Few people in the real estate or mortgage industries are sad to see 2009 slip in to the history books. Our company actually had a record volume year but there was nothing easy about it. The changes that took place this year were a challenge to say the least.
Next year is going to have some major adjustments right out of the chute, a new Good Faith format and corresponding booklet kick off January 1st. The new GF is supposed to be simpler for the consumer, so much for that. The old version was one page and the new one is four pages. The information I received from HUD explaining this simplified version of the Good Faith Estimate is 85 pages long! But guess what, I actually like the new version. It is going to make it difficult for loan officers to bait-and-switch which has been my biggest pet peeve with the industry. Hopefully, that is going to change next year because of this form.
HUD’s Settlement Cost Booklet has grown up as well, the old version is 20 pages and the new one is 49 pages. I am not a conspiracy buff, but the paper industry sure looks guilty.
Here is some really good news; FNMA is predicting stable rates throughout the year. They predict the 30 year fixed will remain about where it is now for the first half of the year and then trend up very slightly the last half. Click Here to see the entire chart.
I expect the low rates, extension and expansion of the tax credit to have a very positive impact on the first quarter. The sharp spike we saw in September and October should continue until April.
In another report they state:
The mortgage market should turn into more of a purchase market next year. With projected increases in home sales and more moderate declines expected in home prices, purchase mortgage originations are expected to increase about 12 percent in 2010.
Click Here to read the full report.
Showing posts with label loans. Show all posts
Showing posts with label loans. Show all posts
Tuesday, December 22, 2009
Wednesday, December 16, 2009
Biweekly Mortgages On The Way Out?
My Calyx application software was updated on Monday and it looks like there were several changes. This morning I received an email regarding the changes in Desktop Underwriter®. The one that caught my eye concerns biweekly mortgages being sold to Fannie Mae. This was announced back in September in FNMA Announcement 09-29:
“Due to a lack of demand and increased operational costs, Fannie Mae is retiring the biweekly payment mortgage product, which requires the borrower to make biweekly payments in accordance with the note. Fannie Mae is also discontinuing the standard first-lien notes and riders that were used in connection with the biweekly payment mortgage.” CLICK HERE to read the entire announcement.
Lenders can still offer the option on portfolio loans, but it sounds like the largest player is out of the game on these.
“Due to a lack of demand and increased operational costs, Fannie Mae is retiring the biweekly payment mortgage product, which requires the borrower to make biweekly payments in accordance with the note. Fannie Mae is also discontinuing the standard first-lien notes and riders that were used in connection with the biweekly payment mortgage.” CLICK HERE to read the entire announcement.
Lenders can still offer the option on portfolio loans, but it sounds like the largest player is out of the game on these.
Wednesday, November 25, 2009
Changes on FHA Streamline Refinance Transactions
There are significant changes taking place with all FHA Streamline refinance transactions. The new guideline will read, "At the time of loan application, the borrower must have made at least 6 payments on the FHA-insured mortgage being refinanced and 12 months seasoning in the subject property." This is a very minor change from the previous guideline.
HUD Mortgagee Letter 2009-48 modifies FHA’s requirements for second appraisals (as described in Mortgagee Letter 2008-09), eliminating the need for a second appraisal on high balance loans in declining markets. This policy is extended to cash-out refinances that exceed $417,000 and is secured by a property located in a declining market. This change is effective immediately and actually favors the homeowner.
FHA will retain the second appraisal policy described in Mortgagee letter 2006-14, Property Flipping Prohibition Amendment. This policy requires a second appraisal when a property is resold between 91 and 180 days following acquisition by the seller, if the resale price is 100 percent (or more) higher than the price paid by the seller when the property was acquired. CLC must obtain a second appraisal from another appraiser and the cost of the second appraisal may not be charged to the homebuyer.
