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Archive for Mortgage News that Matters

After getting hammered for years from special interest groups, banks and lenders, the Federal Housing Administration has announced they are loosening credit standards on federally insured mortgages under the FHA finance program. The Department of Housing and Urban Development has worked with the FHA in an effort to simplify the process for borrowers that recently defaulted on their home loans to get a second chance. To qualify for this revised FHA loan program for people with poor credit, applicants must be able to document that their loan default, short-sale or bankruptcy was caused by economic factors beyond their control. According to the LA Times, people must be able to show the underwriter that their income dropped at least 20% for at least six months.

Get a Second Chance with FHA Home Buyer Loans for People with a Bad Credit History

People that have the ability to document the income dip, job loss or reduced business income now would be required to document 1 year with on-time housing and credit-card payments prior to applying to finance a house with a FHA home purchase loan. In a recent HUD bulletin, the Federal Housing Administration introduced this aggressive FHA home buyers loans.

FHA also mandated that borrowers interested in this bad credit FHA mortgage must attend house counseling from an approved agency outlined by HUD. In the past, people were not eligible for a FHA mortgage programs for 3-years after a home foreclosure or 2-years after a chapter 7 or 13 bankruptcy.

Other Lending Highlights

In a recent interview, FHA Commissioner Carol Galante said, “What we’ve did here is to say, ‘Let’s look at the Great Recession and financial crisis with that lens,'” Galante said. “We want to recognize and distinguish between Americans hindered by that very serious circumstance beyond their control versus borrowers that may have run into problems because they maxed out their charge cards and fell behind on their payments.” As the economy started getting better we were hearing about more and more people whose access to credit moving forward was being stifled by the situation the country has been through,”

Many people in the industry had been anticipating that HUD and Congress would tighten guidelines more because of the low reserves and increased delinquencies, so this announcement of expanding guidelines for FHA mortgages for people with bad credit. Many lenders and brokers believed that HUD would raise the 500 minimum credit score requirement as well as increase the down-payment requirement from 3.5% to 5%., so the fact that this isn’t happening is great news for loan originators and home buyers nationally. Read the original LA Times Article.

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Did you know that over 70% of homeowners that are eligible for the “Home Affordable Refinance Program” have taken advantage of this government backed refinance program? It’s pretty shocking that there are people out there that have 5 and 6% rates on underwater mortgages and they have not reached out to HARP lenders for a solution that guarantees a fixed rate solution with a lower interest rate and reduced monthly payment. The underwater mortgage refinance has already helped over a million homeowners secure a competitive fixed interest rate, even though the borrower owe more on their mortgage than their property is appraised it.

I asked a few seasoned loan veterans how this could be. There theory is that many homeowners are not aware that they are eligible for no equity home refinancing. Despite massive marketing campaigns on radio, television and direct mail, many homeowners are simply out of the loop. The HARP 2.0 will not last forever, so hopefully these homeowners will be reached so that they can realize the benefits of refinancing underwater loans. If you are a homeowner that closed your last home loan prior to June 1, 2009 and your mortgage is owned by Fannie Mae or Freddie Mac, you may be eligible for underwater mortgage refinancing.

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We get many emails from consumers seeking guidance in how to qualify for a handful of high risk mortgages that seem to have obstacles around them. I list 3 common questions below for mortgage loans that appear to be in high demand this year. The only problem is that all three of the home loans is not regarded highly with most conventional prime lenders in 2013.

  1. How do I get approved with bad credit mortgage lenders?  We see thousands of borrowers that need a mortgage but happen to have credit scores below the threshold that today’s conventional lenders are seeking. With that being said, many people with low fico scores are migrating towards government loans, because they have more flexible guidelines with respect to credit. FHA still accepts borrowers with credit scores as low as 500 and VA still has no minimum credit scores in their guidelines for buying or refinancing. That doesn’t mean that government lenders are looking to approve people with poor credit, but underwriters can and do make exceptions when borrowers have compensating factors.
  2. Can I get a home loan with no down payment?  Yes 100% home loans that require zero down-payment are available to people who meet the criteria of USDA and VA mortgage programs. The USDA is a loan reserved primarily for people that are buying or refinancing in a rural region of the country. The VA mortgage is a program designed for military borrowers and retired veterans. Both loan programs require nothing down and the interest rates are competitive.
  3. Do stated Income mortgage loans exist? Yes and No. Hard money and subprime lenders still offer “stated income loans.” In wake of the recent housing crisis, conventional and government lenders state that they do not allow stated or no income documentation loans. They require full documentation with their purchase and refinance programs. However, the “streamline” program which is endorsed by FHA and VA does not require pay-stubs, W2’s or verification of income from the borrower’s employer. They do in fact do a verification of employment in an effort to verify that the borrower still has a job.  So in a sense, the government programs still allow stated income mortgages to borrowers that already have an existing mortgage with either FHA or VA. No cash out is allowed with the streamline either.
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The poor economic news has contributed to falling interest rates on home mortgages once again. In most cases, when the unemployment rate rises, consumers benefit from improved pricing on purchase loans and refinancing. Several lenders in San Diego, Los Angeles and Orange County have indicated the mortgage rates for refinancing have decreased in the last few days. As reported by the Mortgage Bankers Association on Monday, home loan rates inched a bit up last week and loan application requests had fallen.

