09 Jun 11 FHA Finance for First Time Home Buyers
FHA is a government insured loan program that was originally designed for first time home buyers. FHA was established to ensure that all Americans could get access to affordable home financing. The current FHA interest rates are lower than most other mortgage products as well. FHA financing enables home buyers to get low payments because FHA rates are more affordable than most people realize.
Whether you are a first time buyer with good or bad credit, you can finance a new home with an FHA mortgage with ease. Simply talk to a FHA approved lender about qualifying for a government loan that meets your needs. HUD recently tightened credit guidelines with FHA loans, but they are still easier to qualify for than most other 1st time loan programs. If you have been looking for a new home and a new lending solution, however, this might be exactly what you have been searching for. Read the original article > Financing a Home with FHA
19 May 11 Did First Time Home Buyers Benefit from Tax Credit?
The government’s recent $8,000 cash incentive for first-time home buyers has proved even more costly for recipients than for taxpayers, according to data released Monday. The first time home buyers tax credit was sold by realtors and loan officer as a “no brainer”, but since then some financial advisors are questioning whether or not it helped new home buyers. The average home buyers have lost twice as much to price declines as they received from the program. According to Zillow, the median home value fell to about $170,000 in March from $185,000 a year earlier. That means a buyer who closed on a house just before the tax-credit program expired in April 2010 collected $8,000 but has since lost $15,000 in value. Those who bought earlier in the program have done worse; the median price is down $20,000 from March 2009.”The $8,000 first-time home buyers tax credit . . . has brought many new families into the housing market,” the White House boasted in November 2009 upon announcing an extension and expansion of the program. Judging by sales declines since, that seems beyond doubt. Over the past year, the pace of existing home sales has fallen more than 6% and that of new home sales has fallen 22%. The credit wasn’t great for taxpayers, either. IRS says it paid $26 billion in home buyer credits in 2009 and 2010, enough to cover the maximum $8,000 credit for more than 3 million buyers.
At least rates on purchase loans were extremely low. FHA has been very helpful with affordable first time home buyer loans that do not require a significant down-payment like traditional home loans require. Both conventional and FHA rates were low, so it’s easy to see how consumers were swayed into buying a house.
House prices indeed tracked the rate of inflation during the 1970s, 1980s and 1990s, straying only slightly and briefly and returning each time. In 2000, house prices began to detach from the inflation rate and race ahead of it. Therefore, normalcy might be restored once the house price rise since 2000 matches the rate of inflation since then. Houses are up 41% since 2000. Inflation has increased other costs by 32%. By this measure, too, prices on a national level seem nearly back to normal but not quite there yet. Read the original Smart Money article > How the $8,000 Tax Credit Cost Home Buyers $15,000 .
06 May 11 Lenders Get Approved to Offer FHA PowerSaver Program
HUD received more praise from the Obama Administration for rolling out their new energy efficient finance solution, the FHA PowerSaver. Don’t get too excited though, as FHA lenders may tighten the borrowing requirements on their new FHA home equity loan product. Underwriters will want to examine all your income and asset documentation because, unlike the other FHA loan programs, the government will only cover 90% of the lending company’s loss or insurance claim in the event of a PowerSaver default. FHA announced 18 more lending companies around the nation that have committed to participating in the PowerSaver program. Quicken Loans, Sun West Mortgage, Seattle’s HomeStreet Bank, the Bank of Colorado, Stonegate Mortgage, Pennsylvania-based AFC First Financial and the University of Virginia Community Credit Union.
