HAMP

Changes announced Friday to the administration’s Home Affordable Modification Program (HAMP) are expected to extend relief to a larger share of struggling homeowners as well as renters, according to federal officials.

One of the key adjustments to the program centers around principal reductions. HAMP currently includes an option for servicers to provide underwater homeowners who are struggling with their payments with a modification that includes a principal writedown.

To encourage investors to agree to principal reduction modifications, Treasury is tripling the incentives for such restructurings, paying from 18 to 63 cents on the dollar, depending on the degree of change in the loan-to-value (LTV) ratio.

The Federal Housing Finance Agency (FHFA) has prohibited Fannie Mae and Freddie Mac from employing HAMP’s principal reducing option for their borrowers. Treasury has notified FHFA that it will pay these same principal reduction incentives to Fannie and Freddie if they allow servicers to forgive principal in conjunction with a HAMP modification.

FHFA issued a statement in response noting that it recently released analysis concluding principal forgiveness does not offer any greater benefits than principal forbearance as a loss mitigation tool.

But the agency says it will reassess the investor incentives now being offered, taking into consideration the number of eligible loans, operational costs to implement such changes, and the potential effects of incentivizing borrowers to remain current.

Among the other changes announced, borrowers who are struggling because of debt beyond their mortgages, such as second liens and medical bills, will be eligible for an alternative program evaluation with more flexible debt-to-income criteria.

In addition, Treasury will expand eligibility to include investor properties that are currently occupied by a tenant as well as vacant properties slated for rental use.

Tim Massad, Treasury’s assistant secretary for financial stability says single-family homes serve an important function as affordable rental housing, and foreclosure of investor-owned homes has disproportionate negative effects on low- and moderate-income renters, as well as communities.

The deadline for HAMP will be extended for an additional year through December 31, 2013.

To date, HAMP has helped approximately 900,000 struggling homeowners permanently modify their mortgage loans, providing them with a median savings of more than $500 a month.

Massad says the administration is committed to a multi-pronged effort to support American homeowners and the housing market recovery.

In addition to foreclosure prevention initiatives such as HAMP, Massad says the federal government plans to focus on transitioning foreclosed properties into rental housing, making it possible for responsible homeowners to refinance, and providing hard-hit states with resources to develop targeted relief programs.

Posted in Announcements, Government efforts to help the Real Estate/Mortgage industry, Mortgage News, Uncategorized | No Comments

Bay Area Real Estate Market Edges Up

DataQuick reports Bay Area real estate sales saw a slight increase at the close of the year. The market saw its sixth consecutive year-on-year gain with a 4.4% sales increase over December 2010 as well as a gain of 18.6% over the previous month. Experts note the driver for the gain was the result of bottom feeding in the market as buyers scooped up foreclosed homes. There was very little mid-market performance, leaving any movement to be determined by bargain hunters, investors and top-tier luxury sales. For more on this continue reading the following article from TheStreet.

The Bay Area’s housing market rounded out 2011 much the way it started it: with constricted and atypical sales activity, lots of bottom feeding, and a largely dormant mid- to move-up market. Sales were up slightly last month, while prices dropped, a real estate information service reported.

A total of 7,494 new and resale houses and condos sold in the nine-county Bay Area in December. That was up 18.6% from 6,317 in November, and up 4.4% from 7,178 in December 2010. The year-over-year increase was the sixth in a row, according to San Diego-based DataQuick.

“We’ll remember 2011 as much for what didn’t happen as for what did. People put discretionary buying and selling on hold, except at the very top of the market. The spectacular gains in affordability, based on the combination of lower prices and ultra-low interest rates, was largely theoretical for many people because it was so hard to get a mortgage. That, combined with negative equity and economic uncertainty, kept people away,” said John Walsh, DataQuick president.

“Many of the deals that did make their way through the system were in the distressed arena – foreclosures and short sales. Much of it was deeply discounted cash purchases, disproportionately at the lower end of the price scale,” he said.

The median price paid for all new and resale houses and condos sold in the Bay Area last month was $351,500. That was down 3.5% from $363,500 in November, and down 6.3% from $375,000 in December 2010. The median has declined on a year-over-year basis for the last fifteen months.

