FHA announced policy changes today to help them "better manage risk" which really means a tightening of guidelines that could negatively impact borrowers attempting to qualify for a home loan. Below are key highlights of the changes:
1. Mortgage insurance premiums (MIP) will be increased to build up capital reserves and bring back private lending by increasing the up-fromt MIP by 50 basis points to 2.25%. FHA is also exploring the possibility of increasing the monthly mortgage insurance factor which would effectively increase mortgage payments of new borrowers.
2. Creation of a risk based down payment system for borrowers. FHA is looking to increase the minimum down payment for borrowers with lower credit scores. The amounts are yet to be decided but the goal is for higher risk borrowers to make larger down payments.
3. FHA plans to reduce allowable seller concessions from 6% to 3% in an effort to reduce incentives to inflate appraisal values. This change will keep FHA's seller concessions limit in line with conventional standards.
The bottom line: Guidelines are going to continue to tighten to the disadvantage of home owners. This is not necessarily a negative as HUD is just trying to keep FHA a viable option for years to come. The key is educating our clients and partners and preparing them for the changes so we can address them upfront...
Wednesday, January 20, 2010
Friday, January 15, 2010
HUD Post A One Year Hold On Anti-Flipping Rule
In an effort to expedite the process of reselling foreclosed properties, HUD announced today they will lift their 90 day anti-flipping rule for one year starting February 1, 2010. HUD believes this moratorium will help stabilize home values and improve conditions in communities where vacant properties are posing safety threats.
This announcement is in line with President Obama's plan to reduce foreclosure inventory. The waiver is effective for one year, but could be extended by the FHA Commissioner. To protect FHA borrowers against predatory “flipping” where properties are quickly resold at inflated prices, the waiver is limited to sales which meet the following conditions:
· All transactions must be arms-length, with no identity of interest between any parties involved in the transaction.
· If the new sales price over 20% of the seller’s acquisition cost, the waiver only applies if the lender meets specific conditions.
The great news is prospective buyers using FHA financing will no longer have to pass on properties due to the 90 day rule. It is also a win for investors as they are more willing to renovate and resell foreclosure inventory...
This announcement is in line with President Obama's plan to reduce foreclosure inventory. The waiver is effective for one year, but could be extended by the FHA Commissioner. To protect FHA borrowers against predatory “flipping” where properties are quickly resold at inflated prices, the waiver is limited to sales which meet the following conditions:
· All transactions must be arms-length, with no identity of interest between any parties involved in the transaction.
· If the new sales price over 20% of the seller’s acquisition cost, the waiver only applies if the lender meets specific conditions.
The great news is prospective buyers using FHA financing will no longer have to pass on properties due to the 90 day rule. It is also a win for investors as they are more willing to renovate and resell foreclosure inventory...
Friday, January 8, 2010
The Impact of The FED on Mortgage Rates in 2010
The Federal Reserve's decision to to stop buying mortgage backed securities by the end of March is creating some fear among industry professionals that mortgage rates will rise and reverse the trend of the housing recovery.
Interest rates on 30-year fixed rate loans have risen nearly 1/2% over the past month in response to the FED's announcement. This recent trend could be part of bigger increases in the coming months, but why is this happening?
The FED has been the largest purchaser of mortgages on the secondary market for the past year. When such a large investor suddenly stops buying, it creates a big reduction in demand, forcing rates higher to attract more buyers. The FED had originally committed $1.25 trillion to purchase mortgages in an effort to help the real estate market recover. As of January 2009 they have purchased $1 trillion to date and expect to reach their full commitment by the end of Q1.
The bottom line when the FED is done buying, it is reasonable to expect mortgage rates could return to their pre-bailout levels of 6.0-6.5%. This would severely reduce the purchasing power of prospective buyers looking to become home owners. If you have any clients who are on the fence, this might be a huge motivation to get in now and take advantage of lower rates and the $8,000 tax credit...
Interest rates on 30-year fixed rate loans have risen nearly 1/2% over the past month in response to the FED's announcement. This recent trend could be part of bigger increases in the coming months, but why is this happening?
The FED has been the largest purchaser of mortgages on the secondary market for the past year. When such a large investor suddenly stops buying, it creates a big reduction in demand, forcing rates higher to attract more buyers. The FED had originally committed $1.25 trillion to purchase mortgages in an effort to help the real estate market recover. As of January 2009 they have purchased $1 trillion to date and expect to reach their full commitment by the end of Q1.
The bottom line when the FED is done buying, it is reasonable to expect mortgage rates could return to their pre-bailout levels of 6.0-6.5%. This would severely reduce the purchasing power of prospective buyers looking to become home owners. If you have any clients who are on the fence, this might be a huge motivation to get in now and take advantage of lower rates and the $8,000 tax credit...
Thursday, December 24, 2009
Merry Christmas
I just wanted to take a moment and wish everyone a Merry Christmas. It has been a year of ups and downs, but I hope you all have survived the bumpy ride and are strapped in for an exciting 2010...
All the best,
Jason
All the best,
Jason
Tuesday, December 15, 2009
3 Ways To Begin Rebuilding Your Credit Score
Over the past few years, our credit score has become increasingly more important to their financial livelihood. At one time credit scores were only used to to evaluate lending risk, but today they are used by insurance companies, prospective employers, and other industries to measure our overall financial health. A low credit score can lead to increased insurance premiums, excessive credit card rates, and high-cost auto loans. If your credit has been damaged and you are feeling the pinch, here are three things you can do to rebuild your credit score...