30 Mar 11 New Mortgage Legislation Being Introduced by Republican Law Makers
More than ever before, Congress and the Senate have been introducing new bills to improve and regulate the mortgage and housing industries. Government home financing maintains over 95% of the marketplace between Fannie Mae, Freddie Mac and FHA loans. The House Republicans who will ultimately have the most influence on the decision have come out with a plan for reforming the two government sponsored enterprises Fannie Mae and Freddie Mac. Scott Garrett (R-NJ) Chairman of the House Financial Services Subcommittee on Capital Markets and Government-Sponsored Enterprises released what was actually a summary of eight bills, each covering a different aspect of reform and each introduced by a different member of the parent Financial Services
The GSE Mission Improvement Act, sponsored by Ed Royce (R-CA)
This legislation would permanently abolish the affordable housing goals of Freddie Mac and Fannie Mae. According to Royce’s comments accompanying the bill, these goals were a central cause behind the collapse of the GSEs and the ongoing goal of the GSEs should be to reduce risk to taxpayers rather than expose them to further losses. “To meet these goals, the GSEs purchased more than $1 trillion in ‘junk loans.’ These home loans accounted for a large portion of the mortgage giants’ losses – losses that were later loaded onto the backs of American taxpayers.”
The Fannie Mae and Freddie Mac Accountability and Transparency for Taxpayers Act (H.R. 31), sponsored by Judy Biggert (R-IL) Chairman of the House Financial Services Subcommittee on Insurance, Housing and Community Opportunity.
This bill would establish an Inspector General (IG) within the Federal Housing Finance Agency (FHFA,) the conservator of the GSEs, provide him/her with additional law enforcement and personnel hiring authority, and require him/her to submit regular reports to Congress on taxpayer liabilities, investment decisions, and management details. These reports would be made publically available.
The GSE Debt Issuance Approval Act, Sponsored by Steve Pearce (R-NM).
Under the requirements of this legislation, the Department of the Treasury would have to formally approve any new debt issued by the GSEs. Pearce comments that, “This will help protect taxpayers by requiring the formal legal authority of U.S. debt issuance to approve the issuing of agency debt which is roughly the same as U.S. debt.”
GSE Credit Risk Equitable Treatment Act, sponsored by Scott Garrett.
This proposed home loan legislation would apply any of the standards applied to private secondary mortgage market participants to the GSEs. It would, according to Garrett, ensure that the GSEs are not exempt from new risk-retention rules mandated by Dodd-Frank and that they face the same retention standards as private market participants. Read the complete article from Mortgage News Daily > Republicans Dive Head First into GSE Reform with Eight New Bills
30 Mar 11 New Retention Rule to Impact Government Backed Home Loans
April 1st is the date when the Dodd-Frank mortgage rules are set to kick in, but few lenders and brokers really believe that the finance reform act will be enforced. Meanwhile the Obama administration seeks to reduce the government’s role in housing, reliance on Fannie Mae and Freddie Mac may be reinforced by a rule growing out of the Dodd-Frank regulatory overhaul. The Federal Deposit Insurance Corp. and the Federal Reserve yesterday released for public comment a proposed rule requiring lenders and bond issuers to keep a stake in some mortgage loans they securitize. The proposal would require loan companies that securitize mortgages to retain as much as 5% of an issue if it is based on mortgages whose borrowers have imperfect credit and make down payments of less than 20%.
The rule includes a key exemption from those standards: Lenders could avoid keeping a share in more challenging conventional and FHA home loans if they get them insured by federal agencies or sell them to Fannie Mae and Freddie Mac, the government-sponsored enterprises now under U.S. conservatorship. The GSEs and the Federal Housing Administration own or insure more than 96% of mortgages now being originated. Making their home loans exempt from the rule would maintain the government as the main holder of mortgage-market risk, said Karen Shaw Petrou, managing partner of Federal Financial Analytics in Washington. “If finalized as proposed, which we doubt, the regulation would memorialize U.S. home financing in the hands of FHA, Fannie Mae and Freddie Mac” Petrou said.
