Fannie Mae is offering a 3.5% incentive for buyers who purchase and close on a Fannie Mae-owned home between January 28 and April 30, 2010. Buyers purchasing properties listed on HomePath.com that are closed within this period may receive up to 3.5% of the final sales price for:
· Closing costs;
· The purchase of new Whirlpool® appliances by Fannie Mae; or
· A mix of closing costs and appliances, at the buyer's discretion, up to the maximum 3.5%.
To be eligible for this incentive:
· Offers must be accepted on or after January 28, 2010;
· Property sales must close before May 1, 2010, and;
· Buyers must be owner-occupants (investors are excluded).
For more information about this incentive, visit www.HomePath.com.
Get help before you fall behind on your FHA mortgage
On Friday, the Federal Housing Administration announced that it will assist borrowers before they become delinquent on their mortgage. Borrowers will need to prove financial problems caused by job loss, fewer hours, lower wages or less self-employed earnings.
Borrowers may also qualify based on a change in circumstances, such as a death or disability.
The workouts available include forbearance, a postponement or reduction in payments for a specified period. This does not actually forgive the payments, the arrearages are added to balance later in the mortgage term.
In more severe cases, borrowers may qualify for permanent payment reductions. This may be done by increasing the term of the loan, reducing the interest rate or even forgiving principal -- or a combination of the three.
Borrowers may also qualify based on a change in circumstances, such as a death or disability.
The workouts available include forbearance, a postponement or reduction in payments for a specified period. This does not actually forgive the payments, the arrearages are added to balance later in the mortgage term.
In more severe cases, borrowers may qualify for permanent payment reductions. This may be done by increasing the term of the loan, reducing the interest rate or even forgiving principal -- or a combination of the three.
Housing Reform Urged by Attorney Generals
A group of 12 state attorney generals is urging the Obama administration to expand the current Making Home Affordable program.
The officials recommended cutting loan balances in addition to lowering mortgage rates and monthly payments, especially in areas that have been hardest hit by declining home prices.
Additionally, the group wants loan servicers to reform adjustable rate mortgages. Currently, 40 percent of these mortgage loans are delinquent and many are expected to go into foreclosure.
The officials recommended cutting loan balances in addition to lowering mortgage rates and monthly payments, especially in areas that have been hardest hit by declining home prices.
Additionally, the group wants loan servicers to reform adjustable rate mortgages. Currently, 40 percent of these mortgage loans are delinquent and many are expected to go into foreclosure.
Delays for homebuyer tax credit
Good news homebuyers: You can file for your $8,000 first-time homebuyer tax credit again.
The bad news: you cannot e-file your taxes so there are going to be long delays.
Buyers who purchased properties after November 6, 2009 had to wait to file until the IRS released a new form and instructions. On January 15, 2010, the IRS finally posted the new form 5405.
New buyers can no longer file form 5405 electronically because of the additional documentation required: proof of residency, a signed mortgage statement, and a drivers license, which the e-file system is not equipped to handle.
For additional information, visit http://www.irs.gov/.
The bad news: you cannot e-file your taxes so there are going to be long delays.
Buyers who purchased properties after November 6, 2009 had to wait to file until the IRS released a new form and instructions. On January 15, 2010, the IRS finally posted the new form 5405.
New buyers can no longer file form 5405 electronically because of the additional documentation required: proof of residency, a signed mortgage statement, and a drivers license, which the e-file system is not equipped to handle.
For additional information, visit http://www.irs.gov/.
Strategic Defaulters Add to Foreclosure Crisis
Strategic defaulters are a new trend that is threatening recovery of the housing market.
Unlike borrowers who defaulted on their mortgage because they lost their job or purchased a home they could not afford, the strategic defaulter can afford to keep paying the mortgage, but believes it is best financially to let the house go into foreclosure.
According to a recent study by Experian, the number of strategic defaults more than doubled to 588,000 from 2007 to 2008, mainly because the homeowner owed more than the house was worth.
Unlike borrowers who defaulted on their mortgage because they lost their job or purchased a home they could not afford, the strategic defaulter can afford to keep paying the mortgage, but believes it is best financially to let the house go into foreclosure.
