Mortgage Update

Refinances and purchases are really picking up the market this week. With these low rates there’s no telling how busy you’re going to be!

Mortgage Update
· Check out my jumbo rates!!!
· Check out my 5 Year Fixed $$$$$ as well.
· Get your buyers off the fence with today’s Low Rates.

QUICK TIP 1: VA loans allow up to 4% towards sellers paid closing costs while FHA allows up to 6%!!

QUICK TIP 2: USDA loans allow for the buyer to finance closing costs and repairs if the appraised value comes in higher than the purchase price. You can use up to the appraised value.

These three programs will help you get more buyers!!

The Homeowner Affordability and Stability Plan

President Obama unveiled his plan to help stabilize the housing market and keep millions of borrowers in their homes.

The Homeowner Affordability and Stability Plan includes two initiatives to help struggling homeowners. One is a refinancing program for homeowners with less than 20% equity in their homes, or who owe more than their home is worth. The second program attempts to lower monthly payments for homeowners at risk of losing their home. In addition, the plan includes a third initiative to support low mortgage rates by strengthening confidence in Fannie Mae and Freddie Mac.

Many of the plan’s details are still being worked out and will not be announced until March 4, here is an overview of the plan’s main components.

Refinancing Initiative
Under current rules, those families who own less than 20% equity in their homes have a difficult time refinancing and taking advantage of the historically low interest rates. Therefore, the refinancing initiative in the new plan provides refinancing help for homeowners with less than 20% equity in their homes or who owe more than their home is worth. This initiative is open to homeowners who have conforming loans which are guaranteed by Fannie Mae and Freddie Mac, and who owe up to 5% more than their home is worth.

According to the plan, “credit-worthy” or “responsible” homeowners can refinance their mortgage into a 30- or 15-year, fixed-rate loan based on current market rates. The refinanced loan, however, cannot include prepayment penalties or balloon payments. For many families, this low-cost refinancing may help reduce their mortgage payments by up to thousands of dollars per year.

As with the rest of the plan, details about this initiative will be released at a future date—including what, if any, credit score requirements will be included.

Stability Initiative
This initiative aims at providing help to individual families as well as entire neighborhoods by helping reduce foreclosures and stabilize home prices. It is intended to help homeowners who are struggling to afford their mortgage payments, but cannot sell their homes because prices have fallen significantly.

The goal of this initiative is simple: “reduce the amount homeowners owe per month to sustainable levels.” To accomplish this, lenders are encouraged to lower homeowners’ payments to 31 percent of their income by lowering their interest rate to as low as 2% or by extending the terms of the loan. In addition, lenders can also lower the principal owed by the borrower, with Treasury sharing in the costs.

Homeowners who are current on their mortgages but are struggling can still apply for this program. As such, this is one of the few programs designed to help homeowners who may face delinquency soon, but are current at the moment.

Since the focus of this initiative is on helping families and neighborhoods, investment properties do not qualify. This initiative also includes a number of additional elements and incentives that benefit homeowners and lenders alike, including:

Incentives to Help Borrowers Stay Current: To provide an extra incentive for borrowers to keep paying on time, the initiative will provide a monthly balance reduction payment that goes straight towards reducing the principal balance of the mortgage loan. As long as a borrower stays current on his or her loan, he or she can get up to $1,000 each year for five years.

Reaching Borrowers Early: To keep lenders focused on reaching borrowers who are trying their best to stay current on their mortgages, an incentive payment of $500 will be paid to servicers, and an incentive payment of $1,500 will be paid to mortgage holders, if they modify at-risk loans before the borrower falls behind.
Supporting Low Mortgage Rates
As part of the Homeowner Affordability and Stability Plan, the Treasury Department is increasing its funding commitment to Fannie Mae and Freddie Mac to ensure the strength and security of the mortgage market and to help maintain mortgage affordability. This portion of the plan will use using funds already authorized in 2008 by Congress for this purpose.

The increased funding will enable Fannie Mae and Freddie Mac to carry out ambitious efforts to ensure mortgage affordability for responsible homeowners, and provide forward-looking confidence in the mortgage market.

Again, the government plans to unveil the final details of the plan on March 4, 2009. For now, you can download a sheet of common Questions and Answers produced by the government at: http://www.treas.gov/initiatives/eesa/homeowner-affordability-plan/ConsumerQA.pdf

I will continue monitoring the plan as new information becomes available. If you have any questions or would like to discuss how this may specifically impact you, I’d be happy to sit down with you. Just call or email me to set up an appointment.

