs (does not include pre-paid items or reserves) and the balance will go toward down payment.

Repayment

1. After the 1st 5 years the loan is forgiven at a rate of 20% per year until the end of the 10th year and the entire 0% interest loan is forgiven.
File goes through a loan committee and funds are awarded based on (a) availability and (b) need. In other words, just because a client may fit all the criteria funds could be awarded to a “more needy” applicant.

Time to Close

Process takes 2 to 3 weeks.

(share this link with your clients and have them call us if they have questions)

Only 41,000 new jobs from Private Sector

2010-06-04T10:01:00.000-06:00

Click here for KSL's article

Looks like we'll have good mortgage rates for a while now that the numers show that of the 431,000 jobs last month but only 41,000 of those jobs were not government jobs. This shows that the economy isn't recover quite as fast as people would have hoped and investors are sticking to Mortgage Backed Securities again.

As a result, mortgage interest rates remain low at 4.5% for an FHA 30-yr Fixed Rate mortgage as of this morning.

One analyst from PIMCO said the US Economy is facing a "new normal" which means the recovery and economic future of the US will not rebound to the levels seen in the past 10 or 20 years.

We'll see what next months payroll shows.

Mortgage Minute 6-01 Credit Monitoring

2010-06-01T08:02:00.000-06:00

We have already informed you of Fannie Mae’s “LQI” – Loan Quality Initiative which begins today where Conventional Mortgages will be double-checked just before closing on several areas. One worry comes from what could happen if credit scores change just before closing. Undoubtedly, there will be services spring up that offer you credit monitoring and there are many who actually do a good job, but buyer beware.

The pitch: The FTC is cracking down on sites that mislead people into thinking they're getting a free credit you lost your wallet. And even then, it doesn't stop someone from opening a new account in your name.

The only way to do that is by freezing your credit reports at all three bureaus through a service like TrustedID (typical cost: $20 to $40).

That will keep new lenders from looking at your reports and prevent accounts from being opened by anyone -- including you. The downside: To take out a loan, you'll have to pay $15 to unfreeze your reports.

The exception: If you have a financial goal (like buying a home) in the months ahead and want to know what actions boost your score as well as when it hits a certain threshold, Equifax's Score Watch may be worth the price.

Mortgage Minute 04-13-2010 FHA 203k

2010-05-28T10:29:00.000-06:00

FHA 203K Rehabilitation Loans

Do you have buyers who need to fix up a home they’re looking to buy? FHA 203K Rehab loans may be the perfect fit. Call us for details. Here are a few bullet points…

• Loan amounts of up to 110% of Expected market value.
• Owner Occupied only (no investment properties)
• 1-4 units and condo’s
• 3.5% down payment
• Minimum FICO of 620
• No payments for up to 6 months if property is not occupied
• Gifts and co-signers allowed (no co-signers on multi-unit properties)
• Repair/replace roofs
• Repair/replace/add exterior decks, patios, porches
• Window and door replacement

Call us today to review your clients needs.

Mortgage MInute 03-09-2010 FDIC closes Centennial Bank

2010-05-28T10:09:00.000-06:00

FDIC closes Centennial Bank

Centennial Bank, Ogden, UT, with approximately $215.2 million in assets and approximately $205.1 million in deposits was approved for payout by the FDIC Board of Directors. The FDIC has been around since January 1, 1934 and is designed to protect depositors. A 5 member board watches banks closely to make sure they are not under capitalized. Typically they must keep 10% of their outstanding loans as deposits. If depositors take out funds the bank becomes undercapitalized. When a bank becomes undercapitalized the FDIC issues a warning to the bank. When the number drops below 6% the FDIC can change management and force the bank to take other corrective action. When the bank becomes critically undercapitalized the FDIC declares the bank insolvent and can take over management of the bank.

Here is an interesting article chronicling one bank takeover in Clark County Washington:

On a mid-January night, some 80 agents of the Federal Deposit Insurance Corp. pull into Vancouver, Wash. Their rental cars are generic, their arrival times staggered. One by one, agents check into a hotel, each quietly offering a pseudonym to the guy at the desk.
They're here to take over the Bank of Clark County, which the FDIC has decided is insolvent. It's the agency's job to insure American bank deposits and to step in when a bank fails. The FDIC tries to keep the planning for its operations top secret, to avoid sparking a panicked run on the bank.
At 9 o'clock on this particular Thursday night, FDIC agents call another bank nearby, Umpqua Bank. They tell executives there that Umpqua has been selected to take over the Bank of Clark County. They order them not to tell anyone. Come to a meeting tomorrow at noon, they say, and we'll fill you in on everything you need to know.
The next day, Ric Carey, an Umpqua vice president, heads into that meeting. "The FDIC had taken a location approximately two miles from the main office of the bank in a hotel under a different name," he says later. "And they've been through quite a few of these. I think one of the gentlemen leading the discussion said, 'You know, I've done over 200 of these over my 25 years, and let me tell you how it's going to work.' "
He agrees it almost feels like a spy movie. "They've done this before — quite a production," he says.

Breaking The News
Todd Zalk is what you'd call a team player, a total bank loyalist to the end and beyond.
Zalk works at the Bank of Clark County — "the best community business bank," he says, "because we've changed the game in business banking and we were winning." He laughs at himself, but a month after the failure he's still wearing his Bank of Clark County nametag, still passing out his bank business cards with a warm handshake and calling people by name whenever possible.
Zalk says he had no idea the FDIC was in town and his bank was about to fail. On Friday afternoon, failure day, he was bringing in new business. "I had people that wanted to open accounts," he says, adding that he opened more than 55 new accounts in the fourth quarter.
He knew the bank was going through a rough time — everyone knew that. The CEO had been saying that the bank was like a ship. The bank had taken on some water in the recent storm and might need a bigger ship, meaning a larger bank, to take it on. But things were basically under control.
On that Friday afternoon, Zalk is out meeting with potential clients.
At 5:01 p.m., a small team enters the Bank of Clark County. They're a casual group, just two FDIC agents and a Washington state regulator, and they head straight for the CEO's office. And this is when it happens: They deliver the news. They tell him his bank is undercapitalized and has failed.
At 5:03 p.m., an agent positioned by the CEO's office door, types the news into a BlackBerry. It is received by everyone on the FDIC takeover team, including the FDIC's manager on location, Ron Hodges.
"At 5:04, we receive the notification that the bank had been declared failed," Hodges says. "It's that simple."
A minute later, FDIC agents begin closing in on the bank. A few are already inside, quietly and discreetly securing the cash and the vaults.
Carey, with Umpqua Bank, has assumed a position down the street. He's sitting in his car, waiting and watching.

