Freddie Mac Bulletin 2015-12 Changes August 20, 2015

Freddie Mac Bulletin 2015-12 announced revisions to their underwriting guidelines which are an expansion toward more liberal guidance and documentation.   U.S. Bank Home Mortgage is pleased to announce that we will be following the enhancements which are effective immediately.

A summary of the changes are below however we encourage you to read the Freddie Mac Bulletin for complete details:

Interested Party Contributions – HOA Dues

The payment of up to 12 months of home owner’s association dues by an interested party is not considered abatement but is considered an interested party contribution and is subject to the requirements for interested party contributions and other conditions.   Sections 25.3 & 42.3

Multiple Financed Properties

• Increasing from four to six the maximum number of financed properties that the Borrower may own or be obligated on when the transaction is a second home or an Investment Property Mortgage
• Review section 22.22.1 for eligibility criteria for investment properties.

Rental Income

The requirement that the Borrower must have a two-year history of managing Investment Properties to use the income from a subject Investment Property or other Investment Properties owned by the Borrower for qualifying purposes has been removed.  Sections 37.14 & 37.16

Rent Loss Insurance

The requirement that the Borrower must have six months of rent loss insurance to use rental income from the subject Investment Property for qualifying purposes has been removed.  Section 22.22.1

Debt Payment-to-Income Ratio Calculation – Student Loans

• The minimum monthly payment amount that must be included in the DTI calculation when a student loan is deferred or is in forbearance and no monthly payment is verified is reduced to 1% of the outstanding balance of the student loan
• This calculation is only used when there is no documentation in the mortgage file indicating the actual monthly payment amount.

Business Debt

• Permitting the exclusion of a monthly payment from the DTI calculation when the Borrower is self-employed and the monthly payment is made by the Borrower’s business, subject to certain conditions the monthly payment per section 37.1

 

Gift Letters

A gift letter is required when gift funds are used as Borrower Funds or reserves. Removed is the requirement that the gift letter must identify the Mortgaged Premises. Sections 37.22 and 23

Underwriting Guidelines will be updated shortly to reflect these changes.

3 major perks of working with a former lender

If you’re considering refinancing or buying another home, working with your old lender could offer distinct advantages.

By Danielle Blundell
October 31, 2014 4:41 PM

The saying “If it ain’t broke, don’t fix it” could apply to lots of things, even mortgage lenders you’ve worked with before. As it turns out, mortgage brokers are highly incentivized to give return customers the royal treatment and in some cases, even cut them a financial break, when they come back for a refinance or another home purchase.

Why? Because mortgage lenders understand that their reputations are on the line, and frankly, their livelihood depends on it.

“In the mortgage business, and really in any business, repeat clients are the lifeline of your company,” says David Hall, President of Shore Mortgage in Troy, Michigan.

So if you were happy with the service you got from your mortgage professional the first time around, it makes a lot of sense to use them again. Read on for the pros of sticking with your old lender on your next home purchase or refinance.

Perk #1: Repeat Customer Discounts

You know how you earn loyalty points – and eventually free coffee – for sticking with Starbucks for your morning latte? Well, the same logic can apply to home loans, albeit on a much grander and less frequent scale. Go back to your original lender, and you could find that she or he is willing to slash some of the mortgage costs your second time around as a thank you for choosing to work with them again.

[Ready to shop for a new mortgage or refinance? Click to compare rates from lenders now.]

Customer retention can be a major motivation for lenders and banks to provide some kind of savings to repeat customers, according to Yael Ishakis, a loan officer and vice president of First Meridian Mortgage in Brooklyn, New York.

Her own company First Meridian offers most repeat clients something called the “Fast Track” program. The program benefits repeat customers the most in regards to reducing their closing costs.

“We try to keep [closing costs] as low as possible, and in certain cases, we run a promotion covering the closing costs or some of them through our lender-paid closing program,” says Ishakis.

Though closing costs vary from state to state, Ishakis says in New York they’re around 4 percent of a home’s purchase price and in New Jersey around 2.5 percent. So for your reference, closing costs on a $300,000 home would cost $7,500 in New Jersey and $13,500 in New York. So having some or even all of that waived could yield a savings of a few thousand dollars, depending on where you live.

