Please enjoy this installment of Mitch Wilcox’s annual review and forecast. Look for some helpful links at the end.
It’s time for my Annual Review and Forecast…
Before we launch into what may appear to be pretty cranky comments (only at first), please allow me to say thank you to everyone for business earned, business shared, and business done during the year. I hope in some way I might have positively impacted your business, and without question many of you have done that for me. I truly appreciate every speck of business that comes my way…thank you! Please enjoy a safe, prosperous and Happy New Year!
OK, here we go:
If you hurry, you just might be first on your block to read this year’s installment. Actually, you may be the only one on your block, other than those homes with sagging gutters and un-mowed lawns. I jest. Not really. I’m serious. We have seriously sad situations to deal with, and there are some folks in seriously sad shape. Who feel they have had the life sucked right out of them. Who feel they have gone from something and somebody to nothing and nobody.
I exaggerate, you say. Here’s a fact for you: For the last 4 years, it’s a rare day when I am not talking to someone who is literally in tears. Someone who thought it would never happen to them; not in a million years. I’m not the only one hearing these stories and I’m not unique; ask just about anybody and you’ll hear how widespread the housing crisis is.
You may not feel all warm and fuzzy by the time you’re done reading, but that’s what coats are for, so it’s time to zip up and deal with it. Be thankful you can get out of the weather. In the event you feel I’m being a bit cranky, just know that you might be cranky too if you had to say ‘no’ to more people more often than you ever dreamed was possible, and if you had to deal with the heartache of those folks you said ‘no’ to. And for those who can qualify for financing, it might make you a bit cranky dealing with crazy underwriting conditions all day; ones that no one can explain, no one has ever seen, and no one has ever heard of before.
Is there any hope out there? Sure there is. There are many folks who qualify for financing, and are able to take advantage of the times we are in. And though many lives have been forever altered, we will get past this. It may not look like we wanted it to, but it will be the best we can make it. If you’re warm at night and aren’t going to bed hungry, count your blessings. Many do not possess those fortunes.
2011 in review
It’s always such a delight to incorporate new terminology into our lives as each year unfolds. Exciting words like “robo-signing,” “shadow inventory,” “quantitative easing,” “fractional banking,” “credit swaps,” and all together now: “Occupy (fill in your favorite city).”
I know a lot of stuff is rolling around out there; at some point somebody, somewhere is going to tell us exactly what it all means. In the meantime, I’ll do my best to add some clarity, vision, hope, and did I say clarity?
2011 was Gumby, damn it (Google Eddie Murphy-SNL)! Bendable, moveable, elusive, rubbery, cranky, without substance and well, just Gumby. It seemed like we couldn’t put our finger on anything that wasn’t jiggling around; like trying to eat jello with chop sticks.
A never-ending concoction of heartache, guidelines, rules, disclosures, and regulations all designed to provide consumer protection, almost none of which has. Banks that have accumulated record levels of deposits, but are scared to death to let any of it go.
Why are the big banks so scared? There is still significant concern over what the mortgage mess will ultimately cost them, in additional regulations and potential lawsuits. This recently from Bloomberg: DZ Bank, the central bank for German cooperative banks, is suing Bank of America and Ally Financial (formerly GMAC) over the sale of residential mortgage-backed securities. DZ alleges that Ally and B of A were "actively involved" in all aspects of the securitizations, and that the offering misrepresented the underwriting standards of the underlying mortgages. "The offering materials also contained material misrepresentations and omissions regarding key statistical characteristics of the mortgage loans," DZ said in a story from Bloomberg & Business Week.
Given the circumstances, an expected year of transition you say? I hope you’re right. Will housing need to recover to positively impact the unemployment picture, or will job creation have to happen before the housing market improves? If a tree falls in the forest…yes; it depends who you ask.
Lender underwriting, credit guidelines, appraised values, and real estate inventories continued to dominate the 2011 lending and real estate landscapes.
If you’re reading this you survived another year. Again. Congratulations! We will continue learning these new norms and figure out ways to continue helping folks do what we believe is in their best interest. Because as Ringo Starr said: “And here we are; we’re still doing it. Because this is what we do.” Those remaining Beatles can get away with anything.
2012 Forecast
Housing
Once again we tackle the elephant in the room first. From my 2010 forecast:
“Housing is lagging while the economy rebounds. Declines in home values are a constraint on consumer spending. ‘The housing sector continues to be depressed,’ Fed officials said in a statement after the 12-14-10 meeting, at which they reiterated a plan to expand record monetary stimulus and said economic growth is “insufficient to bring down unemployment.”
Can you say ditto? While we have seen some economic gains, we didn’t see much gain in housing. 2012 may bring some housing relief to certain parts of the country that were negatively impacted, as we work through our distressed inventories, but many areas will continue the struggle. It’s all about that tree falling and if it makes a sound….what version do you believe?
From the National Association of Realtors (NAR):
Here are the latest NAR take-aways regarding the outlook for 2012:
• No economic recession in sight. The GDP is expected to rise 2.5 percent in 2012. That is, the income of everyone combined in the U.S. will rise by 2.5 percent.
• The net job creation is expected to be 1.5 to 2 million. The national unemployment rate will slide to 8.4 percent by this time next year.
• The baseline forecast for existing home sales is a rise of 5 percent, while home prices will finally turn positive, albeit by only 2 percent. The total industry commission revenue, therefore, can be expected to rise by around 7 percent.
• New home sales will rise by 16 percent. A stronger comeback is in the cards, after brutal declines during the housing bust years.
And from Barclay’s via Reuters:
“(Reuters) - Barclays Capital upgraded homebuilder D.R. Horton Inc to "overweight" and pointed to a potential recovery in the U.S. housing sector in 2012, encouraged by stabilizing prices in non-distressed home sales.
The brokerage also raised 2012 earnings estimates and price targets for a host of other U.S. homebuilders, including Toll Brothers Inc., Lennar Corp and Meritage Homes Corp.
"It has become increasingly apparent to us that the pieces for a rebound next year are beginning to fall into place - chief among them being stabilization in prices for non-distressed home transactions," the brokerage said in a note.
In addition, Barclays, which initiated coverage on the sector about two months back, said economic indicators--including job creation, delinquencies, housing starts, homebuyer traffic and consumer sentiment--also showed that the housing industry was stabilizing.
Separately, brokerage Susquehanna expressed a note of caution over new home sales and said tripling of insurance in force since 2007, falling home prices, and a recent up-tick in Federal Housing Administration delinquencies could increase headwinds in an already "low delivery environment."
Meanwhile, another brokerage (Guggenheim) downgraded homebuilders such as Toll Brothers, Lennar Corp, Meritage Homes Corp and Ryland Group to "neutral" from "buy," citing absence of any positive new catalyst. The brokerage, however, maintained its "Cautiously Optimistic" view of the sector.
The homebuilding stocks have taken a breather since their big October rally, which saw DR Horton and Toll Brothers touch the valuation peaks they achieved during last year's winter trading rally.”
So there is mixed-news, and some optimism out there….but there’s also this, from Forbes:
11/29/2011 @ 4:32PM
Every Day Is Black Friday In Housing As Prices Tank, Case-Shiller Shows
“Foreclosed homes continue to weigh on the market.
Housing markets remain deeply depressed, as the latest S&P/Case-Shiller Home Price Indices show. September data, released Tuesday, show that prices continue to drift lower, with three cities posting new index lows, as real estate markets remain unable to shrug off a massive inventory of foreclosed homes and a weak economy.
National home prices fell at an annual rate of 3.9% in the third quarter, as real estate markets tread even lower. The decline appears to be decelerating, as Q2 prices fell 5.8% on an annual basis while Q3 inched up sequentially 0.1%.
“Housing remains stuck in the proverbial mud,” explained Gluskin Sheff’s Dave Rosenberg. Despite the annual index appearing to decelerate its decline, both the 10- and 20-city composites fell more than expected. In September, the 10-city fell 3.3% while the 20-city was down 3.6% over the same month in 2010; 18 of the 20 cities surveyed registered negative annual rates in September.
Six of the 20 cities fell on a monthly basis, with Atlanta, Las Vegas, San Francisco, LA, Seattle, and Tampa down in September over August. Even more “disturbing,” as Case-Shiller Index Chairman David Blitzer put it, was the fact that three markets — Atlanta, Las Vegas, and Phoenix — posted “new crisis lows.”
“Over the last year home prices in most cities drifted lower. The plunging collapse of prices seen in 2007-2009 seems to be behind us,” explained Blitzer, who added “markets are fairly thin, and the relative lack of closed transactions might be exacerbating the downside. The problem continues to be the massive backlog in the foreclosure pipeline. According to RealtyTrac, new foreclosures jumped 7.4% in October on a monthly basis to 230,678, while the number of foreclosed homes sold tanked 25% to 75,243 in September from the prior month, according to the most recent data.
As Blitzer explained, the problem is the low levels of transactions. Fed Chairman Ben Bernanke has explained on numerous occasions that housing, along with employment, is among the most important prerequisites for any economic recovery. After a real estate bubble-induced financial crisis that brought the global economy to its knees, the Fed has done all it can to support housing prices, to no avail.
Interest rates have fallen to record lows, with 10-year Treasuries frequently trading below 2%. The Fed has engaged in two rounds of quantitative easing and is currently in the process of extending the maturity of its balance sheet, providing further support for housing markets by pushing long-term rates lower and allowing cheaper mortgage refinancing. The Fed is also currently reinvesting the proceeds of its agency securities portfolio into residential mortgage backed securities.
But, as Rosenberg said, prices remain depressed because in housing, “every day is Black Friday.” Major Banks like JPMorgan Chase, Citi, and Bank of America still hold massive amounts of foreclosed and distressed properties on their balance sheets. Blitzer notes that “any chance for a sustained recovery will probably need a stronger economy,” but his comment begs the question, as the economic recovery is in part conditional on stronger housing markets. Analysts at Barclays put it more clearly, writing in a note “we expect prices to begin to stabilize as distressed sales gradually decline as a proportion of total sales, but this process will take some time.”
Housing markets have yet to recover. On an absolute level, home prices hit a bottom after the crisis, and have bounced around that bottom, drifting even lower. On a rate-of-change basis, there was a clear bounce from the bottom and a substantial second dip.
Any sort of self-sustaining recovery, at this point, appears unfathomable.”
Yikes. Did that tree falling in the forest make a sound? Possibly. Is your cup half full or half empty?
Comerica Bank takes a stab at it: "Residential real estate markets are looking a little better as both construction of new homes and sales of existing homes ticked up in November. Improving consumer confidence and gradually tightening labor markets look like they are helping to build a foundation under housing. Of course the firmest support to the foundation would be improving sales prices and that has not happened yet. Prices still look soft for most market areas, sagging under the weight of bloated inventories of distressed homes for sale."
Going forward, it often seems government is often frozen until the next election. Continuing to sit on the sidelines is not spurring activity beyond bank-owned homes, short sales and those that have to move. The economy cannot recover without housing, unemployment cannot recover without hiring, and consumers will not spend until the economy improves. It’s a vicious circle. Bold steps are needed that may involve banks taking a haircut to their asset value. (How many would shed crocodile tears for institutions that have failed their customer base?) Our politicians and civil servants appear to lack the business acumen to successfully steer us out of this, and too many bad decisions were made according to political expediency. Constantly aiming recovery efforts at those under water or likely to foreclose will only be a band aid. We need to boldly go where no politician has gone before... more wasted billions thrown at the situation from the bottom up instead of the top down clearly has not worked. Refinance programs must be realistic, aggressive and effective. So far, this has not been the case.
So, what's my forecast? I’m a cup half-full guy. I note there are some parts of the country that never did see a bubble, and some areas have already experienced the stirrings of home appreciation. That being said, I believe we will continue to see slight retraction in housing values to some degree in Q1-2-3 12 as we continue to work through the new rules in lending and appraisal, and based on how quickly distressed inventory goes away.
Last year, I forecasted a 2012 new construction shortage and I’m sort of sticking to my guns on that. Homebuilders are more optimistic than they've been about single-family home sales in a year and a half, according to a report released by the National Association of Home Builders. It didn’t skyrocket, but the moderate pick up is nice to see. According to the National Association of Homebuilders/Wells Fargo Housing Market Index (HMI), builder confidence continued to show gains in December, the third consecutive monthly increase and the highest level since May 2010. Starts and permits have also perked up, with single-family starts up 4.6 percent on a year-ago basis in November and permits up 3.6 percent over the same period. The increases mirror improvement in construction outlays and sales, which have also seen gains in the past few months. While the increases are promising, I do not believe a 'genuine' recovery in housing activity has begun. Indeed, the major obstacles that have troubled the housing market over the past few years still remain intact, including the oversupply of single-family homes and continued distressed transactions.
We may see the beginning of what our new norm will be by year’s end 2012. I believe we will struggle to move out of the up-down-bouncing on the bottom conditions we have experienced lately. However, lower values, combined with low mortgage rates (increased affordability), may continue to turn the “buy now” light bulb on for many.
The GDP
We’ve been stumbling along fairly well, all things considered…..
The consensus for 2012 among many economists is better based on various surveys. Economists surveyed by Bloomberg and Reuters are expecting GDP growth in 2012 at +2.4%, up from 2011 amounts that are under 2.00%.
Of course, most forecasts include the caveat that Europe could drag the world back into recession, and at worst a global credit crisis if banks in the region fail or sovereign debt defaults occur. 2012, like 2011, may be held captive by Europe's continuing inability to accomplish much.
My GDP forecast? I concur that if the European markets experience a lengthy struggle, the US GDP will continue to struggle. I am hoping we see upwards of 4.000% by Q4 2012.
Inflation
The Fed’s efforts at driving inflation up have had mixed results. The Q4 2011 annual average rate is 3.4%.
This is a key driver of the overall effect on housing; I believe we will see about 2.00% by Q3-Q4 12.
Unemployment
At the time of publication, weekly jobless claims were expected to have increased by 14K based on surveys of economists and analysts; claims as reported fell 4K to 364K, the lowest weekly filings since April 2008. Continuing claims fell 79K to 3.55 mil; the continuing claims figure does not include the number of Americans receiving extended benefits under federal programs. Those who’ve used up their traditional benefits and are now collecting emergency and extended payments decreased by about 136,300 to 3.51 million in the week ended Dec. 3. Three weeks now where claims have declined may be evidence that firings are declining and in turn might foreshadow an increase in employment and possible consumer spending.
My best guess is we will see slight improvement up to Q3 12, but will we will end the year slightly below 9.0%. There just doesn’t appear to be long-term sustainability in sight. So goes the GDP, so goes unemployment and wages:
Mortgage Interest Rates and The Fed
For Q4 2011 I forecasted 30 year fixed rates in the mid 5.000% range. I couldn’t have been more wrong…we currently reside at about 4.000% at publication. The US and global markets have really played havoc with rates, credit, and overall world economies. No excuses…just fact. Or, I’m not nearly as smart as I thought I was…your choice.