Gone In A Flash
Zalk, oblivious to all this, heads back into the office after a long day of work. And it's weird, he says, how tense everyone seems. A teller mentions that there's a staff meeting at 6 p.m.
"By this time it was quarter to 6, and I went up to someone who was senior vice president at the bank and I said, 'How are you doing?'" Zalk says. "And they said, 'Oh I'm doing all right.' I could tell something was going on and they didn't want to say. We looked across to the other side of the bank and there were two employees adjusting pictures on the wall. And he kind of laughed and said, 'Wow, that reminds me of adjusting the chairs on the Titanic before it sank.' And that really told me something was going down."
The Bank of Clark County staff gathered in the lobby at 6 p.m. The group included a couple of people in suits whom none of the bank staff recognized.
"Mike Worthy, our CEO, came out," Zalk says. "It was very short. He stood up and said, 'Well, I've used the analogy that we were a ship that was taking on some water and we needed to pull up next to a bigger ship, and we thought we had a few buyers for that. And now the biggest ship that sails the seas has come alongside us, and they are going to be taking us over — and that is essentially the federal government."
At 6:03 p.m., down the street in his car, Carey notices his BlackBerry vibrate. He was getting the signal, an e-mail: "It's time. Come in."
Two minutes later, Carey gets out of the car and starts walking toward the bank. Meanwhile, in the lobby, a woman from the FDIC takes the stage.
"She said within the next 10 minutes there will be 80 FDIC employees coming into the bank. And I looked out there, and it was dark so I couldn't really see," Zalk says. "Then all these people, mostly in suits and professional clothing with attorney-type briefcases, start entering the bank, just flooding into the bank. I was so awestruck at them coming in — and so many of them coming into the bank, that I turned around and looked over there, and just kept watching them, and they just continued to come. I mean 80? I mean, our bank had, like, 100 employees."
Out in the parking lot, he noticed a flash. It was a photographer for the local newspaper taking a photo for the front page of Saturday's edition.

Keeping The Doors Open
At 6:08 p.m., Carey enters the bank he will own in just a few days. He finds the staff members are standing in their closed bank headquarters trying to digest the news. Some of them are crying. He remembers one of them saying, "My goodness, I just told one of our biggest customers yesterday, 'Don't worry, everything's fine.'"
He says they seemed almost personally embarrassed that they now had to face those customers.
It's now around 6:10. The Clark County people have a bunch of questions running through their heads — first among them: Do we get to keep our jobs? Carey can't answer that. Umpqua will need only about a third of the Bank of Clark County staff. But it's too soon to let individuals know whether they just lost a job.
The Bank of Clark County no longer exists. It's not quite Umpqua Bank yet. The FDIC is in charge. The bank has to open its doors Tuesday morning — Monday is Martin
Luther King Jr. Day.
The FDIC agents announce that, through the weekend, the staffers will be temporary employees of the FDIC. Stay and help us, the agents say.
"Most of us were planning on leaving at the end of the day," says Ken Moody, the bank's vice president of information systems. "My daughter had a seventh birthday that we were going to go to."

An Autopsy
At 6:20 p.m., the FDIC agents spread out into offices, storage rooms, hallways, into any space available. They tape handmade signs to the doors, labeling rooms with functions like "audit," "security" and "investigations."
The agents begin going through files. They change the Web site and count all the cash by hand, a task that takes three hours. They check the safe deposit boxes, go through desk drawers and toss out bank letterhead.
From all the paperwork and computer hard drives, the FDIC has to reconstruct the bank's entire balance sheet. It has to know what it's selling to Umpqua.
The agents' work includes checking every single account. Ones with a balance under $250,000 are fully insured by the FDIC. But some people have more than that, and there are business accounts and loans and it gets complicated. Some of the accounts are covered, some aren't.
While the agents are sorting all this out, they can't have customers going online and moving money around. They need to shut down the bank's computers for a short while, maybe an hour. "Things started happening very quickly and with what seemed to be a lot of precision," Moody says.
At 6:25 p.m., Moody sees three agents approaching. They hand him a thumb drive and ask him to plug it into a computer. The drive contains all the instructions about all the computer systems.
"It was like watching an autopsy being performed by a really skillful surgeon," he says. "They just came in and sliced and diced and broke the bank up into a bunch of different pieces, threw them into different buckets — and did it with great efficiency."
It was like an autopsy, he says, of all the work the bank employees had done together for a decade.

'They Were Really Nice'
Many workers at the Bank of Clark County said one thing about the FDIC that you don't often hear about a government agency — that it did a really good job. They describe the agents as kind, courteous and efficient. Everything was structured, even how and when to grieve.
"Many of the people who came in from the FDIC got to where they were because they were part of a bank that was failed," says Lisa Stapleton, an assistant loan officer. "And they were like, 'You know what? We've been where you are. And we understand and it's going to be fine.' So they were really nice. Having that empathy helped it kind of make it a little more pleasant."
The Bank of Clark County had 100 employees and assets of $446 million — it was a really small bank. But the federal takeover kept 80 FDIC agents, about 50 Bank of Clark County staff, and 100 Umpqua employees, working round the clock for three days.
Most of the largest banks in trouble right now — Citibank, Bank of America — are about 6,000 times the size of the Bank of Clark County and much, much more complicated.
Considering the scale involved, it's not surprising the U.S. Treasury secretary's latest plan does everything it can to avoid using this process on those big banks. When you take over a little bank, it's called receivership. When you do it to a big bank, people throw around the word nationalization.

Mortgage Minute 01-05-09 Portfolio Program

2010-05-28T10:06:00.000-06:00

New Loan Program

We have a new “portfolio” loan program which will be available. These loans are not sold to Fannie Mae and/or Freddie Mac and as a result do not have some of the same restrictions. Here are some details:

• Up to 95% LTV with a 700 or higher credit score
• Appraisal Transfer of HVCC is allowed
• Borrower may own up to 10 properties (special guidelines and reserve requirements apply)
• Property Inspection Waivers are possible if indicated by Desktop Underwriter
• Only 1 year Verification of Employment / 4506T required
• < 90 day seller seasoning required (for Flips) – 2nd appraisal is required IF value has increased > 25%
• Employer provided subordinate financing ( a 2nd Mortgage) is permitted
• Can lock AFTER loan is approved (so get your clients CREDIT approved up front!!!)

Mortgage Minute 11-03-09 Appraisal Fraud

2010-05-28T10:04:00.000-06:00

Appraisal Fraud up 46%

According to InterThinx.com, the mortgage fraud specialists, appraisal fraud is up 46% from the same time in 2008.
But wait, who would be the perpetrators, has not HVCC made us safe? Thanks to HVCC, Mortgage brokers, those evil, underhanded, self-serving scourges of real estate and sole cause of the mortgage crisis have not been able to order appraisals (except FHA) or even talk to appraisers in the third quarter of 2009.

That leaves (choke) the innocent victims of wicked mortgage brokers, Banks. There must be some mistake because we all know that banks would never do anything underhanded. I am sure we will soon learn, probably from a trusted politician, that, possibly, the cause was appraisers still tainted by previous mortgage broker contact. These appraisers will certainly be sent to rehab at taxpayer expense. Soon, thank goodness, due to vigilent efforts of our trusted banks and politicians, the world will be a better place. Banks will be the only ones left to serve the public with by stifling their competition in the name of mortgage reform. A 2005 Georgetown University study shows that loans originated by brokers cost 1.13% less points than those originated by bank employees… so that’s the road we’re headed toward apparently: Less choice at a higher cost. Seems to be the HVCC way!!!

Mortgage Minute 10-13-2009

2010-05-28T10:02:00.000-06:00

FHA loans which were the original “subprime” loans have come to be known for great options for first time home buyers or buyer’s with bad credit because of their current features:

• Down Payment: they require very little down payment and that down payment can even be gifted from a family member or employer
• Credit: you don’t have to have stellar credit (or even a credit score at all with non-traditional trade lines) although most lenders require only 620 compared with Conventional at 680 or higher
• Debt Ratio: you can have higher debt ratio (up to 58% that I have seen) than conventional (44%)
• Co-Signer: Borrowers who are students with no monthly income can use their “kiddie condo” feature and have a family member co-sign and qualify for the same terms as if the borrower were to qualify all on their own.
• Streamline: Borrowers can also “streamline” refinance their loan with no appraisal or income documentation.

