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FHFA revises HARP to help more borrowers

October 26, 2011 By Leave a Comment

The Federal Housing Finance Agency, along with Fannie Mae and Freddie Mac, on Monday announced changes to the Home Affordable Refinance Program (HARP) to help more borrowers.

The program will continue to be available to borrowers with loans sold to Fannie Mae and Freddie Mac on or before May 31, 2009, with current loan-to-value (LTV) ratios above 80 percent.

The new program enhancements address several other key aspects of HARP including:

Eliminating certain risk-based fees for borrowers who refinance into shorter-term mortgages and lowering fees for other borrowers;
Removing the current 125 percent LTV ceiling for fixed-rate mortgages backed by Fannie Mae and Freddie Mac;
Waiving certain representations and warranties that lenders commit to in making loans owned or guaranteed by Fannie Mae and Freddie Mac;
Eliminating the need for a new property appraisal where there is a reliable AVM (automated valuation model) estimate provided by the Enterprises; and
Extending the end date for HARP until Dec. 31, 2013, for loans originally sold to the Enterprises on or before May 31, 2009.
Fannie and Freddie plan to issue guidance with operational details about the HARP changes to mortgage lenders and servicers by Nov. 15. Since industry participation in HARP is not mandatory, implementation schedules will vary as individual lenders, mortgage insurers and other market participants modify their processes.
CAR.org

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How will Fed decision affect home loan rates?

September 22, 2011 By Leave a Comment

The Federal Reserve announced it’s changing its investment strategy, which means we could have lower mortgage rates in the future. The Fed has deccided to shift $400B in holdings to boost the lagging economy.

Operation Twist? The committee’s words: To help support conditions in the mortgage markets, the Committee will now reinvest principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. In addition, the Committee will maintain its existing policy of rolling over maturing Treasury securities at auction.

The Director of SDSU’s real estate center, Mr. Lea (former past chief economist of mortgage giant Freddie Mac), said officials are basically selling off shorter-term Treasury holdings for longer-term ones and mortgage-backed securities.

“They’re changing the composition of their balance sheet,” said Lea.. “This isn’t a new round of quantitative easing. They’re reinvesting, not injecting more money into the economy.”
This could mean pushing down long-term interest rates, and in turn, mortgage rates.

Read the full story  Lily Leung at lily.leung@uniontrib.com

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Mortgage rates hit 60-year low, but few qualify

September 9, 2011 By Leave a Comment

Mortgage rates have reached their lowest levels in six decades, making this the best time in most Americans’ lives to buy or refinance a home. For people who qualify, today’s rates could save thousands of dollars a year. Read article  MercuryNews.com

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Getting a fair appraisal in a tough market

September 9, 2011 By Leave a Comment

Since the real estate market took a downturn, some people have complained they couldn’t buy, sell, or refinance a home because an appraiser used bank-owned (REO) or short-sold homes as comparables in the valuation process, which dragged down the value of their home. While using REO and short-sold properties can lower the value of a home, some homeowners are upset that their county assessor will not use these properties as comps for their property taxes.

Making sense of the story

In California, some assessors will consider distressed sales when looking at comps, but it varies widely by county, neighborhood, and house. In general, assessors will always look at non-distressed sales first and if there are enough, disregard REO and short sales. However, if there are not enough standard sales, or the home is in an area dominated by distressed sales, the assessor likely will take these properties into account.

Under Proposition 13, property is assessed upon a change in ownership at its fair market value. That is usually the same as the sale price. However, with distressed property, the sale price may not equal fair market value.
Between changes of ownership, assessors can raise values only by an inflation rate, not to exceed 2 percent per year, plus the value of major improvements or additions.

Under Prop. 8, owners who think the market value of their property has fallen below its assessed value can ask for a temporary reduction to the fair market value.

Homeowners who think their homes are worth less than the assessed value can usually ask their assessor for an informal review. If they are still not satisfied, they can file a formal appeal with their county’s assessment appeals board by Sept. 15 or Nov. 30, depending on the county.

San Francisco Chronicle

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When income is freelance

September 2, 2011 By Leave a Comment

After the financial market downturn in 2008, getting approved for a mortgage loan became even more difficult. Combine that with the fledgling economy, which left many people turning to freelance work, and the challenges involved in qualifying for a home mortgage increase exponentially. However, with a little extra work, home buyers using freelance work as proof of income still can qualify for a new loan.

Making sense of the story

Borrowers who earn most of their income on 1099s should be prepared for extra preparation, paperwork, and discussion of their financial standing when applying for a mortgage.

It’s important that independent contractors show that their income is stable and increasing. For some, that may mean declaring all their income on their tax returns, and not, say, carrying anything over to the next year, even if it means paying more taxes.

Consistency in income is key, so those applying for a mortgage this fall or winter should be prepared to provide proof for year-to-date income.