The Fed is / has been determined to keep rates low, anticipating that low mortgage rates will (eventually) assist in turning the housing market around. It’s now a given that it will take more than low rates to get housing moving.
I believe that the Fed actions, combined with the overall effect of the US and world global markets, will contribute to keeping mortgage rates low for at least all of 2012. How low? I will be surprised if we exceed 5.000% for the 30 year fixed rate by Q4 2012. I anticipate 30 year fixed mortgage rates will remain below 6.000% for what could be several years, which would likely delay moves to longer loan terms (40 & 50 years) that address lower monthly payment needs.
The Fed Funds Rate, currently at the historical low of .09%, will likely finish 2012 below .25%.
Putting this in perspective, since 1954 can you guess the highest Fed Funds Rate? If you said it occurred in 1974….nope. Must have been in 1980? Nah. How about this: On June 1, 1981 the Fed Funds Rate was 19.10%, 19.01% higher than the current rate. Of course you & I were much too young to remember those times.
Housing Affordability
Here’s the 100 watt bulb (non-incandescent of course) in a sea of 40 watt bulbs. Housing is more affordable now than it has been in at least 40 years. The combination of lower home prices, record low mortgage rates, and a slight rise in family income are contributing to a rise in housing affordability.
Is that a glimmer of hope on the horizon? Well, sure; there’s always reason for hope. Some folks out there had great years, and some had pretty good years. Many others were wondering if it will ever return to normal, however.
There can be no doubt that attitude is more of a stimulus than the facts at hand. I say we must continue thinking positive; we must help those in need as much as we are able. What is working and what is right will defeat what isn’t working and what is wrong. Many of you and many before us have faced much harder challenges than these.
It’s often hard to believe that another year has passed. If ever there was a reason to want to see the years behind us, it’s what we have experienced in the last several we have seen. While I never want to miss a single thing, and truly enjoy life’s daily challenges, treasures, sorrows and delights…I am truly looking forward to what surely must be better times for all.
What we all will no doubt continue to do is provide the very best of what we have and what we are, and that’s what will ultimately make it go forward; because that’s just what we do in this great country.
Have a safe New Year!
Helpful links:
Unlimited LTV refinance/HARP 2.0 loan lookup and application process:
1) Look up your loan to see if Fannie or Freddie owns it:
http://www.fanniemae.com/loanlookup https://ww3.freddiemac.com/corporate
2) If your loan is owned by Fannie or Freddie, apply for an unlimited LTV refinance lower than your current rate:
https://0990471896.secure-loancenter.com/WebApp/FullAppLogin.aspx
Loan video library; short videos of all you need to know about mortgages:
http://mijoymortgage55.blogspot.com/p/video-library.html
Getting a mortgage loan after negative credit events…how long does it take?
http://mijoymortgage55.blogspot.com/2011/12/putting-time-frames-on-borrowers.html
Want “Daily Rates” delivered to your in-box? E-mail with “Rates” in the subject line:
mitch.wilcox@bankoforegon.net
Friday, December 30, 2011
Friday, December 16, 2011
Investment & 2nd Home Refinances to 105%
Effective immediately, I am pleased to announce that in addition to primary residences, second home and investment properties are now eligible for refinance loans on the current HARP Program. The maximum 1st mortgage loan-to-value is 105%, with no maximum CLTV.
CLTV is "Combined Loan-To-Value;" meaning the total owed on both a 1st & 2nd mortgage as a percent of the home's value. For this program, we can refinance a 1st mortgage to 105% of the appraised value, regardless of the balance on an existing 2nd (if a 2nd mortgage is in place), subject to the ordinary qualifiers.
Your existing 1st mortgage must be owned by Fannie or Freddie. To find out if Fannie or Freddie owns your loan, you can look it up here:
http://www.fanniemae.com/loanlookup
https://ww3.freddiemac.com/corporate
If you are interested, to estimate a rate and payment for you I will need the estimated appraised value of the home, current loan balance and interest rate, 2 years' income/job history, monthly debt, and the aprox. credit strength.
Once you have determined that Fannie or Freddie owns your loan, if you wish to apply immediately, you can do so here: https://0990471896.secure-loancenter.com/WebApp/FullAppLogin.aspx
CLTV is "Combined Loan-To-Value;" meaning the total owed on both a 1st & 2nd mortgage as a percent of the home's value. For this program, we can refinance a 1st mortgage to 105% of the appraised value, regardless of the balance on an existing 2nd (if a 2nd mortgage is in place), subject to the ordinary qualifiers.
Your existing 1st mortgage must be owned by Fannie or Freddie. To find out if Fannie or Freddie owns your loan, you can look it up here:
http://www.fanniemae.com/loanlookup
https://ww3.freddiemac.com/corporate
If you are interested, to estimate a rate and payment for you I will need the estimated appraised value of the home, current loan balance and interest rate, 2 years' income/job history, monthly debt, and the aprox. credit strength.
Once you have determined that Fannie or Freddie owns your loan, if you wish to apply immediately, you can do so here: https://0990471896.secure-loancenter.com/WebApp/FullAppLogin.aspx
Thursday, December 8, 2011
Putting Time Frames on Borrowers Returning After a Foreclosure or Short Sale
We are hard-pressed to pick up a newspaper or listen to a newscast without seeing or hearing something about bankruptcies, foreclosures, or the credit crisis in general. Millions of Americans who over-extended themselves in the last decade are now paying “the price,” and the impact of the “shadow inventory” that hangs over the housing market will last for years. But looking at things from a granular perspective will help to keep things in perspective. In the past, borrowers who had declared bankruptcy, or turned in their keys (“deed in lieu of foreclosure,” similar to a defendant pleading “no contest” in a court case) usually moved into the “subprime” category. And with that sector of the market came higher rates. Now, millions of Americans are going through bankruptcies, or mailing in their keys – how long will it be until they regain “A-paper” status with the agencies or large lenders?
It is not an easy question to answer. Is any underwriting question easy to answer, now or in the past? Basic information for the agencies: Fannie Mae (FNMA) and Freddie Mac (FHLMC) can be found at:
https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2010/sel1005.pdf
or
http://www.freddiemac.com/learn/service/foreclosure.html.
Fannie Mae, for example, requires 5 years from the completion date for foreclosures. “From the fifth to seventh year following the foreclosure completion date, the purchase of a principal residence is permitted with a minimum 10% down and 680 FICO score. The purchase of a second or investment property is not permitted for 7 years. Limited cash out refinances are permitted for all occupancy types. Pre-foreclosure (Short Sale) minimum is 2 years from the completion date (no exceptions or extenuating circumstances).”
For Fannie, a situation involving a Deed-in-Lieu of Foreclosure “requires a 4 year period from the date the deed-in-lieu is executed. From the fifth to the seventh year following the execution date the borrower may purchase a property secured by a principal residence, second home or investment property with the greater of 10 percent minimum down payment or the minimum down payment required for the transaction. Limited cash out and cash out refinance transactions secured by a principal residence, second home or investment property are permitted pursuant to the eligibility requirements in effect at that time.” And under a Chapter 7 Bankruptcy “A borrower is eligible for an A paper loan program 4 years after discharge or dismissal, provided they have reestablished credit and have maintained perfect credit after the bankruptcy.” Chapter 13 Bankruptcy: 2 years from the discharge date or 4 years from the dismissal date.
In summary, for Fannie, strategic defaulters have to wait 7 years after a foreclosure, but 2 or 4 years after a deed in lieu (depending on LTV of 80 or 90%). In a case where the home was not lost through a strategic default, but due to extenuating circumstances beyond a borrower's control, such as job loss, death, divorce, medical issues, etc., then the waiting period is reduced to 3 years on a foreclosure (90 LTV, cash-out refis are not allowed, and purchases must be owner occupied) and is reduced to 2 years on a deed-in-lieu (maximum of 90% LTV). The intention is to provide incentive for deeds-in-lieu vs. foreclosures, and not to punish borrowers who lost their home through events beyond their control. Strategic defaulters via foreclosure have to wait 7 years, and homes lost through extenuating circumstances are eligible in 2 years for deeds-in lieu and 3 years for foreclosures (90%LTV). The selling guide lists how lenders are required to document extenuating circumstances (section B3-5.3-08) and also the foreclosure and re-established credit.
Freddie Mac’s time lines and requirements are very well spelled out in its on-line guides. “Recovery Time Periods for Reestablishment of Credit” vary based on a number of criteria. With “Extenuating Circumstances” for example, a foreclosure requires 36 months from the completion date as reported on the credit report. Deed-in-lieu is 24 months from the execution date, and a short sale is 24 months from the completion date. “Whenever a Borrower has had a previous foreclosure, deed-in-lieu of foreclosure or a short sale within the last seven years, the Mortgage must either be: a purchase transaction Mortgage secured by a Primary Residence with a maximum loan-to-value (LTV)/total LTV (TLTV)/Home Equity Line of Credit TLTV (HTLTV) ratio of the lesser of 90% or the maximum LTV/TLTV/HTLTV ratio for the transaction, or a "no cash-out" refinance Mortgage that meets the requirements of Chapter 24.
By the way, “extenuating circumstances” are created by “non-recurring events that are beyond the borrower's control, which result in a sudden, significant, and prolonged reduction in income, or a catastrophic increase in financial obligations. However, extenuating circumstances cannot be solely defined by the event; they must take into consideration the interrelationship between the event, the severity of the resulting hardship, and the extent of the borrower's efforts to resolve the situation.”
Government Loans
Turning to government loans, for Wells Fargo, per a source in the wholesale channel, VA loans require a 2 year wait for both foreclosures and short sales and if the original loan was serviced by Wells Fargo an automated approval is required.
For FHA insured loans, 3 years for both and an automated approval is required if the loan was Wells Fargo. Generally speaking, for conventional agency loans it is 4 years for both, with the usual automatic approval requirement. (In all cases if the loan was Wells Fargo and there is no automatic approval the wait is 7 years.)
Watch out for specific lender guidelines, as other lenders require a 2 year wait only for FHA or VA, subject of course to the full borrower profile.
What does all this mean? First, remember that non-agency lenders do exist who often offer programs tailored to borrowers who have lost their homes due to foreclosures or short sales. And not all borrowers are out of the “potential homeowner pool” for seven years. If there are extenuating circumstances, if MI or low LTV’s are involved, etc., borrowers may be eligible for an A-paper home loan sooner - which is certainly good news for the housing market in the near future.
Need to know how the entire loan process works? Go here: http://www.mijoymortgage.com/Loan_20_Process1.html
Need more info or wish to apply for HARP II (unlimited LTV refinance)? Go here: http://www.mijoymortgage.com/.
It is not an easy question to answer. Is any underwriting question easy to answer, now or in the past? Basic information for the agencies: Fannie Mae (FNMA) and Freddie Mac (FHLMC) can be found at:
https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2010/sel1005.pdf
or
http://www.freddiemac.com/learn/service/foreclosure.html.
Fannie Mae, for example, requires 5 years from the completion date for foreclosures. “From the fifth to seventh year following the foreclosure completion date, the purchase of a principal residence is permitted with a minimum 10% down and 680 FICO score. The purchase of a second or investment property is not permitted for 7 years. Limited cash out refinances are permitted for all occupancy types. Pre-foreclosure (Short Sale) minimum is 2 years from the completion date (no exceptions or extenuating circumstances).”
For Fannie, a situation involving a Deed-in-Lieu of Foreclosure “requires a 4 year period from the date the deed-in-lieu is executed. From the fifth to the seventh year following the execution date the borrower may purchase a property secured by a principal residence, second home or investment property with the greater of 10 percent minimum down payment or the minimum down payment required for the transaction. Limited cash out and cash out refinance transactions secured by a principal residence, second home or investment property are permitted pursuant to the eligibility requirements in effect at that time.” And under a Chapter 7 Bankruptcy “A borrower is eligible for an A paper loan program 4 years after discharge or dismissal, provided they have reestablished credit and have maintained perfect credit after the bankruptcy.” Chapter 13 Bankruptcy: 2 years from the discharge date or 4 years from the dismissal date.
In summary, for Fannie, strategic defaulters have to wait 7 years after a foreclosure, but 2 or 4 years after a deed in lieu (depending on LTV of 80 or 90%). In a case where the home was not lost through a strategic default, but due to extenuating circumstances beyond a borrower's control, such as job loss, death, divorce, medical issues, etc., then the waiting period is reduced to 3 years on a foreclosure (90 LTV, cash-out refis are not allowed, and purchases must be owner occupied) and is reduced to 2 years on a deed-in-lieu (maximum of 90% LTV). The intention is to provide incentive for deeds-in-lieu vs. foreclosures, and not to punish borrowers who lost their home through events beyond their control. Strategic defaulters via foreclosure have to wait 7 years, and homes lost through extenuating circumstances are eligible in 2 years for deeds-in lieu and 3 years for foreclosures (90%LTV). The selling guide lists how lenders are required to document extenuating circumstances (section B3-5.3-08) and also the foreclosure and re-established credit.
Freddie Mac’s time lines and requirements are very well spelled out in its on-line guides. “Recovery Time Periods for Reestablishment of Credit” vary based on a number of criteria. With “Extenuating Circumstances” for example, a foreclosure requires 36 months from the completion date as reported on the credit report. Deed-in-lieu is 24 months from the execution date, and a short sale is 24 months from the completion date. “Whenever a Borrower has had a previous foreclosure, deed-in-lieu of foreclosure or a short sale within the last seven years, the Mortgage must either be: a purchase transaction Mortgage secured by a Primary Residence with a maximum loan-to-value (LTV)/total LTV (TLTV)/Home Equity Line of Credit TLTV (HTLTV) ratio of the lesser of 90% or the maximum LTV/TLTV/HTLTV ratio for the transaction, or a "no cash-out" refinance Mortgage that meets the requirements of Chapter 24.
By the way, “extenuating circumstances” are created by “non-recurring events that are beyond the borrower's control, which result in a sudden, significant, and prolonged reduction in income, or a catastrophic increase in financial obligations. However, extenuating circumstances cannot be solely defined by the event; they must take into consideration the interrelationship between the event, the severity of the resulting hardship, and the extent of the borrower's efforts to resolve the situation.”
Government Loans
Turning to government loans, for Wells Fargo, per a source in the wholesale channel, VA loans require a 2 year wait for both foreclosures and short sales and if the original loan was serviced by Wells Fargo an automated approval is required.
For FHA insured loans, 3 years for both and an automated approval is required if the loan was Wells Fargo. Generally speaking, for conventional agency loans it is 4 years for both, with the usual automatic approval requirement. (In all cases if the loan was Wells Fargo and there is no automatic approval the wait is 7 years.)
Watch out for specific lender guidelines, as other lenders require a 2 year wait only for FHA or VA, subject of course to the full borrower profile.