As far as refinances go, mortgage lenders may work with their vendors to reduce the closing costs (appraisers, etc.) to make it as cost effective as possible for the client, says Ishakis.

Furthermore, whether you’re refinancing or simply looking to buy a new home, Ishakis says quality former lenders will try to get you the best deal and won’t simply offer you the same mortgage as before.

“For example, if someone tells me that they plan on moving in five years I would be prone to give them a 7-year adjustable rate mortgage [with a much lower rate] to save them money,” says Ishakis. “I would decide the term according to their needs at the time.”

[Want to refinance your mortgage? Click to compare rates from multiple lenders now.]

Perk #2: Hassle-Free, Faster Paperwork

Nobody likes paperwork, right? Whether you’re at the doctor’s office or the DMV, it’s always a drag to sit with a clipboard and sift through a seemingly endless amount of questions. The same goes for the paperwork involved in the mortgage application process, along with the documents you need to provide.

What if we told you it could be quicker and easier? All you have to do is simply go back to your previous lender for your refi or new home purchase.

When a former customer returns, Ishakis says the first thing a lender will do is retrieve their old file. While your former officer must tailor your new loan to your current situation, that former file can provide the paperwork foundation for your new application, particularly if some of your financials and employment have stayed the same.

“A lot of the paperwork can be reused so it will save a bit of the hassle,” says Ishakis.

Still, while the paperwork process should be easier, Ishakis says there are some things that must be current, updated, and verified.

“Every lender will require up-to-date tax returns, pay stubs, and bank statements,” she says.

So it’s best to have those documents ready and with you when you first revisit your lender to speed up the entire loan procurement process.

Perk #3: Potential Bank Bonuses

Sometimes putting all your eggs in one basket pays off big time. This could be potentially true at a local or national bank chain, which may have the resources to offer additional perks when you invest more of your money with them through a mortgage and maintaining an account with a high balance.

So if you’re looking to refi or secure a second mortgage, consider asking your current banking partner or inquire about mortgages at another large bank to see what deals might be available if you were to bundle together an account or two with your mortgage. Bank branch financial representatives should be able to give you all the details on qualifying for whatever perks they offer when discussing loan and account options with you.

Again, Ishakis says these types of perks from banks have to do with customer retention, almost like a cable company offering you a Visa card or a free year of DVR to stay with your current service provider.

“A bank may want all the business – not only the mortgage but the account deposits and investments,” says Ishakis. “This gives them an opportunity to keep the customer happy.”

And just how will they keep you happy? Well, let’s just say it’s not by offering you unlimited movies or a free landline. Often, Ishakis says, if you maintain a high total relationship balance (including savings, checking, mortgage balance, etc.) with a bank, you could be entitled to perks like free ATM withdrawals everywhere, free money transferring services, access to higher interest rates on savings accounts, free checks, or a free safety deposit box.

As far as direct benefits to your mortgage itself goes, Ishakis has seen some “free appraisal” offers, which could save you a couple thousand dollars, depending on the market you’re in.

It is important to realize, however, that your total use of these “perks” should be substantial enough to offset the mortgage costs you’d be incurring over the life of the loan. If you go this route, make sure the bank’s financial representative understands your mortgage needs and can offer competitive interest rates.

Ultimately, it helps to remember that a mortgage is not just processing paperwork, says Ishakis.

“A good loan officer understands the whole picture and will give advice and work to structure a loan that is perfect and unique to the client,” she explains.

View Original post on Yahoo Homes
https://homes.yahoo.com/news/3-perks-of-original-lender-183125810.html

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Foreclosures fall to pre-housing bust levels

Foreclosures fall to pre-housing bust levels

Brought to you by:
CNN Money

The long national foreclosure nightmare is nearing its end, with foreclosure filings hitting their lowest level since before the housing bust.

