Mortgages

FHFA's new program to help underwater homeowners

Today the Federal Housing Finance Agency announced a new program designed to help even more underwater homeowners refinance their mortgages at today's low rates. The plan hopefully will allow homeowners to lower their monthly mortgage payments, thus freeing up money to be spent in the broader economy and help the US from slipping back into recession again.


Previous programs had been restricted to homeowners who were no more than 125% upside-down on their homes. The new FHFA program places no cap on how much the borrower owes, or how far underwater they are.  Only mortgages backed by Fannie Mae and Freddie Mac will be eligible. Need to know if your mortgage is owned or managed by Fannie/Freddie? Check here and then here. Then call us for a loan officer recommendation.


Helpful links -

Does Freddie Mac own your mortgage?

Does Fannie Mae own your mortgage?

Condo financing near-impossible to get

A while back, I wrote a piece called Condo Re-Financing: Tricky to Impossible. Nowadays, that lending dilemma has grown -- it's next to impossible to get a new mortgage to purchase a condo, according to my favorite lenders Kevin Reiser and Jeannie Bolger. (need an ace loan officer? call me or text me and I'll forward their info. 602-999-8831). The exception may be luxury condos, think million dollar plus, but I'm not sure that mortgage market is healthy either.


The reason one can't get a mortgage to buy a condo these days has almost nothing whatsoever to do with the buyer and his/her credit profile. It has to do with the condo community and it's overall financial health/outlook. Many, many condo (and patio home and townhome) communities have experienced so many foreclosures that their Homeowners Associations are in severe financial distress. Other times, the owner-occupant to investor ratio is so out of whack - with investors owning 75% or more of the units in the community - that lenders won't lend to anyone who wants to buy there.


If you're really digging the idea of a condo right now.... check with several lenders first. Getting a mortgage for your new, hip pad might be tricky to impossible.


Want more in-depth explanation of the metro Phoenix condo market outlook? Try this article we wrote waaaay back in Spring 2010. http://thephoenixagents.com/newsletters/viewpoint-2010-0407/

Mortgage rates lowest since 1971

Mortgage rates set new record lows this week, per a report by mortgage giant Freddie Mac (the Primary Mortgage Market Survey), hitting rates not seen since 1971.

Rates on 30-year fixed-rate mortgages averaged 4.12 percent with an average 0.7 point for the week ending September 8th, 2011.

Despite the fact that it’s been 40 years since we saw mortgage interest rates this low, the Mortgage Bankers Association simultaneously reports that buyer demand for mortgages remains at record lows, close to the low demand levels last seen in 1996.

(some content above based on original reporting published on Inman.com; chart below originally published by the New York Fed)

30yr mortgage rates from 1970 to 2010

Mortgage interest rates plunge on debt deal news

From one of my favorite loan officers, Gary Ogami at Pinnacle Peak Lending, Inc. comes the news that mortgage interest rates just hit year-long lows:

…rates are now at the year’s lows, and are only slightly above the all-time lows we saw almost one year ago.

The passage of a debt ceiling and deficit reduction agreement, along with weaker than expected manufacturing and GDP figures, bonds have rallied as investors have sought safety.  This has lead to higher bond, and more importantly, mortgage-backed securities (MBS) prices, which have brought yields and rates lower.  The last time we approached this price level for MBS’s was late summer/early fall of last year!

Mortgage Term Rate APR
30 Yr Fixed 360 months 4.250% 4.297%
15 Yr Fixed 180 months 3.625% 3.736%

 

Are you looking for a mortgage loan officer? Try Gary, I highly recommend him.

Gary Ogami
Pinnacle Peak Lending, Inc.
gary@pinnaclepeaklending.com

He’ll get your pre-qualification on the fast track and meanwhile you can start searching for homes on our MLS SearchContact us with any questions and when you’re ready to hire a Realtor!

