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Thank you to those of you that helped by sigining the petition Request For Reconsideration of HVCC Petition to the New York Attorney General, Fannie Mae, Freddie Mac, and the Office of Federal Housing Enterprise Oversight. http://www.hvccpetition.com/SignPetition.aspx
Wednesday, November 18, 2009
Tuesday, November 10, 2009
Amazing rehab/home improvement loan
If you are thinking about buying a house, remodeling or repairing the house you have, then it's definitely in your best interest to know about the FHA 203k loan. This is truly and an excellent loan program in today’s market but not many people even know it’s out there to take advantage of.
So.....what the heck is it?? Basically, a 203k loan allows you to buy a house and fix it up without using money out of your own pocket and basing the loan amount on "future value" after the improvements have taken place. There are two flavors of 203k: Streamline & a fully funded. Here is what you need to know.
Streamline:
This is a less complicated 203k loan that should be used for improvements and repairs up to $35,000.
Types of work that can be done include:
So.....what the heck is it?? Basically, a 203k loan allows you to buy a house and fix it up without using money out of your own pocket and basing the loan amount on "future value" after the improvements have taken place. There are two flavors of 203k: Streamline & a fully funded. Here is what you need to know.
Streamline:
This is a less complicated 203k loan that should be used for improvements and repairs up to $35,000.
Types of work that can be done include:
- Finish basement
- Remodel Kitchen & baths
- New furnace and air conditioning
- Minor electrical and plumbing
- Connecting to public water & sewer
- Decks
- New flooring
- New paint
- New cabinets or countertops
- Siding
- New roof
- Buy Appliances: stove, refrigerator, microwave, dishwasher, hood vent, & washer & dryer
As an example: Jon and Jane want to buy a house for 200,000. The house needs a new furnace, roof & they would like to put on a deck which altogether costs $23,000. With their streamline FHA 203k loan, they will need a down payment of 3.5% of $223,000 (the purchase price plus the cost of repairs). The loan amount will be $215,195 and the down payment amount is $7805. Fifty percent of the funds that are needed to complete the project are released at the time the loan closes and the other 50% are held in escrow and disbursed upon completion.
A refinance would work in a similar fashion. Let's say Jim owns a home that today is valued at 300k. Jim owes 275k and he wants to finish the basement which will cost 35k. Jim can get a loan for up 96.5% of $335k to complete his project but since the project is using the maximum amount of 35k, Jim's loan amount will be $310,00. This would allow him to complete the lower level with no out of pocket expense.
Fully funded 203k loan:
This is the 'real McCoy' version utilizing the full potential of the funds for a complete rehab project. As an example, if Jon & Jane decided to buy a 300k home that needed to be completely rehabbed & planned on putting an addition, they would opt for a full 203k. Let's say the project will cost 160k. Provided the future value could be supported, Jon & Jane could have a loan amount for 96.5% of $460k, allowing them to cover nearly the full cost of the remodel.
In today's real estate market, the FHA 203k loan is a tremendous option. The government wants the housing market to recover and neighborhoods to flourish. While the tidal wave of foreclosures is not predicted to subside for some time, this provides unprecedented opportunity for a buyer with vision. Some of these places need some work, and the FHA 203k loan is ideal for those that have ability to buy but are not cash rich. Coupled with the extension of the tax credit (which is no longer just for first time home buyers), there is major incentive to get off the bench.
Monday, September 21, 2009
FHA announces changes
FHA has announced some big changes on the heels of it's actuary report which is expected to show that the capital reserve ratio has dropped below the congressional mandate of 2%. Along with the planned changes, FHA commissioner David Steven's also announced his intention to hire a Chief risk officer for the first time ever!
“To be clear, the fund’s reserves are sufficient to cover our future losses, so the FHA will not require taxpayer assistance or new Congressional action,” Stevens said. “That said, given the size and scope of the FHA and its importance to today’s market, these risk management and credit policy changes are important steps in strengthening the FHA fund, by ensuring that lenders have proper and sufficient protections.”
Amongst the changes, FHA will be raising the net worth requirement for FHA funding sources from $250,000 to ONE MILLION DOLLARS. Effective January 1 2010, financial institutions will have to submit yearly audited financials to FHA to prove they are adequately capitalized to meet the new standards.
