My Business & Mortgage Blog

House OKs bill to modify mortgages

Bankruptcy judges could cut the mortgage debt of homeowners in bankruptcy court as a last resort to avert foreclosure, under a bill approved by a 234-191 vote Thursday in the U.S. House of Representatives.

Seen by Democratic supporters as vital to stabilizing the crumbling U.S. real estate market, the so-called "cramdown" bill has been opposed by bankers, despite amendments to limit its scope, including one restricting it to existing mortgages.

To read the entire article, please visit: http://money.cnn.com/2009/03/05/real_estate/cramdown.reut/index.htm?postversion=2009031113

Borrowers can check eligibility for a loan mod, refi

By Inman News, Friday, March 20, 2009.

READ the attached :

http://www.inman.com/news/2009/03/20/feds-launch-home-affordable-site

These  can  help:

http://makinghomeaffordable.gov/

http://www.fanniemae.com/homeaffordable

http://www.freddiemac.com/avoidforeclosure

and  you might even check out:

http://www.hopenow.com/

Fannie, Freddie limits back to $729,750

http://www.inman.com/news/2009/02/23/fannie-freddie-limits-back-729750

This  should  be  a  joke  but  its not 

http://www.msnbc.msn.com/id/29760888/

Written By: Bonnie Wilt-Hild
Senior DE Underwriter & NAMP Instructor

Loan Modifications
Written By: Bonnie Wilt-Hild, Senior FHA DE Underwriter

  I thought I would talk about loan modifications this week and share some insight with all of the professionals out there that have embarked on this relatively new aspect of the mortgage industry. As we are all aware there are several borrowers out there who no longer qualify for a refinance due to decreasing property values and in some cases unacceptable credit. Tightening..Read Full Blog >>   

Subprime is dead, but the FHA lives on during refi boom

A rush of mortgage refinancings is reviving the St. Louis mortgage business, which was flat on its back just two months ago.

Rates on a 30-year mortgage averaged 4.96 percent last week, according to the national mortgage giant Freddie Mac. That was the lowest in the 38-year history of the company's survey.

Low rates are sending home­owners running to refinance. The Mortgage Bankers Association's national index of refinancing applications has risen sevenfold in the last two months.

To read the entire article, please visit: http://www.stltoday.com/stltoday/business/stories.nsf/0/F6C317958DA8703E8625754100136FD1?OpenDocument

FHA loans soar in popularity as market crisis worsens

As the mortgage and credit crisis continues, the Federal Housing Administration is becoming a lifeline for homebuyers seeking affordable mortgages.

That includes the seven-county Pittsburgh region, where the Department of Housing and Urban Development issued 5,521 FHA-insured loans for home purchases in 2008, a 105 percent increase over 2,692 loans in 2007. Nationally, the FHA had only 4 percent of the mortgage market, three years ago. Today it has more than 21 percent.

 

To read the entire article, please visit: http://www.pittsburghlive.com/x/valleyindependent/teenscene/s_610472.html, 

HUD Secretary Calls for Accelerated Loan Modifications

Housing and Urban Development Secretary Shaun Donovan said Friday that the federal government “must accelerate loan modifications” and cited a “desperate need” for industry-wide standards to govern those alterations.

The White House is preparing to roll out its own plan to deal with foreclosures and the housing market, and some $50 billion in money from the Troubled Asset Recovery Program has been earmarked to help stanch foreclosures. President Barack Obama could outline further steps next week during a swing through Denver and Phoenix, where home prices fell by 33% in 2008, among the worst such declines in the nation.

To read the entire article, please visit: http://blogs.wsj.com/developments/2009/02/13/hud-secretary-calls-for-accelerated-loan-modifications/?mod=googlenews_wsj

Friday, February 13, 2009

Lenders drop mortgage brokers

Some big banks have cut back on doing business with mortgage brokers - and if the trend continues, many mortgage brokers could close down.