Metro Phoenix: cheaper to buy than rent

[caption id="" align="alignright" width="242" caption="Image credit Shuttermon via StockExchange"]Image ID 1020195 by user Shuttermon[/caption]

Trulia regularly tracks the buy vs. rent equation and reports again that it’s cheaper to buy a home than to rent in metro Phoenix. See full story here: http://explore.trulia.com/datavis/rentvsbuy/Q2-2011/


Meanwhile, mortgage rates are in free-fall, according to an Inman.com interpretation of Freddie Mac’s rate survey…




Rates on fixed-rate mortgages declined for a seventh week in a row to new lows for the year ... Freddie Mac said in releasing the results of its weekly Primary Mortgage Market Survey.



It’s not the ideal time for everybody to buy a home, and mortgages are still a bit difficult to obtain. But it could be a great time for you to buy:




  1. Home prices just double-dipped according to Case-Shiller numbers (they're down over 50% from their Summer 2006 peak)

  2. Sellers are frequently willing to pay the buyer's closing costs,

  3. There's talk in Washington about increasing the minimum cash down payment of the FHA mortgage program from 3.5% to 5% sometime soon, so buying now could save you a couple thousand dollars over waiting


A few questions can help you decide if you should consider buying a home now, or not...

  • Are you emotionally & financially ready to be a homeowner?

  • Do you have stable employment?

  • Do you plan to stay put in your home for 5 to 10 years into the future?

  • Do you have a couple months’ worth of salary in savings?

  • Have you planned your future budget to account for costs of home ownership like maintenance & property taxes?

  • Do you consistently pay your bills on time or even early?

  • Do you know what your credit score is? (studies show that people who know their score tend to have better credit ratings than people who don’t know their score)

  • Have you talked with a lender to find out how much home you’ll qualify for? (In Arizona, buyers *must* submit a loan approval with a purchase offer)


If you answered yes to all or most of these questions, you’re probably a great candidate to buy a home. Contact your Realtor. Don’t have a Realtor yet? You’re in luck, we’re Realtors. Winking smile Read what our clients say about us behind our backs, and then give us a shout by email, phone or even text or Facebook.

Ready to start browsing listings online? We provide you a direct link to the private, Realtors-and-appraisers-only Multiple Listing Service. That's the most up to the second, accurate information consumers can get their hands on. Use our map based home search, or use our Detailed home search to really dial in on your housing wants and needs.

What credit score do I need to get a mortgage?

Image ID 1193076 by Stock Exchange user svilen001The minimum FICO credit score needed to qualify for a mortgage changes frequently. As of February 2011, the general answer is … buyers need a FICO credit score of about 640 to qualify for a home mortgage.

BUT…  there are exceptions. Bottom line: if you have a score under 640 you might still qualify for a mortgage, but you’ll probably need more cash on hand.

From Rob Chrisman’s daily mortgage news email…

Wells Fargo reduced its minimum FICO's for FHA loans to below 600. Direct Mortgage Wholesale has done something similar by reducing its minimum FHA FICO to 580 ….  There are other requirements, of course, including 90% maximum LTV, no gift funds, etc.

Deleting the banker-speak, what this means in plain English is that buyers with FICO scores less than 640 probably are going to need to make a down payment of about 10% of the purchase price, and that money cannot be gifted to the buyer.

“Not gifted” doesn’t mean your money is stupid. It just means that the 10% cash down payment has to be the buyer’s own money, and sitting in their bank account for a couple of weeks before the purchase takes place.

Want to see if you qualify to buy a home? Have more questions? Give me a call or shoot me an email and I’ll connect you with one of my favorite loan officers. They’ll hook you up.

Heather Barr, Realtor
Chris & Heather, The Phoenix Agents @ Thompson’s Realty
602-999-8831 voice/text    
Heather@ThePhoenixAgents.com

read what clients say about realtor heather barr

Not paying your mortgage? Don’t worry, banks making money off you anyhow.

Image ID 1290133, money4 by svilen001Clients always ask me, “WHY are banks so SLOW in agreeing to short sales??”

There’s a ton of reasons; almost none of them make sense. But for about 2-3 years I’ve been adding this opinion to my list of reasons banks are slow to OK short sales.