Additionally, the new policies will make it more cumbersome to do 'streamline refinances'. This is a rate reduction program for FHA to FHA financing which currently requires little to no documentation to complete. FHA will now establish new requirements for seasoning, payment history, income verification and demonstrate a net tangible benefit to the borrower. The new changes provide for a collection of credit score information when available and caps the maximum loan-to-value (LTV) ratio at 125%.
Furthermore, new guidelines will be set forth on ordering appraisals for FHA-insured mortgages. Although the Home Valuation Code of Conduct (HVCC) does not apply to FHA, the plan is to adopt language from the Code to align its standards with those government-sponsored enterprises (GSEs), which fall under HVCC. Boooo!
HVCC was implemented by Fannie Mae and Freddie Mac on May 1, 2009. At that time the FHA decided not to adhere to the policy arguably increasing demand for FHA loan products as originators and Realtors alike quickly learned of the problems associated with HVCC. Although they are not requiring the use of AMC's or other third parties to order the appraisal, the new requirements do not allow any commissioned based lender staff member to order an FHA appraisal.
When it comes to ordering appraisals, currently FHA requires that the appraisal must be transferred if switching lenders. This slows the process in cases where the original lender is reluctant to transfer the the appraisal in a timely manner. The new policy allows for a new appraisal to be ordered if there are mistakes, the appraiser is on the 2nd lenders ineligible list or if the "Failure of the first lender to provide a copy of the appraisal to the second lender in a timely manner would cause a delay in closing, posing potential harm to the borrower". Potential harm includes events outside the control of the borrower such as loss of interest rate lock, purchase contract deadline, foreclosure proceedings, and late fees. FHA also reduced the length of time an appraisal can be used from 6 months to 4 months.
While lenders seeking to originate, underwrite or service FHA loans must meet the new eligibility criteria, mortgage brokers such as ourselves will still be able to originate these loans through their relationships with approved lenders, but we will no longer receive independent FHA approval of eligibility, according to the new changes.
The lenient policies of FHA have been widely critisized and called "The New Subprime". FHA loans are federally insured mortgages made available to first-time home buyers. They require down payments as low as 3.5% (but it's really less because closing costs can be rolled in) and a credit score of just 620 in contrast to 700+ required by most private lenders right now.
As the subprime market crashed and burned, less qualified home buyers returned to FHA, leading to a huge increase in FHA loan volume. Almost a third of mortgages are FHA loans now, up from just 2% in 2006. Unlike most of the Subprime loans however, FHA loans are are sold as fixed rate mortgages and require full documentation of income and assets. While the rise in delinquency has certainly been noticable, the likelihood of a Subprime-esque repeat is not high. In fact, it is more likely that inflation will cause these borrowers' incomes to rise and thanks to the low fixed rates, thier payments will remain flat. While some minor changes to FHA seem appropriate, any drastic modifications would be a "pox on both your houses", the one you own and the one next door..... that won't sell because nobody qualifies to buy it.
“To be clear, the fund’s reserves are sufficient to cover our future losses, so the FHA will not require taxpayer assistance or new Congressional action,” Stevens said. “That said, given the size and scope of the FHA and its importance to today’s market, these risk management and credit policy changes are important steps in strengthening the FHA fund, by ensuring that lenders have proper and sufficient protections.”
Amongst the changes, FHA will be raising the net worth requirement for FHA funding sources from $250,000 to ONE MILLION DOLLARS. Effective January 1 2010, financial institutions will have to submit yearly audited financials to FHA to prove they are adequately capitalized to meet the new standards.
Additionally, the new policies will make it more cumbersome to do 'streamline refinances'. This is a rate reduction program for FHA to FHA financing which currently requires little to no documentation to complete. FHA will now establish new requirements for seasoning, payment history, income verification and demonstrate a net tangible benefit to the borrower. The new changes provide for a collection of credit score information when available and caps the maximum loan-to-value (LTV) ratio at 125%.
Furthermore, new guidelines will be set forth on ordering appraisals for FHA-insured mortgages. Although the Home Valuation Code of Conduct (HVCC) does not apply to FHA, the plan is to adopt language from the Code to align its standards with those government-sponsored enterprises (GSEs), which fall under HVCC. Boooo!