That may be bad news for consumers because fewer brokers could lead to a less competitive marketplace and more expensive home loans resulting from consumers not being able to easily comparison-shop rates.

Lenders drop mortgage brokers

Some big banks are cutting out mortgage brokers and having lending generated by their own people. That could be bad for consumers.

"The banks want to get rid of mortgage professionals to reduce competition," said Alan Rosenbaum, founder of GuardHill Financial, a New York City-based brokerage firm. "It's not good for consumers."

A few years ago, according to Rosenbaum, mortgage brokers were responsible for 80% of the mortgage-lending business in America. He said that's probably under 70% now and dropping.

Chasing higher profits

Chase took the step of discontinuing its wholesale lending for two main reasons, according to Kelly. For one, "The best people to originate the loans, we believe, are those working in our bank branches," he said. Secondly, Chase determined that loans originated by brokers defaulted at higher rates than did bank-originated loans.

The brokers scoff at that. "Mortgage brokers don't develop their own products, their own guidelines and parameters," said Savitt. "They take applications; Chase makes all the decisions."

"Mortgage brokers have been blamed for everything from tooth decay to global warming, and it's baloney," added Allen Hardester, a Maryland-based broker.

He pointed out that no mortgage broker ever underwrites a loan, creates a loan program or approves an application. Lenders always have the final say.

And, if the loans from brokers did perform poorly, it's because lenders encouraged, nay prodded, brokers into bringing them more and more poor-quality customers during the boom years. Subprime mortgages were very profitable, before they started to default at higher and higher rates.

"The lenders dangled large carrots in front of brokers," said Rosenbaum. "They told me, 'Unless you give us more subprime business, I can't improve your pricing for your good customers.'"

So far, the other big banks, Wells Fargo (WFC, Fortune 500) and Bank of America (BAC, Fortune 500), have not followed Chase and Citi's leads. "[These] lenders may be looking at this as an opportunity," Savitt said. "They said they were committed to the broker channel and would expand it," he said.

If that's true, it shouldn't affect the market too much even if two big-hitters drop out.

"It will remain a competitive environment," said Courson.

Plus, he said, the there will be a flight to quality. "I think even for banks that continue to take mortgage broker-originated loans, there will be much higher standards."

That includes requiring brokers to show greater stability by demonstrating higher net worth and posting higher surety bonds (a kind of performance guarantee). 

Stumped home sellers look to make a trade

‘Swaps’ grow in popularity as market slump, financing problems deepen:

Blynda and Leonard Masters wanted to buy a bigger home in Jacksonville, Fla., so they could entertain more and host extended family. Like many would-be home buyers in this market, however, they faced an increasingly common financing problem: They couldn’t borrow to buy a new property until they sold their old one.

The Masters didn’t think they could buy the property since they hadn’t sold theirs. But the agent running the open house floated a radical proposition: The Masters could “swap” their house with the seller. That is, they and the seller could sell their houses to one another and schedule a near-simultaneous closing that would let both parties avoid financing complications.

I have been waiting patiently for some sign that there might be some relief for my daughter and others like her who are in danger of foreclosure. To date, I’ve seen a lot of money doled out to corporate America but have seen not a drop trickle down to the taxpayer. It’s been too long – what’s the president waiting for?
— Karen, Springfield, Mass.

As in past housing busts, the ongoing surge in foreclosures has revived stories about a practice called “jingle mail” — in which people just mail their keys to the bank and move away. It’s hard to know just how widespread the practice really is. But it’s not a good idea, for several reasons.

The most important reason: You signed a contract, took the money and promised to pay the lender back. That’s what the law now requires you to do. If you can’t, the law provides for a number of other ways to discharge your debt properly.

There’s a lot of blame to go around for the current housing and lending meltdown: Borrowers bought more house than they could afford, mortgage brokers tricked borrowers into signing ruinous loans, lenders paid no attention to whether borrowers were good for the money, appraisers went along with ridiculous home values, Wall Street packaged bad loans for sale to investors, rating agencies failed miserably to warn those investors about the risk, regulators slept through the entire mess, etc.

