Lowest Mortgage Rates Since 1971

www.youtube.com/watch?v=RCbPhlOZ-Rw

Mortgage refinance applications have risen in recent weeks, but only a small percentage of loan applicants qualify for home buying or mortgage refinancing.  Mortgage lenders have significantly tightened home loan guidelines in an effort to reduce foreclosures.  Even government mortgage finance options like VA and FHA mortgage loans have experienced major changes that make qualifying for a refinance or purchase more difficult than ever.  According to BofA mortgage executive, Jeff Moran, “Home mortgages have truly become a commodity, because the interest rates are very appealing, but very few borrowers meet the criteria to qualify for these record low interest rates.”  Moran continued, “If a borrower has good credit, good income and minimal liabilities then there is a real opportunity for the applicant to qualify for the mortgage loan of a lifetime.”

Popular loan programs like cash out second mortgage loans and interest only mortgages have almost completely disappeared.  Bad credit mortgage options are few and far between with FHA and VA home loans occasionally taking a risk on a borrower with a poor credit score.  Home equity loans were once offered at 125%, but now you can consider yourself truly blessed if you qualify for a 90% equity loan.  Even the FHA streamline refinance loan requires borrowers to pay for the closing costs “out of pocket.”  Most borrowers are using a FHA loan for cash out refinancing because they do not require a 700 credit score like most home equity lenders demand today.

Undoubtedly the pool of borrowers that qualify for mortgage refinancing or home buying has shrunk, but maybe there is a silver lining.  In the near future interest rates will likely rise.  If you are one of the chosen few who meet today’s lending requirements you just might qualify for the mortgage loan of a lifetime.  If you do qualify -- - -- Seize the opportunity and lock into the lowest fixed rate ever!

Fixed VA Mortgage Rates Starting at 4.25%

As far as military home loans go, nothing beats the VA mortgages for flexibility and affordability.  VA home loans enable a borrower to finance the purchase of the home with no money down.  VA loans also enable military borrowers to refinance their home with no equity.  With the exception of the USDA loan, there is no other zero down home loan than the VA mortgage available on the retail or wholesale mortgage market today.  If you are active in the military or a veteran financing a home has never been easier.

Zero Down Home Loans and 100% Mortgage Refinancing with VA Home Loans 

The 100% refinance programs enable rate and term refinancing with no equity.  The VA streamline mortgage is unique because it often requires no appraisal and no income documentation.  The VA streamline refinance really is amazing because with 100% mortgage refinancing and no appraisal, the loan to value could be more like 115 or 125% in this depressed housing market. VA mortgage lenders like originating VA loans because the underwriting is flexible with credit and the borrowers typically have income that can be easily documented.  According to a spokesman for the VA Home Mortgage Loan Company, “VA mortgage loans ensure affordability with low VA rates and the loan guidelines make it a no brainer for the borrower.”  The VA loan programs requires no money down and enable borrowers with less than perfect credit get a second chance with their military home financing benefits.   The VA mortgage loans have also been performing better on the secondary market as less VA loans have defaulted or been foreclosed upon.  Talk to a loan officer today and see if you meet the VA loan eligibility requirements.

Wells Fargo announced today that they were closing their mortgage lending division that was originating subprime mortgages.  I started thinking again—–Wells Fargo did not originate has not been originating subprime loans, but they did buy Wachovia who bought World Savings and they certainly originated risky loans.  World Savings was the first wholesale lender that extended option ARM loans to mortgage brokers nationwide.  Option ARMs are the high risk loans that featured a negative amortization loan payment option.  That means that borrowers had the ability to pay less than an “interest only” and the deficit would be applied at the end of the year to the borrower mortgage balance.  These loans were the first of their kind, because borrowers could have their outstanding mortgage balance compounding negatively like a credit card.  For years World Savings succeeded with the negative amortization loans because they had strict underwriting criteria that required the borrower to demonstrate they had they ability to pay the loan back. 

