Down Payment Proposal Could Make A Mountain Out Of A Mortgage

Most home buyers put down less than 20 percent when they take out a mortgage, a sign of how hard it has become to scrape together enough cash to purchase a home. It’s especially tough in the pricey Washington area, where more than half of borrowers put down less than 10 percent.

Prospective home buyers may soon face a rude awakening.

Seeking to avoid a repeat of the foreclosure crisis, the Obama administration and regulators have proposed rules that are all but certain to boost the interest rates and fees on many low-down-payment loans. Only borrowers putting down 20 percent could get the best deals.

Click Here to Read:   Down Payment Proposal Could Make A Mountain Out Of A Mortgage...

FHA Announces It Will Continue To Insure Wholesale Houses

Once again the Federal Housing Administration (FHA) has announced that it will be extending its anti-flipping waiver, allowing buyers to continue to use FHA-insured loans to purchase homes that are being resold within 90 days of their purchase[1]. The law was originally enacted in 2003 to “ease fraudulent transactions” in which investors bought houses for low prices and then sold them for higher ones, relying on the fast pace of appreciation and the buying mania at that time to make the house salable at a higher value (FHA believes that these values were inflated) rather than taking time to make improvements to the property. The FHA found that buyers in these transactions were more likely to default on their loans and that incidences of straw buyers and unethical appraisal methods were much higher on flips. As a result, the administration opted to stop insuring home loans on these properties.

Click Here to Read:   FHA Announces It Will Continue To Insure Wholesale Houses...

Free Home? Iowa Couple Investigated

Authorities are investigating an Ankeny, Iowa, couple who--after only making one mortgage payment--were able to save their home from foreclosure and have their mortgage voided by using a loophole in a 100-year-old state law.

The couple was able to get their mortgage voided by using a law requiring both spouses’ signature on the mortgage documents. During court foreclosure proceedings on their home, Matt and Jamie Danielson blamed a hasty home loan approval by their lender and the fact that Jamie Danielson never signed the mortgage in 2007 as reasons to keep their house and void the mortgage. They won in court. 

Click Here to Read:   Free Home? Iowa Couple Investigated...

Banks Push to Weaken Dodd-Frank Risk Rules

Bank regulators are set to hold an open meeting on Tuesday to discuss a controversial risk-retention rule for mortgages—and its even more controversial carve-out.

Under the Dodd-Frank financial reforms, banks are required to retain at least five percent of the risk on mortgages they securitize. 

The idea was that banks would be more careful about making loans and structuring mortgage-backed securities if they were required to keep a part of the credit risk. From the start, that has had banks griping that this will choke off the mortgage market and raise borrowing costs of home-buyers. 

Click Here to Read:  Banks Push to Weaken Dodd-Frank Risk Rules...

How to Jump Through Condo-Lending Hoops

Borrowers run into two problems when getting a mortgage on a condominium: strict standards that make it hard to qualify for a condo loan, and high costs.

These issues beset condo buyers who want to get mortgages as well as people who already own condos and want to refinance.

"Condos are like the canary in the coal mine, a leading indicator of the health of the real estate market," says John McClellan, a branch manager with Supreme Lending in Austin, Texas. "Recently, lenders' biggest losses came from condos, so they are viewed as risky." Some lenders reject condo loans altogether.

Read more:  How to Jump Through Condo-Lending Hoops...

Five Mortgage And Foreclosure Myths

In a mortgage market that changes as quickly as this one, today’s fact is tomorrow’s fiction.  For buyers, misinformation can be the difference between qualifying for a home loan or not.

Sellers and owners, knowledge is foreclosure-preventing, smart decision-making power! Without further ado, let’s correct some common mortgage misconceptions.

Click Here to Read:   Five Mortgage And Foreclosure Myths...

Major Changes Ahead For Mortgage System

Fundamental changes are probably ahead for the American mortgage system as the federal government pushes to unwind its unprecedented involvement in the housing market.

These changes could significantly raise the down payments demanded by lenders, curtail the availability of long-term mortgages with fixed interest rates, and increase the cost of borrowing in general.