Mind you, this is my opinion. I have nothing to back up this idea other than a rudimentary understanding of Accounting 101:


  • accounts receivable = assets


  • accounts payable = liabilities


I believe that one of the many reasons banks are so slow to approve short sales is that while they stall, they can book the mortgage payments as an accounts receivable item, whether the homeowner is actually making the payments or not. The second the bank OKs a short sale, they have to book a giant loss. Again, only my opinion, but it passes the common sense test with everybody I’ve mentioned it to.

Now, a story at Forbes magazine backs me up, sort of. (hat tip to Mish’s Global Economic Analysis blog for the story link)

Robert Lenzner at Forbes writes US Banks Reporting Phantom Income on $1.4 Trillion Delinquent Mortgages
[Due to loose accounting rules, banks are] allowed to accrue interest on non-performing mortgages” until the actual foreclosure takes place, which on average takes about 16 months.

All the phantom interest that is not actually collected is booked as income until the actual act of foreclosure. As a result, many bank financial statements actually look much better than they actually are. At foreclosure all the phantom income comes off the books of the banks.

This means that Bank of America, Citigroup, JP Morgan and Wells Fargo, among hundreds of other smaller institutions, can report interest due them, but not paid, on an estimated $1.4 trillion of face value mortgages on the 7 million homes that are in the process of being foreclosed.

Ultimately, these banks face a potential loss of $1 trillion on nonperforming loans, suggests Madeleine Schnapp, director of macro-economic research at Trim-Tabs, an economic consulting firm 24.5% owned by Goldman Sachs.

Astounding! The extent to which our entire financial system is built on castles in the air is staggering. Banks make money because they say they do. Our dollar bills have value because we all agree they do.

I’m gonna go sit down now. My head hurts.

Mortgage fraudster found guilty (and rich)

From one of the more entertaining feeds in my Google Reader, CreditBloggers:

A lawyer who helped a gang of mortgage scammers steal $23 million from banks pleaded guilty to seven felonies on Wednesday as part of the federal government’s larger crackdown on loan fraud.

[He] faces a maximum of 210 years in prison for his role in the scam, and he will be forced to repay the money he stole. He will be sentenced in April.

For once, somebody who got rich through scams gets what’s coming to him. Good!

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Buy a home for 1% cash down

Stock Exchange Image ID 164990 by user daimon057

Although most of the low-down and no-down payment purchase programs are long gone with the financial crash of 2008, we do have 1 lender who has 1 loan program that’s a 1% cash down payment program.

Here’s an example of a recent client of mine who used this program.


  • Home purchase price – $85,500


  • Seller contribution to buyer’s closing costs – $2,700


  • 1% Down Program’s contribution to buyer’s down payment – $2,137


  • Buyer’s cash out of pocket for home inspections, appraisals, utility company deposits, etc., – $500


  • Buyer’s cash out of pocket on closing day, all-in – $1,033


The program is good in most of Metro Phoenix, AZ as of January, 2011. Among other things, buyers must meet a minimum credit score, and must have stable and verifiable employment income. Buyers must take a homeowners’ education class which takes about 1-2 hours of studying and about 15-20 minutes in exam time. The program can be used to buy a foreclosure (REO) home. The seller is not required to contribute to the buyer’s closing costs, but may.

Not all buyers qualify, and not all homes qualify. But it could be a viable option for you if you’re a little low on cash but want to be a homeowner.

Contact me for more details.

Heather Barr, Realtor
The Phoenix Agents at Thompson’s Realty
602-999-8831 or Heather@ThePhoenixAgents.com

photo credit: user daimon057 at the online photo sharing site StockExchange
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Mortgage Rates Headed Toward 6%

Mortgage rates ended 2010 with a steep ascent but we have to keep the figures in perspective. Rates were higher then the year started versus when it ended. And, historically, we remain well below the average.

That's why mortgage rates should rise in 2011. Momentum is drawing rates up, and the market is moving towards its mean. The Refi Boom is over and higher costs are coming.

Above quote originally published by, and copyright reserved by Dan Green of TheMortgageReports.com, an Ohio-based mortgage lender with an excellent blog.

Here’s a chart showing mortgage rates over the past 40 years.