To get approved for the Option ARM, borrowers needed to supply income documentation and have home equity that was assessed by a licensed local appraiser.  Self-employed borrowers loved the World Savings Option ARMS because it gave them the ability to pay less in month’s in which their cash flow was low.  World Savings offered bad credit mortgage loans to borrowers who had a significant amount of home equity and income that could be documented. After a while however, World Saving got sucked into the competitive mortgage broker market as Countrywide and WAMU were pushing competitive Option ARM products that paid high yield spread premiums that made loan officers wealthy.  All the while, Wells Fargo never jumped into the option ARM market.  The company maintained it did not want to put their prime loan portfolio in jeopardy because they did not believe the Option ARM product was a good risk.  Wachovia Corporation, another prime lender could not resist the option ARMs and the lure of these exotic home loans so they bought World Savings.

In 2006 the subprime mortgage crisis exploded when home loan lenders started going out of business as loan defaults started mounting.  Home values started plummeting nationally and in 2007 the economy took a turn for the worst.  In 2008 employment skyrocketed and mortgage giants like WAMU and Wachovia were on the verge of bankruptcy.  The government stepped in and brokered Chase to take-over WAMU and Wells Fargo to take-over Wachovia.    

Don’t you find it interesting that after years of refusing to originate the risky option ARM product that Well Fargo went out and bought, Wachovia who just failed because they bought the biggest option ARM lender, World Savings?  I find it strange that after nearly escaping the mortgage industry debacle because of their wavering from their conservative lending philosophy that Wells Fargo would make this kind of catastrophic investment.  Did they ever think to do a back-ground check on this billion dollar bank they were buying?  This is sad because 4,000 people would still have their job today at Wells if it were not for this impulsive and uncharacteristic transaction.  Maybe they should take a page from Obama and blame their mistake on Bush.  Regardless of this giant financial blunder, Wells Fargo is still a great company that will survive the series of crisis’s and continue to be America’s most trusted mortgage lender.   

Moving forward, I would anticipate Wells Fargo will originate more government finance programs like FHA and VA.  Since 1934, FHA home loans have performed better than conventional mortgage products and the government continues to insure FHA refinance and home purchase loans.  VA home loans are another good bet, because Wells know that the borrowers have the income in the military and again the government guarantees these loans as well. 

I would not hold my breath for Wells to reopen and of their subprime lending divisions anytime soon, nor would expect them to roll out competitive jumbo mortgage loan programs until the housing sector begins to actually rebound. 

I’m sure Wells will continue to originate conventional mortgages because that is what they have always done well.  The bottom line is that Wells Fargo maintains that good credit borrowers that can document their income deserve low rate home mortgages with minimal lending fees.  The company offers stellar customer service and typically their loan officers have extensive financing experience.  And who can argue with Wells Fargo on the prime lending criteria as it has performed well through 6 wars and they have been lending for more than half of the time that the United States of America has existed.  Some critics may consider the Wells Fargo layoffs to be a setback for the mortgage industry but it is my contention that Wells Fargo is taking a few steps back in an effort to regroup and survive.  Like the Los Angeles Lakers did after the 3^rd quarter in game 7 against the Celtics, sometime you need a time-out to shake off your mistakes so you get get back and focus on what you are good at.  Like the Lakers with basketball, people will associate Wells Fargo with mortgage lending for many years to come.

What does the Fed raising rates mean to the average American borrower?  It means that mortgage lenders and banks will begin to hike the mortgage rates. 

Right now a 5% 30-year year fixed rate mortgage is a reality with FHA home loans, conventional and VA mortgages.  When the Fed starts jacking the rates, mortgage refinancing rates will rise as the cost of borrowing could sky-rocket. 

Refinance while the rates are low. If there are opportunities now for you to save money, get off your but and refinance your mortgage.  If you are considering buying a home, discuss your eligibility with a loan officer and find a house to make an offer on.  Now is the time to maximize home financing with affordable mortgage rates that will save you money.

www.youtube.com/watch?v=w_r-ASDViF8

CBS’s Scott Pelley reports on the mortgage crisis that has yet to find a resolution and has spun into a serious foreclosure crisis that is far from over, with a second wave of expected home loan defaults on the way that could deepen the bottom of the U.S. economic recession.