The government's effort to scale back its role in housing could show up in small ways soon. In April, the Federal Housing Administration plans to raise the annual premium it charges borrowers by a quarter of a percentage point. In October, the maximum size of loans that the federal government backs is scheduled to drop to $625,500 from $729,750. The most dramatic proposal - eliminating mortgage financiers Fannie Mae and Freddie Mac - could take five to seven years.

Click Here to Read:  Major Changes Ahead For Mortgage System...

Lenders Skirt Foreclosure Rules

At least 55 Franklin County homeowners will lose their houses at an auction Friday despite the fact that their foreclosure cases appear to contain mistakes, omissions of critical evidence or questionable affidavits, The Dispatch found in a review of court documents.

The newspaper examined the files of more than 130 homeowners whose houses are slated for auction Friday. Half of the cases had issues that consumer advocates call troubling and should have raised red flags before a judge ordered the homes sold.

Click Here: Lenders Skirt Foreclosure Rules...

FHA Loans: Getting an FHA Loan After Foreclosure

With the recent news of the record amount of foreclosures during the month of September, it is obvious to wonder who will be able to purchase a home in the future. Losing a home to foreclosure is stressful and for many it is the end of the emotional road of homeownership. In reality, foreclosures have been happening all along, but not at the high rate as what has happened over the past few years. Many people who went through this process years ago are now ready to purchase a home again due to low home prices. Getting an FHA loan after foreclosure is possible and happens everyday.

Click Here:  FHA Loans: Getting an FHA Loan After Foreclosure...

Mortgage Damage Spreads

The unfolding foreclosure-processing debacle is causing bank stocks to slide and putting millions of delinquent borrowers in limbo.

But how disruptive the crisis ultimately becomes—for homeowners, the housing market and the broader economy—depends on how quickly a number of technical problems and legal challenges are resolved in the months ahead.

Click Here to Read:   Mortgage Damage Spreads...

GMAC Will Review Foreclosures in All 50 States

GMAC Mortgage will review its foreclosure procedures in all 50 states, broadening an initial review that began about two months ago. The move follows Bank of America's decision to do the same.

GMAC, which is a unit of Ally Bank, has hired a number of accounting and legal firms to go over its foreclosure procedures. The company earlier started reviewing foreclosure-related affidavits in 23 states, and in some cases halted the foreclosure process, though GMAC says it hasn't yet found evidence of "inappropriate" foreclosures.

Click Here to Read: GMAC Will Review Foreclosures in All 50 States...

A Downside of Short Sales

STRUGGLING homeowners have found some refuge in short sales, in which lenders allow borrowers to escape foreclosure by selling a home for less than what is owed on the mortgage. Government programs offering incentives to both parties will push the number of short sales to 400,000 this year from 100,000 in 2008, according to CoreLogic, a financial consulting firm.

But the jump in short sales has also given rise to a new form of fraud — which, as a recent study by CoreLogic suggests, could undermine the burgeoning practice.

Fraudulent short sales take many forms, but Frank McKenna, the vice president for fraud strategy at CoreLogic and one of the report’s authors, says one arrangement is more common than others.

Click Here to Read: A Downside of Short Sales...

Paying Off the House in 15 Years

A growing number of homeowners are choosing to pay down their mortgages at a faster rate--even if it means a substantial jump in their monthly payments.

Between January and June, 26% of homeowners who refinanced chose a 15-year fixed-rate mortgage, according to data from CoreLogic, a provider of financial, property and consumer information. During all of 2009, 18.5% of borrowers who refinanced opted for a 15-year term.

What's prompting the shift to shorter loans? Historically low interest rates for fixed-rate mortgages.

Homeowners are doing the math and realizing that rates have fallen enough so the increase in payment between a new 15-year mortgage and their current loan is no longer unbearable for their budgets, says Bob Walters, chief economist at online lender Quicken Loans.

Click Here to Read: Paying Off the House in 15 Years...

One Third Of All Americans Unqualified For A Mortgage

According to research from Deutsche Bank, the number of Americans with credit scores below 600 has increased to 26% from only 15% prior to the start of the recession. Further examination of credit data reveals that 9% of all Americans have a credit score in the 600-649 range.