As of March 5th 3.3% of all mortgages are in foreclosure and 7.88% are in default (11.18% total). Default is considered more than 30 days late. Because of the attractive features of FHA loans the default rate on FHA loans (2.43% in foreclosure and 13.73% in default for a total of 16.16%) is much higher than Conventional loans (6.94%). FHA Streamline mortgages are currently at a 24% default rate…
As a result FHA is changing a few of its guidelines and proposed legislation could change the face of FHA even more.

Home Run Grant 2

2009-09-08T08:32:00.000-06:00

Governor Herbert announced he will make available $8 Million in Federal Stimulus Funds to help kickstart Utah’s struggling housing market. The $10 Million that Governor Huntsman used on 1,600 of the 3,000 newly built and never occupied homes was gobbled up in less than 12 weeks. The first version of the grant resulted in $367 Million in home sales according to Utah Housing Corporation.
The grant works the same way as the last one, except as follows:
Restrictions:

• 1,950 Grants will be available (instead of 1,600)
• $4,000 Amount (instead of $6,000)
• Newly built, never occupied
• SFR, Condo, PUD
• Fixed Rate Mortgage Only
• Income cap of $75K (single) or $150K (joint)
• NO limit to sales price
• No First Time Homebuyer restriction
• If the home is completed, the commitment expires 10 days after issuance.
• If the home is NEW CONSTRUCTION, the commitment expires June 30, 2010.
• Last date to apply is November 30, 2009.
• 3rd Party IRS verification will be used to ensure borrowers are under the income limit.
• The grant will probably be taxable.

Governor Herbert said the new grants will lead to 9,000 jobs either being saved or created and $25 million in income and sales tax revenue.
For details visit www.utahhousingcorp.org

New Condo Rules for FHA

2009-08-27T14:04:00.000-06:00

* From RealtyTrac.com
In rules just posted, the FHA says that starting October 1st. Here are some of the highlights everyone needs to know:
•Changes effective for all FHA Case Numbers assigned on or after 10/1/2009. The spirit behind these changes is to complete a current due diligence of all condo projects.
•Spot approvals are being eliminated. This means, to obtain FHA Financing for a condominium, the project must be FHA-Approved.
•All current condominium project approvals will be invalid (with the exception of projects approved on or after October 1, 2008) and will be required to go through the re-approval process. There will be 2 approval process options:
1)HUD Review and Approval Process (HRAP)
2)Direct Endorsement Lender Review and Approval Process(DELRAP) This option is available only to lenders who have unconditional Direct Endorsement authority and staff experience in reviewing and approving projects.

HUD will only accept approval packages from review from:
1) FHA Lenders, or
2) Builders/Developers
•Going forward, all projects will require re-certification every two years.
• FHA will limit their exposure per project to 30%.
• New construction (or less than <1 year old) will no longer require a 10-year warranty. Condos will follow the same guidelines as SFR, which requires a one-year builder’s warranty, copy of the building permit and certificate of occupancy. Project approval is not required for:
1)FHA-to-FHA streamlines refinances
2)FHA/HUD Real Estate owned (REO) division sales.
Getting projects back on the approved list is anticipated, initially, to be a long process. And until a project is approved, FHA financing is not an option. Those who have condos for sale right now, may choose to aggressively market their property for a worry-free sale and closing before October 1st.
Condos must meet several new standards:
• All projects not deemed to be used primarily as residential real estate are out.
• Because of noise worries, FHA insurance will be unavailable when properties are within 1,000 feet of a highway, freeway, or heavily traveled road; 3,000 feet of a railroad; one mile of an airport; or five miles of a military airfield. The FHA says that lenders “must avoid or mitigate” such conditions before completing their loan review process, but how does one avoid or mitigate an air force base? How much mitigation is enough mitigation? The obvious result is that with an abundance of caution lenders will be unable to finance properties with potential noise hazards.
• There will be no more FHA loans if the “property has an unobstructed view, or is located within 2,000 feet, of any facility handling or storing explosive or fire-prone materials.”
• Also, FHA loans are out if the property is located within 3,000 feet of a dump, landfill, or super-fund site.
• Not more than 25 percent of the property’s total floor area can be used for commercial purposes.
• No more than 10 percent of the units may be owned by one investor. This will apply to developers/builders that subsequently rent vacant and unsold units. For two and three unit condominium projects, no single entity may own more than one unit within the project; all units, common elements, and facilities within the project must be 100 percent complete; and only one unit can be conveyed to non-owner occupants.
• No more than 15 percent of the total units can be in arrears (more than 30 days past due) of their condominium association fee payment.
• At least 50 percent of the total units must be sold prior to endorsement of any mortgage on a unit. Valid presales include an executed sales agreement and evidence that a lender is willing to make the loan.
• At least 50 percent of the units of a project must be owner-occupied or sold to owners who intend to occupy the units. For proposed, under construction or projects still in their initial marketing phase, FHA will allow a minimum owner occupancy amount equal to 50 percent of the number of presold units (the minimum presales requirement of 50 percent still applies).
• Projects in designated wetland and flood zones will not qualify for FHA insurance.

If you look at the new FHA rules above you will instantly notice several problems.
First, a lot of existing condo projects are easily within 1,000 feet of a “heavily traveled road.” That’s why they were built in major metro areas and while the financing rules have changed the condo units cannot be moved.
Second, huge numbers of properties — especially in California, Florida and Las Vegas — will never pass muster under the new ownership standards or the arrears guidelines. This is a significant problem given that FHA-insured loans now represent about one-quarter of all mortgage financing.
Third, condo loans under the FHA rules will be dependent on the use of land NOT controlled by condo owners. For instance, if someone builds a gas station two blocks away is that an example of a “facility” which handles or stores explosive or fire-prone materials? Why is it so terrible to have a property near a golf course that was built on top of a reclaimed landfill?
Fourth, the cost of private-sector condo financing without FHA insurance will increase because borrowers will have fewer options.
“From the perspective of a mortgage insurer the new FHA rules make a lot of sense,” says James J. Saccacio, chief executive officer of RealtyTrac.com, the leading online marketplace for foreclosure properties. “However, in many cases these new standards will apply retroactively. Projects built long-ago and units bought when the rules were different will be impacted. Many of the states which now have the worst foreclosure problems will be hurt because less condo financing will be available. In general, the FHA needs to re-think its standards, especially those which are beyond the control of unit owners.”

Rural Housing

2009-08-27T14:02:00.000-06:00

- One of the last true 100% loans
- 102% Financing (2% goes to Rural Housing to Guarantee Loan)
- 6% seller concessions
- No monthly MI
- Full Doc only
- Only available in “Rural Areas” – nothing in Salt Lake County, in Utah County the property needs to be west of the Jordan River or South of the Spanish Fork River.
- 581 Minimum FICO Debt Ratio is 29/41 unless score is > 620 then by exception your debt ratio can go to 50%
- No Automated Underwriting System (AUS… like DU/DO). These loans are manually underwritten by and underwriter right from the start.