For example, if a property is resold for $80,000 within six months of the seller’s acquisition of that property for $40,000, the mortgage lender must obtain a second independent appraisal supporting the $80,000 sales price. The mortgage lender may also provide documentation showing the costs and extent of rehabilitation that went into the property as support for the increased value but must still obtain the second appraisal.
HUD Mortgagee Letter 2009-48 modifies FHA’s requirements for second appraisals (as described in Mortgagee Letter 2008-09), eliminating the need for a second appraisal on high balance loans in declining markets. This policy is extended to cash-out refinances that exceed $417,000 and is secured by a property located in a declining market. This change is effective immediately and actually favors the homeowner.
FHA will retain the second appraisal policy described in Mortgagee letter 2006-14, Property Flipping Prohibition Amendment. This policy requires a second appraisal when a property is resold between 91 and 180 days following acquisition by the seller, if the resale price is 100 percent (or more) higher than the price paid by the seller when the property was acquired. CLC must obtain a second appraisal from another appraiser and the cost of the second appraisal may not be charged to the homebuyer.
For example, if a property is resold for $80,000 within six months of the seller’s acquisition of that property for $40,000, the mortgage lender must obtain a second independent appraisal supporting the $80,000 sales price. The mortgage lender may also provide documentation showing the costs and extent of rehabilitation that went into the property as support for the increased value but must still obtain the second appraisal.
Tuesday, November 24, 2009
Rates Continue to Improve
It is a very strange market. A few days ago I commented that interest rates are nearing the bottom and that is still my position. But here we are two days before a four day weekend and rates are still improving. The markets are going to be closed Thursday and Friday and normally that alone would push rate higher.
My primary goal is to help buyers and sellers close transactions as quickly and smoothly as possible. Doing that is good for our local economy. Rates as low as they are today are creating all types of opportunities for both buyers and sellers.
Consider this, if you check out the rates on my application site you will find and FHA 30 year fixed under 5% without points. Click Here
FHA allows the seller to contribute funds for the buyer’s closing cost (payable at closing from the sale proceeds). This is a huge marketing tool that could give a seller a distinct advantage over other properties listed for sale. Consider a home selling for $200,000, a buyer could purchase with only 3.5% down or $7,000, roll the up front mortgage insurance premium into the loan amount making the loan $196,377. Based on today’s rate of 4.875% it is possible for the seller to provide a start rate of only 2.875% fixed for the first year, 3.875% for the second year and then 4.875% for the remaining 28 years!!! Cost to the seller for this example would be two points or $4,084. That is much better than a 5% reduction in the sale price, the seller would net almost $6,000 more and the buyer receives awesome payments.
STOP!! He said something other than "fixed rate" - no I didn’t. The example is a fixed rate of 4.875% for 30 years, it is temporally bought down for 2 years. And it works very well if the buyer is qualified for the payment based on the highest rate. I have closed about a kazillion of these loans over the years.
In our example above the APR is 5.843% assuming a note and payment rate of 4.875%, fixed for 30 years.
My primary goal is to help buyers and sellers close transactions as quickly and smoothly as possible. Doing that is good for our local economy. Rates as low as they are today are creating all types of opportunities for both buyers and sellers.
Consider this, if you check out the rates on my application site you will find and FHA 30 year fixed under 5% without points. Click Here
FHA allows the seller to contribute funds for the buyer’s closing cost (payable at closing from the sale proceeds). This is a huge marketing tool that could give a seller a distinct advantage over other properties listed for sale. Consider a home selling for $200,000, a buyer could purchase with only 3.5% down or $7,000, roll the up front mortgage insurance premium into the loan amount making the loan $196,377. Based on today’s rate of 4.875% it is possible for the seller to provide a start rate of only 2.875% fixed for the first year, 3.875% for the second year and then 4.875% for the remaining 28 years!!! Cost to the seller for this example would be two points or $4,084. That is much better than a 5% reduction in the sale price, the seller would net almost $6,000 more and the buyer receives awesome payments.