According to a recent study by Experian, the number of strategic defaults more than doubled to 588,000 from 2007 to 2008, mainly because the homeowner owed more than the house was worth.
HAMP on track to meet goal
More than 110,000 permanent loan modifications were approved under the Obama administration’s Home Affordable Modification Program (HAMP) as of December, according to the U.S. Dept. of the Treasury and the Dept. of Housing and Urban Development (HUD). Under HAMP, more than 850,000 homeowners have had a median payment reduction exceeding $500.
At its current pace, HAMP is on track to meet the goal of assisting 3 million to 4 million homeowners by reducing monthly mortgage payments to affordable and sustainable levels, according to the report.
At its current pace, HAMP is on track to meet the goal of assisting 3 million to 4 million homeowners by reducing monthly mortgage payments to affordable and sustainable levels, according to the report.
FHA 90-day anti-flipping rule waived
The Dept. of Housing and Urban Development (HUD) announced Friday it will eliminate for one year the Federal Housing Administration (FHA) 90-day anti-flipping rule.
FHA’s anti-flipping rule generally prohibits insuring a mortgage on a home owned by the seller for less than 90 days. That rule already has been waived for certain transactions, including REOs. Beginning Feb. 1, buyers may use FHA-insured financing to purchase properties resold through private developers and investors. This one-year waiver will give FHA buyers access to a broader array of recently foreclosed properties.
Under the temporary waiver, all transactions must be made at arm’s-length and may require additional documentation of improvements and justification of certain price increases. Additional documentation may include a second appraisal and a property inspection ordered by the lender.
FHA’s anti-flipping rule generally prohibits insuring a mortgage on a home owned by the seller for less than 90 days. That rule already has been waived for certain transactions, including REOs. Beginning Feb. 1, buyers may use FHA-insured financing to purchase properties resold through private developers and investors. This one-year waiver will give FHA buyers access to a broader array of recently foreclosed properties.
Under the temporary waiver, all transactions must be made at arm’s-length and may require additional documentation of improvements and justification of certain price increases. Additional documentation may include a second appraisal and a property inspection ordered by the lender.
FHA Policy Changes
FHA officials hope that policy changes will ensure borrowers have a stronger equity position and are less likely to default. These policy changes include:
(1) Raising the up-front mortgage insurance premium. The premium will rise to 2.25 percent from its current 1.75 percent. HUD is expected to release a Mortgage Letter on January 21, 2010, making the premium increase effective in the spring.
(2) Raising the mimum credit score requirement. New borrowers will be required to have a minimum FICO score of 580 to qualify for FHA's 3.5 percent down payment program. New borrowers with less than a 580 FICO score will be required to put down at least 10 percent. FHA expects this to take effect in early summer after it goes through the normal regulatory process.
(3) Reduce allowable seller concessions. The agency is lowering the maximum permissible level to 3 percent from its current 6 percent limit. FHA expects this to take effect in early summer.
(1) Raising the up-front mortgage insurance premium. The premium will rise to 2.25 percent from its current 1.75 percent. HUD is expected to release a Mortgage Letter on January 21, 2010, making the premium increase effective in the spring.
(2) Raising the mimum credit score requirement. New borrowers will be required to have a minimum FICO score of 580 to qualify for FHA's 3.5 percent down payment program. New borrowers with less than a 580 FICO score will be required to put down at least 10 percent. FHA expects this to take effect in early summer after it goes through the normal regulatory process.
(3) Reduce allowable seller concessions. The agency is lowering the maximum permissible level to 3 percent from its current 6 percent limit. FHA expects this to take effect in early summer.
FHA Announcements
FHA fell below is legislated requirement to have 2% in excess capital for reserves above and beyond forcasted losses. Being below this 2% requires the FHA, by law, to make changes to get the funds reserves back over 2%.
Virtually all of the losses are from 2006, 2007, and 2008 book years. These are the worst years in the housing crisis from an origination standpoint and they contained programs like the SFDPA (seller funded downpayment assistance) that have extremely high default rates.