If the housing market recovers and private capital becomes available for mortgages, the rule’s biggest beneficiaries could be the largest lenders, including Wells Fargo Home Mortgage and JPMorgan Chase Mortgage Large institutions can more easily afford to hold loans on their books. Community banks, which generally need to sell their home loans in order to keep originating new mortgages, would find it harder to meet the new standard if they couldn’t get government backing for riskier loans. The risk-retention rule is mandated by the Dodd-Frank mortgage reform and is designed to prevent the shoddy underwriting practices that fueled the housing bubble. During the debate on the Dodd-Frank bill last year, some housing interest groups applauded the amendment allowing exceptions for qualified residential mortgages, or QRMs, assuming that regulators would carve out many if not most home loans.
“We’re very glad to see that the regulators are proposing to exempt loans sold to Fannie and Freddie,” said Ann M. Grochala, vice president of lending and accounting policy at the Independent Community Bankers of America. “In that regard, it should have a minimal impact on community banks.” Jerry Howard, president of the Washington-based National Association of Homebuilders, questioned whether Fannie Mae and Freddie Mac would have the capacity to finance any more mortgages. FHA loan limits are set to be reduced in October and the administration and congressional Republicans are seeking to cut the companies’ portfolios, meaning they won’t be able to hold as much debt. “The ability of the GSEs to continue to do their jobs is going to be greatly impeded,” he said. Many mortgages now being originated don’t meet the 20% down-payment standard. According to Corelogic Inc, over a fifth of the nearly 464,000 home mortgages issued in 2010 had down payments of less than 15%. Read the complete Bloomberg article online > Dodd-Frank Mortgage Risk-Retention Rule May Reinforce Role of Fannie Mae
30 Mar 11 Higher Rates Hurting Refinancing
Interest rates appear to be creeping upward. According to the Mortgage Bankers Association, the average fixed 30-year mortgage increased to 4.92%. The average fixed 15-year mortgage rate increased to 4.16%. Lenders are reporting decreasing inquires for mortgage refinance loans. With refinance rates continuing to rise, many homeowners are nervous because they did not take advantage of record breaking mortgage rates in November and December of last year. See the original article online > Mortgage Refinance Applications Decline.
25 Feb 11 Questioning the Loan Officer Compensation Rule from the Federal Reserve
Is the Federal Reserve way off in their attempt to limit loan officer’s compensation? Even if it’s a good idea to curb loan costs, should the Fed be capping income for an industry? The mortgage loan origination sector will affect thousands of people in each state. Of course every borrower wants a clearer path towards more no cost loan options, but if it deteriorates the industry is it worth it?
In a new letter industry trade groups are urging the Federal Reserve to reject a recent staff interpretation regarding its loan officer compensation rule that would restrict payments between mortgage companies and “affiliated” real estate brokerages and title agencies. The compensation rule becomes operative April 1st, 2011.
Trade group officials recently learned that the Fed staff believes fees paid to affiliated title or real estate brokerage servicers could run afoul of the rule. “This would, in effect, prohibit — for no justifiable reason — a successful and long-established business model that offers consumers one-stop loan services through a network of affiliated companies,” the letter says. The signers to the letter are urging Fed governors “not to adopt” the staff interpretation and consider two possible solutions.
One solution would be to exempt “bona fide and reasonable” fees paid for third-party title, appraisal and real estate brokerage services from the scope of the loan compensation rule. “A second solution might be to limit the definition of ‘affiliate’ to include mortgage lending and mortgage brokering businesses as specifically stated in the rule but not to include ancillary providers in that definition,” the letter says. Some of the signers to the letter include the Real Estate Providers Council, the National Association of Realtors, and Consumer Mortgage Coalition. Read the original article was written by Brian Collins for the National Mortgage News.
09 Feb 11 Get Mortgage Help from the Pros
Nationwide posted another interesting article on homeowners seeking mortgage help. The blog post underscores the challenges and obstacles that borrowers will face trying to qualify for a refinance loan or modification in this climate. Franky Finance reminds us that 2011 is not the year that you go to your relatives for home refinancing. This is a year in which refinance guidelines will tighten, so only trust veteran loan officers and lenders that have the track record you deserve.