The FHA home loan was reborn in 2007 with new cash out requirements that enabled borrowers to qualify for cash out refinancing up to 95%.  In an effort to curb foreclosures HUD introduced the FHA Secure refinance that enabled borrowers who were paralyzed with a high rate adjustable mortgage to lock into a fixed rate loan that they could afford.  The homeowners that had enough equity began utilizing FHA home loans for debt consolidation and home improvement funding.  In 2008, Congress finally passed an economic bill that mandated FHA mortgage loan amounts to increase nationally.  High cost area were now able to refinance with loan amounts up to $729,750 in some cases.  Many of the FHA mortgage lenders began to get nervous as foreclosure rates soared and they collectively believed that FHA loans were quickly becoming the replacement for sub-prime refinance loans.  Even though FHA has never made credit score minimums, the lenders took the guidelines into their own hands and started making credit score minimums like 580 and 620 for mortgage refinance transactions.  This was a huge blow for homeowners because FHA loans has always been based on the compensating factors and they were truly pioneers of “outside of the box” mortgage loans. 

2008 has been a turbulent year to say the least for the mortgage industry.  Foreclosure rates shattered records set in 2007 and major banks like Indy Mac and WAMU began to fail.  The FDIC began bailing out banks and the country found themselves in the worst economic state since the great depression.  Congress passed a bill that called for an $800 hundred billion dollar bail-out that was created to reopen the credit lines so that banks would start lending again.  Meanwhile home values have been tanking across the nation with short sales and foreclosure driving down the property values every month. 

FHA just introduced the Hope for Homeowners Loan that is considered a “short refinance” because it is the first mortgage loan modification endorsed by FHA.  The Hope for Homeowner loans offer an incentive to FHA mortgage lenders to write down the mortgage balance to fair market value and then turn around an offer a loan to these homeowners at 90% loan to value.  There are some contingencies like; the borrowers need to be at least 90 days late on their mortgage.  The borrowers aren’t allowed to take out a second mortgage for 5 years and if they sell the property or refinance in the five years they have to pay some of it back to FHA. 

Here is the problem; the lenders expect these borrowers to have a debt to income ratio under 38%.  If that was the case, these borrowers would not be 3 months behind on their mortgage.  In the first 2 weeks, FHA reported that only 45 in the country qualified for the Hope for Homeowners program.  Unfortunately very few borrowers qualify for this new FHA mortgage and you have to wonder how long the public will put up with the lending act from the mortgage giants as they take hand-outs from the government bail-out without coming through with any meaningful loan programs that meet the needs of todays “no equity” economy.

HOPE for Homeowners Interview

www.youtube.com/watch?v=xqRJ4HwZt3k

The main stream media has grabbed hold of the foreclosure crisis and the mortgage meltdown.  Unfortunately many newspapers are only reporting the shams of the loan modification brokers.  Most articles I read are warning distressed homeowners not to pay the $3,000 to $5,000 in fees to have a professional renegotiate the mortgage terms on your loans, because they say there are many non-profit companies out there that will do it for free.  These non profit foreclosure prevention companies are overwhelmed, underfunded and quite frankly have no intention of helping homeowners modify their mortgages.  With all of the misinformation and poser mortgage products, many homeowners are left with little hope as the mortgage meltdown and foreclosure crisis have turned our economy upside down. 

Article written by Bryan Dornan.

HUD needs more to gear from FHA mortgage brokers.  Tell them why FHA Secure and Hope for Homeowners give the lending community no hope at all.  Let HUD know that their products are close to working, but the banks are restricting the refinance programs to a point beyond approving.  Let HUD know that if we don’t get some affordable refinancing products that are applicable with today’s economic struggles that we will all be selling mortgage loan modifications that could significantly undermine property values and home equity as we know it.  Don’t sit back quietly and let mortgage lending disappear.

Even though FHA has set these changes to take effect on January 1st of next year, you can already see mortgage banks adjusting for HUD’s new FHA policies by shifting their lending requirements to benefit the bank and shareholders.  A select few of FHA mortgage lenders are enabled to implement these new provisions because they are allowed to introduce their own lending restrictions.

