14 Aug 10 Has Obama Mortgage Relief Gone Too Far?
The Obama administration funded the Home Affordable Refinance Program, Home Affordable Modification Program, Hope for Homeowners and now the Emergency Homeowner Loan Program. Most of these tax-payer funded mortgage-bailout programs failed miserably. However, the Home Affordable Refinance Program,initiatve did help underwater homeowners with 125% mortgage refinancing , but only a small percentage of homeowners met th Fannie Mae and Freddie Mac loan requirements. Rates on fifteen-year loans dropped to 3.92% this week and the thirty-year rates fell to 4.44%. Nationwide reported that economist have forecasted that approximately 20 million homeowners will have an underwater mortgage at some point in 2011. The Fed announced this week they it would use the proceeds from Fannie Mae and Freddie Mac portfolio of mortgage-backed securities to purchase government debt.
FHA refinancing requirements are getting more difficult for the average borrower as HUD is said to be tinkering with a minimum credit score of 500. Lenders are bracing themselves for tighter FHA guidelines in the coming year as HUD moves to rebuild the reserves for the FHA insurance premiums. Read the original article online > Relief for Refinancing with Short Refinance and Emergency Homeowner Loan Programs
09 Aug 10 FHA Premiums Rising
HUD announced last Friday that FHA loan premiums would be rising in a few weeks. As more and more borrowers struggle to qualify for FHA refinancing, it’s hard to not question the timing of this HUD decision. Yes raising FHA insurance premiums paid by borrowers will increase the depleted FHA loan reserves, but won’t this reduce new FHA home loan applications even more?
There is clearly a big difference in what consumers will pay annually for FHA loan premiums. However, one must also consider several additional matters when comparing the old premium schedule with the new one. Under the current plan the big money is due up front and that is usually when first-time buyers, are least likely to have extra money. That is when new home buyers are less likely to be able to afford a FHA loan made larger by the addition of the up-front mortgage insurance premiums. By reducing the up-front insurance cost HUD has made the FHA mortgage a lot more practical for many marginal borrowers.
Second, the insurance requirement might not last for seven years. The FHA allows borrowers to end their insurance payments after five years if the value of their loan is less than 78% of the property’s value. “For FHA home loans with terms more than 15 years,” says HUD, “the mortgage insurance premium will be terminated when the Loan to Value ratio reaches 78%, provided the borrower has paid the MIP for at least five years. If the Loan to Value hits 78% and the borrower has not paid MIP for at least five years then the borrower must continue to pay MIP until the five year requirement is met. ” FHA mortgage rates are so low it is hard to believe that first time homebuyers will not reconsider purchasing a home in 2010 or 2011.
06 Aug 10 Government Mortgage Help with FHA Short Refi Program
HUD announced another round of government mortgage help with their new FHA Short Refinance program. Many homeowners are struggling as their home values have declined dramatically in recent years. In fact many borrowers are actually underwater with their mortgage balance greater than their home value. According to HUD, 11.3 million borrowers were underwater with their home loan and most would welcome the government mortgage help. HUD Secretary Shaun Donovan told a group in a recent speech that California, Arizona, Florida, Michigan and Nevada were the states with the most underwater home loans.
The FHA Loan Blog reported that many lending companies who are approved to originate FHA loan products believe that this mortgage relief initiative will help out a lot of struggling homeowners, but the reality is that most borrowers will be unable to meet the FHA loan requirements.
Tags: FHA short refi, Government Mortgage Help, underwater home loans
29 Jul 10 Mortgage Rates Drop 4 out last 5 Weeks
Mortgage rates have steadily been falling in 2010. Yields on U.S. Treasury bonds have fallen as shaky investors look for safer investments. Mortgage rates tend to track the yields on Treasurys. Low mortgage rates helped spark a little activity in the sluggish housing market. According to the Mortgage Bankers Association, home loan applications for home buying inched up 2% last week from the previous week. Mortgage refinance activity has faltered slightly over the last week even though the refinance rates were also lower on the 15 and 30-year loans. The FHA Home Loan blog reported that FHA rates dropped again last week.
Tags: refinance rates
08 Jul 10 FHA Mortgage Volume Drops
The FHA Loan Guide published an article indicating that FHA originations decreased slightly in May. The government report showed that FHA loan closings dropped 3% in May from April’s volume. FHA loan companies originated $22.3 billion of FHA loans for single-family homes in May. Almost 72% of the 124,750 FHA loan approvals went to borrowers buying a home. Of the 30,900 FHA refinance loans in May, 68% were conventional loan transactions with borrowers putting only 3.5% down-payments which are the minimum FHA requirements for home purchase transactions. The Federal Housing Administration indicated that 8.42% of its insured FHA loans are 90 days or more past due which almost the same as the 8.49% reported in April. Read the original article online > FHA Loan Production Dips Slightly.
