Bill Offers Renewed HOPE for Troubled Owners

The Obama Administration on Wednesday signed a bill that attempts to inject some hope into the housing rescue program–called Hope for Homeowners.
 
The original program asked banks to reduce mortgage balances voluntarily to 90 percent of a home’s current market value. The loan would then be refinanced into an FHA mortgage.

The program didn’t work because it forced lenders to sell short with no chance of an upside, says Tom Kelly, a spokesman for JP Morgan Chase.

The new version of Hope sweetens the pot by paying lenders $1,000 for every Hope-refinanced loan and easing the amount they have to write off by allowing loans of up to 93 percent of the market value.

But the most important change is that it allows the U.S. Department of Housing and Urban Development, FHA’s parent agency, to share home-price appreciation with investors, up to the appraised value of the property when the existing loan was first issued.

This bill originally included cramdown legislation that would have allowed bankruptcy judges to modify the first mortgage, but that portion of the legislation was defeated in the Senate.

Source: CNNMoney, Les Christie (05/20/2009)

Tax Credit Can Be Used for Down Payment

Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development, on Tuesday said that the Federal Housing Administration is going to permit its lenders to allow home buyers to use the $8,000 tax credit as a down payment.

Previously, most buyers wouldn’t receive the funds until after they filed their tax return, and that deterred some people from using the credit. The NATIONAL ASSOCIATION OF REALTORS® has been calling for the change.

“We all want to enable FHA consumers to access the home buyer tax credit funds when they close on their home loans so that the cash can be used as a down payment,” Donovan says. His remarks came in an address to several thousand REALTORS® gathered Tuesday morning at “The Real Estate Summit: Advancing the U.S. Economy,” at the 2009 REALTORS® Midyear Legislative Meetings & Trade Expo in Washington, D.C..

He says FHA’s approved lenders will be permitted to “monetize” the tax credit through short-term bridge loans. This will allow eligible home buyers to access the funds immediately at the closing table.

Source: NAR

Is FHA Key to Housing Turnaround?

Federal Housing Administration loans can be a very good deal for home buyers, especially those who don’t have a lot of cash or whose credit rating isn’t stellar, experts say.

FHA loans now account for 20 percent of new mortgages, up from 3 percent in 2006. What’s more, the number of authorized FHA lenders has increased 500 percent in two years.

Other benefits of FHA loans include easy loan modifications for borrowers who fall behind, easy refinancing plans if rates decline, and low rates overall, which don’t rise if the borrower has a low credit score. There are no income restrictions on FHA loans, so even borrowers with good incomes may find them attractive.

FHA loans still require a pre-settlement inspection of the home, but the process isn’t nearly as arduous as it once was, says George Hanzimanolis, past president of the National Association of Mortgage Brokers.

Source: CNNMoney.com (04/01/2009)

Georgia Dream, NSP

I know I said this before…but really, NOW is a good time to buy. Take a look at what my mortgage specialist sent me:

“DCA Allows up to $14,000 for down payment or repairs on foreclosed properties under Neighborhood Stabilization Program

The Department of Community Affairs, better known as DCA, has come out with a new program to help sell foreclosures and benefit owner- occupant purchasers whether or not they are first time homeowners.

Tagged the Neighborhood Stabilization Program (NSP), DCA will provide $14,000 to be used for down payment assistance or repairs as long as the property is purchased at 85% or less of the market value as determined by an appraisal that is required prior to contract.

Borrowers must qualify for FHA or VA loan guidelines and fall within fairly generous  income limitations (cannot exceed 120% of Area Median Income) based on the number of family members and must attend a required counseling course.  For example, a family of 2 purchasing in a metro Atlanta county, could earn up to $68,350 and a family of 4 can earn up to $85,450.

The $14,000 DAP would be an interest free second mortgage “loan” that would not have to be repaid as long as the customer lives in the house for at least 5 years.  Otherwise, it would have to be repaid on a pro-rata basis of 20% of the DAP amount per year when the house is sold.