Last month distressed property sales — the combination of foreclosure resales and “short sales” — rose to 49.6% of the resale market. That was up from 45.9% in November and up from 48.2% from December 2010.

Last month 31.4% of Bay Area sales were for $500,000 or more, down from a revised 32% in November, and down from 35% in December 2010.

Government-insured FHA home purchase loans, a popular choice among first-time buyers, accounted for 23.4% of all Bay Area home purchase mortgages in December, up from 21% in November and up from 23.2% a year earlier.

One indicator of mortgage availability that had seen improvement this year dropped again in December, when 11.7% of the Bay Area’s home purchase loans were adjustable-rate mortgages, down from a revised 12.3% in November, and up from 9.6% in December last year. Over the last decade, ARMs have accounted for 50.8% of all purchase loans.

Jumbo loans, mortgages above the old conforming limit of $417,000, accounted for 26.2% of last month’s purchase lending, down from a revised 29% in November, and down from 31.6% a year earlier.

Last month absentee buyers — mostly investors — purchased a record 23.8% of all Bay Area homes sold, up from 21.7 %in November and 20.2% a year earlier. Absentee buyers paid a median $225,000 in December, down from $250,000 in November and $262,750 a year earlier.

The typical monthly mortgage payment that Bay Area buyers committed themselves to paying last month was $1,336, down from $1,387 in November, and down from $1,558 a year earlier. Adjusted for inflation, last month’s payment was 51.6% below the typical payment in spring 1989, the peak of the prior real estate cycle.

This article was republished with permission from TheStreet.

Posted in Home Buying, Home Listings, Mortgage News | No Comments

Mortgage rates…

Mortgage rates: Week ending 12/30/2010 30-yr. fixed: 4.86 Fees/points: 0.8% 15-yr. fixed: 4.20% Fees/points: 0.8% 1-yr. adjustable: 3.26% Fees/points: 0.6% (Source: Freddie Mac)

Posted in Mortgage News | No Comments

HUD announces nationwide first-look program

The U.S. Dept. of Housing and Urban Development recently announced a new agreement with the nation’s top mortgage lenders to offer select state and local governments, including California, and nonprofit organizations a “first look” or right of first refusal to purchase foreclosed homes before making the properties available to private investors.

The National First Look Program is the first-ever public-private partnership agreement between HUD and the National Community Stabilization Trust and is intended to give communities participating in HUD’s Neighborhood Stabilization Program  a brief exclusive opportunity to purchase bank-owned properties in certain neighborhoods so the homes can be rehabilitated, rented, resold, or demolished.

Posted in Government efforts to help the Real Estate/Mortgage industry, Home Buying, Mortgage News, Uncategorized | No Comments

The FHA’s “Short Refinance” program

The Obama administration recently announced a new program to help underwater homeowners who are current on their mortgage payment refinance into a new FHA-insured loan.

Posted in Government efforts to help the Real Estate/Mortgage industry, Home Buying, Mortgage News | No Comments

Borrowers spend less time researching a home loan than a car purchase


Despite the credit freeze of 2008, borrowers have not changed the amount of time they spend researching a home loan, according to a Zillow Mortgage Marketplace survey. The survey found that borrowers who obtained a home loan in the past five years typically spent five hours researching their options, unchanged from March 2008. Nearly one-third (31 percent) spent two hours or less. This is on par with the typical time spent researching a vacation or computer purchase, and half the time consumers typically allocate to research a car purchase.

In the past five years, 16 percent of U.S. adults report they have obtained or refinanced a home loan and two-thirds (65 percent) of those admit they want to do things differently when shopping for their next home loan, according to the survey.

Posted in Mortgage News, Uncategorized | No Comments

FHA Guidelines set to change

FHA, the most popular loan program available is going to change soon.