08 Jul 10 Wells Fargo Announces Nearly 4000 Layoffs in Consumer Finance Unit
Wells Fargo Announced Thursday that it would no longer originate subprime home loans and were closing their finance division that specialized in those higher risked loans. According to Reuters Wells Fargo was poised to close their consumer finance division that was established a hundred years ago. Even though Wells Fargo has a reputation as a prime mortgage lender that had conservative lending guidelines they had been struggling with delinquencies and loan defaults from their own bad credit home mortgages in addition to mortgage portfolios it acquired from Wachovia Corporation when they recently took them over.
Wells Fargo announced they were closing 638 Wells Fargo Financial offices, which increased its number of retail branches to 6,600 after the Wachovia merger. The bank also has 2,200 Wells Fargo Home Mortgage offices and will eliminate about 2,800 employees from its Wells Fargo Financial unit and will most likely slash another 1,000 jobs in the next year.
According to Dave Kvamme, chief executive of Wells Fargo Financial in Des Moines, “The nonprime real estate business had really declined dramatically over the last 12 to 18 months.” He believed that that Wells waited too long to convert their loan officers from originating subprime loans to FHA mortgage loans too late. As the non-prime home loans contributed to the increased loan defaults that put the company in a position of risk they no longer were comfortable with. Kvamme continued, “The bank has switched from offering subprime mortgages to offering FHA home loans guaranteed by the government.”
Tags: bad credit home mortgages subprime home loans, Consumer Finance Unit, Wachovia Corporation, Wells Fargo, Wells Fargo Home Mortgage
07 Jul 10 FHA Mortgage Rates Dip to New Lows
MBA reported that FHA mortgage rates dipped to record lows last week. This spurred homeowners to go online to shop mortgage refinance rates. According to a spokesman from the FHA Home Loan Company, “Many borrowers are making a last ditch effort to refinance their adjustable rate loan into a more secure fixed rate mortgage that guarantees no interest rate changes for thirty years.”
FHA mortgage rates are available at 4.75% on fixed 30-year loan terms. There is no pre-payment penalty for early pay-off and if the FHA interest rates drop, that borrowers can access the FHA streamline for rate and term refinancing. FHA mortgage programs are more appealing and more affordable than ever. Read the original article online FHA Home Loans for Refinancing and Home Buying
Tags: FHA mortgage programs
01 Jul 10 FHA and VA Get Exemptions in Finance Reform Bill
According to a report from the American Banker, the Federal Housing Administration and the Department of Veterans Affairs were awarded exemptions in the finance reform bill that passed last week. From a loan origination perspective, VA and FHA lenders would be getting an unfair advantage. The reality is that in today’s mortgage market loan companies are offering FHA or VA or both loan products so will this have a dampening effect? This could pose more of a risk of defaults on FHA and VA home loans. So FHA and VA home loans Former MBA chairman David Kittle thinks FHA is getting a pass from Congress in this bill.
How will the Exemptions Effect the Non Government Mortgage Companies?
Under the final mortgage reform bill, federal banking agencies, the Securities and Exchange Commission, and Federal Housing Finance Agency will draft rules establishing underwriting standards and allowable product features for these fully documented loans. Qualified home loans also have to meet a new and tougher “ability to repay” standard in the bill along with a 3% limit on points and fees and a separate 2% limit on bona fide discount points. Regulators have the flexibility to set risk-retention requirements lower than 5% for residential loans that don’t meet the qualified mortgage test.
Balloon, negative amortization, and most interest-only notes will be excluded from the definition but debt-to-income ratios and verification practices must be defined by regulators and could change. The bill, as expected, gives little boost to a revival of the private-label securitization market. “Time and time again we keep hearing that we need the private sector to jump in, yet all the regulations that are being passed are keeping them out of the game, on the bench, on the sidelines,” said Sylvia Alayon, senior vice president of national operations at due diligence firm Capital Markets Assessment Corp. “We do need the private sector because many loans, like jumbo loans, can never be absorbed by the government agencies, and they represent a significant part of the market.”