DCA will fund the NSP loan as per the Georgia Dream Seller Guide, Chapter 2, Section 212.  For more information, visit their website at: http://www.dca.state.ga.us/housing/homeownership/programs/GeorgiaDream.asp

This and That

FHA cash out refis: I had a question last week about the new changes that are taking place with FHA in regards to refinancing.  FHA previously allowed up to 95% LTV for cash out refinances but is going back to 85% LTV effective April 1st.

Investment Property:  Be prepared to put 25% down for purchases.

New Appraisal Procedures: In an effort to take some of the alleged “loan officer influence” out of the appraisal process, most lenders are going to a system May 1st that will require lenders to rotate conventional appraisal orders and not allow loan officers to discuss cases directly with appraisers.  The rule may not apply to FHA loans, but some lenders may apply it to all appraisals just to be safe.   

Underwriting Turnaround: If I were you, I would be asking your loan officer if they have underwriters and closers on location.  I am hearing stories that brokered loans can take as long as 3 weeks to underwrite.  Refinances are the culprit.

Making Home Affordable: The U.S. Treasury Department went live on March 19th with its Making Home Affordable program, which aims to help homeowners refinance or modify their mortgages. The toll free no. for this service is 888-995-4673.  The website is http://www. Makinghomeaffordable.gov.

Loan  Modifications: Dick Runstadler, who represents US Housing Assist, disagrees with one of the things I mentioned last week about qualifying for loan modifications.  The company I talked to, Integrated Loan Services, told me that they typically require borrowers to have verifiable income to qualify for a loan modification.  Dick says that USHA has closed many loan modifications for unemployed people.  For more information about USHA, contact Dick at 678-455-0072.

Name Change:  Opteum Mortgage, Metro Cities Mortgage, F&T Mortgage and several former Indy Mac retail branches will soon operate under one parent company: Prospect Mortgage.  Opteum is scheduled to change its name to Prospect on April 1st.  Prospect Mortgage will thus operate a network of mortgage offices in all 50 states.  So I wanted to let you know that I will be getting new business cards soon.  You will have to wait and see what they say.

And finally, to the agent that expressed resentment to the “political comments” and inferences I made in last week’s column  in regards to the AIG bonuses, I would like to apologize.  The goal in my newsletter each week is to educate, inform and entertain.  So from hence forth and without hesitation, upon request, I will gladly refund anybody’s subscription fee.

Until next week.”

Best regards,

Sam Thompson
Loan Officer and columnist
email: Sthompson@opteum.com <mailto:Sthompson@opteum.com>
web:  http://www.opteum.com/sthompson <http://www.opteum.com/sthompson>

4 Tips to Getting a Loan

These days one of the biggest impediments to closing a real estate sale can be the buyer’s ability to get a mortgage.

Here are some tips for anyone who hopes to land a loan:

  • Turn to the government. The biggest source of loans these days is the Federal Housing Administration (FHA) and the Veterans Administration (VA). These programs accept borrowers with lower credit scores and allow them to put down as little as 3.5 percent of the purchase price.

  • Document, document, document. Borrowers will need bank statements, brokerage statements, W-2 forms and tax returns.

  • Boost credit scores. Borrowers should avoid having more than one-third of their maximum borrowing capacity outstanding on one credit card. If necessary, rotate the debt among several cards.

  • Work your connections. Comparison shopping is easy online, but if your customer has an established relationship with a local bank, suggest they try that lender first.

Source: BusinessWeek.com, Christopher Palmeri (01/23/09)

Historic West End Brick Gem!

634 Holderness- 3bed/2baths completely renovated, move-in ready….with great character! Large front porch,new back deck- cute Jack/Jill bathroom with TWO pocket doors :)-a MUST see! 139.9K List price *Serious buyers only!  This one will move fast, MUST have pre-approval