What does all this mean? First, remember that non-agency lenders do exist who often offer programs tailored to borrowers who have lost their homes due to foreclosures or short sales. And not all borrowers are out of the “potential homeowner pool” for seven years. If there are extenuating circumstances, if MI or low LTV’s are involved, etc., borrowers may be eligible for an A-paper home loan sooner - which is certainly good news for the housing market in the near future.
Need to know how the entire loan process works? Go here: http://www.mijoymortgage.com/Loan_20_Process1.html
Need more info or wish to apply for HARP II (unlimited LTV refinance)? Go here: http://www.mijoymortgage.com/.
Wednesday, September 21, 2011
Rates move downward with Fed action today - time ro refi!
Now is the time to pull the refi trigger if you can...
Today's action by the Fed has caused downward movement to mortgage rates.
Markets had been expecting the Fed to commit to shifting their TREASURY holdings to longer maturities (like selling 2-3yr notes and buying 10's), and indeed, that was announced today. 10 and 30yr Treasuries rallied from already impressively low levels on the news.
But the Fed included a somewhat surprising nod to the Secondary Mortgage Market in committing to reinvest the income it receives from monthly payments and periodic pay-offs in its MBS portfolio BACK INTO MBS (aka "mortgage-backed-securities," the bonds that govern mortgage rates). This caused a
massive break of recent highs and pushed MBS well into all time highs. Remember that the higher the MBS PRICE, the lower interest rates can potentially go. Although MBS are the most direct driver of mortgage rates, there are other factors at play.
Today's Rates: The current market is in a state of flux at the moment and mortgage rates either already have or are likely in the process of moving to ALL TIME LOWS. From 4.125% yesterday, Best Execution on a 30yr Fixed is closest to 3.875% this afternoon depending on the lender. In some cases it's 4.0%.
FHA/VA deals are in a bit of a predicament that's keeping them blocked off below 3.75% (there's no secondary market for rates any lower than that right now!). For similar reasons, 15 year fixed conventional loans may be stuck at 3.25%, though that's still an improvement from yesterday.
The secondary market factors driving adjustable rate loans are in a massive state of flux, but one that is mixed between positive and negative. Shorter ARMS are generally the same to slightly better whereas longer ARMS could actually be worse.
Please note there can be a fair amount of variety between lenders and that this has been exaggerated by recent market volatility.
Today's action by the Fed has caused downward movement to mortgage rates.
Markets had been expecting the Fed to commit to shifting their TREASURY holdings to longer maturities (like selling 2-3yr notes and buying 10's), and indeed, that was announced today. 10 and 30yr Treasuries rallied from already impressively low levels on the news.
But the Fed included a somewhat surprising nod to the Secondary Mortgage Market in committing to reinvest the income it receives from monthly payments and periodic pay-offs in its MBS portfolio BACK INTO MBS (aka "mortgage-backed-securities," the bonds that govern mortgage rates). This caused a
massive break of recent highs and pushed MBS well into all time highs. Remember that the higher the MBS PRICE, the lower interest rates can potentially go. Although MBS are the most direct driver of mortgage rates, there are other factors at play.
Today's Rates: The current market is in a state of flux at the moment and mortgage rates either already have or are likely in the process of moving to ALL TIME LOWS. From 4.125% yesterday, Best Execution on a 30yr Fixed is closest to 3.875% this afternoon depending on the lender. In some cases it's 4.0%.
FHA/VA deals are in a bit of a predicament that's keeping them blocked off below 3.75% (there's no secondary market for rates any lower than that right now!). For similar reasons, 15 year fixed conventional loans may be stuck at 3.25%, though that's still an improvement from yesterday.
The secondary market factors driving adjustable rate loans are in a massive state of flux, but one that is mixed between positive and negative. Shorter ARMS are generally the same to slightly better whereas longer ARMS could actually be worse.
Please note there can be a fair amount of variety between lenders and that this has been exaggerated by recent market volatility.
Tuesday, September 20, 2011
The Fed Meeting and Follow Up Comment
I received quite a bit of feedback regarding yesterday's posting and thought it might be helpful (cathartic?) to follow up with some news about the Fed meeting today/tomorrow and the think tank reaction. We all have our ideas and some of them might actually be effective....
The FOMC meeting gets started today, a two day affair leading to tomorrow's policy statement and belief the Fed will officially announce "Operation Twist" as it is being dubbed. Many now are confident the Fed will act; if it doesn't, the long end of the yield curve (10 and 30 yr bonds, as well as mortgage markets) will likely be hit hard. The Fed will decide to replace short-term treasuries in its $1.65 trillion portfolio with long- term bonds, according to 71% of 42 surveyed economists. The move, likely to try and bend the yield curve, will probably fail to reduce the 9.1% unemployment rate, 61% of the economists said. Among those, 15% predict it will be “somewhat harmful.”
Looking over the wires this morning, it appears there is little in the way of understanding what "Operation Twist" will do for the economy. Stories are lining up that the stock indexes are better this morning on belief the Fed's expected move will help the economy. I don't subscribe to that thinking; lower long term interest rates that are supposed to go lower on the Fed move will have little if any impact on unemployment, will not likely motivate small businesses to spend or hire, and won't do much for the housing sector.
To reiterate the point, Banks are scared to death to lend. Regulators continue to step on them with more red tape and regulations that simply do not make sense. Then we have the FHFA launching law suits against the large mortgage lenders demanding re-payment of as much as $800B for what FHFA is saying were faulty loans; and telling Fannie and Freddie to increase fees by as much as 10 basis points.
Washington continues to be unable to get out of its own way; suing banks so late in the game is counter-productive and sends a message that lenders are at risk for anything they do. Will the new norm be that bureaucrats/banks operate with one foot on the throttle, one foot on the brake, and only act when no one is in the rear view mirror? Is it any wonder banks won't lend?
Until next time...
The FOMC meeting gets started today, a two day affair leading to tomorrow's policy statement and belief the Fed will officially announce "Operation Twist" as it is being dubbed. Many now are confident the Fed will act; if it doesn't, the long end of the yield curve (10 and 30 yr bonds, as well as mortgage markets) will likely be hit hard. The Fed will decide to replace short-term treasuries in its $1.65 trillion portfolio with long- term bonds, according to 71% of 42 surveyed economists. The move, likely to try and bend the yield curve, will probably fail to reduce the 9.1% unemployment rate, 61% of the economists said. Among those, 15% predict it will be “somewhat harmful.”
Looking over the wires this morning, it appears there is little in the way of understanding what "Operation Twist" will do for the economy. Stories are lining up that the stock indexes are better this morning on belief the Fed's expected move will help the economy. I don't subscribe to that thinking; lower long term interest rates that are supposed to go lower on the Fed move will have little if any impact on unemployment, will not likely motivate small businesses to spend or hire, and won't do much for the housing sector.
To reiterate the point, Banks are scared to death to lend. Regulators continue to step on them with more red tape and regulations that simply do not make sense. Then we have the FHFA launching law suits against the large mortgage lenders demanding re-payment of as much as $800B for what FHFA is saying were faulty loans; and telling Fannie and Freddie to increase fees by as much as 10 basis points.
Washington continues to be unable to get out of its own way; suing banks so late in the game is counter-productive and sends a message that lenders are at risk for anything they do. Will the new norm be that bureaucrats/banks operate with one foot on the throttle, one foot on the brake, and only act when no one is in the rear view mirror? Is it any wonder banks won't lend?
Until next time...
Monday, September 19, 2011
Can you Refi? It’s time to repeal Dodd/Frank, and other ramblings…
The grand experiment has failed.
It’s time for consumers and business leaders to step forward and say “enough is enough.”
Many of us in the real estate and lending business know that mortgage loan underwriting and appraisal requirements are beyond ridiculous. While the big banks continue to horde money, insist on tighter than ever reasons to lend it, and wait to see how much they will need to give up to the Fed and others in lawsuits, consumers bear the brunt in the inability to obtain a reasonably underwritten mortgage loan. Should you think this is an over-reaction, ask anyone who has experienced the loan process recently.
While some borrowers are squeaky clean and the process goes smoothly, most are not squeaky clean and experience a nightmare in over-regulated appraisal and loan requirements, and lengthy closing timelines.
Senator Corker (Tenn.) on CNBC 9-2-11 hit the preverbal nail on the head; he said Washington (politicians) have no idea what makes business function. Amen.
What took place in Washington in the aftermath of the 2008 crisis is coming home to roost within the business world. Regulations were piled on by Barney Frank and Chris Dodd as both saw an opportunity to increase government's influence on businesses and consumers. Neither one of them had, or has a clue; Dodd/Frank must be repealed as well as choking the life out of regulators.
The time is way past for all of us to say “enough is enough!”
Can you refi? Consumers are having a hard time coming up with enough incentive to buy these days with prices and interest rates falling. Many that would like to re-finance and improve their financial situation are struggling due to extreme tight underwriting and low appraisals. If you can refinance it’s a GREAT time!
If the President and Congress want to do something that doesn't cost and may increase consumer confidence and spending they should open the pipeline increasing re-financing. Instead we have the FHFA launching $200B of lawsuits against banks and individuals over sub-prime bad loans. Will the FHFA also sue S&P, Moody's and Fitch for rating the *CDO’s (Collateralized Debt Obligations) made up of sub prime loans at AAA? No! If the government were to get out of the way the US economy would improve more quickly.
How about this? Re-finance all mortgages that are current and have been current for six months with no appraisals and no credit underwriting; but no cash outs unless the appraisal allows it. Lowering mortgage payments is the same as getting a bonus or an increase in pay.
Yeah, right…that would require out of the box thinking which scares bankers to death.
The Wall Street Journal had quite an opinion piece on the recent Bank of America job cuts. "What is the cost of overregulation? Bank of America appears to have provided part of the answer by announcing...it will cut 30,000 jobs between now and 2014. CEO Brian Moynihan said the bank's plan is to slash $5 billion in annual expenses from its consumer businesses. Mr. Moynihan didn't say this, but we will: These layoffs are part of the bill for the last two years of Washington's financial rule-writing. After loose monetary policy had combined with insane housing policy to create a financial crisis, the Democrats who ran Washington in 2009 and 2010 enacted myriad new rules that had nothing to do with easy money or housing. Take the amendment that Illinois Democrat and Senator Dick Durbin (with the help of 17 Senate Republicans) attached to last year's Dodd-Frank financial law. Mr. Durbin's amendment instructed the Federal Reserve to limit the amount of "swipe fees" that banks can charge merchants when customers use debit cards. How exactly does forcing banks to charge Wal-Mart less money for operating an electronic payment system prevent the next financial crisis? Readers may wait a long time for a satisfactory answer, but the cost of this Dodd-Frank directive is straightforward."
The WSJ opinion piece goes on. "Restricting bank profits on a particular product may have obvious populist appeal, but politicians shouldn't be surprised if banks decide that such consumer credit operations aren't good businesses and can function with fewer employees. Add in the various federal programs aimed at extracting penalties for this or that mortgage-foreclosure error and it's understandable that a bank would have trouble forecasting growth to justify its current work force. To be sure, Bank of America is also suffering from its own mistake in deciding to buy Countrywide Financial in 2008. As for the financial industry generally, it had become distended and needed to shrink after the bubble years of easy money. But given the real-world results for bank employees, politicians should not be allowed to pretend that there are no consequences when they deliberately reduce the profitability of employers. Mr. Obama proposed last week to spend some $450 billion more in outlays or tax credits to create more jobs, but it would have cost a lot less to save these 30,000."
Here’s some comment on the Fed's and the Administration's perception of why the economy is so weak. All the talk is centered around Easing, Monetary Policy, Interest Rates, Stimulus etc. and while low interest rates are great it is not interest rates that are keeping the economy down at this point.
Lack of jobs and lack of confidence are the problem. Nothing is going to get better until we achieve real job growth and recent Jobless Claims numbers are indicating that nothing is changing. Job growth will stimulate a housing recovery and both will boost the economy.
Now the wiz bang geniuses in DC think that they can tinker with rates and numbers and fix it enough to get re-elected but I submit they are wrong. Businesses and entrepreneurs (read new businesses and job creation) need to have confidence that a fairly predictable business and regulatory environment exists in which to operate. That does not exist today hence businesses, large and small, are not willing to risk and are sitting on whatever cash they have. The answer, I think, to repairing the economy and promoting growth is not interest rates, a new Stimulus, the Fed buying bonds, or whatever else they tried that hasn't worked. The answer is rolling back the tsunami of new regulations the politicians have placed in motion.
Businesses literally do not know if what they are doing today is going to become illegal next month or next year. We are experiencing "death by regulation" in almost every industry. Hundreds of new regs are still to be written and implemented. Our Industry is only one, among many, that are being pummeled with new rules and regs.
Bottom line is: get the Government out of our way and American businesses will get moving.
Until next time…
*Definitions: A collateralized debt obligation, or CDO, is a debt instrument (a bond) that is backed by a pool of other bonds. From the same pool of bonds, several CDO tranches are normally created. The least risky tranches have a priority claim on interest and principal paid by the underlying bonds. In return, these tranches receive the lowest rates of interest. The riskiest tranches are the first to absorb any defaults among the underlying bonds. In return, these tranches receive the highest rates of interest.
What are “tranches” you ask? Tranches are from the French for slice, portion or batch, the word tranche most commonly refers to one in a series of debt instruments that are backed by a common underlying pool of assets, but which have different terms and conditions. Tranches within a given debt issue typically represent a spectrum of risk and return tradeoffs, ranging from high risk/high return to low risk/low return. Apart from this specific application, the term tranche often is heard within the financial services industry as a synonym for segment or group. Thus, rather than hearing about a client segment, you may hear someone speak about a tranche of clients.
All clear? Contact me any time: log onto http://www.mijoymortgage.com/ for all the good stuff.
It’s time for consumers and business leaders to step forward and say “enough is enough.”
Many of us in the real estate and lending business know that mortgage loan underwriting and appraisal requirements are beyond ridiculous. While the big banks continue to horde money, insist on tighter than ever reasons to lend it, and wait to see how much they will need to give up to the Fed and others in lawsuits, consumers bear the brunt in the inability to obtain a reasonably underwritten mortgage loan. Should you think this is an over-reaction, ask anyone who has experienced the loan process recently.
While some borrowers are squeaky clean and the process goes smoothly, most are not squeaky clean and experience a nightmare in over-regulated appraisal and loan requirements, and lengthy closing timelines.
Senator Corker (Tenn.) on CNBC 9-2-11 hit the preverbal nail on the head; he said Washington (politicians) have no idea what makes business function. Amen.
What took place in Washington in the aftermath of the 2008 crisis is coming home to roost within the business world. Regulations were piled on by Barney Frank and Chris Dodd as both saw an opportunity to increase government's influence on businesses and consumers. Neither one of them had, or has a clue; Dodd/Frank must be repealed as well as choking the life out of regulators.
The time is way past for all of us to say “enough is enough!”