To increase the chances of getting a mortgage approval, borrowers should pay off other debts, including balances on credit cards.

Pinpointing the source of the down payment also is helpful. If the down payment will be a gift from a relative, borrowers are advised to submit an account statement showing the funds are available and awaiting the home purchase. Same goes for borrowing from a 401(k).

Freelancers also should be prepared for a more in-depth analysis of their ability to repay the debt. Submitting tax returns from the last three years and explaining any significant differences in income is advised.
Read the full story  The New York Times

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Robo-signed mortgages date back more than a decade, possibly invalidating deeds

September 2, 2011 By Leave a Comment

NEW YORK — Counties across the United States are discovering that illegal or questionable mortgage paperwork is far more widespread than first thought, tainting the deeds of tens of thousands of homes dating to the late 1990s. Read article

By Pallavi Gogoi, Associated Press

 

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Homeownership hits lowest level since 1965

August 31, 2011 By Leave a Comment

Last Friday, the Census Bureau reported that the percentage of people who owned a home had dropped to 65.9 percent during the second quarter – its lowest level since the first quarter of 1998 and far from the high of 69.2 percent in late 2004.

Read the full story  CNN Money

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Trying to time the bottom may hurt your bottom line

August 24, 2011 By Leave a Comment

It’s no secret the U.S. has been in a real estate tailspin since June 2006. More than one-fourth (27 percent) of single-family homeowners are now in negative equity, which means their homes are worth less than what they owe on them. As a result of dropping home values, we are all caught in a sort of real estate limbo: homeowners are waiting on the sidelines to sell and home buyers are trying to time the bottom, waiting for the ultimate rock-bottom bargain. All of this leads many to wonder: “when will the bottom happen?” When will this frozen real estate landscape begin to thaw?

What many people don’t consider is that home prices are only one factor in how much a home will actually cost per month. The other major factor to take into consideration is mortgage rates.
Read more Zillow

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Short sales: Are they worth the trouble?

August 18, 2011 By Leave a Comment

Short sales – a real estate transaction in which the homeowner needs to sell the property, but owes more on the mortgage than the home currently is worth – continue to dominate the housing market, but these real estate transactions aren’t for everyone.

Making sense of the story

Typically with a short sale, the homeowner is underwater and has experienced a financial hardship such as a job loss. To limit the damage to his credit rating, a homeowner may attempt to work with his lender to negotiate a short sale. Not only must the bank approve of the short sale itself, it also must agree to the price, since the bank will accept the difference as a loss.

Unlike foreclosures, in which the owner has walked away and the bank is looking to unload a vacant – and sometimes vandalized – property, a short sale isn’t a distressed home that will sell at an extremely low price. According to data from RealtyTrac, short sales typically sold for nearly 10 percent less than the market price in the first quarter of 2011, whereas foreclosures sold at an average discount of 35 percent.

Home buyers wanting to purchase a short sale must have patience. In most cases, when a buyer makes an offer on a house, he receives a response from the seller within a few days, or even hours. With a short sale, the bank must approve of the sale and bank representatives are overloaded with cases. It may take 30 days or longer for a buyer to receive a response from the bank.

In a traditional real estate transaction, it is common for a home buyer who currently owns his home to make his offer contingent on selling his current home. In short sales, most banks will not approve an offer that is contingent on the buyer selling his current home, as too many things can go wrong.

Banks also typically won’t consider short-sale offers that have inspection contingencies in them, so buyers can either do an inspection prior to making an offer or forego an inspection altogether.
Even with the challenges associated with short sales, buyers should not avoid these transactions. Being prepared ahead of the time and working with an experienced REALTOR® can help buyers avoid frustration and surprises down the line.
Read the full story AOL Real Estate

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Sorting through lending costs

August 11, 2011 By Leave a Comment

Although the Consumer Financial Protection Bureau, the federal agency created to oversee mortgage lending, only recently opened, the Bureau started looking at ways to protect consumers during the loan-shopping period long before it’s official start date.

Making sense of the story

The bureau is exploring avenues for combining the two forms that borrowers currently receive – the three-page Good Faith Estimate and the two-page Truth in Lending Act form. These forms tell would-be borrowers the terms of their loan – for instance, how payments on an adjustable-rate mortgage change. They also lay out fees.

Fees can make a big difference when comparison shopping. The simplest way to compare loans is by looking at the Annual Percentage Rate, or A.P.R. That calculation rolls in fees as well as the stated interest rate. Because lenders are required to follow the same formula, useful comparisons can be made.

Borrowers are advised to request a Good Faith Estimate from every lender they approach. While the Good Faith Estimate is in place to help borrowers, according to one lender, some lenders may provide interest-rate quotations that expire almost instantaneously, making it difficult for buyers to comparison shop.

Borrowers should be wary if they receive two or three different Good Faith Estimates and there is a difference of several thousand dollars.
Read the full story New York Times

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