Housing Services of Utah County's $5,000 Grant

2009-08-27T13:52:00.000-06:00

$5,000 Housing Services of Utah County Grant

#1 Funds are limited: check http://housingservicesut.org/loantoown/ to see if funds are available.
Who Qualifies?
1. First Time Home Buyers
2. With Credit Score > 700, then DTI is 35% / 45%
3. With Credit Score > 650, then DTI is 33% / 43%
4. There can be no co-signers involved.
5. Borrowers must complete a Community Action Pre-Purchase Counseling Class ( which is free)

Income Limits

1. The client’s debt to income ratios meet HSUV guidelines (which is in the
2. application packet)
Property Limits
1. Single Family Residence (single homes, condo’s, twin homes etc. but no accessory apartments)
2. The purchase price of the home cannot exceed $ 232,305
3. Eligible Cities: Orem, Lehi, Lindon, Payson, Pleasant Grove, Spanish Fork, Springville, and Unincorporated Utah County (Rural farmland, not in an incorporated City)
4. If the home is NEWER than 30 years the client is eligible for $ 5,000 toward 2 the required down payment and the one time closing costs (does not include pre-paid items or reserves).
5. If the home is OLDER than 30 years the client is eligible for $ 15,000 which will pay for the one time closing costs (does not include pre-paid items or reserves) and the balance will go toward down payment.
Repayment
1. After the 1st 5 years the loan is forgiven at a rate of 20% per year until the end of the 10th year and the entire 0% interest loan is forgiven.
File goes through a loan committee and funds are awarded based on (a) availability and (b) need. In other words, just because a client may fit all the criteria funds could be awarded to a “more needy” applicant. Process takes 2 to 3 weeks.

Housing and Economic Reform Act (H.E.R.A.)

2009-08-27T13:50:00.000-06:00

In 2008, the Home Onwership and Equity Protection Act (HOEPA) and the Housing and Economic Recovery Act (HERA) were passed by Congress. The new regulations were written to provide a more transparent, level and fair regulation of the real estate industry with the end result to protect the consumer by making them more informed and more confident in their home financing choices. In 2008 Fannie and Freddie adopted the Home Valuation Code of Conduct (HVCC) to reinforce appraiser independence and enhance the integrity of the evaluation process.
The Mortgage Disclosure Improvement Act, effective July 30, 2009, part of the Housing and Economic Recovery Act (HERA) of 2008, specifies new requirements for the disclosure portion of the loan application and fulfillment process. Highlights of these changes include:
• Collection of Fees: No fees, other than a bona fide and reasonable credit report fee, can be charged prior to the applicant’s receipt of the initial Truth-In-Lending (TIL) disclosure.
• New Business Day Definition: Saturdays are now considered a business day for purposes of disclosure receipt. Business days will include all calendar days except Sundays and federal holidays.
• Timing of Disclosures: Early disclosures must still be provided no later than three business days after receipt of an application. Under the new rule, early disclosures must also be provided at least seven business days before closing/signing.
• Early Disclosure: The initial Truth-in-Lending (TIL) disclosure is required to be provided to the borrower on both purchase and refinance transactions involving a borrower’s principal or secondary dwelling.
• APR Change: If the APR increases by more than 0.125 percentage points from the value last disclosed to the borrower, a corrected Truth in Lending (TIL) disclosure must be furnished to the borrower at least three business days before closing/signing.
• Re-Disclosure Mailing Period: When corrected disclosures are mailed, the borrower is presumed to have received their corrected disclosures three business days after mailing.
• Appraisal Disclosure: Homebuyer must receive the appraisal at least 3 business days prior to the mortgage closing.
This enforces the importance of home buyers to obtain a full credit approval as early as possible during the home buying process so that they are subject only to (a) appraisal, (b) clear title and (c) homeowner’s insurance. It also stresses that any changes in their situation at all could significantly delay “rush” closings because the waiting periods must be enforced. This could also jeopardize locks and borrowers could end up having to pay extra to extend their locked loans.

Nationwide Debt Ratio

2009-08-27T13:49:00.000-06:00

Fannie Mae, Freddie Mac and FHA have limitations on how much they will lend a borrower with respect to their income level. This is called Debt-to-Income ratio. Standard guidelines state that their debt burden should not exceed:
31% (housing) and 43% (total)

Electronic Automated Underwriting Systems (AUS) often approve borrowers up to 55% (housing) and 65% (total) in many instances.

More than 7.5 million homeowners spend at least half of their income on housing; 19 million are above 30%. That's 53% of all homeowners with mortgages. No wonder Americans feel strained. Almost 15% of American homeowners with a mortgage are spending half of their income or more on housing costs, according to 2007 data released this week by the U.S. Census Bureau. That is up from nearly 7.1 million the year before. an estimated 10 million homeowners owe more on their mortgages than their homes are worth, according to Moody's Economy.com. More than 4 million homeowners were at least one month behind on their loans at the end of June, and almost 500,000 had started the foreclosure process, according to the Mortgage Bankers Association.

San Francisco is among 14 cities where at least 20% of homeowners with a mortgage spend half or more of their incomes on housing, an Associated Press analysis of the 100 largest U.S. metro areas has found. Other such cities include the California metro areas of Stockton, Los Angeles, Riverside, Oxnard-Thousand Oaks and San Diego. Also in the top 10 are the Fort Myers, Sarasota and Orlando areas in Florida, and New York-Northern New Jersey-Long Island. The most cost-burdened homeowners in the country live in the Miami-Fort Lauderdale-Miami Beach area: 58% of homeowners there spend 30% of their income on housing costs, and 29% spend half of their income or more on housing.

Obama's Proposed Legislation

2009-06-17T15:43:00.000-06:00

This afternoon, President Obama released a blueprint to regulatory changes, including some affecting the future of the mortgage industry. These regulatory changes have been described as "the most sweeping regulatory changes since the Great Depression."

The Washington Post reported that the proposed changes would create "a new consumer protection agency [with] vast powers to overhaul U.S. mortgage lending practices, upending current federal rules aimed at protecting home buyers."

According to The Wall Street Journal, "Mortgage brokers also could be charged with new duties, such as presenting homeowners with the best available mortgage loans and ensuring consumers can afford the mortgages. So those of us who already do this, will just keep staying the course.

And the new agency could ban certain practices like prepayment fees or 'yield spread premiums,' blamed for incentivizing brokers to steer borrowers to costly loans."

It's important to note that these proposed changes have not occurred and have not been implemented. I will follow this story closely and provide you with the most accurate information on this important story here at my blog.

Appraisal issues with Home Valuation Code of Conduct

2009-06-10T08:38:00.000-06:00

So, if you thought the housing market was about to rebound quickly then you'd better watch this video regarding the new rule on Conventional appraisals that Freddie Mac and Fannie Mae instituted beginning on May , 2009.

It is amazing how much this 1 guy has been able to meddle with an already fragile housing system. We'll just have to wait and see how much longer it will take for everything to be straightened out.

Mortgage Rates Could Be Set to Rise!!!

2009-06-09T08:36:00.000-06:00

Mortgage rates have risen considerably over the last few days. US Treasury yields rose to the highest level in 7 months on Monday. This followed a Friday Labor report where the job loss in May (345,000) was much less than expected (520,000). The dramatic slowing in the rate of job losses convinced many that the economy was set to rebound in the second half of the year from the worst recession in decades and that the Fed will have to depart from its near-zero interest rate policy. Short-term rates are pricing in a 0.5 increase in the Federal Funds rate in this December. With the government selling huge amounts of bonds to finance its economic recovery and financial rescue efforts, the latest move up in yields reinforced a trend that has been in place since the start of the year that has seen bond yields rise. When investors decide to move their money into the stock market, bond yields go up. If no one wants to buy our bonds, the yields must go up. When Bond Yields rise, rates go up.

Here's the schedule of bond sales this week:

Tuesday $35B 3-yr Notes
Wednesday $19B 5-yr Notes
Thursday $11B 30-yr Notes

Here's a short video from some Wall Street experts on what the sale of bonds could mean this week... stay tuned!!!

Mortgage Rates close to "bottoming out"?