Can you refi? Consumers are having a hard time coming up with enough incentive to buy these days with prices and interest rates falling. Many that would like to re-finance and improve their financial situation are struggling due to extreme tight underwriting and low appraisals. If you can refinance it’s a GREAT time!
If the President and Congress want to do something that doesn't cost and may increase consumer confidence and spending they should open the pipeline increasing re-financing. Instead we have the FHFA launching $200B of lawsuits against banks and individuals over sub-prime bad loans. Will the FHFA also sue S&P, Moody's and Fitch for rating the *CDO’s (Collateralized Debt Obligations) made up of sub prime loans at AAA? No! If the government were to get out of the way the US economy would improve more quickly.
How about this? Re-finance all mortgages that are current and have been current for six months with no appraisals and no credit underwriting; but no cash outs unless the appraisal allows it. Lowering mortgage payments is the same as getting a bonus or an increase in pay.
Yeah, right…that would require out of the box thinking which scares bankers to death.
The Wall Street Journal had quite an opinion piece on the recent Bank of America job cuts. "What is the cost of overregulation? Bank of America appears to have provided part of the answer by announcing...it will cut 30,000 jobs between now and 2014. CEO Brian Moynihan said the bank's plan is to slash $5 billion in annual expenses from its consumer businesses. Mr. Moynihan didn't say this, but we will: These layoffs are part of the bill for the last two years of Washington's financial rule-writing. After loose monetary policy had combined with insane housing policy to create a financial crisis, the Democrats who ran Washington in 2009 and 2010 enacted myriad new rules that had nothing to do with easy money or housing. Take the amendment that Illinois Democrat and Senator Dick Durbin (with the help of 17 Senate Republicans) attached to last year's Dodd-Frank financial law. Mr. Durbin's amendment instructed the Federal Reserve to limit the amount of "swipe fees" that banks can charge merchants when customers use debit cards. How exactly does forcing banks to charge Wal-Mart less money for operating an electronic payment system prevent the next financial crisis? Readers may wait a long time for a satisfactory answer, but the cost of this Dodd-Frank directive is straightforward."
The WSJ opinion piece goes on. "Restricting bank profits on a particular product may have obvious populist appeal, but politicians shouldn't be surprised if banks decide that such consumer credit operations aren't good businesses and can function with fewer employees. Add in the various federal programs aimed at extracting penalties for this or that mortgage-foreclosure error and it's understandable that a bank would have trouble forecasting growth to justify its current work force. To be sure, Bank of America is also suffering from its own mistake in deciding to buy Countrywide Financial in 2008. As for the financial industry generally, it had become distended and needed to shrink after the bubble years of easy money. But given the real-world results for bank employees, politicians should not be allowed to pretend that there are no consequences when they deliberately reduce the profitability of employers. Mr. Obama proposed last week to spend some $450 billion more in outlays or tax credits to create more jobs, but it would have cost a lot less to save these 30,000."
Here’s some comment on the Fed's and the Administration's perception of why the economy is so weak. All the talk is centered around Easing, Monetary Policy, Interest Rates, Stimulus etc. and while low interest rates are great it is not interest rates that are keeping the economy down at this point.
Lack of jobs and lack of confidence are the problem. Nothing is going to get better until we achieve real job growth and recent Jobless Claims numbers are indicating that nothing is changing. Job growth will stimulate a housing recovery and both will boost the economy.
Now the wiz bang geniuses in DC think that they can tinker with rates and numbers and fix it enough to get re-elected but I submit they are wrong. Businesses and entrepreneurs (read new businesses and job creation) need to have confidence that a fairly predictable business and regulatory environment exists in which to operate. That does not exist today hence businesses, large and small, are not willing to risk and are sitting on whatever cash they have. The answer, I think, to repairing the economy and promoting growth is not interest rates, a new Stimulus, the Fed buying bonds, or whatever else they tried that hasn't worked. The answer is rolling back the tsunami of new regulations the politicians have placed in motion.
Businesses literally do not know if what they are doing today is going to become illegal next month or next year. We are experiencing "death by regulation" in almost every industry. Hundreds of new regs are still to be written and implemented. Our Industry is only one, among many, that are being pummeled with new rules and regs.
Bottom line is: get the Government out of our way and American businesses will get moving.
Until next time…
*Definitions: A collateralized debt obligation, or CDO, is a debt instrument (a bond) that is backed by a pool of other bonds. From the same pool of bonds, several CDO tranches are normally created. The least risky tranches have a priority claim on interest and principal paid by the underlying bonds. In return, these tranches receive the lowest rates of interest. The riskiest tranches are the first to absorb any defaults among the underlying bonds. In return, these tranches receive the highest rates of interest.
What are “tranches” you ask? Tranches are from the French for slice, portion or batch, the word tranche most commonly refers to one in a series of debt instruments that are backed by a common underlying pool of assets, but which have different terms and conditions. Tranches within a given debt issue typically represent a spectrum of risk and return tradeoffs, ranging from high risk/high return to low risk/low return. Apart from this specific application, the term tranche often is heard within the financial services industry as a synonym for segment or group. Thus, rather than hearing about a client segment, you may hear someone speak about a tranche of clients.
All clear? Contact me any time: log onto http://www.mijoymortgage.com/ for all the good stuff.
Be a USDA loan expert; 100% financing still allowed
USDA Programs Guaranteed Loan Changes
USDA has 2 main borrower programs, a “Direct” loan, which is an interest rate subsidy loan that USDA loans directly to qualified low income borrowers, and a “Guaranteed” loan program where USDA insures institutional loans made to qualified borrowers, based on geographic and income qualifiers. Here’s a link to the qualifiers:
http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do?NavKey=home@1
Currently, USDA charges borrowers an Upfront Guarantee Fee of 3.5% of the loan amount.
Effective with USDA commitments on/after 10-1-11, an Annual (monthly) Borrower Fee will be added, the Upfront Fee will be reduced.
The Upfront Guarantee Fee will be reduced from 3.5% to 2% for purchase transactions. This fee can be financed into the loan amount with an LTV up to 102% (100% financing), or paid in cash.
The Upfront Guarantee Fee for refinance transactions will remain at 1%.
The USDA will implement a new Annual (monthly) Fee of 0.30% charged on all loans with a Conditional Commitment issued on or after October 1, 2011. This fee will be added to the borrower’s monthly payment and will remain for the life of the loan. The initial Annual Fee, for the first year of the loan, will be calculated based upon the guaranteed loan amount. For the remaining years of the loan, the Annual Fee will be calculated on the average annual scheduled unpaid principal balance of the loan, not the actual unpaid principal balance.
Examples for a $100,000 30 year fixed loan at 4.250%, Old vs. New:
Loan amount Upfront fee Annual (Monthly) Fee Monthly payment total
With Upfront fee P/I/Monthly fee
Old
$103,500 3.5% / $3500 -0- $509.16
New
$102,000 2 .0% / $2000 $24.87 $526.65
Bottom line, about $17 more per month on $100,000 loan.
Fee calculators can be found here:
https://usdalinc.sc.egov.usda.gov/USDALincTrainingResourceLib.do.
The calculators are located in the Loan Origination section under Documentation and Resources.
Now you're an expert...until next time....
USDA has 2 main borrower programs, a “Direct” loan, which is an interest rate subsidy loan that USDA loans directly to qualified low income borrowers, and a “Guaranteed” loan program where USDA insures institutional loans made to qualified borrowers, based on geographic and income qualifiers. Here’s a link to the qualifiers:
http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do?NavKey=home@1
Currently, USDA charges borrowers an Upfront Guarantee Fee of 3.5% of the loan amount.
Effective with USDA commitments on/after 10-1-11, an Annual (monthly) Borrower Fee will be added, the Upfront Fee will be reduced.
The Upfront Guarantee Fee will be reduced from 3.5% to 2% for purchase transactions. This fee can be financed into the loan amount with an LTV up to 102% (100% financing), or paid in cash.
The Upfront Guarantee Fee for refinance transactions will remain at 1%.
The USDA will implement a new Annual (monthly) Fee of 0.30% charged on all loans with a Conditional Commitment issued on or after October 1, 2011. This fee will be added to the borrower’s monthly payment and will remain for the life of the loan. The initial Annual Fee, for the first year of the loan, will be calculated based upon the guaranteed loan amount. For the remaining years of the loan, the Annual Fee will be calculated on the average annual scheduled unpaid principal balance of the loan, not the actual unpaid principal balance.
Examples for a $100,000 30 year fixed loan at 4.250%, Old vs. New:
Loan amount Upfront fee Annual (Monthly) Fee Monthly payment total
With Upfront fee P/I/Monthly fee
Old
$103,500 3.5% / $3500 -0- $509.16
New
$102,000 2 .0% / $2000 $24.87 $526.65
Bottom line, about $17 more per month on $100,000 loan.
Fee calculators can be found here:
https://usdalinc.sc.egov.usda.gov/USDALincTrainingResourceLib.do.
The calculators are located in the Loan Origination section under Documentation and Resources.
Now you're an expert...until next time....
Wednesday, August 17, 2011
How to stop the credit bureaus from selling your information!
Did you know that when your credit report is generated, the credit bureaus sell your inquiry to lenders who subscribe to this service? These lenders (sharks looking for a meal!) then contact you to solicit your business.
What is the best way to stop the selling of leads by credit agencies?
"Trigger leads" are a problem for many in the industry, where after the credit report is run, suddenly a borrower hears from other lenders. From a local lender: "One way to reduce this problem is do not put in any borrower phone numbers when pulling a credit report. I always delete my borrower's phone numbers before I pull the report. The credit agencies do not need phone numbers to obtain a credit report. This is not fool-proof ....the repository may have a phone number on file for borrower ...or someone might be able to look it up. But my experience is that this has reduced the number of solicitation calls to my customers."
Another wrote: "We always give our borrowers a document that says, 'Important -- Opt-Out Instructions: Credit reporting agencies will put your name on a 'target list' within 24 hours after your credit report is ordered in connection with a mortgage. They will sell this list. As the result you will receive phone calls and junk mail with offers of loans, insurance, etc. from a variety of unscreened vendors.
If you wish to avoid receiving this unwanted solicitation, either call 1-800-567-8688 or go to www.optoutprescreen.com and follow the instructions. It takes 5 business days to process your request to opt out. So, let us know the date you complete the request to opt-out. We will order your credit report on the 6th day." Great advice!
Until next time...
What is the best way to stop the selling of leads by credit agencies?
"Trigger leads" are a problem for many in the industry, where after the credit report is run, suddenly a borrower hears from other lenders. From a local lender: "One way to reduce this problem is do not put in any borrower phone numbers when pulling a credit report. I always delete my borrower's phone numbers before I pull the report. The credit agencies do not need phone numbers to obtain a credit report. This is not fool-proof ....the repository may have a phone number on file for borrower ...or someone might be able to look it up. But my experience is that this has reduced the number of solicitation calls to my customers."
Another wrote: "We always give our borrowers a document that says, 'Important -- Opt-Out Instructions: Credit reporting agencies will put your name on a 'target list' within 24 hours after your credit report is ordered in connection with a mortgage. They will sell this list. As the result you will receive phone calls and junk mail with offers of loans, insurance, etc. from a variety of unscreened vendors.
If you wish to avoid receiving this unwanted solicitation, either call 1-800-567-8688 or go to www.optoutprescreen.com and follow the instructions. It takes 5 business days to process your request to opt out. So, let us know the date you complete the request to opt-out. We will order your credit report on the 6th day." Great advice!
Until next time...
Monday, August 15, 2011
A Refinance Road Map-A locked loan isn't always a closed loan...
A Locked Rate Doesn’t Always Mean A Closed Loan
Rates are bouncing around near record lows set last October and consumers are looking to seize the opportunity. There's always a rush by consumers and loan agents to lock rates on dips, and that practice is all the more prevalent when extreme daily rate swings raise the sense of urgency. But before you take the ready-fire-aim approach, remember the old saying: haste makes waste. Just because a rate is locked doesn't mean the loan will close. Here's how you can make sure that it does:
Let Your Lender Run Your Credit Score: Credit bureau scoring models know people shop for mortgages, so more than one mortgage-related credit run in a 30 day window won't reduce your score. Many critical loan approval factors are built into a credit report, so a lender should run your credit before the rate lock, even if you've worked with that lender before. Your rate is predicated on the credit score, and scores fluctuate daily as you use credit cards. Credit reports also show current balances on housing and all other debt, and these balances can impact qualifying. Credit reports also show any derogatory items on your credit history, including recent creditor mistakes you may not know about---these are common, and you're guilty of creditor mistakes until you prove you're innocent. Most lenders can help here, but it takes time so running credit should be first in the process.
Tell Your Lender About Job, Income, Asset Changes: If you're working with a lender for the first time, of course you must provide a full financial profile along with paystubs, tax returns and bank statements to back it up. But if you're working with a lender you've already worked with, never assume the documentation process is any different. Tell them everything when you talk about rates. Have you changed jobs or titles? Did you not get your bonus this year? Or was it bigger? Did you spend all your savings on a vacation or new car? Or will you in the next 60 days? All banks approve loans based on your debt-to-income ratio, and these factors all go into the calculation. The debt comes from the credit report and tax returns, and the income comes from paystubs, tax returns and bank statements.
Provide All Documentation Immediately: Provide this documentation right away even if a busy loan agent doesn't ask for it right away. The only exception to this rule is if the loan agent explicitly tells you they're doing a special refinance that doesn't require documentation because of some certain bank or government program.
Your Property Must Qualify: It's not enough for your credit score and debt-to-income ratio to qualify you. The property must also qualify. First, there must be enough equity in your home. Due to appraisal rules that prevent loan agents from pre-screening home values with appraisers, you usually have to pay for an appraisal up front to find out if you have sufficient equity. Second, the lender may require any big deferred maintenance issues like rotting wood, chipping paint, water damage or signs of water damage to be fixed before the loan closes---this is another timing issue that affects rate locks, so tell your lender if you have maintenance issues. And if you're in a condo, the condo building must have at least 51% owner-occupancy, a healthy budget with no (or at least well-explained and documented) special assessments, no litigation, no single owner holding more than 10% of units, and no more than 20% commercial space (or 25% for FHA).
Don't Forget Your Second Mortgage!: If you have a second mortgage, the second mortgage holder must agree to 'subordinate' behind a new first mortgage before the new mortgage can close. Whether or not the second mortgage is with the lender handling the refi, this subordination review and approval adds time to the process, sometimes weeks. As such, see 'Is Your Rate Locked For Long Enough' below. And zero-balance Home Equity Lines of Credit (HELOCs) follow these same rules. Even if there's a zero balance, the HELOC holder must approve the subordination.