The changes announced today will get the reserves up and put in place some controls to protect the fund and FHA for the long term, while making sure not to overly, adversely, impact this housing market at a critical time.
Virtually all of the losses are from 2006, 2007, and 2008 book years. These are the worst years in the housing crisis from an origination standpoint and they contained programs like the SFDPA (seller funded downpayment assistance) that have extremely high default rates.
The changes announced today will get the reserves up and put in place some controls to protect the fund and FHA for the long term, while making sure not to overly, adversely, impact this housing market at a critical time.
HUD Expands Waiver for Anti-Flipping Rule
The US Department of Housing and Urban Development (HUD) announced that it is temporarily expanding the property flipping waiver to include investors and entities that purchase foreclosures either singly or in bulk for resale.
Under the waiver, homes that were foreclosed on and are being sold by the mortgagee or on its behalf may be purchased by FHA borrowers without regard to the 90-day seasoning period. NAR worked with the California Association of REALTORS® and FHA to expand the waiver. HUD first announced the waiver on June 9, 2008, and the waiver was to be in effect for only one year.
HUD exempted from the property flipping rules properties sold by HUD through its Real Estate Owned activities, new homes being sold by builders and properties being sold by relocation companies and the property owner's employer as part of a job relocation. HUD later extended the waiver through May 10, 2010.
Under the waiver, homes that were foreclosed on and are being sold by the mortgagee or on its behalf may be purchased by FHA borrowers without regard to the 90-day seasoning period. NAR worked with the California Association of REALTORS® and FHA to expand the waiver. HUD first announced the waiver on June 9, 2008, and the waiver was to be in effect for only one year.
HUD exempted from the property flipping rules properties sold by HUD through its Real Estate Owned activities, new homes being sold by builders and properties being sold by relocation companies and the property owner's employer as part of a job relocation. HUD later extended the waiver through May 10, 2010.
Record Number of Foreclosures in 2009
Total foreclosures in 2009 reached 2.8 million, a 21 percent increase over 2008 and a 120 percent rise compared to 2007, according to foreclosure sales web site RealtyTrac in a year-end report released Wednesday.
California, Florida, Arizona, Illinois account for 50 percent of all foreclosures.
California, Florida, Arizona, Illinois account for 50 percent of all foreclosures.
FHA Cracks Down on Dubious Lenders
The Federal Housing Administration served subpoenas Tuesday on 15 mortgage companies with high default rates for FHA-backed loans.
The agency has previously taken action against several lenders with questionable records, including Lend America and Taylor, Bean & Whitaker Mortgage Co.
Department of Housing and Urban Development's Inspector General, Kenneth Donohue said he plans to determine why these 15 lenders had so many loans that defaulted shortly after they closed.
Troubled lenders include: First Tennessee Bank N.A, of Memphis, Tenn.; Alethese LLC, of Lakeway, Texas; Security Atlantic Mortgage Co., of Edison, N.J.; Pine State Mortgage Corp., of Atlanta; Birmingham Bancorp Mortgage Corp., of West Bloomfield, Mich.; Alacrity Financial Services LLC, of Southlake, Texas; Assurity Financial Services LLC, of Englewood, Colo.; D and R Mortgage Corp., of Farmington, Mich.; Webster Bank, of Cheshire, Conn.; Mac-Clair Mortgage Corp., of Flint, Mich.; Americare Investment Group Inc., of Arlington, Texas; 1st Advantage Mortgage, of Lombard, Ill.; American Sterling Bank, of Independence, Mo.; Sterling National Mortgage Co., Inc., of Great Neck, N.Y.; and Dell Franklin Financial LLC, of Columbia, Md.
John Courson, CEO of the Mortgage Bankers Association, applauded the crackdown. "We're concerned about the viability of the program and we want to make sure that the bad apples and the bad players, frankly, are eliminated," he said.
The agency has previously taken action against several lenders with questionable records, including Lend America and Taylor, Bean & Whitaker Mortgage Co.