Total foreclosure filings, including notices of default, scheduled auctions and bank repossessions, dropped to 127,790 in June, down 35% over the past 12 months, according to RealtyTrac. Overall, filings have hit their lowest monthly level since December 2006. The number of foreclosure filings have plunged so fast — down 14% since May — that the housing market could be back to pre-mortgage meltdown levels before the end of the year, according to Daren Blomquist, a vice president at RealtyTrac.

“Halfway through 2013 it’s becoming increasingly evident that foreclosures are no longer a problem nationally, [although] they continue to be a thorn in the side of several state and local markets,” he said.

The five states with the highest percentage of foreclosure filings last month were Florida, Nevada, Illinois, Ohio, and Georgia. In Florida, Miami, Orlando, Jacksonville, Ocala, and Tampa held the top five spots for filings among the nation’s metro areas.

While initial filings for foreclosures dropped by 45% year-over-year to a seven and a half year low, the number of homes that were further along in the process and were repossessed have not fallen as quickly.

“[At the last stage of foreclosure] they trail other filings,” said Blomquist.

Bank repossessions are still trending at a rate of more than 420,000 a year, compared with a historical average of 250,000, said Blomquist.

Many of these repossessions are occurring in states where courts supervise the foreclosure process and they are just now working through a backlog of foreclosures that built up after the so-called robo-signing scandal.

“The increases in judicial foreclosure auctions demonstrate that these delayed foreclosure cases are now being moved more quickly through to completion,” said Blomquist. “Given the rising home prices in most of these markets, it is an opportune time for lenders to dispose of these distressed properties.”

And as home values rise nationwide, more homeowners are able to keep their homes or sell them before they lose them to foreclosure.

Written by: Les Christie

FHA is tweaking programs to improve revenue and cut losses

Among other changes, new borrowers early next year are likely to be charged slightly higher annual mortgage insurance premiums.

By Kenneth R. HarneyNovember 25, 2012

WASHINGTON — You may have seen headlines last week about the Federal Housing Administration needing a taxpayer “bailout” by the Treasury and wondered: Uh oh. Is the FHA heading down the fiscal drain like Fannie Mae and Freddie Mac, which have required billions in federal assistance just to stay in business?

The answer is no, which is good news for the FHA’s traditional borrowers, who are primarily moderate-income, first-time purchasers, people with limited cash for down payments and less-than-perfect credit histories.

There is a strong possibility that the FHA will not require any money transfer from the Treasury, which in any event would not occur until September. Meanwhile, the FHA is making tweaks to its program rules that could affect some loan applicants in the months ahead, and which are designed to improve revenue flows to the agency and cut back on losses.

Among the most immediate changes, new borrowers early next year are likely to be charged slightly higher annual mortgage insurance premiums — 1.35% of the loan balance rather than 1.25% at present. On loans above $625,500 in high-cost areas such as California and metropolitan Washington, D.C., the annual premium will go to 1.6% from 1.5%.

This will not be a major problem for most people, but it could cause some buyers to check out the FHA’s competitors: private mortgage insurers whose monthly premiums on loans for applicants with high credit scores may be more attractive than the FHA’s.

To increase revenue streams long term, the FHA also is abandoning its practice of allowing borrowers to cancel their annual mortgage insurance premium payments when their loan balance drops to 78% of the property value. In effect, this will mean that borrowers who obtain 30-year FHA loans could be paying premiums for decades.

Is this a big deal? Clem Ziroli Jr., president of First Mortgage Corp. in Ontario, thinks it could encourage some borrowers with higher credit quality to “refi out” of their FHA loans and seek better deals in the conventional marketplace.

But Paul E. Skeens, president of Colonial Mortgage Group in Waldorf, Md., sees it differently. With fixed 30-year mortgage rates in the mid- to upper-3% range and virtually certain to increase — maybe significantly if the economy improves in the coming years — “Everybody is going to want to keep these loans forever,” he predicts. “They’re not going to want to refi.”

Other changes on the FHA horizon:

• More financial counseling for applicants who have low FICO credit scores, are purchasing their first homes and are seeking to make minimum 3.5% down payments.