Incorrect Loan Balances Blow Rate Locks: Setting your refi loan amount is related to credit reports and the 'Cost Or No-Cost Refinance' section below. Your credit report will show your existing loan balance, and if you choose a refi with closing costs, you need to choose whether you're paying cash or adding costs to the new loan. If loan agents are locking rates too quickly, here are a couple ways it can blow up the process: (1) they forget to account for existing loan payments you just made or will make during the refi process, then they find out when you're signing final papers and you have to restart---which can blow your rate lock, or (2) they assume your property will appraise for a certain amount and if your value comes in low, they have to redo the loan amount---which can cause you to have a higher rate or fees, or you might have to pay your loan down in order to qualify.
Cost or No-Cost Refinance?: If you think rates will drop more, it's best to do a no-cost refinance so that you can refinance again later without having fees wash out the lower-rate benefit. If you think rates are as low as they can go, it's best to do a refinance with normal fees ($2500-4500 depending on your market) and perhaps 'buy your rate down' by paying tax deductible points (a 'point' is 1% of your loan amount). On a no-cost transaction, lenders offset your closing costs by offering a slightly higher rate, usually .125% to .25% higher.
What Is The Rate Outlook?: The U.S. and global economies are in uncharted territory given mass post-crisis government stimulus spending, so even the best market oracles don't know how rates will play. But here's what we do know: rates drop when mortgage backed securities (MBS) rise, and MBS are at all-time highs because they're one of the best safe havens for global investors rattled by market uncertainty. This is why rates are at record lows. MBS are priced for a very weak economic outlook. Any signs of improvement will cause MBS to sell and rates to rise.
Getting Rate Quotes: Even the best rate websites like aren't a substitute for a rate quote. As noted in the 'Cost or No-Cost' section, there's a direct relationship between rates and fees, so a rate quote will depend on your objectives and it can only be provided to you by a lender. Always insist on a full written term sheet displaying the rate, term (e.g., 30yr fixed), every single line item closing cost, total monthly costs including insurance and taxes, and total cash-to-close or cash-in-hand at closing. Lenders are required by Federal law to give you a three-page Good Faith Estimate but this form is a joke because it doesn't show you all of your line items, nor your total monthly cost, nor your cash-to-close. So make sure your lender shows this to you in some written format before you lock a rate.
Is Your Rate Locked For Long Enough?: Banks are busy during these rate dips and quoted rates can only be locked for a certain number of days. Ask your loan agent when they expect to close your loan, and if their quoted rate lock is enough time to get the deal done. Also refer back to the 'Provide All Documentation Immediately' section above, so you can hold the loan agent's feet to the fire if the delays are on their end and not yours.
Your Rate vs. Headline Rates: Every Thursday Freddie Mac publishes a rate survey from the previous week. This is source material for virtually all media. In addition to the fact that those rates are expired by the time you're reading about them, there's lots of fine print the headlines don't catch including: those rates are only for loans to $417k, single family homes only, owner-occupied only, and most of those loans have .7% to .8% in points (aka extra fees). Rates on this website are more timely, but again, a rate quote is based on your profile and your property profile so it must come from a lender to be specific.
What If Rates Drop More During Loan Process?: When you lock a rate, you're setting that rate then the market will go up or down. It's very much like buying a stock. The main difference is that lenders have what they call 'renegotiation' policies if rates drop after you've locked. All renegotiation policies are similar in that rates have to drop significantly for you to be able to capture some of that drop after you've already locked a rate. Bottom line: renegotiations don't let you capture the entire gain because you've already made a commitment. So as an example, if you locked a rate at 4.75% and the quoted rate for that same unlocked loan a week later dropped to 4.5%, most lender renegotiation policies will give you half of the gain which would put you at 4.625%.
What’s The Bottom Line?: The bottom line to all of this: find an honest lender you can trust and rely on and let him/her do their job. An honest lender (and most are) will take good care of you and get you the right loan at the right price.
More good loan stuff: http://www.mijoymortgage.com/.
Rates are bouncing around near record lows set last October and consumers are looking to seize the opportunity. There's always a rush by consumers and loan agents to lock rates on dips, and that practice is all the more prevalent when extreme daily rate swings raise the sense of urgency. But before you take the ready-fire-aim approach, remember the old saying: haste makes waste. Just because a rate is locked doesn't mean the loan will close. Here's how you can make sure that it does:
Let Your Lender Run Your Credit Score: Credit bureau scoring models know people shop for mortgages, so more than one mortgage-related credit run in a 30 day window won't reduce your score. Many critical loan approval factors are built into a credit report, so a lender should run your credit before the rate lock, even if you've worked with that lender before. Your rate is predicated on the credit score, and scores fluctuate daily as you use credit cards. Credit reports also show current balances on housing and all other debt, and these balances can impact qualifying. Credit reports also show any derogatory items on your credit history, including recent creditor mistakes you may not know about---these are common, and you're guilty of creditor mistakes until you prove you're innocent. Most lenders can help here, but it takes time so running credit should be first in the process.
Tell Your Lender About Job, Income, Asset Changes: If you're working with a lender for the first time, of course you must provide a full financial profile along with paystubs, tax returns and bank statements to back it up. But if you're working with a lender you've already worked with, never assume the documentation process is any different. Tell them everything when you talk about rates. Have you changed jobs or titles? Did you not get your bonus this year? Or was it bigger? Did you spend all your savings on a vacation or new car? Or will you in the next 60 days? All banks approve loans based on your debt-to-income ratio, and these factors all go into the calculation. The debt comes from the credit report and tax returns, and the income comes from paystubs, tax returns and bank statements.
Provide All Documentation Immediately: Provide this documentation right away even if a busy loan agent doesn't ask for it right away. The only exception to this rule is if the loan agent explicitly tells you they're doing a special refinance that doesn't require documentation because of some certain bank or government program.
Your Property Must Qualify: It's not enough for your credit score and debt-to-income ratio to qualify you. The property must also qualify. First, there must be enough equity in your home. Due to appraisal rules that prevent loan agents from pre-screening home values with appraisers, you usually have to pay for an appraisal up front to find out if you have sufficient equity. Second, the lender may require any big deferred maintenance issues like rotting wood, chipping paint, water damage or signs of water damage to be fixed before the loan closes---this is another timing issue that affects rate locks, so tell your lender if you have maintenance issues. And if you're in a condo, the condo building must have at least 51% owner-occupancy, a healthy budget with no (or at least well-explained and documented) special assessments, no litigation, no single owner holding more than 10% of units, and no more than 20% commercial space (or 25% for FHA).
Don't Forget Your Second Mortgage!: If you have a second mortgage, the second mortgage holder must agree to 'subordinate' behind a new first mortgage before the new mortgage can close. Whether or not the second mortgage is with the lender handling the refi, this subordination review and approval adds time to the process, sometimes weeks. As such, see 'Is Your Rate Locked For Long Enough' below. And zero-balance Home Equity Lines of Credit (HELOCs) follow these same rules. Even if there's a zero balance, the HELOC holder must approve the subordination.
Incorrect Loan Balances Blow Rate Locks: Setting your refi loan amount is related to credit reports and the 'Cost Or No-Cost Refinance' section below. Your credit report will show your existing loan balance, and if you choose a refi with closing costs, you need to choose whether you're paying cash or adding costs to the new loan. If loan agents are locking rates too quickly, here are a couple ways it can blow up the process: (1) they forget to account for existing loan payments you just made or will make during the refi process, then they find out when you're signing final papers and you have to restart---which can blow your rate lock, or (2) they assume your property will appraise for a certain amount and if your value comes in low, they have to redo the loan amount---which can cause you to have a higher rate or fees, or you might have to pay your loan down in order to qualify.
Cost or No-Cost Refinance?: If you think rates will drop more, it's best to do a no-cost refinance so that you can refinance again later without having fees wash out the lower-rate benefit. If you think rates are as low as they can go, it's best to do a refinance with normal fees ($2500-4500 depending on your market) and perhaps 'buy your rate down' by paying tax deductible points (a 'point' is 1% of your loan amount). On a no-cost transaction, lenders offset your closing costs by offering a slightly higher rate, usually .125% to .25% higher.
What Is The Rate Outlook?: The U.S. and global economies are in uncharted territory given mass post-crisis government stimulus spending, so even the best market oracles don't know how rates will play. But here's what we do know: rates drop when mortgage backed securities (MBS) rise, and MBS are at all-time highs because they're one of the best safe havens for global investors rattled by market uncertainty. This is why rates are at record lows. MBS are priced for a very weak economic outlook. Any signs of improvement will cause MBS to sell and rates to rise.
Getting Rate Quotes: Even the best rate websites like aren't a substitute for a rate quote. As noted in the 'Cost or No-Cost' section, there's a direct relationship between rates and fees, so a rate quote will depend on your objectives and it can only be provided to you by a lender. Always insist on a full written term sheet displaying the rate, term (e.g., 30yr fixed), every single line item closing cost, total monthly costs including insurance and taxes, and total cash-to-close or cash-in-hand at closing. Lenders are required by Federal law to give you a three-page Good Faith Estimate but this form is a joke because it doesn't show you all of your line items, nor your total monthly cost, nor your cash-to-close. So make sure your lender shows this to you in some written format before you lock a rate.
Is Your Rate Locked For Long Enough?: Banks are busy during these rate dips and quoted rates can only be locked for a certain number of days. Ask your loan agent when they expect to close your loan, and if their quoted rate lock is enough time to get the deal done. Also refer back to the 'Provide All Documentation Immediately' section above, so you can hold the loan agent's feet to the fire if the delays are on their end and not yours.
Your Rate vs. Headline Rates: Every Thursday Freddie Mac publishes a rate survey from the previous week. This is source material for virtually all media. In addition to the fact that those rates are expired by the time you're reading about them, there's lots of fine print the headlines don't catch including: those rates are only for loans to $417k, single family homes only, owner-occupied only, and most of those loans have .7% to .8% in points (aka extra fees). Rates on this website are more timely, but again, a rate quote is based on your profile and your property profile so it must come from a lender to be specific.
What If Rates Drop More During Loan Process?: When you lock a rate, you're setting that rate then the market will go up or down. It's very much like buying a stock. The main difference is that lenders have what they call 'renegotiation' policies if rates drop after you've locked. All renegotiation policies are similar in that rates have to drop significantly for you to be able to capture some of that drop after you've already locked a rate. Bottom line: renegotiations don't let you capture the entire gain because you've already made a commitment. So as an example, if you locked a rate at 4.75% and the quoted rate for that same unlocked loan a week later dropped to 4.5%, most lender renegotiation policies will give you half of the gain which would put you at 4.625%.
What’s The Bottom Line?: The bottom line to all of this: find an honest lender you can trust and rely on and let him/her do their job. An honest lender (and most are) will take good care of you and get you the right loan at the right price.
More good loan stuff: http://www.mijoymortgage.com/.
Tuesday, August 9, 2011
Brother, can you spare $980 Billion?
Cash held by US banks surged 8.4% to a record $981B during the week ending July 27, according to Fed data. That's more than 3x the amount held in July of 2008. What does that tell you about where banks, and individuals, are putting their money?
There's plenty of money out there...now if we could just get the underwriting guidelines back to some semblance of reality we just might see some of it result in an actual home loan....
There's plenty of money out there...now if we could just get the underwriting guidelines back to some semblance of reality we just might see some of it result in an actual home loan....
Rent 'Em Out! How Long Must I Wait?
Hoaw about we rent 'em out?
Source: Reuters. As a glut of foreclosures on the market weighs down home values across the country, a bipartisan bill introduced in the House proposes a solution to reducing the high inventories: Rent the properties out. The proposed bill, Neighborhood Preservation Act of 2011, calls on banks and the government-sponsored enterprises--Fannie Mae and Freddie Mac--to start renting out some of their foreclosed properties to reduce REO sales and “stabilize home values and restore confidence in the housing markets.” The bill would authorize federally-chartered institutions to enter into a long-term lease -- for up to five years -- with the occupant of the property or with another person, and then at the end of the agreement provide an option to buy the home to the tenant. According to the bill, this would allow the foreclosed property to remain occupied during the still-sluggish housing market and “preserve the property itself as well as the aesthetic and economic values of neighboring homes and even whole neighborhoods.” Not sure if the real estate community will buy into this but if the long-view is considered, anything that helps stablize values may not be a bad idea.
See the Press Release: http://miller.house.gov/UploadedFiles/07-28-11_Press_Release_-_Rep._Miller_Statement_on_Neighborhood_Preservation_Act_of_2011.pdf
After a negatvie credit event, how long will it take before one can get a new home loan?
A sluggish housing market has caused millions of home owners to lose their home to foreclosure, short sale, or deed in lieu of foreclosure. But once these former home owners get a better handle on their credit, how long do they have to sit on the sidelines until they can secure future financing to buy a home again? As an article in The New York Times notes “there are plenty of asterisks and conditions” when it comes to how long a borrower must wait after a “significant derogatory event,” like a foreclosure or short sale. In general, however, The New York Times notes that the longest wait to buy again will come if there is a foreclosure in the former home owner’s past. Fannie Mae and Freddie Mac have a three-year waiting period following a foreclosure, and a two-year wait following a short sale, deed in lieu, or discharge or dismissal of bankruptcy. However, if borrowers can justify that the circumstance for the foreclosure or bankruptcy occurred because of an illness or job loss — or other “extenuating circumstance” — that may help reduce their wait. But with no such extenuating circumstances, these former home owners may have to wait longer, even up to seven years following a foreclosure or four years after bankruptcy, the article notes. For loans insured by the Federal Housing Administration, borrowers with perfect credit afterwards also will, in general, have to wait three years after a foreclosure and two years after a bankruptcy is discharged, The New York Times notes. Following a short sale, borrowers will have to wait three years to secure another FHA loan — however, there are plenty of exceptions. Borrowers will have to wait three years if they were in default at the time of the short sale and had no extenuating circumstances. However, if the borrowers were on time with all their payments a year prior to the short sale, they may have no wait at all and might even qualify for an FHA loan immediately."
Want to know where you/clients fit in all of this? Contact me; I'll help.
Need loan tools? It's all here: www.MiJoyMortgage.com. Until next time...
Source: Reuters. As a glut of foreclosures on the market weighs down home values across the country, a bipartisan bill introduced in the House proposes a solution to reducing the high inventories: Rent the properties out. The proposed bill, Neighborhood Preservation Act of 2011, calls on banks and the government-sponsored enterprises--Fannie Mae and Freddie Mac--to start renting out some of their foreclosed properties to reduce REO sales and “stabilize home values and restore confidence in the housing markets.” The bill would authorize federally-chartered institutions to enter into a long-term lease -- for up to five years -- with the occupant of the property or with another person, and then at the end of the agreement provide an option to buy the home to the tenant. According to the bill, this would allow the foreclosed property to remain occupied during the still-sluggish housing market and “preserve the property itself as well as the aesthetic and economic values of neighboring homes and even whole neighborhoods.” Not sure if the real estate community will buy into this but if the long-view is considered, anything that helps stablize values may not be a bad idea.