What is the expected impact of HOPE for Homeowners (H4H)?

What is the expected impact of HOPE for Homeowners (H4H)? Per HUD.gov

The Congressional Budget Office estimates that as many as 400,000 homeowners could avoid foreclosure through this program over the next three years.

What is the value of the HOPE for Homeowners program to lenders?

Only FHA approved mortgagees can originate H4H loans. H4H loans may benefit lenders by helping them avoid foreclosure expenses. Although the lender will likely have to write down their existing loan in order to originate an H4H loan, it is still less expensive than foreclosure and disposition of property.

Why should existing lien holders accept the short payoff that is required under the terms of the law?

HUD understands that it will be a challenge to encourage lien holders to accept short payoffs in order to participate in this program, especially when there are other loss mitigation tools available that may provide a more suitable solution. However, in instances where those tools are ineffective, we believe that the holders of these mortgages should accept the short payoffs in lieu of the tremendous losses associated with foreclosure. Similar challenges exist with subordinate lien holders but by offering them the opportunity to have an interest in FHA’s share of future appreciation in the property, we hope to entice these lien holders to participate as well.

What advice should loan servicers/lenders give borrowers who are facing difficulties fulfilling their obligations on their existing mortgage(s)?

The H4H program is another loss mitigation option to keep borrowers in their homes on sustainable and affordable terms. Lenders should provide information to borrowers on possible options include contacting a HUD approved counseling agency. Borrowers may call 1-800-569-4287 or visit http://www.hud.gov/offices/hsg/sfh/hcc/hccprof14.cfm

When can I start originating H4H loans?

The program is effective from October 1, 2008 to September 30, 2011.

Eligibility and Underwriting issues

How does the H4H program differ from FHA Secure?

Under H4H:

• Any type of first mortgage as long as it was originated on or before January 1, 2008.

• All existing lien holders must waive prepayment penalties and late charges, as well as extinguish all liens against the property.

• Existing first lien holders are required to accept the proceeds of the H4H mortgage as payment in full.

• Borrowers will be required to share both the initial equity created with the H4H loan, and future appreciation.

• The maximum loan amount is $550,440, nationwide.

How does the appreciation sharing piece work?

To entice subordinate lien holders to participate in the negotiation process and release their liens, FHA has the authority to share its future appreciation entitlement with them. At settlement, subordinate lien holders will receive a certificate that evidences their interest as an obligation backed by HUD, with payment conditional on the value of HUD’s appreciation share.

Are there special underwriting requirements for the H4H program?

Yes, in addition to standard underwriting procedures, the underwriter must:

• Determine that the borrowers existing total monthly mortgage payment is in excess of 31% of their gross monthly income in March of 2008.

• Determine the borrower’s total monthly mortgage payment on the new H4H loan is less than the borrower’s total monthly mortgage payment on existing loans.

• Determine that the DTI’s are at or below 31/43. However, if the borrower has successfully completed a 3 month trial modification, ratios can be expanded not to exceed 38/50.

• Review income as reported on the transcript or copy of the borrower’s income tax returns for the previous two years.

How is the total monthly mortgage payment on the existing loan(s) calculated for the purpose of qualifying the borrower for the H4H program?

The total monthly mortgage payment is defined as the fully indexed, fully-amortizing Principal, Interest, Taxes and Insurance (PITI) payment. This includes homeowner’s association dues, grounds rents, special assessments, and all subordinate liens as of March 1, 2008.

Can I add a non-occupying co-borrower to help qualify?

No, however you may add a non-occupying ,co-signer who does not have any ownership interest in the property.

What if there is currently a non-occupying co-borrower on the loan?

The non-occupying co-borrower will need to quit claim their interest in the property prior to the occupying co-borrowers applying for the H4H program.

What loans are eligible for refinance under the H4H program?

Any type of mortgage is eligible for refinancing under the H4H program, including conventional (prime, Alt-A, subprime), or government backed (FHA, VA, or Rural Development), fixed or adjustable rate mortgage.

The loan must have originated on or before January 1, 2008, the borrower must have made at least six (6) payments on the existing mortgage, and the total monthly mortgage payment exceeds 31% or the borrower’s March 2008 gross monthly income. The borrower may be current or delinquent at the time the new H4H mortgage is originated.

What properties are eligible?