• A new short-sale program that reaches out to existing FHA homeowners who are seriously delinquent and heading toward foreclosure. FHA Acting Commissioner Carol J. Galante said the agency plans to streamline the short-sale option — where owners are permitted to sell their house for less than the balance on the mortgage — to avoid the huge costs of foreclosures.

• Structural alterations to the FHA’s reverse mortgage program, which enables senior homeowners to withdraw funds based on the equity in their properties. The program dominates the industry and accounts for the vast majority of outstanding reverse loans in the country, but has produced inordinate losses to the FHA insurance fund because of home-value declines and the failure of some borrowers to make their property tax and insurance payments, thereby triggering foreclosures. Although few details are yet available and Congress would have to approve any statutory changes, Galante said the agency plans to restrict the amounts that seniors can draw down in a lump sum upfront, among other remedial actions next year.

Galante’s predecessor as commissioner, David H. Stevens, now chief executive of the Mortgage Bankers Assn., said in an interview that the FHA also needs to consider some form of basic “qualification standards” — reverse mortgage applicants should have sufficient income and assets to ensure that they don’t blow through their initial lump-sum drawdowns and have nothing left to pay taxes and insurance. Currently there are no such requirements.

The bottom line on the FHA’s forthcoming program tweaks? Jeff Lipes, vice president of Rockville Bank in Hartford, Conn., put it this way: The FHA isn’t making fundamental changes. Its basic mix of enticements — low down payments, low credit score requirements and generous underwriting rules compared with competitors — aren’t going away, “so I don’t think the tweaks will have that great an impact on most FHA buyers.”

 

Distributed by Washington Post Writers Group.

Copyright © 2012, Los Angeles Times

 

Borrower Behavior and Loan Statistics of Interest; Ally/Rescap Update; Chatter on Agency’s Future

by Rob Chrisman
Borrower Behavior and Loan Statistics of Interest; Ally/Rescap Update; Chatter on Agency’s Future
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Increase Font Size Apr 19 2012, 9:03AM
The United States is an amazing place – everyone is different! But here’s an interesting chart someone sent me on state’s teen pregnancy rates, and some interesting comments below it.

Knowledge is power – just think of all the data that is contained in title companies, MERS, national appraisal companies, loan origination systems, and so forth. When one looks at all the data out there, some interesting trends emerge. For example, the National Association of Realtors (NAR) has analyzed 2011 investor behavior, and, as LO’s can tell you, there was a significant rise in non-owner purchases last year. Investors purchased 1.23 million existing and new homes, an increase of 64.5% from 2010, and investment home sales comprised 27% of all activity, an increase of 17%. Nearly half of investor purchases were made in cash, and half were distressed homes. The regions that saw the most activity were the South (41%) and West (23%), while purchases in the Midwest and Northeast made up 17% and 15% of the total, respectively.

A recent study conducted by TransUnion has revealed that, when faced with credit card, auto loan, and mortgage debt, the typical troubled borrower is most likely to let their mortgage payments slip. Four million indebted borrowers were surveyed (that’s a lot of dinner-time phone calls!), and a mere 9.5% of those were delinquent on auto loans, while 17.3% were delinquent on credit card payments. Nearly 40% of the borrowers polled were behind on their mortgage, opting instead to pay auto and credit card loans.

January saw more short sales close nationally than foreclosures for the first time, meaning that banks were agreeing to more deals. Short sales accounted for almost 24% of home purchases in January versus about 20% for sales of foreclosed homes. (In January 2011 it was 16 and 23%, respectively.) Depository banks were never designed to be landlords, hold real estate, or voluntarily swallow losses on thousands or millions of homes. But they can process short sales in less time and at significantly less cost than foreclosures, leading to fewer foreclosures on the market, leading to fewer distressed properties on the market.

Lastly, Ellie Mae released a report using a sample of loan application data from its database for March compared to February 2012 and September and December 2011. (Ellie Mae States that there were two million loan applications processed through its systems in 2011.) In March, 61% of originations were for refinancing, about the same as three and six months previous but down from 67% in February. FHA-backed loans accounted for 28% versus 64% for conventional. A typical loan regardless of its purpose took 42 days to close in March, about the same as in February but down three to five days from December. The majority of loans that went through Ellie Mae were 30-year fixed-rate loans but 20% were 15 year and about 4% were ARMs.