See the Press Release: http://miller.house.gov/UploadedFiles/07-28-11_Press_Release_-_Rep._Miller_Statement_on_Neighborhood_Preservation_Act_of_2011.pdf
After a negatvie credit event, how long will it take before one can get a new home loan?
A sluggish housing market has caused millions of home owners to lose their home to foreclosure, short sale, or deed in lieu of foreclosure. But once these former home owners get a better handle on their credit, how long do they have to sit on the sidelines until they can secure future financing to buy a home again? As an article in The New York Times notes “there are plenty of asterisks and conditions” when it comes to how long a borrower must wait after a “significant derogatory event,” like a foreclosure or short sale. In general, however, The New York Times notes that the longest wait to buy again will come if there is a foreclosure in the former home owner’s past. Fannie Mae and Freddie Mac have a three-year waiting period following a foreclosure, and a two-year wait following a short sale, deed in lieu, or discharge or dismissal of bankruptcy. However, if borrowers can justify that the circumstance for the foreclosure or bankruptcy occurred because of an illness or job loss — or other “extenuating circumstance” — that may help reduce their wait. But with no such extenuating circumstances, these former home owners may have to wait longer, even up to seven years following a foreclosure or four years after bankruptcy, the article notes. For loans insured by the Federal Housing Administration, borrowers with perfect credit afterwards also will, in general, have to wait three years after a foreclosure and two years after a bankruptcy is discharged, The New York Times notes. Following a short sale, borrowers will have to wait three years to secure another FHA loan — however, there are plenty of exceptions. Borrowers will have to wait three years if they were in default at the time of the short sale and had no extenuating circumstances. However, if the borrowers were on time with all their payments a year prior to the short sale, they may have no wait at all and might even qualify for an FHA loan immediately."
Want to know where you/clients fit in all of this? Contact me; I'll help.
Need loan tools? It's all here: www.MiJoyMortgage.com. Until next time...
Tuesday, August 2, 2011
What's Up With US Debt?
From Sigma Research...
"There still is the media firing up the flame of a possible down grade of US debt by S&P. We have no idea about what the rating agency will do but in the end it won't matter much. As we noted yesterday, a down grade of US debt essentially down grades all other sovereign debt whether or not S&P agrees. The US US US
I have mentioned before that it's going to come down to us voters to get US debt under control and you can best express this at the ballot box and in your communication with our elected officials.
So far, mortgage interest rates have not been directly impacted by the US debt/budget issues. Rates continue to remain low based on overall economic news....as usual. It is not likely we will see significant rate movement until or unless the economy reacts or world events cause movement.
For certain we are still in a positive environment for home buyers...low values and low rates won't last forever so once again, if you're inclined, get out there and get pre-approved (contact me!) and get in the game!
Until next time....
Friday, July 22, 2011
Government Efficiency?
OK, let's all say it together...oxymoron...I do have hope that the US budget eventually gets balanced and we don't leave ourselves in a continual black hole of debt that gets passed on to future generations. I do think it's we voters that must insist on a balanced budget though as I 'm not at all convinced that the White House or Congress has the motivation or inclination to do the right thing. Oh yeah, about that government efficiency thing (not that I am overly pessimistic, but...):
All you Need to Know about Government Bureaucracy & Complexity:
Pythagorean Theorem: 24 words.
Lord's Prayer: 66 words.
Archimedes' Principle: 67 words.
10 Commandments: 179 words.
Gettysburg address: 286 words.
Declaration of Independence: 1,300 words.
US Constitution with all 27 Amendments: 7,818 words.
US Government regulations on sale of cabbage: 26,911 words.
Yikes....until next time....
All you Need to Know about Government Bureaucracy & Complexity:
Pythagorean Theorem: 24 words.
Lord's Prayer: 66 words.
Archimedes' Principle: 67 words.
10 Commandments: 179 words.
Gettysburg address: 286 words.
Declaration of Independence: 1,300 words.
US Constitution with all 27 Amendments: 7,818 words.
US Government regulations on sale of cabbage: 26,911 words.
Yikes....until next time....
Wednesday, July 13, 2011
Oregon Real Estate lands 3 cities in the top 15 for next 5 years growth...
As reported by Business Insider, the Fiserv Case Schiller Index indicates that Oregon will have 3 cities in the top 15 real estate markets in the next 5 years, Bend coming in at #2.
See the entire article: The Best Housing Markets For The Next 5 Years.
If you check out my 4-21-11 post you will see I've been bullish on the real estate markets. I will say it again...housing values combined with low rates has created as close to the perfect storm as we will all likely see in our lifetimes.
In many areas of the country (not all to be sure) the time to buy is NOW. Contact me with any questions/comments/rants/raves...your feedback is welcome.
At the least, I can give you the straight scoop on if you can buy and what you can buy based on the payment you want. Check my website for all the cool tools you need to know: www.mijoymortgage.com.
Until next time...
Friday, June 17, 2011
Some Father's Day History...
Father's Day, in the United States, is a holiday (third Sunday in June) to honour fathers. Credit for originating the holiday is generally given to Sonora Smart Dodd of Spokane, Washington, whose father, a Civil War veteran, raised her and her five siblings after their mother died in childbirth. She is said to have had the idea in 1909 while listening to a sermon on Mother's Day, which at the time was becoming established as a holiday. Local religious leaders supported the idea, and the first Father's Day was celebrated on June 19, 1910, the month of the birthday of Dodd's father. In 1924 President Calvin Coolidge gave his support to the observance, and in 1966 President Lyndon B. Johnson officially proclaimed it a national holiday. Observance on the third Sunday of June was decreed by law in 1972. Although it was originally largely a religious holiday, Father's Day has been commercialized with the sending of greeting cards and the giving of gifts. Some observe the custom of wearing a red rose to indicate that one's father is living or a white rose to indicate that he is deceased. Other males—for example, grandfathers or uncles who have assumed parenting roles—are often also honoured on the day. Some Roman Catholics have continued to observe the feast day of Saint Joseph, on March 19, as a tribute to fathers.
Copyright © 1994-2009 Encyclopædia Britannica, Inc. For more information visit Britannica.com.
Happy Father's Day Dad's!
Copyright © 1994-2009 Encyclopædia Britannica, Inc. For more information visit Britannica.com.
Happy Father's Day Dad's!
Friday, May 27, 2011
Memorial Day...Why?
I can think of no better source of information for Memorial Day than this from the Department of Veterans Affairs:
Memorial Day History
Three years after the Civil War ended, on May 5, 1868, the head of an organization of Union veterans — the Grand Army of the Republic (GAR) — established Decoration Day as a time for the nation to decorate the graves of the war dead with flowers. Maj. Gen. John A. Logan declared that Decoration Day should be observed on May 30. It is believed that date was chosen because flowers would be in bloom all over the country.
The first large observance was held that year at Arlington National Cemetery, across the Potomac River from Washington, D.C.
The ceremonies centered around the mourning-draped veranda of the Arlington mansion, once the home of Gen. Robert E. Lee. Various Washington officials, including Gen. and Mrs. Ulysses S. Grant, presided over the ceremonies. After speeches, children from the Soldiers’ and Sailors’ Orphan Home and members of the GAR made their way through the cemetery, strewing flowers on both Union and Confederate graves, reciting prayers and singing hymns.
Local Observances Claim To Be First Local springtime tributes to the Civil War dead already had been held in various places. One of the first occurred in Columbus, Miss., April 25, 1866, when a group of women visited a cemetery to decorate the graves of Confederate soldiers who had fallen in battle at Shiloh. Nearby were the graves of Union soldiers, neglected because they were the enemy. Disturbed at the sight of the bare graves, the women placed some of their flowers on those graves, as well.
Today, cities in the North and the South claim to be the birthplace of Memorial Day in 1866. Both Macon and Columbus, Ga., claim the title, as well as Richmond, Va. The village of Boalsburg, Pa., claims it began there two years earlier. A stone in a Carbondale, Ill., cemetery carries the statement that the first Decoration Day ceremony took place there on April 29, 1866. Carbondale was the wartime home of Gen. Logan. Approximately 25 places have been named in connection with the origin of Memorial Day, many of them in the South where most of the war dead were buried.
Official Birthplace Declared In 1966, Congress and President Lyndon Johnson declared Waterloo, N.Y., the “birthplace” of Memorial Day. There, a ceremony on May 5, 1866, honored local veterans who had fought in the Civil War. Businesses closed and residents flew flags at half-staff. Supporters of Waterloo’s claim say earlier observances in other places were either informal, not community-wide or one-time events.
By the end of the 19th century, Memorial Day ceremonies were being held on May 30 throughout the nation. State legislatures passed proclamations designating the day, and the Army and Navy adopted regulations for proper observance at their facilities.
It was not until after World War I, however, that the day was expanded to honor those who have died in all American wars. In 1971, Memorial Day was declared a national holiday by an act of Congress, though it is still often called Decoration Day. It was then also placed on the last Monday in May, as were some other federal holidays.
Some States Have Confederate Observances Many Southern states also have their own days for honoring the Confederate dead. Mississippi celebrates Confederate Memorial Day on the last Monday of April, Alabama on the fourth Monday of April, and Georgia on April 26. North and South Carolina observe it on May 10, Louisiana on June 3 and Tennessee calls that date Confederate Decoration Day. Texas celebrates Confederate Heroes Day January 19 and Virginia calls the last Monday in May Confederate Memorial Day.
Gen. Logan’s order for his posts to decorate graves in 1868 “with the choicest flowers of springtime” urged: “We should guard their graves with sacred vigilance. ... Let pleasant paths invite the coming and going of reverent visitors and fond mourners. Let no neglect, no ravages of time, testify to the present or to the coming generations that we have forgotten as a people the cost of a free and undivided republic.”
The crowd attending the first Memorial Day ceremony at Arlington National Cemetery was approximately the same size as those that attend today’s observance, about 5,000 people. Then, as now, small American flags were placed on each grave — a tradition followed at many national cemeteries today. In recent years, the custom has grown in many families to decorate the graves of all departed loved ones.
The origins of special services to honor those who die in war can be found in antiquity. The Athenian leader Pericles offered a tribute to the fallen heroes of the Peloponnesian War over 24 centuries ago that could be applied today to the 1.1 million Americans who have died in the nation’s wars: “Not only are they commemorated by columns and inscriptions, but there dwells also an unwritten memorial of them, graven not on stone but in the hearts of men.”
To ensure the sacrifices of America ’s fallen heroes are never forgotten, in December 2000, the U.S. Congress passed and the president signed into law “The National Moment of Remembrance Act,” P.L. 106-579, creating the White House Commission on the National Moment of Remembrance. The commission’s charter is to “encourage the people of the United States to give something back to their country, which provides them so much freedom and opportunity” by encouraging and coordinating commemorations in the United States of Memorial Day and the National Moment of Remembrance.
The National Moment of Remembrance encourages all Americans to pause wherever they are at 3 p.m. local time on Memorial Day for a minute of silence to remember and honor those who have died in service to the nation. As Moment of Remembrance founder Carmella LaSpada states: “It’s a way we can all help put the memorial back in Memorial Day.”
Flag Protocol:
On Memorial Day the flag is raised briskly to the top of the staff and then solemnly lowered to the half-staff position, where it remains only until noon. It is then raised to full-staff for the remainder of the day.
The half-staff position remembers the more than one million men and women who gave their lives in service of their country. At noon their memory is raised by the living, who resolve not to let their sacrifice be in vain, but to rise up in their stead and continue the fight for liberty and justice for all.
Happy Memorial Day!
Memorial Day History
Three years after the Civil War ended, on May 5, 1868, the head of an organization of Union veterans — the Grand Army of the Republic (GAR) — established Decoration Day as a time for the nation to decorate the graves of the war dead with flowers. Maj. Gen. John A. Logan declared that Decoration Day should be observed on May 30. It is believed that date was chosen because flowers would be in bloom all over the country.
The first large observance was held that year at Arlington National Cemetery, across the Potomac River from Washington, D.C.
The ceremonies centered around the mourning-draped veranda of the Arlington mansion, once the home of Gen. Robert E. Lee. Various Washington officials, including Gen. and Mrs. Ulysses S. Grant, presided over the ceremonies. After speeches, children from the Soldiers’ and Sailors’ Orphan Home and members of the GAR made their way through the cemetery, strewing flowers on both Union and Confederate graves, reciting prayers and singing hymns.
Local Observances Claim To Be First Local springtime tributes to the Civil War dead already had been held in various places. One of the first occurred in Columbus, Miss., April 25, 1866, when a group of women visited a cemetery to decorate the graves of Confederate soldiers who had fallen in battle at Shiloh. Nearby were the graves of Union soldiers, neglected because they were the enemy. Disturbed at the sight of the bare graves, the women placed some of their flowers on those graves, as well.
Today, cities in the North and the South claim to be the birthplace of Memorial Day in 1866. Both Macon and Columbus, Ga., claim the title, as well as Richmond, Va. The village of Boalsburg, Pa., claims it began there two years earlier. A stone in a Carbondale, Ill., cemetery carries the statement that the first Decoration Day ceremony took place there on April 29, 1866. Carbondale was the wartime home of Gen. Logan. Approximately 25 places have been named in connection with the origin of Memorial Day, many of them in the South where most of the war dead were buried.
Official Birthplace Declared In 1966, Congress and President Lyndon Johnson declared Waterloo, N.Y., the “birthplace” of Memorial Day. There, a ceremony on May 5, 1866, honored local veterans who had fought in the Civil War. Businesses closed and residents flew flags at half-staff. Supporters of Waterloo’s claim say earlier observances in other places were either informal, not community-wide or one-time events.
By the end of the 19th century, Memorial Day ceremonies were being held on May 30 throughout the nation. State legislatures passed proclamations designating the day, and the Army and Navy adopted regulations for proper observance at their facilities.
It was not until after World War I, however, that the day was expanded to honor those who have died in all American wars. In 1971, Memorial Day was declared a national holiday by an act of Congress, though it is still often called Decoration Day. It was then also placed on the last Monday in May, as were some other federal holidays.
Some States Have Confederate Observances Many Southern states also have their own days for honoring the Confederate dead. Mississippi celebrates Confederate Memorial Day on the last Monday of April, Alabama on the fourth Monday of April, and Georgia on April 26. North and South Carolina observe it on May 10, Louisiana on June 3 and Tennessee calls that date Confederate Decoration Day. Texas celebrates Confederate Heroes Day January 19 and Virginia calls the last Monday in May Confederate Memorial Day.
Gen. Logan’s order for his posts to decorate graves in 1868 “with the choicest flowers of springtime” urged: “We should guard their graves with sacred vigilance. ... Let pleasant paths invite the coming and going of reverent visitors and fond mourners. Let no neglect, no ravages of time, testify to the present or to the coming generations that we have forgotten as a people the cost of a free and undivided republic.”
The crowd attending the first Memorial Day ceremony at Arlington National Cemetery was approximately the same size as those that attend today’s observance, about 5,000 people. Then, as now, small American flags were placed on each grave — a tradition followed at many national cemeteries today. In recent years, the custom has grown in many families to decorate the graves of all departed loved ones.