The property to be refinanced must be the borrower’s primary and only residence in which the borrower has an ownership interest.

Only 1-unit properties are eligible, including condominiums, cooperative units and manufactured housing permanently affixed to realty.

Does the borrower have to be delinquent on their existing loans to be eligible for the H4H program?

No, the borrower may be current or delinquent at the time of application for the H4h mortgage.

What must the existing lienholders do?

Existing first mortgage lien holders must waive any and all prepayment penalties and late payment fees, agree to accept the proceeds from the H4H mortgage as payment in full, and release their outstanding mortgage liens.

Existing subordinate lien holders must waive all prepayment penalties and late payment fees as well as release their outstanding mortgage liens.

Will I have to get a new appraisal or can I use an AVM?

In all cases a new FHA appraisal must be ordered specifically for the H4H transaction and the appraisal should be no more than 3 months old at the time of closing.

What are the rates for the Upfront Mortgage and Annual Insurance Premiums (UFMIP)?

The Upfront Mortgage Insurance Premium (UFMIP) is 3% and the Annual is 1.5%

Can the UFMIP be financed?

Yes, however the maximum LTV under the H4H program is 90% regardless of whether or not the UFMIP is financed.

Will there be additional disclosure requirements?

Yes, the originating lender must provide the HOPE for Homeowners Consumer Disclosure and Certification form at the time of initial application for the Program.

Are there additional lender certifications?

Due to the statutory requirements and the unique nature of the program, lenders and underwriters will execute a certification assuring HUD that they have underwritten and closed the loan in accordance with the H4H program guidelines.

What is the maximum LTV for the H4H program?

The maximum LTV for the Program is 90%, including any financed UFMIP.

Who can pay closing costs?

Standard FHA policy regarding closing costs is applicable, including the 1% cap on origination fees.

• Borrowers may pay closing costs from their own assets,

• They may be financed into the mortgage provided the 90% LTV limit is not exceeded,

• The servicing lender, originating lender and/or a third party (e.g. a Federal, state or local Program) and/or

• The originating lender my pay the borrower’s closing costs and prepaid items through premium pricing.

Is subordinate financing allowed to pay closing costs, like under FHASecure?

No. Subordinate financing is not allowed in the first 5 years of the mortgage except in when necessary to ensure maintenance of property standards.

Will Wall Street be receptive to purchasing these new loans?

These loans can be securitized in Ginnie Mae FS Pools, making them attractive to Wall Street and other investors.

Interest rates are at a 4 month low

It’s shaping up to be a busy month! Interest rates are at a 4 month low and I’m continuing to watch the bond market for you. See the article attached as well as the newsletter for an industry update. Make it a great month and if I can help you are someone you know with a purchase mortgage or refinance. Attached is a free appraisal flyer for you to use or give to a friend.

Has the Housing Bubble Popped?
http://www.mortgagenewsdaily.com/09052008_Housing_Bubble.asp

Make it great!

Oh by the way, I’m never too busy for any of your referrals.

Rates Get Better

I mentioned on Friday that interest rates were on a roller coaster ride late last week. Fortunately, I noticed that mortgage bonds were overbought midweek and got my clients locked in saving most of them 0.125% on their 30 year fixed mortgages. This saved them anywhere from $25 and $40 per month. I look forward to helping your clients too. This weeks newsletter explains what happened last week.

100% financing

Are you tired of your clients hearing NO, NO, NO, I can’t find anyone to qualify me on 100% financing, interest rates are too high, I don’t have enough money for a down payment or closing costs, or I am in a declining or soft real estate market and cannot meet my lender’s new qualifying guidelines?

If you are tired of hearing these objections, then I can help you sell more homes because I can turn these frustrated clients into buyers.

Call me today to discuss the benefits of FHA financing for your clients. I have a privately funded down payment assistance program that has been approved by the FHA to help get families into homes.

This program allows:
Down payment and closing cost assistance to the buyer
Lower interest rates
No declining or soft market policy
Easier to meet with low or no credit scores needed
No asset reserves required
This program is restricted to primary residences only
Full documentation, but also allows non-occupant co-borrowers to help qualify.
The maximum loan amount 500K.

The responsibility of executing this program correctly will be based on the ability of the buyer, seller, and lender all working together to accomplish our goal. I will be more than happy to school all who are involved in the transaction to help accomplish this goal.