STOP!! He said something other than "fixed rate" - no I didn’t. The example is a fixed rate of 4.875% for 30 years, it is temporally bought down for 2 years. And it works very well if the buyer is qualified for the payment based on the highest rate. I have closed about a kazillion of these loans over the years.
In our example above the APR is 5.843% assuming a note and payment rate of 4.875%, fixed for 30 years.
Monday, November 23, 2009
FHA Financing For Condos
The recent Mortgagee Letter from HUD is going to impact the availability of purchase money for condos. In theory the new guidelines are supposed to make the process easier. At first glance I thought it would be (see post July 30), until I read the entire publication.
The item that alarmed me the most is the Recertification Process. All of the condos on the existing approved list will be moved a new list that requires recertification every two years. This is a big change.
Consider the unlucky buyer that purchases a condo under this system and finances it using an FHA loan. Three years later they try to sell it and the project is no longer approved unless someone has recertified the entire project. This could have a huge impact on values. It is possible a homebuyer could close on a loan today and the same loan would not be available for a new buyer tomorrow. A loan on the exact same condo may require only 3.5% down payment one day and then require 10% down the next. That difference would eliminate many buyers and that impacts value.
Here is something to consider, there are 322 projects in Kentucky on the existing approved list. This means someone will need to recertify 13+ projects per month, or roughly 3 per week - and do it for FREE??? Good luck with that.
The item that alarmed me the most is the Recertification Process. All of the condos on the existing approved list will be moved a new list that requires recertification every two years. This is a big change.
Consider the unlucky buyer that purchases a condo under this system and finances it using an FHA loan. Three years later they try to sell it and the project is no longer approved unless someone has recertified the entire project. This could have a huge impact on values. It is possible a homebuyer could close on a loan today and the same loan would not be available for a new buyer tomorrow. A loan on the exact same condo may require only 3.5% down payment one day and then require 10% down the next. That difference would eliminate many buyers and that impacts value.
Here is something to consider, there are 322 projects in Kentucky on the existing approved list. This means someone will need to recertify 13+ projects per month, or roughly 3 per week - and do it for FREE??? Good luck with that.
Wednesday, November 18, 2009
There Is Good News If You Look
There is so much negative in the headlines today that it may not be easy to find something good, but it is there if you search hard enough. Rates for example, I just posted some of the lowest rates in my career on my application web site: http://centurymortgageco.lendingstation.com/products.aspx
Folks, those are fixed rates! But some of them have points, you say!!! And we all know the late night real estate gurus tell us not to pay points. For years I have suggested that homebuyers can control the payment by how they manage the transaction from the beginning. What happens if you negotiate and have the seller pay the points on your behalf? Then it is possible to receive the new tax credit if you qualify and an additional tax deduction.
http://www.irs.gov/taxtopics/tc504.html
We are seeing the beginning of the influx of people because of the new jobs at Fort Knox, this can only be a plus for the entire region.
My company is having a bumper year; in fact a few weeks ago we surpassed the largest annual volume in the company’s history with two months to go. Rates are only partially responsible. Our staff has expanded while competitors have laid off personnel. There really is good news if you look for it.
Folks, those are fixed rates! But some of them have points, you say!!! And we all know the late night real estate gurus tell us not to pay points. For years I have suggested that homebuyers can control the payment by how they manage the transaction from the beginning. What happens if you negotiate and have the seller pay the points on your behalf? Then it is possible to receive the new tax credit if you qualify and an additional tax deduction.
http://www.irs.gov/taxtopics/tc504.html
We are seeing the beginning of the influx of people because of the new jobs at Fort Knox, this can only be a plus for the entire region.
My company is having a bumper year; in fact a few weeks ago we surpassed the largest annual volume in the company’s history with two months to go. Rates are only partially responsible. Our staff has expanded while competitors have laid off personnel. There really is good news if you look for it.
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