Historically speaking, rates really have very, very little “down” left in them. It’s almost inevitable that mortgage interest rates will go up. How soon? Hard to say, but if you’re like the average home buyer, Murphy’s Law says rates will go up before you’re ready for them to do so.

Chart showing 30-year fixed rate mortgage rates over past 40 years was originally published by, and copyright of The St. Louis Federal Reserve, which has a website chock-full of useful and fun economic data, charts, graphs and statistics.

Wrapup of 2010 mortgage world

How to describe last year's story?
With one word.  Regulatory!!

Consumers?  The Feds wish them oh so well!
Yes- good intentions pave the road to hell.

To punish the villains of our industry,
They devised a plan of transparency.

Brilliant idea!  HVCC,
And a "comprehensible" GFE!

That form is now so simplified,
That everyone is mystified.

Each lender sees it differently,
Can the broker get the YSP??

What dates? Which blocks? Are we compliant?
On Amanda we are all reliant!!

What day can we sign our docs?
For each thing there are different clocks!

A three day wait....do we start with zero?
When docs go out we're the hero!

We've never seen so many quirks!
No one's sure how this all works!

When to collect borrower's fees?
Brokers re-issuing GFE's!!

Paperwork brings us to our knees!
We're murdering so many trees!

Re-verify and then once more,
Employers hate us by the score!

When was the appraisal sent?
Where's that pesky document?

Our government in its benevolence,
Never uses common sense.

The only ones who are helped at all,
Are those supplying alcohol!

Happy New Year!
reprinted with permission, originally published by Rob Chrisman who publishes a lovely daily email about changes in the world of residential mortgage lending. it’s aimed at mortgage loan officers and others in the field. The average person has literally no idea how often regulations change in mortgageland. Rob’s email comes daily, and runs about 2 or 3 pages every day.

Condo refinancing: tricky to impossible

Way back in April of 2010, my partner Chris wrote a piece about how condos were doing in the Great Recession. This was after much discussion between the two of us. The piece was long, well reasoned and thoughtful. It was also long. We’re both sometimes guilty of over-writing. <smile>

Essentially, Chris’ piece reminded buyers that when you buy a condo you’re also buying the neighborhood and the HOA. If the HOA or your individual neighbors have financial troubles, you could too.

If more than 51% of your condo community isn’t owner-occupied housing – it’s a vacation home, or a rental – then you might have a very hard time refinancing your condo mortgage, even if your income and credit is great. Same thing with past-due HOA fees: if more than 15% of the condo owners in your community are late on their dues, you probably won’t be able to refinance your mortgage.

Couple days back, the gloomy bloggy giant Housing Doom published a much shorter piece about condos that essentially warns the same thing.

Condos make a great investment for many types of buyers – especially first time home buyers, retirees, vacationers and single professionals – but they’re not for everyone. Buyers should understand that when there’s a recession, condos have historically taken a bigger hit to values than detached housing. You need a Realtor, maybe even an attorney and financial advisor to help you make the decision to buy or not buy a condo.

Do you need a Realtor? A Realtor who knows a lot about the condos in the North and West regions of Metro Phoenix? You’re in luck! I’m that Realtor. If you’re thinking about buying a condo, give me a shout.

Jumbo mortgages

A jumbo mortgage is a home loan that’s too big (in dollars) to be sold to government backed agencies (Fannie Mae, Freddie Mac). The upper dollar limit for jumbos varies geographically but the general rule of thumb is a loan larger than $417,000 is a jumbo.

It seems to me that people who have money continue unaffected when there’s a deep recession in the American economy. I always joke: people with money are always economically safe, the truly poor can rely on welfare and charity, and the working & middle classes buckle down during recessions because they know they’re the ones who are really going to take a beating.

Be that as it may (or not)…   In an odd twist on normal, jumbo mortgages have suffered during the Great Recession. Usually they account for 18% of the real estate market, but according to a new Wall Street Journal (WSJ) report, jumbo mortgages were only 5% of the real estate mortgage market in 2009 and 2010.