Bear Stearns bailout

I hope you had a relaxing Easter weekend. This weeks update covers the news about last weeks Bear Stearns bailout. Ever thought about the Pros and Cons of buying a car versus leasing one? This week’s update covers it all! Also, just in case you didn’t get a chance to read why new mortgage rates go up after a Fed cut see the attached article.

I’d like to address one topic today. Have you ever noticed in the Desert Sun that many of the articles are written by the Associated Press? Ask your clients who wrote the articles they are reading and quoting and ask them if it’s a nationally related article or a local article. You may be surprised!



St. Patrick’s Day

I’m sure you’re off to a very green St. Patrick’s Day! Last week the financial markets were pretty green for you too with mortgage rates dropping by as much as 0.25% for most programs. But be careful! With inflation numbers down reported last week the Fed could cut Fed rates by another 0.75% in tomorrows meeting. These rates are tied to the Prime rate, consumer loans, and credit cards, but the Fed rates are what the Fed lends to banks overnight! With a Fed cut, inflation could rise and when inflation rises mortgage rates are likely to go up. I recently sent out an article explaining this. If you’d like to look at it again please let me know. Make it a great week!

Oh by the way, I’m never too busy for any of your purchase or refinance mortgage referrals! Have a safe and fun St. Patrick’s Day!

MMG Weekly For the week of Mar 17, 2008 — Vol. 6, Issue 12
“JUST WHEN I THOUGHT I WAS OUT…THEY PULL ME BACK IN.” Al Pacino in the 1990 film, The Godfather III And if Bonds and home loan rates thought they were out of the days of volatility…they got pulled right back in, as last week brought daily price swings of almost historic proportions. For the week overall, fixed home loan rates improved by about .25%.

What led to the dramatic action this week? The bipolar emotional state of the markets began deeply depressed on Monday, but then were filled with joy Tuesday, when the Fed made an interesting move by announcing the creation of the new Term Securities Lending Facility (TSLF). The TSLF will provide borrowing banks with $200 Billion to draw on to help inject liquidity into the credit markets, and further, will accept some mortgage-backed securities as collateral, which effectively may help to “upgrade” the value and perception of battered Mortgage Bonds.

But in the meantime…struggles are still being played out related to the downgrade and losses experienced by companies holding massive amounts of mortgage-backed securities. Headlines hit on Thursday about The Carlyle Group, which manages a portfolio of mortgage-backed securities, not being able to meet a margin call and being forced to sell off large amounts of mortgage paper into the markets at great financial losses. Then on Friday, the news broke that financial brokerage and investment banking giant, Bear Stearns had suffered enormous losses, and their lack of liquidity endangered them from going out of business…or “sleeping with the fishes”. The new aforementioned TSLF is designed to help this type of liquidity problem, but it will not go into effect for a few weeks, and Bear Stearns would not last that long. Coming to the rescue with loans were both the NY Fed and JP Morgan Chase. These sure are exciting times.

One bright spot for the financial markets was a low consumer inflation reading. The Overall and Core Consumer Price Index (CPI) figures were reported unchanged, far cooler than the expected increases of 0.3% and 0.2% respectively. These tame inflation numbers give the Fed a green light to cut the Fed Funds Rate by another .75% at Tuesday’s meeting…but read on to understand exactly how this cut may impact YOU.

IF THE IDEA OF KEEPING BUSINESS IN THE “FAMILY” CONJURES UP IMAGES OF MICHAEL CORLEONE AND OFFERS THAT CAN’T BE REFUSED – YOU’LL WANT TO READ THIS WEEK’S MORTGAGE MARKET VIEW TO LEARN SOME TIPS ON RUNNING A SUCCESSFUL FAMILY BUSINESS, WHERE YOU LIKELY WON’T HAVE TO WORRY ABOUT EITHER GUNS OR CANNOLI’S.

Forecast for the Week

So if you love all the excitement, drama, intrigue and crazy volatility of late…you’ll love the week ahead, as it is loaded full with market movers. We’ll get the latest readings on the health of the manufacturing and housing sectors, but the main event will take place on Tuesday when the Federal Reserve announces its latest interest rate decision and Policy Statement.

The Fed is expected to cut the Fed Funds Rate by another .75%. However, as we’ve seen following every Fed rate cut in the recent cycle, chances are very good that Bond pricing will worsen following the cut…which results in higher home loan rates. This happens because Fed rate cuts help to stimulate the economy, by making it less expensive to finance personal and business purchases…and this in turn fuels inflation, the arch-enemy of fixed return assets like Bonds, which home loan rates are based on.