HVCC was implemented by Fannie Mae and Freddie Mac on May 1, 2009. At that time the FHA decided not to adhere to the policy arguably increasing demand for FHA loan products as originators and Realtors alike quickly learned of the problems associated with HVCC. Although they are not requiring the use of AMC's or other third parties to order the appraisal, the new requirements do not allow any commissioned based lender staff member to order an FHA appraisal.
When it comes to ordering appraisals, currently FHA requires that the appraisal must be transferred if switching lenders. This slows the process in cases where the original lender is reluctant to transfer the the appraisal in a timely manner. The new policy allows for a new appraisal to be ordered if there are mistakes, the appraiser is on the 2nd lenders ineligible list or if the "Failure of the first lender to provide a copy of the appraisal to the second lender in a timely manner would cause a delay in closing, posing potential harm to the borrower". Potential harm includes events outside the control of the borrower such as loss of interest rate lock, purchase contract deadline, foreclosure proceedings, and late fees. FHA also reduced the length of time an appraisal can be used from 6 months to 4 months.
While lenders seeking to originate, underwrite or service FHA loans must meet the new eligibility criteria, mortgage brokers such as ourselves will still be able to originate these loans through their relationships with approved lenders, but we will no longer receive independent FHA approval of eligibility, according to the new changes.
The lenient policies of FHA have been widely critisized and called "The New Subprime". FHA loans are federally insured mortgages made available to first-time home buyers. They require down payments as low as 3.5% (but it's really less because closing costs can be rolled in) and a credit score of just 620 in contrast to 700+ required by most private lenders right now.
As the subprime market crashed and burned, less qualified home buyers returned to FHA, leading to a huge increase in FHA loan volume. Almost a third of mortgages are FHA loans now, up from just 2% in 2006. Unlike most of the Subprime loans however, FHA loans are are sold as fixed rate mortgages and require full documentation of income and assets. While the rise in delinquency has certainly been noticable, the likelihood of a Subprime-esque repeat is not high. In fact, it is more likely that inflation will cause these borrowers' incomes to rise and thanks to the low fixed rates, thier payments will remain flat. While some minor changes to FHA seem appropriate, any drastic modifications would be a "pox on both your houses", the one you own and the one next door..... that won't sell because nobody qualifies to buy it.
Monday, August 17, 2009
It's a great day to lock if you can. As expected the Fed announced quantitative easing (QE) will come to an end. By slowly weaning the Treasury market from Federal Reserve buying, Chairman Bernanke will be causing treasury rates to rise and satisfy US creditors. In the mean time, the story this morning is the huge sell-off in the global equity markets, and the outlook for a serious decline in the US stock market this morning. If you haven't noticed, what's bad for the market is good for rates and thus we have once again dipped below that Mendoza line of 5.0% for a conventional 30 year fixed. The moral of this story...it's time to lock! If you are considering refinancing, it is my opinion that this recent dip will be short-lived and while the Fed will continue use its substantial balance sheet to buy mortgages, having the effect of keeping mortgage rates low, I expect that 4.875 soon will be history.
Here are today's rates at Primestar...please call us for a 5 minute consultation and reference this blog 952-548-8840 or go to http://www.goprimestar.com/contact_us.html
15 year fixed
Rate 4.500%
APR 4.697%
Details
30 year fixed
Rate 4.875%
APR 4.991%
Details
5 yr ARM
Rate 4.25%
APR 3.939%
Details
FHA
Rate 5.000%
APR 5.110%
Details
VA 30 year fixed
Rate 5.125%
APR 5.276%
Details
http://www.goprimestar.com/
Here are today's rates at Primestar...please call us for a 5 minute consultation and reference this blog 952-548-8840 or go to http://www.goprimestar.com/contact_us.html
15 year fixed
Rate 4.500%
APR 4.697%
Details
30 year fixed
Rate 4.875%
APR 4.991%
Details
5 yr ARM
Rate 4.25%
APR 3.939%
Details
FHA
Rate 5.000%
APR 5.110%
Details
VA 30 year fixed
Rate 5.125%
APR 5.276%
Details
http://www.goprimestar.com/
Tuesday, August 11, 2009
Would you lock your rate if you were offered....