The origins of special services to honor those who die in war can be found in antiquity. The Athenian leader Pericles offered a tribute to the fallen heroes of the Peloponnesian War over 24 centuries ago that could be applied today to the 1.1 million Americans who have died in the nation’s wars: “Not only are they commemorated by columns and inscriptions, but there dwells also an unwritten memorial of them, graven not on stone but in the hearts of men.”
To ensure the sacrifices of America ’s fallen heroes are never forgotten, in December 2000, the U.S. Congress passed and the president signed into law “The National Moment of Remembrance Act,” P.L. 106-579, creating the White House Commission on the National Moment of Remembrance. The commission’s charter is to “encourage the people of the United States to give something back to their country, which provides them so much freedom and opportunity” by encouraging and coordinating commemorations in the United States of Memorial Day and the National Moment of Remembrance.
The National Moment of Remembrance encourages all Americans to pause wherever they are at 3 p.m. local time on Memorial Day for a minute of silence to remember and honor those who have died in service to the nation. As Moment of Remembrance founder Carmella LaSpada states: “It’s a way we can all help put the memorial back in Memorial Day.”
Flag Protocol:
On Memorial Day the flag is raised briskly to the top of the staff and then solemnly lowered to the half-staff position, where it remains only until noon. It is then raised to full-staff for the remainder of the day.
The half-staff position remembers the more than one million men and women who gave their lives in service of their country. At noon their memory is raised by the living, who resolve not to let their sacrifice be in vain, but to rise up in their stead and continue the fight for liberty and justice for all.
Happy Memorial Day!
Thursday, April 28, 2011
What Did Bernanke Say Yesterday? What Does It All Mean?
Fed Chief Ben Bernanke spoke yesterday about interest rates and the economy.
Markets continue to think about what Bernanke said yesterday at his press conference, Bernanke is to be lauded for his willingness to stand up with reporters and provide some additional clarity about what the Fed is thinking about raising rates. He said it would take at least two more FOMC meetings before the Fed considered any tightening.
There was a lot to consider from his comments but the most intriguing comment was " Its not clear we can (the Fed) get substantial improvements in payrolls without some additional inflation risks, and in my view we can't achieve a sustainable recovery without keeping inflation under control". What that means to markets remains to be answered; keep unemployment high and keep inflation under control, or do things that lower unemployment and send interest rates higher?
As Bernanke spoke yesterday gold and oil prices exploded and the dollar was racked with more selling against the euro. Investors and traders continue to run to safety, a little into US treasuries but a huge run to gold as the outlook remains muddled to say the least.
Employment isn't likely to improve much, US debt increasing is an increasing concern in global markets, inflation in the rest of the world is increasing while the US refuses to admit it, consumers are tightening discretionary spending as gas price, food prices, and price increases are beginning to be passed down to consumers and it isn't just food. The Fed still thinks commodity prices and energy price increases are "transitory" without definition as to what that means in terms of time.
Bernanke admitted emerging markets are continuing to expand, yet somehow he appears to believe that the demand from those emerging markets for food and energy will not push US inflation higher and commodity and energy prices will decline.
As always, it will unfold as it will....and we will all be affected in one way or another!
Markets continue to think about what Bernanke said yesterday at his press conference, Bernanke is to be lauded for his willingness to stand up with reporters and provide some additional clarity about what the Fed is thinking about raising rates. He said it would take at least two more FOMC meetings before the Fed considered any tightening.
There was a lot to consider from his comments but the most intriguing comment was " Its not clear we can (the Fed) get substantial improvements in payrolls without some additional inflation risks, and in my view we can't achieve a sustainable recovery without keeping inflation under control". What that means to markets remains to be answered; keep unemployment high and keep inflation under control, or do things that lower unemployment and send interest rates higher?
As Bernanke spoke yesterday gold and oil prices exploded and the dollar was racked with more selling against the euro. Investors and traders continue to run to safety, a little into US treasuries but a huge run to gold as the outlook remains muddled to say the least.
Employment isn't likely to improve much, US debt increasing is an increasing concern in global markets, inflation in the rest of the world is increasing while the US refuses to admit it, consumers are tightening discretionary spending as gas price, food prices, and price increases are beginning to be passed down to consumers and it isn't just food. The Fed still thinks commodity prices and energy price increases are "transitory" without definition as to what that means in terms of time.
Bernanke admitted emerging markets are continuing to expand, yet somehow he appears to believe that the demand from those emerging markets for food and energy will not push US inflation higher and commodity and energy prices will decline.
As always, it will unfold as it will....and we will all be affected in one way or another!
Thursday, April 21, 2011
Buyer Incentive/Market is right!
Greetings,
Limited time on this one folks (don't you love that old tried and true but now real tired phrase!). Nevertheless, FannieMae is calling the shots on this one so you gotta play be their rules....contact me right away to get qualified, or have an associate/friend/family member contact me. The fact is, it's a GREAT time to buy in most areas of the country right now as values are about as low as they are going to go, and interest rates will continue creeping up. Do NOT miss the boat on this unprecedented market we are now in.
How do I know values are at or near the bottom? The simple fact is that right now while I am writing this real estate investors are snatching up property and paying cash to do so. That activity is one of the first signs of a recovering real estate market.
We have also seen rental property vacancy rates come down, and monthly rent expense has gone up; another sign of recovery.
No, we are not out of the woods yet, but please do not be one of those who misses the boat and says, "Man, I should have jumped on that while the timing was right."
I am here to tell you that the time is right...right now! If you don't get moving someone else will. Don't believe that? Ask anyone trying to buy right now what happened when they submitted an offer on a bank-owned property. You will likely hear that after several offers, they still haven't had an offer accepted due to competing offers, many of them for cash.
You do have an opportunity to get in on this if you do something now. Please do not say you didn't know...after reading this, you now know!
Contact me today...I'll provide honest answers and take good care of your specific needs...I've been doing that for my clients for a long time!
Here's the scoop on the Fannie program:
Properties owned by FannieMae (taken back by Fannie in a foreclosure) are sold by Fannie through their HomePath program.
You will first need to be pre-approved by a lender (me; apply at www.mijoymortgage.com, or contact me by phone or e-mail), and a local Real Estate Broker/Agent must write a purchase offer for you. Sound confusing? Not to worry, I can walk you through this one step at a time.
Fannie Mae has recently announced a special incentive, effective with offers submitted on or after April 11th on HomePath properties. FannieMae is currently offering buyers up to 3.5% (of the purchase price) in closing cost assistance through June 30, 2011.
The HomePath property buyer must meet the following qualifications to be eligible: Buyers and/or selling agents must request the incentive upon submission of the initial offer in order to be eligible. The initial offer must be submitted on or after April 11, 2011 and close by June 30, 2011. If an initial offer was made prior to the effective date, the offer is not eligible for the incentive. The sale must close on or before June 30, 2011. No exceptions will be made to this deadline.
Only buyers purchasing a HomePath property as their primary residence may receive up to 3.5% in closing cost assistance. Second homes and investment properties are excluded from the incentive. The buyer must sign the Owner Occupant Certification Rider to the Real Estate Purchase Addendum. If a buyer's total closing costs are under 3.5%, the difference will not be available as a credit to the buyer.
Until next time....
Limited time on this one folks (don't you love that old tried and true but now real tired phrase!). Nevertheless, FannieMae is calling the shots on this one so you gotta play be their rules....contact me right away to get qualified, or have an associate/friend/family member contact me. The fact is, it's a GREAT time to buy in most areas of the country right now as values are about as low as they are going to go, and interest rates will continue creeping up. Do NOT miss the boat on this unprecedented market we are now in.
How do I know values are at or near the bottom? The simple fact is that right now while I am writing this real estate investors are snatching up property and paying cash to do so. That activity is one of the first signs of a recovering real estate market.
We have also seen rental property vacancy rates come down, and monthly rent expense has gone up; another sign of recovery.
No, we are not out of the woods yet, but please do not be one of those who misses the boat and says, "Man, I should have jumped on that while the timing was right."
I am here to tell you that the time is right...right now! If you don't get moving someone else will. Don't believe that? Ask anyone trying to buy right now what happened when they submitted an offer on a bank-owned property. You will likely hear that after several offers, they still haven't had an offer accepted due to competing offers, many of them for cash.
You do have an opportunity to get in on this if you do something now. Please do not say you didn't know...after reading this, you now know!
Contact me today...I'll provide honest answers and take good care of your specific needs...I've been doing that for my clients for a long time!
Here's the scoop on the Fannie program:
Properties owned by FannieMae (taken back by Fannie in a foreclosure) are sold by Fannie through their HomePath program.
You will first need to be pre-approved by a lender (me; apply at www.mijoymortgage.com, or contact me by phone or e-mail), and a local Real Estate Broker/Agent must write a purchase offer for you. Sound confusing? Not to worry, I can walk you through this one step at a time.
Fannie Mae has recently announced a special incentive, effective with offers submitted on or after April 11th on HomePath properties. FannieMae is currently offering buyers up to 3.5% (of the purchase price) in closing cost assistance through June 30, 2011.
The HomePath property buyer must meet the following qualifications to be eligible: Buyers and/or selling agents must request the incentive upon submission of the initial offer in order to be eligible. The initial offer must be submitted on or after April 11, 2011 and close by June 30, 2011. If an initial offer was made prior to the effective date, the offer is not eligible for the incentive. The sale must close on or before June 30, 2011. No exceptions will be made to this deadline.
Only buyers purchasing a HomePath property as their primary residence may receive up to 3.5% in closing cost assistance. Second homes and investment properties are excluded from the incentive. The buyer must sign the Owner Occupant Certification Rider to the Real Estate Purchase Addendum. If a buyer's total closing costs are under 3.5%, the difference will not be available as a credit to the buyer.
Until next time....
Thursday, April 14, 2011
A Slap on the Wrist?
Here's news from Mortgage Daily about the Fed and the big lenders...I guess I'm pretty curious what the pending penalties will be. For sure housing inventories have been impacted as many banks have stopped the foreclosure process pending the outcome of the Fed actions. Time will tell...here's the report:
Mortgage News Daily - MND NewsWire
http://www.mortgagenewsdaily.com
Loan Servicer Sanctions Levied. Penalties Pending
BY JANN SWANSON
Posted 4/13/2011 2:02 PM
The Federal Reserve, Office of Comptroller of the Currency (OCC), FDIC, and Office of Thrift Supervision (OTC) have issued formal enforcement actions
against 14 banking and two loan servicing related organizations which they found had demonstrated a "pattern of misconduct and negligence related to
deficient practices in residential mortgage loan servicing and foreclosure processing." The Fed said that these deficiencies represent significant and
pervasive compliance failures and unsafe and unsound practices.
The banking organizations cited are: Bank of America Corporation; Citigroup Inc.; Ally Financial Inc.; HSBC North America Holdings, Inc.; JPMorgan Chase
& Co.; MetLife, Inc.; The PNC Financial Services Group, Inc.; SunTrust Banks, Inc.; U.S. Bancorp; and Wells Fargo & Company, Aurora Bank, EverBank,
OneWest Bank and Sovereign Bank. All 14 were named by FDIC, eight by OCC, ten by the Federal Reserve and four by OTC.
Three of the organizations, SunTrust, HSBC and Ally Financial, were singled out by the Federal Reserve and ordered to promptly correct many deficiencies
in loan servicing and foreclosures that were identified by examiners over the last few months.
Action is also being taken against Lender Processing Services (LPS) and Mortgage Electronic Registration Systems addressing what the Fed called
significant compliance failures and unsafe and unsound practices at the companies and their subsidiaries. LPS will be required to address deficient
practices related primarily to the document execution services it provides to servicers through two subsidiaries, DocX and LPS Default Solutions. MERS is
required to address significant weaknesses in oversight, management supervision, and corporate governance.
The action followed an interagency review of the banks by their respective regulators and FDIC which issued the following statement.
"The findings of the interagency review clearly show that the largest mortgage servicers had significant deficiencies in numerous aspects of their foreclosure
processing. These deficiencies included the filing of inaccurate affidavits and other documentation in foreclosure proceedings (so-called "robo-signing"),
inadequate oversight of attorneys and other third parties involved in the foreclosure process, inadequate staffing and training of employees, and the failure
to effectively coordinate the loan modification and foreclosure process to ensure effective communications to borrowers seeking to avoid foreclosures. The
interagency review was limited to the management of foreclosure practices and procedures, and was not, by its nature, a full scope review of the loan
modification or other loss-mitigation efforts of these servicers. A thorough regulatory review of loss mitigation efforts is needed to ensure processes are
sufficiently robust to prevent wrongful foreclosure actions and to ensure servicers have identified the extent to which individual homeowners have been
harmed."
The banking organizations have been order to provide corrective actions in servicing and foreclosure processes. Among other things, each must submit
plans acceptable to the Federal Reserve that:
Provide borrowers a specific person to be their primary point of contact;
Ensure that the foreclosure process ends once a modification has been approved and the borrower is performing under that modification.
Establish oversight over third-party vendors of mortgage loan servicing, loss mitigation, or foreclosure-related support, including local counsel in
foreclosure or bankruptcy proceedings;
Provide remediation to borrowers who suffered financial injury as a result of wrongful foreclosures or other deficiencies identified in a review of the
foreclosure process; and
Strengthen programs to ensure compliance with state and federal laws regarding servicing, generally, and foreclosures, in particular.
In addition to ordering corrective action the Fed said it expects to levy financial penalties on the organizations. There are other actions under consideration
by federal and state regulatory and law enforcement organizations and the Fed said its actions are complementary to and do not preclude any actions that
may be taken by others. No penalties have been announced yet.
A few of the banks have already responded to the Federal Reserve action. Ally Financial confirmed it had entered into a consent order with both the
Federal Reserve and the FDIC as a result of the ongoing investigation into it loan processing procedures. MetLife also confirmed its consent order and said
it has committed to further enhance its oversight of risk management, audit and compliance programs.
Mortgage News Daily - MND NewsWire
http://www.mortgagenewsdaily.com
Loan Servicer Sanctions Levied. Penalties Pending
BY JANN SWANSON
Posted 4/13/2011 2:02 PM
The Federal Reserve, Office of Comptroller of the Currency (OCC), FDIC, and Office of Thrift Supervision (OTC) have issued formal enforcement actions
against 14 banking and two loan servicing related organizations which they found had demonstrated a "pattern of misconduct and negligence related to
deficient practices in residential mortgage loan servicing and foreclosure processing." The Fed said that these deficiencies represent significant and
pervasive compliance failures and unsafe and unsound practices.