The 2009 FHA Mortgage Loan Limits have been set and since the foreclosure crisis continues to pull down comparable sales for appraisals across the nation, the temporarily increased loan limits from the 2008 Economic Stimulus Bill are exactly that–temporary.   The FHA mortgage loan limits will be decreasing in 2009 and so will the hope for many good borrowers who were planning for a mortgage refinance loans next year.  Many California mortgage refinancing opportunities will disappear…

Borrowers in high cost areas like Southern California, have to search for alternative lending options because as of January 1st 2009, FHA will no not insure mortgage loans above $625,500.  These jumbo mortgage loans will likely see higher interest rates and more borrowers could find themselves in line for a loan modification. 

Hopefully the new year will bring true mortgage refinance opportunities for homeowners who need it most.  The FHASecure program and Hope for Homeowners looked great on paper, yet very few homeowners were actually able to qualify for the foreclosure prevention programs because the lenders simply didn’t want to take the risk that FHA guidelines allowed.  Only time will tell, but maybe President elect, Obama can throw some optimism this mortgage brokers direction.

Seriously, please elaborate on your “mortgage credit” that is said to be a 10% home mortgage credit that enables homeowners to benefit if they choose not who do not itemize the mortgage interest with their tax returns.  They say on average that will yield $500 to 10 million homeowners.  One question Mr Obama…Wouldn’t the average homeowner get more back with present tax incentives already being practiced?  The answer is yes.  So is it a tax credit or increased tax on homeowners?

Obama’s website suggests that they have been examining the sub-prime mortgage lending issues for years.   This is good because it is imperative that the next president thoroughly understand the housing sector and mortgage financing.  Apparently, Obama introduced legislation to fight the war on mortgage fraud.   He vows to protect consumers against abusive mortgage lending practices. The STOP FRAUD Act offers a federal definition of mortgage loan fraud and increases the funding for federal and state law enforcement programs.  He vows to implement new criminal penalties for home financing professionals found guilty of fraud while requiring co-workers to report fraudulent activity.  Who can argue with this…People want to put a face with the housing crisis that has cost them the equity in their home and in some cases the home themselves. 

Obama says he will eliminate laws that prevent bankruptcy courts from introducing loan modifications. This is a good thing if banks are going to modify loans why not do it at this level as well.  Obama says he will introduce a HOME score which enables borrowers to compare several home loan products while better understanding the total cost of the mortgage.  This is what the Federal Truth and Lending Statement does.  It multiplies an average of the borrower’s monthly payment over the months they have the loan.  (ie.  3,000 a month over 360 months will cost you $1,080,000)   The truth in Lending Law is pretty darn clear.  We all should take some responsibility with this mortgage meltdown.  Whether you are a homeowner, loan officer, lender, bank or politician, we all played a role that led to this foreclosure epidemic.

Here is the problem Mr. President, the sub-prime meltdown and the foreclosure crisis problem is far more complicated than predatory lending from unscrupulous mortgage brokers.  Banks do not like mortgage brokers and for years they fueled the fire that mortgage brokers caused the sub-prime meltdown.  For the last decade, Banks have created mortgage guidelines that created a housing boom.  American homeowners prospered and what could go wrong.  Lending guidelines in 2005 and 2006 went too far in allowing no money down home loans for borrowers with little, no or bad credit.  The housing bubble bursted and jobs were lost.  The mortgage industry melted and banks tightened their guidelines to the point where average homeowners could not qualify top refinance into a fixed rate mortgage they could afford.  FHA home loans have started to require certain credit scores and lenders like to play appraiser and reduce their appraised value to the point where everyone has been wasting their time.  Home values plummeted and the foreclosure concerns became an epidemic.  Loan modifications have become the modern refinance loan and now when the Fed cuts interest rates, mortgage rates actually rise.  Welcome to my world Mr. President….I’m an unemployed mortgage broker who like to write about the truth. 

Article was written by Bryan Dornan who is the marketing director with Nationwide Marketing.