2009-04-01T09:15:00.000-06:00

By Kim Chipman and Romaine Bostick at Bloomberg.com

March 27 (Bloomberg) -- Mortgage rates are “probably as good as it’s going to get” and the housing market is likely to rebound sooner than some forecasts, Freddie Mac interim Chief Executive Officer John A. Koskinen said.

“Mortgage rates, if they go down at all further, it’s going to be incremental,” Koskinen told reporters today in Washington after he met with President Barack Obama. “Interest rates are probably close to bottoming out, and therefore we are telling people” to buy a house now.

The U.S. 30-year fixed mortgage rate as tracked by Freddie Mac fell to 4.85 percent, the lowest on record, on a government plan to increase purchases of mortgage bonds. The U.S. housing market, the worst since the Great Depression, may improve sooner than some economists’ forecasts as people who had put off home purchases take advantage of a “buyer’s market.”

“This is more attractive than they’ve ever been and about as attractive as they’re ever going to be,” Koskinen said of mortgage rates. ‘We are going to begin to see a lot of home purchases by people on the sidelines who are suddenly discovering ‘hey I can afford a house.’”

“I think you will see a return of confidence in the housing market that we haven’t had in the last couple years.”

Freddie will also have a “modest amount of assets” to participate in Treasury Secretary Timothy Geithner’s plan aimed at ridding banks of toxic real-estate holdings.

Modest Amount

Geithner announced a program this week that may generate as much a $1 trillion in financing to buy illiquid assets using $75 billion to $100 billion from a U.S. bank rescue fund. The effort relies on a Federal Reserve partnership with private investors to buy the securities and guarantees to entice buyers.

“We may have $5-to-$10 billion worth of assets that would be available and appropriate,” Koskinen said. “But that’s not our major focus, our major focus now is really implementing the president’s program” to help homeowners avoid foreclosure, he said.

“We will probably end up refinancing 3 million to 4 million borrowers who have mortgages ultimately held by Fannie and Freddie,” he said.

Freddie earlier this month tapped Koskinen, who was non- executive chairman, as interim CEO to replace David Moffett, who left the mortgage-finance company after six months on the job.

The company, which has been operating under government control since September, selected director Robert Glauber to take Koskinen’s previous position, also on an interim basis, and said the board is working with Freddie’s conservator, the Federal Housing Finance Agency, to hire a permanent CEO.

FHA Cash-Out Changes

2009-03-23T11:33:00.000-06:00

Here are the 9 things you need to know about these changes:
1. This is a temporary change, and effective as of April 1st, 2009 (No, it's not a joke).
2. When adding a simultaneous 2nd lien, there will be a max CLTV of 85%.
3. Existing 2nd liens can be re-subordinated with no max CLTV.
4. When existing 2nd liens are modified to accommodate the new 1st, there is no max CLTV.
5. Must have 12 months seasoning as primary residence to get max cash-out of 85%.
6. Less than 12 months seasoning as primary residence, loan amount will be capped at 85% of the appraised value or sales price, whichever is lower.
7. Existing loan must be current and not delinquent or in arrears.
8. A second appraisal is required for all cash-out refis above $417,000.
9. Non-owner occupants cannot be added to qualify for cash-out refis.

Update on Utah's Home Run $6,000 Grant

2009-03-16T13:14:00.000-06:00

Here are a few updates as of Monday 3/16 for Utah's new Home Run Grant program of $6,000.

A) New Construction Only - Home Never has been occupied; Condo’s and PUD’s , Manufactured Homes and Single Family Residence

B) Money will only be available until the Grant money is gone (do not know how long that will be)Income Limits $75,000 for single person, $150,000 married person

C) No Sales Price Limit

D) $6,000 could be considered taxable income (consult CPA)

E) Money must be used within 30 days of commitment or money will go to someone else.

Forms and Summary of program will be available from me as soon as the program is available (could be a couple of days after Governor has signed the bill).

1. Prior to sending in Request for Commitment Loan must have:
• Occupancy Permit and/or Clear Final Inspection
• Approval (no conditions). Signed Transmittal Summary by underwriter
• Appraisal
• Buyer and Seller Signed Disclosure

2. Underwriter will complete and sign Home Run Grant Request Form requesting $6,000 and certifying income.

3. UHC will send Commitment to Lender (plan on 2-3 days)

4. After buyer signs closing documents at title company, Escrow officer will send to UHC request for funds and wire instructions along with Signed HUD Settlement Statements and Warranty Deed.

5. UHC will have bank wire funds to Title Company (could take 2 days)

As you can see in item #1 above, the buyer must have an approval (with no conditions), which means it is VERY iportant to stress to your buyers to become 100% credit approved now so that they are approved for the Grant Funds as soon as Governor Huntsman signs the Bill.

We Shouldn't Buy What We Cannot Afford

2009-03-04T15:50:00.000-07:00

This says it all:
(click on the image above to play video)

Home Affordable Modification Program Guidelines

2009-03-04T13:20:00.000-07:00

Well, whether you like it or not, as a US Citizen you are now in the mortgage business. Today the Government announced it's Home Affordable Modification Program Guidelines. In essense, this program is "suppose" to help to stabilize the housing market and curb foreclosures. But here are the details and what it entails.
(click here to see full guidelines)

Summary of Guidelines

• For Loans originated on or before January 1, 2009.

• Modifications can start from now until December 31, 2012; loans can be modified only once under the program.

• Owner Occupied, First-lien loans on owner-occupied properties with unpaid principal balance up to $729,750.

• All borrowers must fully document income, including signed IRS 4506-T, two most recent pay stubs, and most recent tax return, and must sign an affidavit of financial hardship.

• Servicers will follow a specified sequence of steps in order to reduce the monthly payment to no more than 31% of gross monthly income (DTI).

• The modification sequence requires first reducing the interest rate (subject to a rate floor of 2%), then if necessary extending the term or amortization of the loan up to a maximum of 40 years, and then if necessary forbearing principal. Principal forgiveness or a Hope for Homeowners refinancing are acceptable alternatives.

• The program will share with the lender/investor the cost of reductions in monthly payments from 38% DTI to 31% DTI.

• Servicers will be paid $1,000 up front and up to $1,000 per year for performing loans.

• Homeowner’s who make their payments may qualify for a $1,000 principle reduction for each of the first 5 years.

• The program will include incentives for extinguishing second liens on loans modified under this program.

My feeling is that as a nation we are just holding on longer and longer to the roote problem which is that for quite some time consumers have become accustomed to getting what they want right now and inexpensively at that. Our nation's economy has been fueled by easy financing options and now the government is enforcing policy that we will all be paying for and will more-than-likely only delay further softening in the housing markets. Please post comments below.

Shopping for the Right Mortgage Professional

2009-03-04T09:25:00.000-07:00

Shopping Around? - Here’s The Inside Scoop On How To Do It Right!

First: make sure you are working with an experienced, professional loan officer. The largest financial transaction of your life is far too important to place into the hands of someone who is not capable of advising you properly and troubleshooting the issues that may arise along the way. But how can you tell?

Here are FOUR SIMPLE QUESTIONS YOUR LENDER ABSOLUTELY MUST BE ABLE TO ANSWER CORRECTLY. IF THEY DO NOT KNOW THE ANSWERS… RUN… DON’T WALK… RUN… TO A LENDER THAT DOES!

1) What are mortgage interest rates based on?

The only correct answer is Mortgage Backed Securities or Mortgage Bonds, NOT the 10-year Treasury Note. While the 10-year Treasury Note sometimes trends in the same direction as Mortgage Bonds, it is not unusual to see them move in completely opposite directions. DO NOT work with a lender who has their eyes on the wrong indicators.