So a word to the wise – if you or someone you know has been ready to move forward on a purchase or refinance, there’s no time like the present. Be sure to get in touch with me, so I can explain your options and help plan a great strategy for your home loan.

Chart: Fannie Mae 5.5% Mortgage Bond (Friday Mar 14, 2008)

The Mortgage Market View…

BUT DON’T EVER TAKE SIDES WITH ANYONE AGAINST THE FAMILY AGAIN…EVER

These lines spoken by Michael Corleone to his brother Fredo could very well apply to small family businesses, which are critical to the nation’s economy. In fact, according to the National Federation of Independent Businesses, more than 1.2 Million businesses across the country are owned and operated by spouses. While these thriving ventures in capitalism are great for the economy, they can cause a lot of stress on your family relationships. That’s why experts recommend you follow a few simple suggestions to keep the business–and your family life–running smooth!

Only Fools Rush In. Starting a family business is a huge commitment. Although it sounds romantic, it’s a lot of work to…well…make it work. Before you jump in, consider what type of business is truly right for you; how the business will impact your financial plans; and how you’ll still make sure you have time in your schedule to enjoy non-business related family time. Because, as The Don says, “a man who doesn’t spend time with his family can never be a real man”.

Put It In Writing. The first step to making your dream a reality is putting together a business plan. The Small Business Administration has a great website that can help you write your business plan. You’ll also need to apply for a business license, tax identification number, and even business loans. Again, you can find the most requested business documents on The Small Business Administration website.

Clarify Roles and Responsibilities. To help avoid frustrations and arguments in the future, make sure everyone agrees on who will be responsible for what. Give yourselves titles and draft job responsibilities…then make sure everyone is happy with their role, and that all of the important everyday duties are covered. Make sure you determine who will pay the bills, who will negotiate contracts, who’s in charge of the marketing plan, who does the hiring, and so on. You don’t want to risk overlooking something or arguing about it later.

Protect Yourself. More important than having Luca Brasi as your bodyguard is making sure you plan your finances and stock away plenty of money to hold you over, especially during the start up phase. Most experts recommend having three to six months worth of living expenses in savings, depending on whether one or two people in the family will be relying on the business as their main income. You’ll also want to meet with a financial planner to make sure your retirement and other financial plans stay on track – and if you need a referral to a great financial pro, just let me know.

Set Boundaries… and Stick to Them! It’s easy to let the business take over your family life. Little by little the business successes and setbacks slip into family conversations… it’s only natural. But don’t let them take over completely. To alleviate this problem, make sure you set up regular “business meetings” where you can talk about key issues and exchange ideas about the business. In addition, establish some off-limit times where you’ll devote yourselves to each other and your family life. After all, even family businesses need some time “away from the office.”

Starting a business with your spouse or family is an exciting time. The key is to harness that excitement while staying cool-headed enough to make smart personal and financial decisions. If you or someone you know needs help with these important details, please don’t hesitate to call. I’ll be happy to discuss your needs and put you in touch with other professionals that can help.

Fed Chair Ben Bernanke

Good Morning! Hope you’re off to a great week!

Last week in mortgage news we saw rates improve by about 0.25% to 0.375%. This was a result from Fed Chair Ben Bernanke and some bad news for the economy from several reports. Up and coming… the Economic Stimulus Package… do you know what to do with your tax rebates? See the tips below!

Oh by the way, if you have a family member or friend from work interested in buying or refinancing a home, I am never too busy for your referrals. Please call or email me their name and I’ll be happy to follow up with them!

Make it a great week!

-Sean

Core Personal Consumption Expenditure Index (PCE)

Happy Friday! Attached is my weekly rate update check it out!

This week was a step in the right direction as far as mortgage pricing was concerned. We’ve seen rates come back down about 0.25% across the board when compared to last week. 30 year fixed conforming rate is at 5.75% with 1 point.

Today, the Core Personal Consumption Expenditure Index (PCE), the Fed’s favored gauge of consumer inflation, was reported in line with estimates for the month of January. When inflation is high mortgage rates go up.

Still no word from HUD regarding conforming loan limit changes; HOWEVER, as soon as I hear what they are I will be sure to send you a special alert!

Make it a great weekend and remember I am never too busy for ANY of your purchase or refinance mortgage referrals!