None of that, however, has anything to do with your obligation to pay a debt you agreed to take on — unless you can prove you were a victim of fraud or predatory lending. If we all got to decide which bills we wanted to pay, we wouldn’t have a functioning economy for very long.

Here’s another good reason: You may not have to throw in the towel on your mortgage after all. The government has just created a $75 billion program to help people in your situation. There’s no way to know whether you’ll qualify for help unless you call your lender. Some lenders are prepared to forgive some — or all — of the principal that exceeds the value of your house. Others may lower your monthly payment and push that extra principal into a “balloon” payment — a lump sum you’ll owe when you sell your house or pay off the rest of the mortgage. If you stay long enough for the housing market to recover, you may find you’re no longer underwater on your loan.

If you don’t qualify for a loan modification, you can try to arrange what’s called a “short sale” — where the lender agrees to let you sell your house at current market value — and then lets you off the hook for the remaining, unpaid mortgage balance. If you can’t find a buyer, the lender may accept what’s called a “deed in lieu” of foreclosure; basically, you sign over the house and the lender calls it even.

You may not find any of these options very attractive; the process of contacting your lender and negotiating a resolution won’t be easy. The lending industry has been far too slow in coming up with practical, effective solutions for the mess it was partly responsible for making. None of that, however, lets you off the hook for properly terminating the agreement you made with the lender. Millions of homeowners are in the same (leaky) boat.

If none of these alternatives work, the law still provides for people who — for whatever reason — can’t pay their debts. It’s called bankruptcy. It’s probably the last option to consider; it will ruin your credit rating, and it’s not a pleasant process to go through. But there’s no shame in finding yourself unable to pay your bills.

Which is more than can be said about just walking away from them.

Written by: Stacey Sprain

2008 FHA Max Mortgage Limits

Mortgagee Letter 2008-02 described 2008 Mortgage Limits, which would have been effective for January 1 – December 31, 2008, as the following:

• The National Housing Act provided that the mortgage limit for any given area shall be set at 95% of the median house price in that area, as determined by the Department of Housing and Urban Development, except that the FHA mortgage limit in any given area could not exceed 87% of the Freddie Mac loan limit, nor be lower than 48% of the Freddie Mac loan limit for a residence of applicable size.

**One Unit Standard Max Mortgage = $200,160

• In areas where 95% of the median house price exceeded the 87% figure, the mortgage limits were set at the 87% amount.

** One Unit High-Cost Max Mortgage = $362,790.

• In addition, the National Housing Act permitted mortgage limits for Alaska, Guam, Hawaii and the Virgin Islands to be adjusted up to 150% of the above ceilings, to account for higher costs of construction.

**One unit Max Mortgage for Alaska, Guam, Hawaii and Virgin Islands = $544,185.

Economic Stimulus Act 2008

Mortgagee Letter 2008-06 was brought to us courtesy of “ESA” and the following changes to FHA mortgage limits were announced which would have been effective March 1 – December 31, 2008:

• The Act provided that the mortgage limit for any given area would be set at 125% of the median house price in that area, as determined by the Department of Housing and Urban Development, except that the FHA mortgage limit in any given area could not exceed 175% of the 2008 Freddie Mac conforming loan limit of $417,000, nor be lower than 65% of the same 2008 Freddie Mac conforming loan limit for a residence of applicable size.

**One Unit Standard Max Mortgage ESA = $271,050

• In areas where 125% of the median house price exceeded the 175% limit of $729,750 for a 1-unit property, the mortgage limits were set at the 175% amount.

**One Unit High-Cost Max Mortgage ESA = $729,750

• In addition, the National Housing Act permitted mortgage limits for Alaska, Guam, Hawaii and the Virgin Islands to be adjusted up to 150% of the above ceilings, to account for higher costs of construction. 