What would it take to lock your rate in? Please take this super fast survey. It will take you less than two minutes........I promise!
Thank you so much! Click here to take survey
Thank you so much! Click here to take survey
Thursday, July 16, 2009
Banks vs. Mortgage Brokers
Many people think they can avoid paying mortgage broker fees by refinancing their home loan with a bank. After all, your bank is a direct lender right? Unfortunately banks are just as guilty, if not more so of overcharging their customers as mortgage brokers. In fact, the Banking Lobby in the United States spent millions of dollars having the disclosure laws changed to exclude banks. That’s right; your bank is exempt from the Real Estate Settlement Procedures Act and is not obligated to disclose their profit margin or markup on your home loan.
Bankers are now also in opposition to Obama's proposal to create a 'Consumer Financial Protection Agency' to regulate mortgage lending and protect conusmers from financial abuse. On the other hand, the National Association of Mortgage Brokers (NAMB) is waiting to see how the legislation plays out. This legislation would put banks at a level of transparency that mortgage broker's have been abiding by for years. According to NAMB executive VP Roy DeLoach "The NAMB applauds provisions calling for all originators to disclose all direct and indirect income". We agree with NAMB and while botched legislation has the potential to hurt consumers by limiting choices, it would be nice to see the playing field evened out. In the mean time, consumers need to stay vigilant and educated about the choices they have today.
As a mortgage broker we have access to wholesale rates and we are willing to work for a flat origination fee. Much like your bank, we can mark up your mortgage rate for a commission from the lender. This commission is known as Yield Spread Premium but as brokers we are obligated to disclose the rate markup and we often use this as an alternative to paying up front fees. When you hear the term "no cost", this is in reference to paying the fees as yield spread, rather than up front. It works like a seesaw, higher rate/lower fees and vice versa but you can see your options clearly and you have the choice to balance your loan to meet your needs. It is also possible to refinance your mortgage paying a flat origination fee without markup of your mortgage rate. This is a deal that is tough to get from your bank or credit union and will save you thousands of dollars every year you keep the loan. Working with a mortgage broker like Primestar, you can be sure that everything is disclosed to you about your loan upfront.
Educating our clients + complete transparency = TRUST! https://www.bbb.org/online/consumer/cks.aspx?id=10407098525144643
Many people think they can avoid paying mortgage broker fees by refinancing their home loan with a bank. After all, your bank is a direct lender right? Unfortunately banks are just as guilty, if not more so of overcharging their customers as mortgage brokers. In fact, the Banking Lobby in the United States spent millions of dollars having the disclosure laws changed to exclude banks. That’s right; your bank is exempt from the Real Estate Settlement Procedures Act and is not obligated to disclose their profit margin or markup on your home loan.
Bankers are now also in opposition to Obama's proposal to create a 'Consumer Financial Protection Agency' to regulate mortgage lending and protect conusmers from financial abuse. On the other hand, the National Association of Mortgage Brokers (NAMB) is waiting to see how the legislation plays out. This legislation would put banks at a level of transparency that mortgage broker's have been abiding by for years. According to NAMB executive VP Roy DeLoach "The NAMB applauds provisions calling for all originators to disclose all direct and indirect income". We agree with NAMB and while botched legislation has the potential to hurt consumers by limiting choices, it would be nice to see the playing field evened out. In the mean time, consumers need to stay vigilant and educated about the choices they have today.
As a mortgage broker we have access to wholesale rates and we are willing to work for a flat origination fee. Much like your bank, we can mark up your mortgage rate for a commission from the lender. This commission is known as Yield Spread Premium but as brokers we are obligated to disclose the rate markup and we often use this as an alternative to paying up front fees. When you hear the term "no cost", this is in reference to paying the fees as yield spread, rather than up front. It works like a seesaw, higher rate/lower fees and vice versa but you can see your options clearly and you have the choice to balance your loan to meet your needs. It is also possible to refinance your mortgage paying a flat origination fee without markup of your mortgage rate. This is a deal that is tough to get from your bank or credit union and will save you thousands of dollars every year you keep the loan. Working with a mortgage broker like Primestar, you can be sure that everything is disclosed to you about your loan upfront.