The banking organizations cited are: Bank of America Corporation; Citigroup Inc.; Ally Financial Inc.; HSBC North America Holdings, Inc.; JPMorgan Chase
& Co.; MetLife, Inc.; The PNC Financial Services Group, Inc.; SunTrust Banks, Inc.; U.S. Bancorp; and Wells Fargo & Company, Aurora Bank, EverBank,
OneWest Bank and Sovereign Bank. All 14 were named by FDIC, eight by OCC, ten by the Federal Reserve and four by OTC.
Three of the organizations, SunTrust, HSBC and Ally Financial, were singled out by the Federal Reserve and ordered to promptly correct many deficiencies
in loan servicing and foreclosures that were identified by examiners over the last few months.
Action is also being taken against Lender Processing Services (LPS) and Mortgage Electronic Registration Systems addressing what the Fed called
significant compliance failures and unsafe and unsound practices at the companies and their subsidiaries. LPS will be required to address deficient
practices related primarily to the document execution services it provides to servicers through two subsidiaries, DocX and LPS Default Solutions. MERS is
required to address significant weaknesses in oversight, management supervision, and corporate governance.
The action followed an interagency review of the banks by their respective regulators and FDIC which issued the following statement.
"The findings of the interagency review clearly show that the largest mortgage servicers had significant deficiencies in numerous aspects of their foreclosure
processing. These deficiencies included the filing of inaccurate affidavits and other documentation in foreclosure proceedings (so-called "robo-signing"),
inadequate oversight of attorneys and other third parties involved in the foreclosure process, inadequate staffing and training of employees, and the failure
to effectively coordinate the loan modification and foreclosure process to ensure effective communications to borrowers seeking to avoid foreclosures. The
interagency review was limited to the management of foreclosure practices and procedures, and was not, by its nature, a full scope review of the loan
modification or other loss-mitigation efforts of these servicers. A thorough regulatory review of loss mitigation efforts is needed to ensure processes are
sufficiently robust to prevent wrongful foreclosure actions and to ensure servicers have identified the extent to which individual homeowners have been
harmed."
The banking organizations have been order to provide corrective actions in servicing and foreclosure processes. Among other things, each must submit
plans acceptable to the Federal Reserve that:
Provide borrowers a specific person to be their primary point of contact;
Ensure that the foreclosure process ends once a modification has been approved and the borrower is performing under that modification.
Establish oversight over third-party vendors of mortgage loan servicing, loss mitigation, or foreclosure-related support, including local counsel in
foreclosure or bankruptcy proceedings;
Provide remediation to borrowers who suffered financial injury as a result of wrongful foreclosures or other deficiencies identified in a review of the
foreclosure process; and
Strengthen programs to ensure compliance with state and federal laws regarding servicing, generally, and foreclosures, in particular.
In addition to ordering corrective action the Fed said it expects to levy financial penalties on the organizations. There are other actions under consideration
by federal and state regulatory and law enforcement organizations and the Fed said its actions are complementary to and do not preclude any actions that
may be taken by others. No penalties have been announced yet.
A few of the banks have already responded to the Federal Reserve action. Ally Financial confirmed it had entered into a consent order with both the
Federal Reserve and the FDIC as a result of the ongoing investigation into it loan processing procedures. MetLife also confirmed its consent order and said
it has committed to further enhance its oversight of risk management, audit and compliance programs.
Wednesday, March 16, 2011
Japan/World Events/Loan Pricing after 4-1-11
Japan/World Events
Most of what is happening now in the world is supportive to US treasuries and therefore mortgage markets. Global events, such as the ongoing crisis in Japan, oil prices and unrest in the Middle East are all contributing factors to what now affects the US economy in a significant way. Generally, if the US Dow/Equities Markets suffer due to events, mortgage rates are lower.
From an economic perspective, world stock markets are hitting 2 1/2 month lows this week, and US Treasury/Mortgage yields have dropped due to the devastation.
Contrary to what some Wall Street analysts believe, one reader wrote, "What happened in Japan is a complete human and economic disaster, not an opportunity for economic growth. Rebuilding projects after a natural disaster are not stimulative whatsoever - the immediate economic effect of the quake/tsunami was that tons of capital and material wealth/assets were destroyed instantly (not to mention all the lives lost). Rebuilding the infrastructure returns that area to where they were before the quake/tsunami. That doesn't equal growth in an economic sense - you have to distinguish between the seen (so-called job creation of the quake/tsunami) and the unseen (economic growth potential of that same labor and capital had there been no quake/tsunami). If one quake/tsunami is 'supportive to economic growth', wouldn't that mean that 10 quake/tsunami's would be phenomenal for economic growth? That makes no sense whatsoever."
The Tokyo stock market improved in the last 2 days, up 6.5% after huge selling recently. However, the problems at the nuclear reactors in Japan are still a major concern. The number of deaths in the country are still undetermined, the impact on Japan's economy is still unquantified and its implications to other economies is presently unknown. Reports that many are leaving Tokyo continue to increase. It may be quite some time before Japan contributes in any positive way to the world economy. There are lots of discussions and opinions but nothing of substance that markets can get its arms around. It's likely going to be weeks and maybe months to assess the longer term consequences from the tragedy; in the meantime, US markets will continue to experience a high degree of volatility.
Whether or not there will be a serious meltdown is an obvious concern but markets are beginning to realize that Japan's economy will be impaired for years in the process of re-building. The impact of one of the largest economies in the world being dragged down is still not fully understood by markets or the Fed. That being said, the Japan crisis, combined with the Fed efforts, mean mortgage rates will likely stay in the current range as this plays out, subject to world reaction and other events that may occur.
April 1, 2011 changes
Over the past three months the mortgage industry has struggled greatly to interpret and implement loan originator compensation reform and new anti-steering regs.
The final rules are scheduled to go live on April 1 but the Federal Reserve still hasn't provided formal written guidance on the rule changes. This forced major mortgage banks and regional lenders to think up their own policies and procedures. Unfortunately there has been little to no uniformity in their individual translations. This lack of interpretative consistency has created confusion and further muddled the loan application process for consumers.
As a result, several lawsuits have been filed against the Fed to delay the rule change. Both the NAIHP (National Association of Independent Housing Professionals), and NAMB (National Association of Mortgage Brokers) filed suit to prevent the April 1st implementation of the LO compensation rule. The NAMB suit seeks temporary and preliminary restraints that would enjoin the implementation of a specific section of the Federal Reserve Board's Final Rule on loan originator compensation. Also, a letter co-authored by Senators David Vitter from Louisiana and Jon Tester from Montana (signed by 32 legislators) was recently sent to the Federal Reserve requesting a delay in the implementation of the Fed's loan originator compensation rules.
The likely outcome to consumers if the rule is implemented is two-fold, in my opinion. First, mortgage rates are likely going to go up, at least .250% across the board. Second, loan amounts below $100-$150K may be difficult to obtain as not enough income can be genrated by lenders to justify the expense of transacting the loan. We will have to see what market pricing is on/after 4-1-11 to be certain.
The rule as written provides that:
Compensation will be restricted under the TILA (Truth In Lending Act) Compensation Rule. In summary, the following rules apply under this new regulation effective April 1, 2011:
• Loan originator compensation cannot be based on the interest rate or loan terms and conditions.
• The loan originator can be compensated by the borrower or lender, but not both in a transaction.
• The loan originator cannot steer the borrower to a loan solely to increase originator compensation.
Personally, I support better control of the lending process and I am a proponent of rules, laws, and regulation the benefit the consumer. So far, I see little benefit for the consumer in what has become a more confusing process, and one that costs the consumer more money in increased fees, wait times, and what I believe will be higher rates; all resulting from the increased regulation in the appraisal process, new TIL/GFE process, compensation plans, and other changes we have seen occur.
Most of what is happening now in the world is supportive to US treasuries and therefore mortgage markets. Global events, such as the ongoing crisis in Japan, oil prices and unrest in the Middle East are all contributing factors to what now affects the US economy in a significant way. Generally, if the US Dow/Equities Markets suffer due to events, mortgage rates are lower.
From an economic perspective, world stock markets are hitting 2 1/2 month lows this week, and US Treasury/Mortgage yields have dropped due to the devastation.
Contrary to what some Wall Street analysts believe, one reader wrote, "What happened in Japan is a complete human and economic disaster, not an opportunity for economic growth. Rebuilding projects after a natural disaster are not stimulative whatsoever - the immediate economic effect of the quake/tsunami was that tons of capital and material wealth/assets were destroyed instantly (not to mention all the lives lost). Rebuilding the infrastructure returns that area to where they were before the quake/tsunami. That doesn't equal growth in an economic sense - you have to distinguish between the seen (so-called job creation of the quake/tsunami) and the unseen (economic growth potential of that same labor and capital had there been no quake/tsunami). If one quake/tsunami is 'supportive to economic growth', wouldn't that mean that 10 quake/tsunami's would be phenomenal for economic growth? That makes no sense whatsoever."
The Tokyo stock market improved in the last 2 days, up 6.5% after huge selling recently. However, the problems at the nuclear reactors in Japan are still a major concern. The number of deaths in the country are still undetermined, the impact on Japan's economy is still unquantified and its implications to other economies is presently unknown. Reports that many are leaving Tokyo continue to increase. It may be quite some time before Japan contributes in any positive way to the world economy. There are lots of discussions and opinions but nothing of substance that markets can get its arms around. It's likely going to be weeks and maybe months to assess the longer term consequences from the tragedy; in the meantime, US markets will continue to experience a high degree of volatility.
Whether or not there will be a serious meltdown is an obvious concern but markets are beginning to realize that Japan's economy will be impaired for years in the process of re-building. The impact of one of the largest economies in the world being dragged down is still not fully understood by markets or the Fed. That being said, the Japan crisis, combined with the Fed efforts, mean mortgage rates will likely stay in the current range as this plays out, subject to world reaction and other events that may occur.
April 1, 2011 changes
Over the past three months the mortgage industry has struggled greatly to interpret and implement loan originator compensation reform and new anti-steering regs.
The final rules are scheduled to go live on April 1 but the Federal Reserve still hasn't provided formal written guidance on the rule changes. This forced major mortgage banks and regional lenders to think up their own policies and procedures. Unfortunately there has been little to no uniformity in their individual translations. This lack of interpretative consistency has created confusion and further muddled the loan application process for consumers.
As a result, several lawsuits have been filed against the Fed to delay the rule change. Both the NAIHP (National Association of Independent Housing Professionals), and NAMB (National Association of Mortgage Brokers) filed suit to prevent the April 1st implementation of the LO compensation rule. The NAMB suit seeks temporary and preliminary restraints that would enjoin the implementation of a specific section of the Federal Reserve Board's Final Rule on loan originator compensation. Also, a letter co-authored by Senators David Vitter from Louisiana and Jon Tester from Montana (signed by 32 legislators) was recently sent to the Federal Reserve requesting a delay in the implementation of the Fed's loan originator compensation rules.
The likely outcome to consumers if the rule is implemented is two-fold, in my opinion. First, mortgage rates are likely going to go up, at least .250% across the board. Second, loan amounts below $100-$150K may be difficult to obtain as not enough income can be genrated by lenders to justify the expense of transacting the loan. We will have to see what market pricing is on/after 4-1-11 to be certain.
The rule as written provides that:
Compensation will be restricted under the TILA (Truth In Lending Act) Compensation Rule. In summary, the following rules apply under this new regulation effective April 1, 2011:
• Loan originator compensation cannot be based on the interest rate or loan terms and conditions.
• The loan originator can be compensated by the borrower or lender, but not both in a transaction.
• The loan originator cannot steer the borrower to a loan solely to increase originator compensation.
Personally, I support better control of the lending process and I am a proponent of rules, laws, and regulation the benefit the consumer. So far, I see little benefit for the consumer in what has become a more confusing process, and one that costs the consumer more money in increased fees, wait times, and what I believe will be higher rates; all resulting from the increased regulation in the appraisal process, new TIL/GFE process, compensation plans, and other changes we have seen occur.
Wednesday, February 23, 2011
Tax Credit Extended for Military Members
http://www.federalhousingtaxcredit.com/home.html
Special Rules for Members of the Military, the Foreign Service
and the Intelligence Community
Congress has acknowledged the unique circumstances affecting members of the military, the foreign service and the intelligence community by making the following exceptions that apply to both the $8,000 tax credit for first-time home buyers and the $6,500 tax credit for repeat home buyers.
Exemption From Tax Credit Recapture Rules
• Typically, homes that are sold or that cease to be used as a principal residence within three years of the initial purchase are subject to recapture of the tax credit.
• However, qualified service members who sell or move from a tax credit home within three years of the initial purchase due to official extended duty are exempt from the recapture rule.
Extension of Tax Credit Deadlines
• The home buyer tax credit is available for qualified purchases with a binding sales contract in place on or before April 30, 2010 and closed by September 30, 2010.
• However, for qualified service members who are ordered on a period of official extended duty, these dates are extended. For these home buyers, the tax credit applies to sales with a binding sales contract in place on or before April 30, 2011 and closed by June 30, 2011.
• A person who is forced to return to the U.S. for medical reasons before completing an assignment of at least 90 days of qualified official extended duty outside of the United States may qualify for the one-year extension.
Definitions
• “Qualified service member” means a member of the uniformed services of the U.S military, a member of the Foreign Service of the U.S., or an employee of the intelligence community.
• “Official extended duty” means any period of extended duty outside of the United States for at least 90 days during the period beginning after December 31, 2008 and ending before May 1, 2010.
Contact me today; we can get you started now!
http://www.mijoymortgage.com/
mitch.wilcox@bankoforegon.net
Special Rules for Members of the Military, the Foreign Service
and the Intelligence Community
Congress has acknowledged the unique circumstances affecting members of the military, the foreign service and the intelligence community by making the following exceptions that apply to both the $8,000 tax credit for first-time home buyers and the $6,500 tax credit for repeat home buyers.
Exemption From Tax Credit Recapture Rules
• Typically, homes that are sold or that cease to be used as a principal residence within three years of the initial purchase are subject to recapture of the tax credit.
• However, qualified service members who sell or move from a tax credit home within three years of the initial purchase due to official extended duty are exempt from the recapture rule.
Extension of Tax Credit Deadlines
• The home buyer tax credit is available for qualified purchases with a binding sales contract in place on or before April 30, 2010 and closed by September 30, 2010.
• However, for qualified service members who are ordered on a period of official extended duty, these dates are extended. For these home buyers, the tax credit applies to sales with a binding sales contract in place on or before April 30, 2011 and closed by June 30, 2011.
• A person who is forced to return to the U.S. for medical reasons before completing an assignment of at least 90 days of qualified official extended duty outside of the United States may qualify for the one-year extension.
Definitions
• “Qualified service member” means a member of the uniformed services of the U.S military, a member of the Foreign Service of the U.S., or an employee of the intelligence community.
• “Official extended duty” means any period of extended duty outside of the United States for at least 90 days during the period beginning after December 31, 2008 and ending before May 1, 2010.
Contact me today; we can get you started now!
http://www.mijoymortgage.com/
mitch.wilcox@bankoforegon.net
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