2) What is the next Economic Report or event that could cause interest rate movement?

A professional lender will have this at their fingertips. For more information you can track these reports here.

3) When Ben Bernanke and the Fed “change rates”, what does this mean… and what impact does this have on mortgage interest rates?

The answer may surprise you. When the Fed makes a move, they are changing a rate called the “Fed Funds Rate”. This is a very short-term rate that impacts credit cards, credit lines, auto loans and the like. Mortgage rates most often will actually move in the opposite direction as the Fed change, due to the dynamics within the financial markets. For more information and explanation, just give us a call.

4) What is happening in the market today and what do you see in the near future?

If a lender cannot explain how Mortgage Bonds and interest rates are moving at the present time, as well as what is coming up in the near future, you are talking with someone who is still reading last week’s newspaper, and probably not a professional with whom to entrust your home mortgage financing.

Be smart… Ask questions… Get answers!

More than likely, this is one of the largest and most important financial transactions you will ever make. You might do this only four or five times in your entire life… but we do this every single day. It’s your home and your future. It’s our profession and our passion. We’re ready to work for your best interest!

New "Home Run" Grant of $6,00 announced by the State of Utah

2009-02-26T16:01:00.000-07:00

At Mortgage Xpress, we have the inside track the new government grant program which will be announced later this week. Call today to get your clients in on this first-come, first-served grant program.

Here are the details:

• $6,000 Grant available AT TIME OF CLOSING to purchase a recently-built, never occupied home
• 1,650 Grants will be provide (costing the state $10 Million)
• Buyer must chose a 30-yr Mortgage
• Must occupy home as primary residence within 30-days
• Income limit ranges between $57,500 (max) and $80,500 (max) depending on county (see Mortgage Xpress for details)
• Sales price limit of $400,000
• Conventional (My Community), FHA, VA, Rural Housing & Utah Housing loans qualify
• 1st Time Home Buyers may also qualify for Federal Tax Credit of $8,000
• Appears $6,000 will be taxable income. The Utah Housing Corporation is seeking a ruling from the IRS to have the grant excluded from federal income tax. IRS response is expected within 2 months, full ruling to follow in approximately 6 months.

Position yourselves as an expert in the real estate industry by helping your clients be the first to apply for this grant. Because funding is limited at first, it is important to help your clients complete a grant application as quickly as possible.

Call me today at 801-636-2446!

Obama Unveils Homeowner Affordability and Stability Plan

2009-02-26T10:35:00.000-07:00

President Obama unveiled his plan to help stabilize the housing market and keep millions of borrowers in their homes.

The Homeowner Affordability and Stability Plan includes two initiatives to help struggling homeowners. One is a refinancing program for homeowners with less than 20% equity in their homes, or who owe more than their home is worth. The second program attempts to lower monthly payments for homeowners at risk of losing their home. In addition, the plan includes a third initiative to support low mortgage rates by strengthening confidence in Fannie Mae and Freddie Mac.

Many of the plan’s details are still being worked out and will not be announced until March 4, here is an overview of the plan’s main components.

Refinancing Initiative

Under current rules, those families who own less than 20% equity in their homes have a difficult time refinancing and taking advantage of the historically low interest rates. Therefore, the refinancing initiative in the new plan provides refinancing help for homeowners with less than 20% equity in their homes or who owe more than their home is worth. This initiative is open to homeowners who have conforming loans which are guaranteed by Fannie Mae and Freddie Mac, and who owe up to 5% more than their home is worth.

According to the plan, “credit-worthy” or “responsible” homeowners can refinance their mortgage into a 30- or 15-year, fixed-rate loan based on current market rates. The refinanced loan, however, cannot include prepayment penalties or balloon payments. For many families, this low-cost refinancing may help reduce their mortgage payments by up to thousands of dollars per year.

As with the rest of the plan, details about this initiative will be released at a future date—including what, if any, credit score requirements will be included.

Stability Initiative

This initiative aims at providing help to individual families as well as entire neighborhoods by helping reduce foreclosures and stabilize home prices. It is intended to help homeowners who are struggling to afford their mortgage payments, but cannot sell their homes because prices have fallen significantly.

The goal of this initiative is simple: “reduce the amount homeowners owe per month to sustainable levels.” To accomplish this, lenders are encouraged to lower homeowners' payments to 31 percent of their income by lowering their interest rate to as low as 2% or by extending the terms of the loan. In addition, lenders can also lower the principal owed by the borrower, with Treasury sharing in the costs.

Homeowners who are current on their mortgages but are struggling can still apply for this program. As such, this is one of the few programs designed to help homeowners who may face delinquency soon, but are current at the moment.

Since the focus of this initiative is on helping families and neighborhoods, investment properties do not qualify. This initiative also includes a number of additional elements and incentives that benefit homeowners and lenders alike, including:
• Incentives to Help Borrowers Stay Current: To provide an extra incentive for borrowers to keep paying on time, the initiative will provide a monthly balance reduction payment that goes straight towards reducing the principal balance of the mortgage loan. As long as a borrower stays current on his or her loan, he or she can get up to $1,000 each year for five years.
• Reaching Borrowers Early: To keep lenders focused on reaching borrowers who are trying their best to stay current on their mortgages, an incentive payment of $500 will be paid to servicers, and an incentive payment of $1,500 will be paid to mortgage holders, if they modify at-risk loans before the borrower falls behind.

Supporting Low Mortgage Rates

As part of the Homeowner Affordability and Stability Plan, the Treasury Department is increasing its funding commitment to Fannie Mae and Freddie Mac to ensure the strength and security of the mortgage market and to help maintain mortgage affordability. This portion of the plan will use using funds already authorized in 2008 by Congress for this purpose.

The increased funding will enable Fannie Mae and Freddie Mac to carry out ambitious efforts to ensure mortgage affordability for responsible homeowners, and provide forward-looking confidence in the mortgage market.

Again, the government plans to unveil the final details of the plan on March 4, 2009. For now, you can download a sheet of common Questions and Answers produced by the government at: www.treas.gov/initiatives/eesa/homeowner-affordability-plan/ConsumerQA.pdf

I will continue monitoring the plan as new information becomes available. If you have any questions or would like to discuss how this may specifically impact you, I’d be happy to sit down with you. Just call or email me to set up an appointment.

Stimulus Plan

2009-02-26T10:29:00.000-07:00

Tax Credit for Home Buyers

First-time home buyers who purchase homes from the start of the year until the end of November 2009 may be eligible for the lower of an $8,000 or 10% of the value of the home tax credit. Remember a tax credit is very different than a tax deduction – a tax credit is equivalent to money in your hand, as opposed to a tax deduction which only reduces your taxable income.

The tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000. Buyers will have to repay the credit if they sell their home within three years.

Tax Credit Versus Tax Deduction

It’s important to remember that the $8,000 tax credit is just that…a tax credit. The benefit of a tax credit is that it’s a dollar-for-dollar tax reduction, rather than a reduction in a tax liability that would only save you $1,000 to $1,500 when all was said and done. So, if a home buyer were to owe $8,000 in income taxes and would qualify for the $8,000 tax credit, they would owe nothing.

Better still, the tax credit is refundable, which means the home buyer can receive a check for the credit if he or she has little income tax liability. For example, if a home buyer is liable for $4,000 in income tax, he can offset that $4,000 with half of the tax credit…and still receive a check for the remaining $4,000!

Phase-out Examples

According to the plan, the tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000.