Still, mortgage insiders were relieved that the mortgage reform bill will not force them to retain risk on all securitizations, regardless of loan characteristics, as in the initial language they had lobbied against. “It’s nice to win one,” said Lewis Ranieri, co-inventor of the mortgage-backed security. Read the original mortgage reform article online. > FHA Loan Program is Exempt from Risk in Mortgage Reform Bill
28 Jun 10 New Bill Could Boost FHA Loan Volume
FHA mortgage volume could get a boost from regulatory reform, because loans insured by government agencies are fully exempt from the bill’s risk-retention requirement. The legislation finalized by the conference committee late last week would require loan originators to retain at least 5% of the credit risk in loans they securitize unless the assets meet a “qualified home mortgage” test. All FHA loans and loans from the Department of Veterans Affairs or the Rural Housing Service will automatically meet that test. “FHA gets a pass,” said David Kittle, senior director of industry relations for IMARC, a mortgage fraud investigation company, and a former chairman of the Mortgage Bankers Association. “Does it give them an advantage? Well, sure. Anytime you are carved out of something that can be onerous for everybody else, then certainly you benefit.”
Certain — and possibly most — loans securitized through Fannie Mae and Freddie Mac will also be eligible for securitization without risk retention. “I believe chances are very good that in the future almost every mortgage that Fannie and Freddie either buy or securitize will be qualified mortgages under the risk-retention provision,” said Glen Corso, managing director of the Community Mortgage Banking Project, a trade group. But without an automatic exemption, lenders will have more hoops to jump through when they make home loans headed to Fannie or Freddie, giving FHA an edge.
How many hoops will ultimately depend on how a “qualified” mortgage is defined. Under the final bill, federal banking agencies, the Securities and Exchange Commission, and Federal Housing Finance Agency will draft rules establishing underwriting standards and allowable product features for these fully documented loans. Qualified mortgage loans also have to meet a new and tougher “ability to repay” standard in the bill along with a 3% limit on points and fees and a separate 2% limit on bona fide discount points. Regulators have the flexibility to set risk-retention requirements lower than 5% for residential loans that don’t meet the qualified mortgage test. Balloon, negative amortization, and most interest-only notes will be excluded from the definition but debt-to-income ratios and verification practices must be defined by regulators and could change.
The bill, as expected, gives little boost to a revival of the private-label securitization market. “Time and time again we keep hearing that we need the private sector to jump in, yet all the regulations that are being passed are keeping them out of the game, on the bench, on the sidelines,” said Sylvia Alayon, senior vice president of national operations at due diligence firm Capital Markets Assessment Corp. “We do need the private sector because many loans, like jumbo loans, can never be absorbed by the government agencies, and they represent a significant part of the market.” Still, mortgage veterans were relieved on Friday that the bill will not force them to retain risk on all securitizations, regardless of loan characteristics, as in the initial language they had lobbied against. “It’s nice to win one,” said Lewis Ranieri, co-inventor of the mortgage-backed security. Article was written by Paul Muolo and Sara Lepro.
Tags: FHA
10 Jun 10 Refinance Applications Drop
According to Mortgage Refinancing Buzz, the home refinance applications fell last week. They noted that the “pool of eligible borrowers eligible for a home refinance has been shrinking significantly as lenders tighten refinance guidelines.” Home purchase loan applications dropped 5.625% last week which is down 42% since the end of April when the home buyer tax credit expired. The refinance index is seriously ailing even though fixed mortgage rates are below 5%. Mortgage refinance activity dropped 14% last week. Michael Fratantoni writes, “Despite the historically low mortgage rates, many homeowners can’t qualify because of negative equity or bad credit.” FHA refinance loans are available but borrowers can’t have any late mortgage payments being reported from their lender in the last year. In addition most FHA lenders are requiring a minimum of a 640 fico score, so that is eliminating millions of borrowers from home refinancing. Read the original article online > Credit Problems Hindering Mortgage Refinancing.
Tags: refinance guidelines
08 Jun 10 FHA Changing Seller Concession Rules for FHA Loans
2010 FHA mortgage rates have reached record lows for purchase and refinance loans. For the first time home buyers who qualify for a FHA home loan, 2010 will be a year to remember. FHA lending guidelines have seen significant changes this year.
One of the key attractions of a FHA mortgage loan is going, going, but not quite gone. Sellers and buyers who move fast can still make the most of it. According to a source at HUD, the Federal Housing Administration plans to reduce maximum “seller concessions” from 6% of the home price to 3%. Seller concession rules allow buyers to look to the property seller to pay for a variety of services and taxes connected with the transaction loan origination and local transfer fees, appraisals, inspections, closing and escrow costs among others though not the down payment.