Interest rates for jumbo mortgages have been high too, but are now back down to earth. The WSJ reports the average jumbo rate through the week ended Oct. 29 was 5.11%, down from about 6.14% on Jan. 1, 2010

It’s my experience that people who can afford to take out a jumbo mortgage expect to get a mortgage easily, with little trouble and few questions about their financial life. Beware, the New Normal is different, even if you’re wealthy. My favorite brokers and the WSJ story report that mortgage underwriting continues to be strict: Borrowers still need excellent credit profiles and must provide complete documentation and verification of income, unlike several years ago. Down payments of 20% to 40% typically are required.

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hat tip Relator John Wake for the inspiration and source article for this post

FHA tightens credit score minimums

By and large, FHA borrowers must now have a minimum FICO credit score of 640.  There are exceptions, especially for borrowers already in escrow with an executed contract and a scheduled closing date…

But the credit tightening that’s hampered the rest of the mortgage industry has now hit the FHA loan program too.

source: Andrew Schmidt and Stephen Rust, The Lending Company, 602-999-1912

Wells Fargo allows 1 shortsale extension

Wells Fargo is no longer granting more than one extension for homeowners to complete a short sale.
"We do allow for one foreclosure postponement provided we have a short sale in hand that has been approved, the buyer has proof of funds of financing approved, and the short sale can close within 30 days of the scheduled foreclosure sale."

If your home mortgage is owned by Wells Fargo and you’re thinking about a short sale, this means you should not waste any time in listing your house for sale. Once the bank issues the Notice of Trustee’s Sale, you’ve got 90 days plus 1 extension to get it sold, or go to auction. Or if you’ve got a shortsale in progress but you’re not going to close the sale before the scheduled auction date, you’ll only get 1 extension.

Talk to your Realtor, your CPA/accountant, or your attorney!

story source: October 4, 2010 daily mortgage email newsletter produced by Rob Chrisman; view online at http://robchrisman.com/

Robo-signing

Image ID 1152432 by Stock Exchange user macaruba (image credit, StockExchange user macaruba)

We’ve all learned a new word recently: robo-signing.

The Big 5 Banks* are holding off on foreclosure proceedings in lots of US states because the employees in charge of signing off on the foreclosure documents have admitted to robo-signing up to 8,000 documents per month without reading each.

Robo-signing and the moratorium on foreclosures, so far as I can tell, doesn’t apply in Arizona. Foreclosures continue in Arizona at their usual pace. Why?

All the states so far affected by the robo-signing scandal are judicial foreclosure states. Arizona is not. In a judicial foreclosure state, the lender must file a lawsuit in court against the homeowner to begin the foreclosure proceedings. Those filing documents are the docs that were robo-signed.

In Arizona, homeowners don’t sign a Mortgage so there is no need for the lender to file a lawsuit to begin a foreclosure proceeding. Arizona homeowners sign a similar but slightly different document called a Deed of Trust. It’s the same idea as a Mortgage, just with an extra party inserted into the process. It’s a threesome: there’s a borrower (homeowner), a lender and a Trustee. The Deed of Trust system works just like a mortgage except in the cases of foreclosure.

The Deed of Trust that Arizona homeowners sign allows the lender to skip filing a foreclosure lawsuit if the homeowner gets behind in their mortgage. The lender simply mails or delivers to the homeowner a document called a Notice of Trustee’s Sale (a “NOTS” or “NoTS”, i.e. a foreclosure). Usually the lenders issue a NOTS after 3-4 missed mortgage payments.

The NOTS is the only notice of their intent to foreclose that Arizona lenders are legally required to provide. It states that the homeowner has 90 days in which to bring the mortgage payments 100% current – including any fees, fines or legal costs – or the Trustee will sell the home at foreclosure auction. On Day 91, the home is auctioned off, unless the homeowner contacted the lender and made other, mutually agreeable arrangements.

Trustees are often attorneys and sometimes the auction takes place in their offices rather than “on the courthouse steps” as in some other states. At least in Arizona, lenders are frequently unable to sell the home to anyone at the foreclosure auction. In that case the lender takes the house “back” and usually lists it for sale in the MLS through a Realtor as an REO property.

We at The Phoenix Agents track REO listings to help us visualize the overall health of the local real estate market. Want to see our stats? Click on over, to <here>.