To break down what this phase-out means to home buyers who are over those amounts, the National Association of Homebuilders (NAHB) offers the following examples:

Example 1: Assume that a married couple has a modified adjusted gross income of $160,000. The applicable phase-out to qualify for the tax credit is $150,000, and the couple is $10,000 over this amount. Dividing $10,000 by $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time home buyer tax credit that is available to this couple, multiply $8,000 by 0.5. The result is $4,000.

Example 2: Assume that an individual home buyer has a modified adjusted gross income of $88,000. The buyer’s income exceeds $75,000 by $13,000. Dividing $13,000 by $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $8,000 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,800.

For those tracking the math in the examples above, you may be wondering where the “$20,000” came from—that is, why you divide “$10,000 by $20,000” in the first example and “$13,000 by $20,000” in the second example. Here’s where the $20,000 comes into play:

The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) of more than $75,000 for single taxpayers and $150,000 for married taxpayers filing a joint return. The tax credit amount is reduced to zero for taxpayers with MAGI of more than $95,000 (single) or $170,000 (married) and is reduced proportionally for taxpayers with MAGIs between these amounts.

In other words:
• $170,000 – $150,000 = the $20,000 in the first example
• $95,000 – $75,000 = the $20,000 in the second example
Remember, these are general examples. You should always consult your tax advisor for information relating to your specific circumstances.

Homes that Qualify

The tax credit is applicable to any home that will be used as a principal residence. Based on that guideline, qualifying homes include single-family detached homes, as well as attached homes such as townhouses and condominiums. In addition, manufactured or homes and houseboats used for principal residence also qualify.

Higher Loan Amounts
More good news – there is an extension on the additional tier of conforming loan amounts which had been first established in 2008. This tier of home loans are those greater than $417,000, and with a maximum that depends on the area, but is not greater than $729,750. These loans will again be eligible for rates that are slightly higher than conforming loan rates, but less expensive than the standard “jumbo” loan rates.

FHFA News Release -

http://www.mortgagemarketguide.com/download/022309_final.pdf

Additional Housing-Related Provisions

Tax Incentives to Spur Energy Savings and Green Jobs — This provision is designed to help promote energy-efficient investments in homes by extending and expanding tax credits through 2010 for purchases such as new furnaces, energy-efficient windows and doors, or insulation.

Landmark Energy Savings — This provision provides $5 billion for energy efficient improvements for more than one million modest-income homes through weatherization. According to some estimates, this can help modest-income families save an average of $350 a year on heating and air conditioning bills.

Repairing Public Housing and Making Key Energy Efficiency Retrofits To HUD-Assisted Housing — This provision provides a total of $6.3 billion for increasing energy efficiency in federally supported housing programs. Specifically, it establishes a new program to upgrade HUD-sponsored low-income housing (for elderly, disabled, and Section 8) to increase energy efficiency, including new insulation, windows, and frames.

Expanding Housing Assistance — This provision increases support for several critical housing programs. It includes $2 billion for the Neighborhood Stabilization Program to help communities purchase and rehabilitate foreclosed, vacant properties.

More Help for Homeowners in the Future
Another thing to keep an eye on in the coming weeks is President Obama’s plan to help struggling borrowers before they are faced with a default on their mortgage.
According to reports, the Obama administration is discussing plans to help borrowers who are struggling to stay afloat, but who have not yet fallen behind on their payments. At this point, details are scarce; however, reports indicate that President Obama is looking to spend approximately $50 billion to directly help homeowners before they face foreclosure and financial disaster.

While this is good news for individual homeowners, it will likely be good for the housing industry as a whole. That’s because, assisting struggling borrowers before they default should help stop the wave of foreclosures, which are estimated to top two million this year. That, in turn, will help stabilize home prices.

The Economic Stimulus Plan is huge, and impacts a number of industries. I’ve highlighted some of the major provisions that may impact you now and in the future.

As always, if you have any questions or would like to discuss how this may specifically impact you, I’d be happy to sit down with you. Just call or email me to set up an appointment.

FHA raises loan limits in Utah again

2009-02-25T08:40:00.000-07:00

FHA just raised the loan limit in Utah County back to $323,750 this morning. Great news!!!

PS – Salt Lake is back to $729,750 and most other counties are at $271,050.

You can verify this by going to the HUD website > State: “Utah” > “Send”

Mortgage Rates As Low As 4.5%???

2008-12-12T14:13:00.000-07:00

While the mortgage market continues to generate a lot of chatter in both the media and in Washington, interest rates are currently near or at all-time lows. If you or anyone you know are looking to take advantage of these low rates, let me explain
why now is the time to act.

Lately there has been talk about the 4.5% 30-year fixed rate mortgage. Will it become a reality though? Right now, no one really knows. Homeowners who could benefit from a lower interest rate need to know that even if 4.5% becomes a reality
from Washington's actions, it would only be available to home buyers, not homeowners seeking to better their rate. If you need to refinance, you will be left out.
You also may have heard about Hope for Homeowners, which is a program approved by legislators to help distressed homeowners. However, regardless of its best intentions, the program has not been embraced by investors, and it is not
available to many it could help.

The bottom line is, the Fed announced recently that they are going to buy up to $600 billion in mortgage-backed securities. This has already driven rates to historical lows. In January, the SEC is meeting and information may be released that could have a significant bearing on rates, potentially for the worse.

Waiting to obtain the best rate is only possible for those with loan applications already in process. Interest rates are incredibly volatile and fluctuations that used to take months are now occurring in just days or even hours. If you don't have an application in process, you could lose out.

We are already seeing lender backlog due to low interest rates. In 2003, with rates at these same low levels, we saw some lenders taking up to 90 days to close a loan.
Home loan rates are currently in the mid- to low-5% range. Home values are currently at 2003-2004 levels, coming down significantly from their high point. If you–or friends and family members you know–are contemplating seeking financing, now
is the time to act.

With a first time home buyer tax credit of up to $7,500 and low or no money down programs available for many people today,now is a great time to buy a home.
If you have any questions about how I can help you, call me today.

Help 4 Homeowner's Program

2008-11-06T10:09:00.000-07:00

Many of you have asked about the Help 4 Homeowner’s program I talked about during sales meeting on Tuesday, specifically about the “Equity Sharing” portion. You can always go to the HUD website for more information, but here’s an example:

Keep in mind that this is only an example and the actual experience will depend on many things, including how much your home increases or decreases in value. Let’s assume you have a home that you purchased for $250,000 and you currently owe $220,000. You need to move, but the home is only going to appraise for $200,000 (at least a $50,000 loss). Instead of going through a short sale you decide to go through with an H4H loan to protect your credit and stay in your home and decide not to move.

1. Let’s say your home has an appraised value at the time you receive your FHA mortgage of… $200,000
2. And your Mortgage is 90% of this, or… $180,000
3. This means the initial EQUITY is the difference between #1 and #2, or… $20,000

In this example, you and FHA will share that 10% EQUITY (or $20,000) when you sell your home OR REFINANCE your loan. Here’s how that $20,000 would be split:

During year 1 FHA receives 100%, or… $20,000 YOU receive 0%, or… $0
During year 2 FHA receives 90%, or… $18,000 YOU receive 10%, or… $2,000
During year 3 FHA receives 80%, or… $16,000 YOU receive 20%, or… $4,000
During year 4 FHA receives 70%, or… $14,000 YOU receive 30%, or… $6,000
During year 5 FHA receives 60%, or… $12,000 YOU receive 40%, or… $8,000
After year 5 FHA receives 50%, or… $10,000 YOU receive 50%, or… $10,000

So, if you sell or refinance your home immediately after your H4H loan, then FHA will keep all the Equity. At first this may seem a little stiff, but remember that you really would have owed $240,000 on the loan so you’re really not losing anything by doing this.