Compare FHA loan concessions with Fannie Mae or Freddie Mac conventional mortgages, where seller concessions are restricted to 3%. For most home buyers, the FHA mortgage program provides additional flexibility that can be very useful when negotiating. ZipRealty broker, Abbie Higashi, said the new FHA guidelines made sense and she supports the move by FHA. She believes that real estate agents should “do the deals now” if more than 3% concessions would help the sale go through.
Tags: qualify for a FHA home loan
13 Apr 10 FHA Looks for Lenders to Take on Risks
The FHA loan program has a $45 billion cushion to cover $757 billion in home-loan guarantees. This is just one part of the federal government’s investment in housing. Another is the bailout of Fannie Mae and Freddie Mac, which has cost taxpayers over $100 billion so far; a third is the Federal Reserve’s purchase of mortgage securities ($1.25 trillion).
How much will the FHA cost taxpayers? FHA officers have told Congress they don’t believe they’ll need a bailout. In fiscal 2009 the agency took in $8.1 billion in premiums from home buyers, while paying out $8.7 billion to cover loan defaults.
Do you think FHA guidelines should tighten more? FHA reserves have reached an all-time low and the FHA financing credibility is waning on Wall St. FHA recently extended first-time home buyer credit gives buyers a subsidy of 10% of the home’s purchase price, up to $8,000, in the form of a refundable credit. All of these moves don’t put money into the FHA loan program. FHA requirements have increased for FHA lenders, so FHA does appear to be having the lenders and brokers take on some of the risk.
18 Mar 10 FHA Market Share
FHA has been in the mortgage news a lot over the last year because of the low mortgage rates and the increasing number of FHA loan defaults. In a recent article posted on the FHA Loan Blog, the topic of FHA market-share was evaluated. FHA credit guidelines were announced that the will accept lower fico borrowers who are willing to come up with a larger down-payment when buying a home.
Many industry insiders believe that FHA will lose some of their market share because of new FHA requirements and tighter FHA guidelines. FHA mortgage rates remain ridiculously low, but most first time home buyers are having a difficult time qualifying for a FHA home loan. Time will tell if American consumers will continue to use FHA mortgage loans for refinancing. Rising mortgage insurance premiums and their higher credit score requirements certainly are not helping matters. Read the original article – Is FHA Losing Market Share for Home Loans?
03 Feb 10 FHA Credit Improving
The FHA home loans originated last year went towards borrowers with better credit scores than in previous years. These borrowers migrated to FHA when the subprime market disappeared. The average credit score of an FHA borrower is now 690, up from 630 only two years ago, agency officials said.
The agency banned 268 FHA lenders from making FHA mortgage loans last year, more than double the total terminated in the previous eight years. The FHA suspended six other firms. Among them were some of the largest FHA mortgage lenders –Taylor, Bean & Whitaker and Lend America, both of which shut their doors soon thereafter. Consumers taking out FHA mortgage loans will have to pay higher upfront fees, perhaps as early as this spring. Those with especially weak credit scores will also have to put down at least 10% instead of the usual 3.5% down-payment. Read the original article from the FHALoanBlog, > Better Credit FHA Loans Performing Well
27 Jan 10 Mortgage Loan Applications Decreased 11% Last Week
According to Bloomberg, the number of mortgage loan applications in the U.S. dropped last week for the first time in a month, led by a slump in home refinancing. The Mortgage Bankers Association’s index of home loan applications fell 11% to 513 in the week ended Jan. 22 from 575.9 a week earlier. The group’s refinancing gauge decreased 15%, while the purchase gauge fell 3.3%.
Mortgage refinance applications dropped significantly over the period. The mortgage bankers group’s home refinance gauge decreased to 2,260.4 from 2663.8 the prior week. The purchase index fell to 215.6 from 223 the prior week. The group’s refinancing index often turns volatile near year-end, making it difficult to determine the underlying trend. The measure plunged 38% in the last three weeks of 2009 then rose 35% in the first two weeks of January. FHA and VA loan applications followed the trend as well.
| Nationwide Mortgage Loans announces discounted mortgage refinancing for all 50 states! | FHA on board with 1st Time Home Buyers Tax Credit. See more on FHA Loans. |
The looming end of the government’s first-time homebuyer tax credit in November caused sales to slump at the end of last year. According to Russell Price, a senior economist at Ameriprise Financial Inc, “We’re seeing some stabilization in the housing market.” Price continued, “The spring selling season should be fairly positive, especially if we do start to see some positive employment growth and mortgage rates remain fairly low.”