Based on current credit score requirements for a mortgage approval, any applicant with a score below 600 is almost certain to be turned down by a banking institution. Borrowers in the 600-649 range are also considered “weak” candidates with a high turn down rate, especially if the credit score is below 620.

Click Here To Read: One Third Of All Americans Unqualified For A Mortgage...

The 5 Dumbest Things on Wall Street

Homeowners drowning under the weight of high mortgage rates and a plunging economy are finding that their rescuer has arrived in a leaky boat without a life ring -- or even a pair of arm floaties. And the lifeline the government did manage to throw out was, apparently, too knotted and twisted for homeowners to untangle.

Click Here to Read: The 5 Dumbest Things on Wall Street...

Fed Adopts New Mortgage Rules to Protect Consumers

The Federal Reserve adopted new standards that ban yield spread premiums on mortgages, a practice that critics say led to homebuyers being saddled with unfairly high mortgage rates.

The premiums involve lenders paying a bonus to mortgage brokers who brought them customers willing to pay high-interest rates on loans, The New York Times reported. Critics say this practice led to brokers forcing high-interest loans on borrowers, telling them it was the best deal they could get.

Click Here To Read: Fed Adopts New Mortgage Rules to Protect Consumers...

Mortgages: How to Pay Less

The interest rates for 30-year fixed-rate mortgages are in free fall, averaging just 4.44% on Aug. 12, according to Freddie Mac. Not only was that down from 5.07% in January, it was the lowest since Freddie began keeping records in 1970.

But even better deals can be found at smaller banks and credit unions.

"I've found that my clients can get routinely better rates by heading to a more regional lender and forgoing the bigger lenders," says Sean Satkus, a real-estate agent in the Washington, D.C., area.

The differences can be stark. On average, the three biggest banks—Bank of America Corp., Wells Fargo & Co. and J.P. Morgan Chase & Co.—offer rates of 4.66% on 30-year fixed mortgages for home purchases, according to Bankrate.com. By contrast, St. Louis's Heartland Bank is offering a rate of 4.50%. Acacia Federal Savings Bank comes in at 4.25%. And Rockland Trust Co. in Boston is offering just 4.13%. (None of these offers include "points," or extra fees to secure lower rates.)

Click Here To Read: Mortgages: How to Pay Less...

FHA Gets Tougher on Mortgages

Consumers looking for home loans backed by the Federal Housing Administration will face tougher hurdles and higher costs under new legislation and new rules that could take effect as soon as this month.

Higher monthly fees, larger down payments and better credit scores are among the new initiatives intended to ensure that the FHA stays solvent. Its reserves, which are used to cover bad loans, plummeted to $3.5 billion at midyear from $19.3 billion in September 2008, according to a report from the FHA's parent, the Department of Housing and Urban Development.

Click Here To Read: FHA Gets Tougher on Mortgages...

Senate Approves Higher Government Mortgage Fees

Higher monthly fees are coming for consumers who take out home loans guaranteed by the Federal Housing Administration, the primary source of mortgages for first-time homebuyers.

The Senate late Wednesday unanimously approved legislation giving the FHA the power to hike monthly premiums it charges to consumers. The measure now goes to President Barack Obama, who is expected to sign it.

The new law would affect new loans and not ones that already have been made.

Click Here to Read: Senate Approves Higher Government Mortgage Fees...

Home Prices Falling Despite Low Mortgage Rates

The fine bloggers over at Calculated Risk have a good article today about the future of housing prices. In essence the article asserts that there have been declines in home values in both May and June that have yet to fully show up in many measures of home prices.

This premise is based upon data from Campbell Surveys that shows prices for short sales fell 6.3%, move-in ready foreclosures fell 6.8 percent, and non-distressed properties dropped 4.6 percent.

The decline can likely be traced to several factors. First is the collapse in demand for homes following the expiration of the first time home buyer tax credit at the end of April (the overall weakness of the economy also plays a part in the lack of demand). The next factor is the massive overhang of houses on the market and in the hands of banks and lenders. Finally, the sheer volume of foreclosed and distressed homes negatively affects the price of homes.

Click Here: Home Prices Falling Despite Low Mortgage Rates...