In addition to EQUITY SHARING, you will be subjected to APPRECIATION SHARING with the FHA. That means that if your home goes up in value, you will share the amount of increase (less closing cost and a portion of the improvements) with the FHA.

1. Let’s say your home has an appraised value at the time you receive your FHA mortgage of… $200,000
2. After 10 years, the home is worth… $300,000
3. This means the APPRECIATION is the difference between #1 and #2, or… $100,000

This appreciation would be shared 50/50 between you and FHA. These examples assume there are no closing costs and no improvements are made to the property.

Rate Trends (as of Tue 11-04-2008)

2008-11-04T11:13:00.000-07:00

Rates this week are trending upwards...
(click here for today's Bond Trend)

Help 4 Homeowner's

2008-11-04T11:05:00.000-07:00

NOTE: Homeowners, contact your existing lender and/or a new lender to discuss how you may qualify for the H4H program.

The HOPE for Homeowners (H4H) program was created by Congress to help those at risk of default and foreclosure refinance into more affordable, sustainable loans. H4H is an additional mortgage option designed to keep borrowers in their homes.
The program is effective from October 1, 2008 to September 30, 2011.

As many as 400,000 homeowners could avoid foreclosure through this program over the next three years. If you are having trouble making your mortgage payments, HOPE for Homeowners may be able to help you, by refinancing your loan into a new 30-year fixed-rate loan with lower payments.

How the Program Works
There are four ways that a distressed homeowner could pursue participation in the HOPE for Homeowners program:
1. Homeowners may contact their existing lender and/or a new lender to discuss how to qualify and their eligibility for this program.

2. Servicers working with troubled homeowners may determine that the best solution for avoiding foreclosure is to refinance the homeowner into a HOPE for Homeowners loan.

3. Originating lenders who are looking for ways to refinance potential customers out from under their high-cost loans and/or who are willing to work with servicers to assist distressed homeowners.

4. Counselors who are working with troubled homeowners and their lenders to reach a mutually agreeable solution for avoiding foreclosure.
It is envisioned that the primary way homeowners will initially participate in this program is through the servicing lender on their existing mortgage. Servicers that do not have an underwriting component to their mortgage operations will partner with an FHA-approved lender that does.

Step 1: Cost-Benefit Analysis
Lender considerations:
Given their fiduciary responsibilities and financial obligations, lenders will assess their portfolio and perform a cost-benefit analysis to determine the feasibility of offering this program to struggling homeowners.

1. Affordability versus value: lenders will take a loss on the difference between the existing obligations and the new loan, which is set at 90 percent of current appraised value. The lender may choose to provide homeowners with an affordable monthly mortgage payment through a loan modification rather than accepting the losses associated with declining property values.

2. Borrower eligibility: Lenders that determine the H4H program is a feasible and effective option for mitigating losses will assess the homeowner’s eligibility for the program:
o The existing mortgage was originated on or before January 1, 2008;
o Existing mortgage payment(s) as of March 1, 2008 exceeds 31 percent of the borrowers gross monthly income;
o The homeowner did not intentionally default, does not have an ownership interest in other residential real estate and has not been convicted of fraud in the last 10 years under Federal and state law; and
o The homeowner did not provide materially false information (e.g., lied about income) to obtain the mortgage that is being refinanced into the H4H mortgage.
Consumer considerations:
The lender will disclose to the homeowner the benefits of the program:
• Home retention,
• New affordable mortgage based on current appraised value,
• 10 percent equity

The lender will also disclose to the homeowner the costs of the program:
• 3 percent upfront mortgage insurance premium and a 1.5 percent annual premium,
• Equity and appreciation sharing with the Federal government, and
• Prohibition against new junior liens against the property unless they are directly related to property maintenance.

Step 2: Negotiations Between Borrowers and Lien Holders
If the lender refinancing the loan does not hold the senior mortgage lien, it will need to secure an agreement from the existing lien holder to waive all prepayment penalties and default fees on the existing loan and accept the loan proceeds from the H4H loan as payment in full. The loan amount (including the 3 percent UFMIP) for the new H4H loan cannot exceed 90 percent of the current appraised value of the property.

The lender will engage existing subordinate mortgage lien holders to extinguish all subordinate liens on the subject property. To entice subordinate lien holders to participate in the negotiation process and release their liens, FHA has the authority to share its future appreciation entitlement with them.

Step 3: Originating an H4H Mortgage
The lender will qualify the homeowner for the new H4H mortgage using the guidelines established under the terms of the program’s unique statutory requirements, ensuring the homeowner has the capacity to make the new payment on the H4H mortgage in a timely manner.

During underwriting of the loan, the lender will calculate the future appreciation interest amount for each subordinate lien holder in accordance with instructions provided by FHA.

At settlement, subordinate lien holders will receive a certificate that evidences their interest as an obligation backed by HUD, with payment conditional on the value of HUD’s appreciation share.

Following funding of the loan the lender will record – in addition to the typical security instrument and note for the first mortgage – a shared equity note and mortgage (SEM) and a shared appreciation note and mortgage (SAM). These mortgages will be serviced by FHA.

The lender will also submit the new mortgage for insurance to FHA, certifying that it has been originated, underwritten and closed in accordance with the H4H program guidelines.

Step 4: Fulfilling H4H Mortgage Obligations
Upon sale of the property, the homeowner will use their sale proceeds to pay off the H4H mortgage as well as the shared equity and shared appreciation mortgages.
FHA will provide instructions to the settlement agents regarding subordinate lien holders who are entitled to a portion of any appreciation.

The lien holder that previously held the highest priority will receive payment up to the full dollar amount of its interest, not to exceed the amount of available appreciation, and so on, until all prior lien holders are satisfied or the amount of available appreciation is exhausted. All remaining appreciation is remitted to FHA.

In instances where the homeowner failed to make the first payment on their new H4H mortgage, the H4H statute prevents FHA from paying claim benefits to anyone holding the mortgage.

Halloween Reverse Pick-Pocket with Billions to "give away!!"

2008-10-31T12:03:00.000-06:00

If you haven't heard there is a Halloween pick-pocket about who is giving away money... Billions, in fact. Just watch click here and watch the clip.

So who is this mystery man with the thumbs up?

He goes all-out helping people get the money they need which you can see by watching this video.

And now he is revealed as someone you know and trust :)

FHA "Buy & Bail" rules

2008-09-23T13:15:00.001-06:00

FHA announced the following description. This has been speculated recently and debated, but once FHA issues their Mortgagee Letter it becomes official.

This update from Mortgagee Letter 2008-25 establishes guidelines for situations where people buy one home with the intention of defaulting on their current residence which is known as "buy & bail." These changes delineate the circumstance in which an underwriter may include the income documented from a valid rental agreement for the current residence.

Here are the 7 things you need to know about these changes:

1. This is a temporary change, and effective as of September 19th, 2008
2. The borrower must be relocating to a new job location
3. The new home must be outside reasonable commuting distance from the current residence (UWs discretion)
4. The borrower must have a fully executed lease with at least a 1 year term from the closing date of their new mortgage
5. The borrower must document receipt of the security deposit and/or first month's rent
6. Current residence must have an LTV of 75% or less
7. The value of current residence can be proved with the following:
a. Appraisal no more than 6 months old, or
b. Original HUD-1 and current bank statement

Use this update and take the opportunity to reach out to your clients and make our team a resource of FHA information.