Department of Housing and Urban Development's Inspector General, Kenneth Donohue said he plans to determine why these 15 lenders had so many loans that defaulted shortly after they closed.
Troubled lenders include: First Tennessee Bank N.A, of Memphis, Tenn.; Alethese LLC, of Lakeway, Texas; Security Atlantic Mortgage Co., of Edison, N.J.; Pine State Mortgage Corp., of Atlanta; Birmingham Bancorp Mortgage Corp., of West Bloomfield, Mich.; Alacrity Financial Services LLC, of Southlake, Texas; Assurity Financial Services LLC, of Englewood, Colo.; D and R Mortgage Corp., of Farmington, Mich.; Webster Bank, of Cheshire, Conn.; Mac-Clair Mortgage Corp., of Flint, Mich.; Americare Investment Group Inc., of Arlington, Texas; 1st Advantage Mortgage, of Lombard, Ill.; American Sterling Bank, of Independence, Mo.; Sterling National Mortgage Co., Inc., of Great Neck, N.Y.; and Dell Franklin Financial LLC, of Columbia, Md.
John Courson, CEO of the Mortgage Bankers Association, applauded the crackdown. "We're concerned about the viability of the program and we want to make sure that the bad apples and the bad players, frankly, are eliminated," he said.
Foreclosures Weigh on Home Appraisals
Approximately 25 percent of real estate practitioners say low appraisals have broken up deals, according to the NATIONAL ASSOCIATION OF REALTORS®.
While foreclosed properties typically are not included in a comparable sales analysis, they account for about 40 percent of home sales -- more than 50 percent in some markets -- making it difficult for appraisers to value properties not in the foreclosure process.
Additionally, new industry rules that require mortgage lenders to order appraisals through in-house staff or appraisal management companies means more appraisers without knowledge of the local market are making valuations.
While non-foreclosures are selling for upwards of 30 percent more than foreclosures, a study of 20 years of home sales by Harvard University's Joint Center for Housing Studies indicates that dwellings closer than 100 yards to a foreclosure lose about 1 percent in value.
While foreclosed properties typically are not included in a comparable sales analysis, they account for about 40 percent of home sales -- more than 50 percent in some markets -- making it difficult for appraisers to value properties not in the foreclosure process.
Additionally, new industry rules that require mortgage lenders to order appraisals through in-house staff or appraisal management companies means more appraisers without knowledge of the local market are making valuations.
While non-foreclosures are selling for upwards of 30 percent more than foreclosures, a study of 20 years of home sales by Harvard University's Joint Center for Housing Studies indicates that dwellings closer than 100 yards to a foreclosure lose about 1 percent in value.
Pending Home Sales Down from Surge but Higher than a Year Ago
Contract activity for pending home sales fell after a surge of activity in preceding months to beat the original deadline for the first-time home buyer tax credit but remains comfortably above a year ago, according to the National Association of Realtors (NAR).
The Pending Home Sales Index, a forward-looking indicator based on contracts signed in November, fell 16.0 percent to 96.0 from an upwardly revised 114.3 in October, but is 15.5 percent higher than November 2008 when it was 83.1.
Lawrence Yun, NAR chief economist, said a drop was expected. “It will be at least early spring before we see notable gains in sales activity as home buyers respond to the recently extended and expanded tax credit,” he said. “The fact that pending home sales are comfortably above year-ago levels shows the market has gained sufficient momentum on its own. We expect another surge in the spring as more home buyers take advantage of affordable housing conditions before the tax credit expires.”"
The Pending Home Sales Index, a forward-looking indicator based on contracts signed in November, fell 16.0 percent to 96.0 from an upwardly revised 114.3 in October, but is 15.5 percent higher than November 2008 when it was 83.1.
Lawrence Yun, NAR chief economist, said a drop was expected. “It will be at least early spring before we see notable gains in sales activity as home buyers respond to the recently extended and expanded tax credit,” he said. “The fact that pending home sales are comfortably above year-ago levels shows the market has gained sufficient momentum on its own. We expect another surge in the spring as more home buyers take advantage of affordable housing conditions before the tax credit expires.”"
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