Educating our clients + complete transparency = TRUST! https://www.bbb.org/online/consumer/cks.aspx?id=10407098525144643
Wednesday, July 1, 2009
How much is your house worth & sustained growth indicators
We had a nice downward trend in rates last week after the Fed announced that they they left their target rate at 0% to 0.25% and the continuation of their previously announced $800 billion dollar purchase of US Treasuries as well as the previously announced $1.25 trillion dollar purchase of MBSs by the end of the year.
We have another big week in announcements including the Unemployment rate tomorrow so we can expect the volatile rate environment to continue for the time being. After last months report from National Association of Realtors (NAR) indicated that existing home sales showed the first month over month increase since September of 2005, a report today shows that the pending home sales rose .1% during the month which is up 6.7% compared with May surprising prognosticators who had forecast no growth.
In May, existing SFR, Townhomes, condos & co-ops rose to an annual rate of 4.77 million units which was a 2.4% increase from 4.66 in April. Keeping with this (hopeful) trend, the U.S. Census Bureau separately reported the median sales price of new homes rose to $221,600 in May which is a 4% increase from April.
All this activity is good news as climbing out of the housing crisis is the first step to an overall rebound. People who are looking to refinance with today's low rates are left wondering how to determine what their home is now worth. It's a good question and today there are really two markets; the distressed foreclosure market and the ordinary market. In the current environment it has been difficult to distinguish between the two when home appraisals are often based on values of foreclosed properties, which sell for significantly less than homes of ordinary sellers.
Distressed homes usually sell for around 20% less than normal homes in the same area, but unless the appraiser takes the time to make this distinction, a traditional home can get lumped in with the bargains. Appraisers are required to use comparable properties that have sold recently, and if there is nothing but distressed sales, what is left to compare to? Is your house worth more because you paid your mortgage on time? We'd like to think so but in a less than ordinary market, it's very difficult to prove.
Still the indicators for recovery are there. NAR's affordability index is near historic highs because with the combination of low housing prices and low rates, the average family is required to devote less of their income toward the mortgage. This should continue to have a positive effect on demand and although the market is not likely to rebound very quickly, we should begin to see a gradual recovery.
To access our custom instant rate quote go to http://www.goprimestar.com/Search_20_Rates.html
We have another big week in announcements including the Unemployment rate tomorrow so we can expect the volatile rate environment to continue for the time being. After last months report from National Association of Realtors (NAR) indicated that existing home sales showed the first month over month increase since September of 2005, a report today shows that the pending home sales rose .1% during the month which is up 6.7% compared with May surprising prognosticators who had forecast no growth.
In May, existing SFR, Townhomes, condos & co-ops rose to an annual rate of 4.77 million units which was a 2.4% increase from 4.66 in April. Keeping with this (hopeful) trend, the U.S. Census Bureau separately reported the median sales price of new homes rose to $221,600 in May which is a 4% increase from April.
All this activity is good news as climbing out of the housing crisis is the first step to an overall rebound. People who are looking to refinance with today's low rates are left wondering how to determine what their home is now worth. It's a good question and today there are really two markets; the distressed foreclosure market and the ordinary market. In the current environment it has been difficult to distinguish between the two when home appraisals are often based on values of foreclosed properties, which sell for significantly less than homes of ordinary sellers.
Distressed homes usually sell for around 20% less than normal homes in the same area, but unless the appraiser takes the time to make this distinction, a traditional home can get lumped in with the bargains. Appraisers are required to use comparable properties that have sold recently, and if there is nothing but distressed sales, what is left to compare to? Is your house worth more because you paid your mortgage on time? We'd like to think so but in a less than ordinary market, it's very difficult to prove.
Still the indicators for recovery are there. NAR's affordability index is near historic highs because with the combination of low housing prices and low rates, the average family is required to devote less of their income toward the mortgage. This should continue to have a positive effect on demand and although the market is not likely to rebound very quickly, we should begin to see a gradual recovery.
To access our custom instant rate quote go to http://www.goprimestar.com/Search_20_Rates.html
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