1. DELETE COLLECTION ACCOUNTS - Paying a collection account can actually reduce your score in the short-run because the credit bureaus report each account based upon their last activity date to determine what impact it will have on the credit score. When a payment is made on a collection, the account gets updated as "paid" making the last activity date more recent. The best way to handle this dilemma is to contact the collection agency. Explain you are willing to pay off the collection account if all reporting is withdrawn from credit bureaus. Once they agree request a letter from the collector stating their agreement to delete the account upon receipt of your payment. Not all collection agencies will play ball, but many will, and the removing these and increasing your score is certainly worth effort.
2. QUICKLY PAY PAST DUE ACCOUNTS - Within the delinquent accounts on your credit report, there is a column called "Past Due". The credit bureaus penalize you tremendously for any account which reports as past due. If you see an amount in this column, contact the creditor to pay the arrears. Then get a copy of the receipt provide to the credit bureaus to remove from your report.
3. DO NOT CLOSE YOUR CREDIT CARDS - Closing a credit card can hurt your credit score because it effects your debt to available credit ratio. If you owe $10,000 and your total credit available is $20,000, you are using 50% of your total credit. If you close a credit card with a $5,000 credit limit, you will reduce your credit available to $15,000 and change your ratio to using 66% of your credit. The bottom line is to keep your accounts open to maximize the utilization and age of credit in your favor.
1. DELETE COLLECTION ACCOUNTS - Paying a collection account can actually reduce your score in the short-run because the credit bureaus report each account based upon their last activity date to determine what impact it will have on the credit score. When a payment is made on a collection, the account gets updated as "paid" making the last activity date more recent. The best way to handle this dilemma is to contact the collection agency. Explain you are willing to pay off the collection account if all reporting is withdrawn from credit bureaus. Once they agree request a letter from the collector stating their agreement to delete the account upon receipt of your payment. Not all collection agencies will play ball, but many will, and the removing these and increasing your score is certainly worth effort.
2. QUICKLY PAY PAST DUE ACCOUNTS - Within the delinquent accounts on your credit report, there is a column called "Past Due". The credit bureaus penalize you tremendously for any account which reports as past due. If you see an amount in this column, contact the creditor to pay the arrears. Then get a copy of the receipt provide to the credit bureaus to remove from your report.
3. DO NOT CLOSE YOUR CREDIT CARDS - Closing a credit card can hurt your credit score because it effects your debt to available credit ratio. If you owe $10,000 and your total credit available is $20,000, you are using 50% of your total credit. If you close a credit card with a $5,000 credit limit, you will reduce your credit available to $15,000 and change your ratio to using 66% of your credit. The bottom line is to keep your accounts open to maximize the utilization and age of credit in your favor.
Tuesday, December 8, 2009
Down Payment Assistance Still Available in Clackamas County
Although most of the down payment assistance (DPA) programs have been pulled off the shelf nationally, the Clackamas County program is still in full swing. First time buyers can work with an approved lender and receive up to $14,000 towards their down payment and reasonable closing costs. The assistance comes in the form of a zero-percent interest, deferred-payment loan and is funded through HUD.
Prior to obtaining a loan the first-time home buyer must complete an approved home buyer training class. To be considered "eligible" the homebuyer must meet the HUD definition of a “first-time homebuyer”. If you have not owned a home during the past 3 years, are a displaced homemaker, or are a single parent, you could be eligible. A "qualified" homebuyer must have an income which does not exceed 80% median income for the area and be able to contribute $1,000 towards the home purchase.
Eligible properties are located in Clackamas County, have a purchase price less than $304,950, and pass a standard property inspection. For information about the program go to http://www.clackamas.us/cd/downpayment.htm...
Prior to obtaining a loan the first-time home buyer must complete an approved home buyer training class. To be considered "eligible" the homebuyer must meet the HUD definition of a “first-time homebuyer”. If you have not owned a home during the past 3 years, are a displaced homemaker, or are a single parent, you could be eligible. A "qualified" homebuyer must have an income which does not exceed 80% median income for the area and be able to contribute $1,000 towards the home purchase.
Eligible properties are located in Clackamas County, have a purchase price less than $304,950, and pass a standard property inspection. For information about the program go to http://www.clackamas.us/cd/downpayment.htm...
Wednesday, November 18, 2009
Why Rent When You Can Get $8K To Buy
The real estate market continues to hobble along as we head into the winter. Many of our friends and neighbors are out of work, but for those of you who have stable jobs and debating whether or not to purchase a home, you can't afford not to.
The Obama Stimulus Plan homebuyer tax credit was extended last week allowing first time home buyers to receive up to $8,000 credit for purchasing a home. The new act adds in a $6,500 dollar tax credit to existing home owners who sell and repurchase a home.
With home prices at 5-10 year lows and interest rates at 30 year lows - what are you waiting for? Get your piece of the pie and buy a home at a steep discount. You won't regret it...
The Obama Stimulus Plan homebuyer tax credit was extended last week allowing first time home buyers to receive up to $8,000 credit for purchasing a home. The new act adds in a $6,500 dollar tax credit to existing home owners who sell and repurchase a home.
With home prices at 5-10 year lows and interest rates at 30 year lows - what are you waiting for? Get your piece of the pie and buy a home at a steep discount. You won't regret it...
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