Frankie Says Work with Experienced Loan Professionals
1. Only seek help from the Best Mortgage Lenders.
2. Borrowers with delinquencies should consider FHA for refinancing.
3. Consider every possible mortgage rate refinancing solution.
Read the complete article > Mortgage and Refinance Help
01 Feb 11 Flipping Homes with a FHA Finance
Obama signed off the FHA loan program that allows people or groups to use FHA financing for flipping homes. Most lenders have becomes used to relying on FHA refinance and home purchase loans insured by the U.S. government. The FHA has insured more than 21,000 mortgages worth over $3.6 billion on properties resold within 90 days of acquisition since last February, when the waiver was first issued, the agency said.
Government lending is still very tight and loans backed by the FHA, which does not make loans directly but guarantees them for borrowers who meet certain restrictions, are the only option available to many borrowers. A few days ago HUD extended the FHA home financing for people flipping homes to obtain government insured home financing. Read the original FHA Financing for Flipped Homes article.
> Read more articles like the Best Home Loans.
26 Jan 11 Goldman Sach’s Mortgage Trading and Derivatives
A recent Bloomberg article revealed that Goldman Sachs Group Inc. heavily profitted from trading derivatives on home loans during the financial crisis. The company admitted to this risky trading and said it relied on the instruments for most mortgage trades and for revenue from commodities, interest rates and currencies. According to a report by the Financial Crisis Inquiry Commission. Goldman Sachs Group said that derivates accounted for 70% to 75% of revenue in the firm’s commodities business from 2006 to 2009 and “half or more” of revenue from mortgage interest rates and currencies. From May 2007 to November 2008, about 86% of $155 billion in trades made by the firm’s mortgage loan business involved derivatives, the FCIC said. Stephen Cohen, a spokesman for Goldman Sachs, declined to comment.
The commission examined derivatives as part of an investigation of the credit crisis, which sparked the worst recession since the 1930s and the loss of more than 8 million U.S. jobs. Derivatives — contracts whose value is derived from assets such as stocks, bonds, currencies or commodities. Many people in the mortgage industry believe that this likely contributed to the turmoil by making it hard for regulators, responding to Lehman Brothers Holdings Inc.’s 2008 bankruptcy, to gauge the interconnectedness of financial firms. Read the complete Business Week article.
26 Jan 11 The State of the Mortgage Industry 2011
In the spirit of politics, Bryan Dornan published an article outlining the “State of the Mortgage Industry.” In April there will be significant changes as the Dodd-Frank mortgage reform bill will finally go into motion. Dornan points out short-sidedness of this bill that is supposed to protect consumers. Like many mortgage executives, he believes that this reform bill is bad for the mortgage industry and ulitemately it will be bad for consumers because the cost to finance a new home and mortgage rate refinancing will rise significantly. In is inevitable that we will see a consolidation in the home financing market as many smaller brokers will close their shops, because they can’t compete with the new rules. The mortgage reform bill will change the way brokers and loan officers are paid and many lending companies have already started down-sizing their loan originators. Read the complete article online > The State of the Mortgage Market
10 Jan 11 Mortgage Refinance Advice for 2011
Many expect 2011 to see a rebound for the mortgage industry as many predict that refinance guidelines will be eased. In a recent article, mortgage marketing specialist, Bryan Dornan revealed 5 tips for maximizing refinance opportunities in 2011.
1. VA refinance. Veterans have a unique opportunity when it comes to home buying and refinancing.
2. Streamline Refinance. If you are having difficulty getting approved for refinancing because of income documentation because you your debt to income ratio is too high and you presently have a government mortgage like a VA or FHA, then consider the streamline refinance.
3. 5/1 ARM. If you are having trouble fitting your mortgage payment into your budget and you want to keep your house, consider the 5/1 because you get a 3% rate fixed for 5 years.
4. Loan modification. If you can’t qualify for traditional refinancing, consider a loan modification. If you have explored to a bad credit mortgage and keep coming up short it may be time to look into mortgage relief.