In a stat of great interest to secondary marketing folks, Ellie Mae calculated a “pull-through” rate for a sampling of loans for which applications had been submitted 90 days earlier. The pull through for March was 47%: 56% for purchases and 42% for refi’s. The average loan closed in March had a FICO score of 749, an LTV of 77% and a DTI of 23/35. (Loans that were denied had an average FICO of 699, 85% LTV, and a DTI of 27/43.)

Bank of America is gone from wholesale and correspondent lending, but a) are still a huge retail force, and b) still dealing with legacy issues from its poorly executed Countrywide purchase (in comparison to Wells swallowing Wachovia & World Savings). BofA said first-quarter profit rose amid a rebound in trading and lower provisions for bad loans. Profit excluding certain one-time items increased to 31 cents a diluted share from 23 cents a year earlier, better than expected. Net income, which includes accounting charges, fell to $653 million from $2.05 billion. For mortgage originations, its market share has plummeted from about 25% in 2007 to 5% or less in recent quarters. Of great interest is how much of the HELOC portfolio will be reclassified into NPAs (due to the change in regulatory guidance that requires HELOCs with high LTVS over 100% be reclassified as an unsecured loan). The guidance is expected to impact $2B of existing loan volume.

In other big-bank news, Ally Financial announced that it’s wholly owned subsidiary Rescap did not make a scheduled interest payment on its 6.5% notes due April 2013 ($473mn outstanding). Rescap now has a 30-day grace period before creditors can accelerate the debt and declare an event of default. Most believe Rescap’s bankruptcy is eminent. We all know that chatter about a potential restructuring and/or bankruptcy filing by Rescap has been prevalent for a few years now – darn those mortgages originated between 2005 and 2007. Recently debt has been extended or renegotiated. Barclays points out that “according to the PSAs that govern Rescap-serviced RMBS trusts, the trustee has the option to terminate the master servicer’s rights and obligations if the master servicer (Rescap) becomes insolvent. The trustee would be required to terminate the master servicer’s responsibilities if directed to by 51% or more of the certificate holders. The trustee would then succeed to the master servicer’s role and be entitled to a similar compensation arrangement.” Things become even more complicated, based on the trustee, primary servicer, master servicer, and which deals are impacted by this, how the servicer settlement factors into the situation, and which servicing assets can be split. There are a lot of moving pieces that make my head spin, mostly focused on the impact to investors rather than the origination universe.

Bloomberg reported on the latest Treasury “fix” for Fannie Mae and Freddie Mac. Once again, it raises the question about what will require Congressional approval and what won’t, because if any major change requires Congress to vote on it, nothing will happen until early 2013. In February of 2011 the Treasury released a “white paper” various options for the agencies, and it seems that the Treasury has focused on Option 3 (sounds like a science fiction movie title) which has the greatest role for the government. In a move that may be used to gauge public opinion, U.S. Treasury officials are leaning toward recommending that Fannie Mae and Freddie Mac be replaced with a government safety net for the mortgage finance system and continued federal backing for loans to lower-income homebuyers. Some believe that the uncertainty surrounding the future of the mortgage finance system has impeded the rebound of the housing market and the private housing-finance market.

Option 3 is where the government would supply “assistance for low- and moderate-income borrowers and catastrophic reinsurance behind significant private capital, private companies could insure mortgage bonds, with the government paying out to bondholders only after shareholders were entirely wiped out. Also on the table are proposals about a government-run “secondary market facility” for residential mortgages to replace Fannie & Freddie, or replacing the GSE’s with privately-capitalized entities that would purchase government backing for the mortgage bonds they issued. But at this point it appears that the Treasury is leaning toward trying to reduce the government footprint on housing – good luck with that one.