  • FHA currently allows the buyer to put as little as 3.5 percent down. Changes in FHA guidelines will require that the  buyer put at least 5 percent down-a significant increase of cash reserves required of the buyer at the closing table.
  • Another  FHA guideline set to change  is that a one time, up front mortgage insurance premium will increase from 1.75% 2.25% of the loan amount.
  • The monthly mortgage insurance is going to increase.  This insurance is calculated by multiplying the base amount of the loan times .055 and then dividing that number by twelve.  The exact increase is unknown but may go up to as much as .1 rather than .055.  This insurance is mandatory for 5 years on FHA loans.
  • Some real estate  experts say that FHA guideline changes will happen April 5th 2010. Others sources like Realty Track claim changes will take place  in the summer.
  • Another important FHA guideline change is that the maximum allowable seller credit has been reduced from 6 percent to 3 percent.  So, the buyer will have to come to the closing table with more cash because sellers can only credit the buyer (at close) up to 3 percent for closing costs. (rather than 6 percent)

The consequence of these changes is that money is more expensive to borrow and more cash is needed at the closing table.

Posted in Government efforts to help the Real Estate/Mortgage industry, Home Buying, Mortgage News, Uncategorized | No Comments

Guidelines for FHA financing about to become more strict

FHA financing allows borrowers to come to the closing table with a minimal down payment.

Most lenders want ten to twenty percent down while FHA borrowers can come to the table with as little as 3.5 percent.

FHA borrowers can ask for a seller credit for up to 6 percent of the purchase price to help pay for closing cost beyond the down payment. This makes FHA financing very popular because closing costs usually run at least 5 thousand dollars.

FHA loans are insured by the government and guarantees investors their money back if the borrower defaults. These loans are super popular because of of the small down payment requirements.

Twenty percent of refinance loans are FHA and thirty percent of all home loans are FHA.

Another reason FHA financing is very popular is because borrowers can have substandard credit.  Currently an FHA buyer can have a credit score as low as 500.

Guidelines about to change

The seller credit for 6 percent is expected to be reduced to 3 percent.

Minimum credit scores will be increased.

One law maker  has proposed to raise the minimum down payment to 5 percent.

This means it will be harder for first time home buyers and those with little saving to get into home ownership.  Home buyers with substantial down payments or investors with cash will have first dips on affordable houses.

Call me if you want to learn more about this situation and how it affects you.

Mark Divittorio   530   957  1577   or email at markdevo@gmail.com

Posted in Mortgage News | No Comments

Mortgage news

The average time it takes for loan to be approved in 2009 47 days.  That number is up from an average of 30 days in 2008.  Customers are less satisfied with their mortgage service because of the extra time it takes for loan approval.

The extra time it takes to get loans approved is due to the fact that there is more scrutiny on loan files.  Investors that buy the bundles of mortgage loans want reassurance that the homes and buyers are a safe investment, especially after the crash!  The underwriters that review the loan files look for issues that identify a buyer that can not make their payment or a house that is defective.  If the underwriter sees any problems, they will kill the loan and the purchase will not happen.

Another reason loans are taking so long to fund is because  interest rates are at record lows, and so the shear volume of people refinancing is huge.

Posted in Mortgage News | No Comments

Changes In Mortgage Criteria Creating Challenges for Home Buyers

In the current state of the economy many challenges have surfaced making it more difficult to obtain financing on home mortgages.

Criteria for securing financing has become much more difficult. Stated income loans, also known as “liars loans” are a thing of the past. No longer can applicants “state” their income. Rather, their income must be fully documented. Even if their credit score is perfect, and they have always paid their bills on time buyer’s income must be verified with full documentation. This eliminates many buyers who want to take advantage of the current real estate market, but can not. This essentially means there is more product per qualified buyer.

Stricter guidelines in obtaining financing pertaining to the condition of the home is yet another challenge for home buyers. Guidelines were loose in the sub-prime hey day, now the pendulum has swung the other way and guidelines are extremely strict. Conventional financing and FHA financing have criteria that is strictly enforced by the underwriters within the lender’s department. Black mold in the shower that accumulated from lack of cleaning, if noted by and overly diligent appraiser, and then spotted by an underwriter, can stop a deal. A mold specialist would have to be hired to certify whether that mold is toxic or not. This is one extreme example of issues that can arise due to current market conditions as they relate to securing financing, there are many more.

A missing light fixture that was removed by the former occupant leaves bare wires exposed. This is considered a health and safety issue that underwriters will flag. An inexpensive fix, but banks are still unwilling to make these repairs. They would prefer a cash offer for an easier transaction that is more likely to close faster.

Posted in Mortgage News | No Comments