5. Re-Apply. Many borrowers were turned down for a refinance loan in 2010, but that doesn’t mean they will not qualify to refinance in 2011.
Read the original article written by Bryan Dornan > 2011 Home Refinancing Tips
13 Dec 10 Millions of Homeowners Have Underwater Mortgages
Unfortunately millions of borrowers are unable to qualify for mortgage refinancing, this year because their mortgage is underwater. That means their home is worth less than their mortgage lien. The homeownership rate could fall below 60% if homeowners who are deeply underwater end up losing their homes, a new underwater mortgage report from mortgage data aggregator CoreLogic suggests. Some 10.78 million homeowners were “underwater” during the third quarter, meaning they owed more on their mortgages than their homes were worth. About 22.5% of all homeowners with mortgages had negative equity. That’s a slight decline from the 10.97 million homeowners who CoreLogic estimates were underwater in the second quarter, but the improvement was driven primarily by foreclosures rather than rising home values.
So far this year, the ranks of underwater mortgages have thinned by about 500,000, CoreLogic said. But price declines in some markets could bring to an end or even reverse recent improvements in negative equity. Many underwater homeowners will eventually lose their homes, and in the meantime may behave more like renters, failing to maintain their properties because they have no stake in them, the report noted.
The official homeownership rate reported by the Census Bureau for the third quarter was 66.9%, down from a peak of 69.2% in the last three months of 2004.
08 Dec 10 Mortgage Interest Deduction
Let’s be honest— homeowners deserve the mortgage interest deduction. Most people bought their home on the assumption that they would get the mortgage interest deduction. MBA reported the home purchase loan applications are way down again, so you have to wonder about the poor timing of the government’s discussions of eliminating this popular interest deduction for homeowners. Most economists believe that if the interest deduction disappears, it could make house values decline another 15%. It is having a chilling effect on some potential homebuyers. Unfortunately, some consumers already believe that the deduction will not be available to them. The federal deficit reduction commission’s recommendation has sown the seeds of uncertainty, as even current homeowners fear that they will not be able to claim the deduction and that their homes will lose even more value.
Historically, the real estate industry has generated 15-18% of U.S. gross domestic product. During the 2001-03 recession, real estate was one of the few growth sectors in the entire economy. Even now, despite serious problems in both housing and commercial real estate, the industry accounts for about 15% of GDP. Many experts have stated that we will not return to better economic times unless and until real estate markets stabilize. 30 year interest rates hover 4% and 15-year mortgage rates are still available at 3.5%. Read the original article online at Lender Intelligence > Will Obama Eliminate Mortgage Interest Deduction?
04 Nov 10 Mortgage Refinance Demand Dips Slightly
In a recent article, Reuters reported that U.S. loan applications for mortgage refinance loans fell last week even as interest rates held near-record lows. The housing market has been showing modest signs of improvement, with home sales picking up in many regions of the country, but tighter lending requirements and a weak labor market are preventing many consumers from taking advantage of record low mortgage rates.
Home Loan Rates Remain at Record Levels!
The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications, which includes purchase and home refinance loans, decreased 5.0% for the week ended Oct. 29th. The 4-week moving average, which smoothes the volatile weekly figures, was up 0.1 %. It was the sixth time in eight weeks that activity fell. The MBA’s seasonally adjusted index of home mortgage refinancing applications fell 6.4 %.
Tom Porcelli, head of U.S. market economics at RBC Capital Markets in New York, said the drop in demand is a reflection of the inability of many homeowners to take advantage of low interest rates. “Lending standards are still stunningly tight,” he said in an interview before the release of the data. “Consumers are in a de-leveraging mode, so buying a home could not be further from their minds right now, and this is what is keeping purchase applications low,” he said.
While demand for home loans to purchase a home rose for a second straight week, activity was below where it was earlier in the month. The MBA’s seasonally adjusted purchase index, a tentative early indicator of home sales, rose 1.4%.