Pricing models everywhere are reeling (maybe that’s too strong of a word) from Wells Fargo’s changes, especially in the mandatory sales world. The bank distributed a new mandatory pricing tool with higher guarantee fees (about 2 basis points in yield which is about 11 basis points in price) that impact the buy-up and buy-down multiples. Originators selling to Wells under a best efforts scenario saw this hit about a month ago, but sellers are warned that another hit will impact July deliveries/agency contract renewal.

Conversely, word from the street suggests that there will be improvements to the Fannie 30-year, fixed-rate, Refi Plus >125% HARP 2.0 whole loan pricing model. Five months ago Fannie provided guidance that it would initially price the >125% LTV product originated under the expanded HARP program at the same price as 15-year and 30-year fixed rate mandatory and best efforts whole loan pricing. But with the recent sales of MBS’s backed by this product, settling in June, it has become evident that a market has developed for the 30-year >125% LTV product (which traders have given a “CR” prefix). So Fannie adjusted its whole loan pricing to reflect current market conditions.

Wednesday was another decent day for folks who prefer non-volatile markets. Traders reported that MBS volume was below normal, while the usual culprits were in buying: banks, REITs, insurance companies, and hedge funds, along with the Fed. By the time the whistle blew, MBS prices ended higher by about .125, and the “benchmark” 10-yr T-note was better by about .250 (1.98%). Thursday morning we have the usual Jobless Claims (expected to drop to 370k from 380k, but it “dropped” to 386k from a revised 388k) with Existing Home Sales for March (called higher to 4.62 million from 4.59 million), Leading Economic Indicators (expected to drop slightly), and the Philly Fed Survey. At 11AM EST the U.S. Treasury Department will announce details of next week’s auctions of 2-, 5- and 7-year notes, estimated unchanged at $99 billion. But when it comes right down to it, none of this is expected to move rates too much, so perhaps, barring some unexpected event, we’ll end about where we start off rate-wise. This morning we’re starting off with the 10-yr, as a proxy for interest rates in general, at 1.96% and MBS prices roughly unchanged.

The Jury…

In a criminal justice system based on 12 individuals not smart enough to get out of jury duty, here is a jury to be proud of:

A defendant was on trial for murder. There was strong evidence indicating guilt, but there was no corpse. In the defense’s closing statement, the lawyer, knowing that his client would probably be convicted, resorted to a trick.

“Ladies and gentlemen of the jury, I have a surprise for you all,” the lawyer said as he looked at his watch. “Within one minute, the person presumed dead in this case will walk into this courtroom.” He looked toward the courtroom door. The jurors, somewhat stunned, all looked on eagerly.

A minute passed. Nothing happened.

Finally the lawyer said, “Actually, I made up the previous statement. But you all looked on with anticipation. I, therefore, put it to you that you have a reasonable doubt in this case as to whether anyone was killed, and I insist that you return a verdict of not guilty.”

The jury retired to deliberate. A few minutes later, the jury returned and pronounced a verdict of guilty.

“But how?” inquired the lawyer. “You must have had some doubt; I saw all of you stare at the door.”

The jury foreman replied:

“Yes, we did look,

But your client didn’t.”

Despite Weaker Treasuries, Mortgage Rates Improve

by Matthew Graham
Despite Weaker Treasuries, Mortgage Rates Improve
Nov 29 2011, 4:52PM

Mortgage Rates improved again today. This would be a good day to NOT be looking at US Treasuries for an indication of mortgage rates. 10yr yields moved about 0.02% higher while the Best-Execution mortgage rate at many lenders moved down to 3.875%.

The increased availability of 3.875% Best-Ex rates today would have us feeling even more like locking than simply entertaining 4.0% Best-Execution offerings of the past few weeks. Nothing changes about the rate guidance at current levels.

Today’s BEST-EXECUTION Rates

•30YR FIXED – 4.0%, increasing amount of 3.875’s.