**One unit Max Mortgage ESA for Alaska, Guam, Hawaii and Virgin Islands = $1,094,625

Housing & Economic Recovery Act- 2009 Loan Limits

• On November 7, 2008 HUD issued Mortgagee Letter 2008-36 to explain 2009 Max Mortgage Limits associated with the Housing and Economic Recovery Act (HERA). HERA provided that the mortgage limit for any given area would be set at 115 percent of the median house price in that area, as determined by the Department of Housing and Urban Development, except that the FHA mortgage limit in any given area could not exceed 150 percent of the Freddie Mac national loan limit, nor be lower than 65 percent of the Freddie Mac national loan limit for a residence of applicable size.

**One Unit Standard Max Mortgage HERA = $271,050

• In areas where 115 percent of the median house price exceeded the 150 percent figure, the mortgage limits were set at the 150 percent amount.

**One Unit High-Cost Max Mortgage HERA = $625,500

• Section 214 of the National Housing Act permitted mortgage limits for Alaska, Guam, Hawaii and the Virgin Islands to be adjusted up to 150% of the above ceilings, to account for higher costs of construction.

**One Unit Max Mortgage Alaska, Hawaii, Guam & Virgin Islands = $938,250.

Finally came the most recent Mortgagee Letter 2009-07 which announced changes associated with the American Recovery and Reinvestment Act of 2009 (ARRA) which was signed into law on February 17th.

• Under ARRA, the revised FHA loan limits for 2009 will be set at the higher of the loan limits established for 2008 under the Economic Stimulus Act of 2008 (ESA) or those established for 2009 under the Housing and Economic Recovery Act of 2008 (HERA).

**Therefore, under both HERA and ESA, and thus under ARRA as well, the FHA national floor limits remain set at the 65 percent amount (the “floor,”) by property size, as follows:

• One Unit Standard Max Mortgage ARRA = $271,050

**Because ESA used a higher multiple in establishing the national FHA loan limit ceiling, as a percentage of the conforming loan limit, than does HERA (175 percent versus 150 percent), the ESA national ceiling is binding under ARRA for 2009.

**One Unit High-Cost Max Mortgage ARRA = $729,750

**Loan limits for the special exception areas of Alaska (AK), Hawaii (HI), Guam (GU) and Virgin Islands (VI) also follow the ARRA rule of choosing the higher of the 2008 ESA and 2009 HERA limits. The National Housing Act permits mortgage limits for Alaska, Guam, Hawaii and the Virgin Islands to be adjusted up to 150 percent of the above national ceilings, by property size, to account for higher costs of construction.

**One Unit Max Mortgage Alaska, Hawaii, Guam & Virgin Islands= $1,094,625

Hopefully laying it all out in this manner has helped you understand these many changes as it certainly helped me!

Stay tuned next week as I’ll define all the crazy terms associated with the numerous conventional loan amount changes over this past year!

About the Writer. As one of NAMP's volunteer writers, Stacey Sprain is currently a NAMP member in good standing and is a NAMP Certified Ambassador Loan Processor (CALP). If you would like to become a volunteer writer for NAMP, please email us at: blog@mortgageprocessor.org.

SOURCE: Published by NAMP Publishing Group, a division of the National Association of Mortgage Processors (http://www.MortgageProcessor.org)

To bad our so called elected leaders are not paying attention.

                                             Wise Words

"You cannot legislate the poor into freedom by legislating the wealthy out of freedom.

What one person receives without working for, another person must work for without receiving.

The government cannot give to anybody anything that the government does not first take from somebody else.

When half of the people get the idea that they do not have to work because the other half is going to take care of them,

and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for,

that my friend, is about the end of any nation. You cannot multiply wealth by dividing it.”

~~~~~ Dr. Adrian Rogers, 1931 –2005 ~~~~~

If you agree, pass this along to your friends !!