The Big 5 Banks are: Bank of America, GMAC, JPMorgan Chase, Citi and Wells Fargo. The Big 5 is just what I call them; it’s not a real thing. That I know of.

Fannie and Freddie caused housing crash?

Did Fannie Mae and Freddie Mac cause the housing debacle? Before we get to the answer, let’s all get on the same page about what Fannie, Freddie and FHA actually are.
Neither Fannie Mae, Freddie Mac or FHA is a bank, they don't lend money.  FHA insures loans and Fannie Mae and Freddie Mac are investors, they purchase loans from the banks who originate them as soon as they are "funded".  (source: the Examiner.com)

Look at the charts below and I think you’ll find that the people who scream that Fannie Mae and Freddie Mac caused the housing crisis are simply wrong. How can two companies that had the smallest share of the mortgage market have caused anything in that market? Other lenders - notably Bear Stearns, Lehman Brothers and the rest of that gang - were involved in the subprime mortgage world far deeper than Fannie and Freddie.

I’ll leave it to each of our lovely readers to decide whether the Fannie/Freddie bashers are stupid, lying or practicing world-class political spin.

mortgage originations by originator (I originally found these charts on Barry Ritholtz' The Big Picture blog)

See how the number of mortgages issued by Fannie and Freddie during the boom years of 2004-2007 dropped dramatically?

Meanwhile the number of mortgages issued by ‘private label’ lenders increased sharply. “Private label” in this context means companies like Lehman Brothers, Bear Stearns, Merrill Lynch, Goldman Sachs and Morgan Stanley.

Here’s the same data divided by mortgage type:

Mortgage originations by product type, 2003-2010

See all those subprime mortgages being offered by companies that weren’t Fannie and Freddie?

See 2004-06? That was the height of the boom; the market cooled after that. Fannie and Freddie lost market share during those years and Lehman, Bear and their friends made more mortgages every year.

This isn’t to say that Fannie and Freddie don’t have their problems. They do. They just aren’t guilty of causing the housing crisis.

FHA loan costs going up Oct 4, 2010

Image ID 1083425 by StockExchange user svilen001 (image credit, StockExchange user svilen001)

There are  changes coming to the FHA's upfront and annual mortgage insurance premiums which are effective on all case numbers obtained October 4, 2010 and later.

The costs of the upfront mortgage insurance premium (UFPMI) and the annual mortgage insurance premium (PMI) are going up. 

In plain English, it’ll be a little more expensive upfront to get an FHA mortgage after October 4, and the monthly payment will be a little higher too. For more technical info, the Mortgage Porter blog has a great run-down on the increase in FHA mortgage insurance premium costs.

If you’re already mortgage and home shopping, you should consider getting your FHA loan started before Friday, October 1. If you’re not already shopping, don’t run out and start just because of this. Just like the $8,000 homebuyer tax credit from earlier this year: don’t buy because of it, but if you’re buying anyway, act now to take advantage of it.

FHA Short Refinance program

The FHA has announced a new program in the ongoing battle to fix the foreclosure crisis.  See details on the FHA website for this FHA Short Finance program for underwater homes.


The main points of the new program -



  • Existing loan to be refinanced is not FHA insured;

  • Must owe more on their mortgage than the value of the property;

  • Must be current on the existing mortgage to be refinanced;

  • Must have a “FICO based” decision credit score greater than or equal to 500;

  • Existing first lien holder must write off at least 10% of the unpaid principal balance (UPB);

  • Loan-to-value (LTV) ratio of no more than 97.75%;

  • Combined loan-to-value (CLTV) ratio must be 115% or less; and

  • For manually underwritten loans, the qualifying ratios can be no greater than 31/50.


Sadly, there are many Metro Phoenix area homeowners who won’t qualify for this program because they’re more than 15% underwater.


update Sept 15, 2010: just heard about another point in this program. To facilitate refinancing, the Treasury Department will provide incentives to existing second-lien holders who agree to full or partial extinguishment of the liens. That's big news! And for some underwater homeowners, making the second mortgage 'go away' might mean the difference between staying in the home or walking away.