•FHA/VA – 3.75%, fewer 3.875’s

•15 YEAR FIXED – 3.375%-3.5%
•5 YEAR ARMS – low 3% range, huge variations from lender to lender.
Guidance:

In a fundamental sense, we’re well aware of the fact that European drama continues to help domestic bond markets. Technically, we’re impressed that mortgage rates have been this flat for this long. The “batting cage” metaphor or the chart below it if you prefer, continue to be the best guidance we can offer in this uncertain environment. With the ongoing sideways movement of Best-Execution around 4%, the chances increase that the next move will carry a bit of momentum with it (as if the current calm is akin to “storing energy”). If it goes in a mortgage rate-friendly direction, there’s limited benefit (an eighth to a quarter of a point of improvement) versus the damage that could result from it going the other way. Fortunately, neither of those eventualities appear to be happening at the moment, so it’s hard to go wrong. We’ll let you know the day that changes.

Batting Cage Metaphor:

(this can be applied to any endeavor where you’re trying to “go out on a high note”). Rate offerings from lenders over the past month have been like a temperamental pitching machine in a batting cage-generally getting the ball across the plate, but with no really juicy pitches. But recently, we’ve seen some more consistently good pitches (best-ex around 4.0% instead of 4.25%). Sure… you’ve seen better, but not by much (3.875% and RARELY 3.75%). How many more will you count on before calling it a day? Personally, I’d like to end my batting cage session with a nice hit. The more “pitches” you wait for with rates already at a 4.0%, the greater the risk that the next pitch will be a curve-ball. To drop the metaphor, although rates this low CAN go slightly lower, the improvements are fairly minimal compared to how much higher they could go. Still, if you’re not in any particular need to refinance and are operating on a longer-term perspective, we continue to feel good about that “wall” at a 4.25% best-execution level as a good stop-loss point for inclined floaters.

Harp Mortgage Program

The HARP Program

The Home Affordable Refinance Program (HARP) has been extended until December 31, 2013 and allows homeowners to refinance into low mortgage interest rates even if the property has decreased in value.

Established in 2009, for Fannie Mae and Freddie Mac, the Home Affordable Refinance Program provides an option for homeowners to refinance “Under Water Mortgages”. A HARP Refinance addresses situations where the homeowner’s property value has fallen causing them to no longer to qualify under traditional underwriting criteria. Homeowners with a loan owned by Freddie Mac or Fannie Mae have the opportunity to refinance with any participating lender as long as the resulting loan is less than 125% of the current property’s value.

The following criteria must be met to qualify for the Home Affordable Refinance Program:

• You must live in the home being refinanced.
• A HARP refinance only applies to Fannie Mae or Freddie Mac mortgages.
• The homeowner must be able to afford the new lower payment.
• The current mortgage must be up to date with no late payments in the past twelve months.
• Payments on the new loan must be more affordable or more stable than on the existing loan.
• The new mortgage balance may not exceed 125% of your home’s current value.
• The maximum Loan to Value (LTV) cap has been removed on home owners looking to refinance in to a fixed rate mortgage.
• However for homeowners looking to refinance in to an adjustable rate mortgage the maximum LTV is set at 105%.

The popularity of the HARP mortgage program has steadily grown since 2009. The three months ending in February 2011 saw record volume of 145,000 new HARP loans.

Appraisals are slowing down the housing recovery

By Paul Mackay – PMACdirect
Monday, November 15, 2011
Posted: 5 pm PT

Here’s another factor working against the housing market recovery : appraisals. Real-estate professionals say that the results of home appraisals are increasingly stalling or preventing sales.

Fewer than 10 percent of realtors blamed appraisals for killing or delaying a deal prior to 2009, according to the National Association of Realtors. But in 2010, 29 percent of them said it was the cause and through September of this year, a third of them said so.

The culprit seems to be a combination of more thorough appraisals required by lenders to determine a home’s value and a housing market that makes it difficult to find homes that are comparable. When the market was more stable, appraisers could compare values with as few as three homes in the area, but now lenders are requiring many more comparisons, which appraisers say makes it harder to find similar properties to compare.

The appraisal is important for buyers because mortgages are typically offered for an amount up to 80 percent of the appraised value of the home. A lower appraisal means a smaller mortgage. For sellers, the appraisal could delay the sale and send them back to the negotiating table if their price is above the appraised value. Often, the buyers and sellers will meet in the middle when it comes to the difference between the selling price and the appraised value in order to get the deal done.

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