Certainly Hurricane Sandy has slowed down the volume as millions of borrowers on the East Coast have been without power. The next few weeks could prove to be very difficult for residents in New York, New Jersey and Pennsylvania. Fannie Mae (FNMA) and Freddie Mac (FMMC) announced expanded help with their disaster relief programs available for distressed homeowners that may have a mortgage owned by one of these government sponsored enterprises. The Home Affordable Refinance Program saw a substantial rise in applications from underwater homeowners last quarter with an 11% increase compared to the previous quarter. There are still millions of homeowners across the country who have been burdened with underwater mortgages that have prevented them from refinancing into a loan with record low rates. HARP refinance rates are available today at 3.5% with no points. The “No fee refinance” has become a popular choice with homeowners this year.

  • No Equity Refinancing Options
  • No Closing Cost Mortgage Programs
  • Low Down-Payments for First Time Home Buyers
  • Record Low Rates for VA, FHA and HARP

According to the Department of Housing and Urban Development applications for FHA loan programs were up last quarter almost 6%. Refinance application led the way for FHA, but HUD reported another surge in first time home buyer loans being submitted into process. The Federal Housing Administration indicated that the increased application volumes was mostly in response to low FHA rates and low down-payment requirements that have help renters become homeowners without breaking their bank.

Today’s rates on a fixed 30-year FHA mortgage were available at 3.25% (APR 3.25%) without any lender fees for loans up to $417,000. With home prices rising in regions like Arizona, California, Nevada, North Carolina and Virginia, many lenders are excited about the new lending opportunities in the year to come.

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Just when you though mortgage rates had hit the “rock-bottom”, the Federal Reserve makes a move that caused interest rates to fall to a new record low. In an effort to stimulate the economy and jump-start the ailing housing markets, the Fed announced a new plan centered on buying mortgage securities.

The Outlook for Record Low Mortgage Rates Has Been Extended by the Fed

St. Louis Federal Reserve President James Bullard down-played the effectiveness of the first two rounds in an interview recently. The Fed hopes that keeping pressure on short and long-term rates will have a positive effect on the economy. It’s no secret that lower interest rates could motivate businesses investment in the economy if borrowing is cheap and easy.

According to the SF Gate, the mortgage bond yields fell to a new ridiculous low. Mortgage News Daily reported better pricing and lower rates for buying and home mortgage refinancing. The gap with an average of 5 and 10-year Treasury rates dipped 16 basis points to 98 basis points which is the lowest recorded since 1992.

According to the latest Freddie Mac survey, the average interest rate for a thirty-year mortgage was 3.55% but the news about the Federal Reserve extending another stimulus with QE3 caused rates to tumble today.

The fifteen-year rates were lower by one basis point at 2.85%. The Freddie Mac report also revealed that average borrowers paid on 0.6 of a point for home mortgages on the 15 and 30-year terms. The 10-year rates and hybrid ARMs remained the same as the previous week but the emerging news from the Federal Reserve certainly could force rates lower in the coming week. We also anticipate that conforming and jumbo pricing may improve this week which cause another surge in refinance applications.

Check the today’s rates now:

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The U.S. economy has been fighting to escape the recession and the housing crisis has emerged as the National focus. Meanwhile the Obama Administration, the Federal Reserve and the entire mortgage industry have joined forces with record low refinance rates and aggressive home loan programs. Can these creative financial minds put an end to the unstable housing sector? Only time will tell, but we are giving these entities an “A” for effort.

This will be Remembered as the Era for Record Low Rate Mortgage Refinancing

The Mortgage Bankers Association announced earlier this month that 2012 has seen the lowest rates for mortgage refinancing since they have been keeping records.

The time for securing the best rate from a refinance loan has never been more right than today. Qualifying for these record low interest rates has been a challenge for many who have seen their incomes and credit scores fall in recent years.

The following refinance loans below have emerged as the leading refinance solutions in America at a time when finances are more important  than ever. The stakes are high for refinancing because many homeowners have an opportunity to save thousands of dollars a year.

1. HARP Refinance – The guidelines for the Home Affordable Refinance have seen drastic changes in 2012. Just try and stop these underwater borrowers from refinancing. Fannie Mae and Freddie Mac made the “loan to value” stipulations disappear for the first time ever.

2. FHA Streamline Refinance –The Federal Housing Administration nearly copied the refinance guidelines from Fannie and Freddie when the altered the home equity requirements to become a non-factor. No appraisal is needed now for existing FHA customers that seek to lower their interest rate through the streamline program. Another reason why the streamline has become so popular is that it is one of the few loans that do not require income documentation. Refinance lenders simply verify the borrower’s employment rather than examining their W2’s, pay-stubs and tax returns for income like most loans require.

3. Bad Credit Refinance –  The average credit score has plummeted in the last few years causing the demand for refinancing with bad credit to soar. Fortunately, Nationwide has become a subprime leader for refinancing. The VA continues to have no minimum credit score for borrowers seeking a refinance and FHA is only asking for a minimum credit score of 500.

4. Cash Out Refinance – With interest rates shattering record once again in 2012 it should come as no surprise that homeowners have been looking to get refinance and get cash out.  FHA allows cash back on 85% LTV refinancing and VA approved military borrowers to get cash back at 90% LTV. Conventional lenders have been requiring 80% LTV for borrowers that want money back and homeowners who are blessed with 20% home equity in their property continue to tap it because money is so cheap. Imagine how much money people are saving who are consolidating 20% credit card debt into a mortgage below 4 percent.

5. 30-Year Fixed Mortgage Refinance – With fixed 30-year rates available at 3.5% (APR 3.67%)  it makes sense that homeowners would migrate towards the most secure and affordable loan of all-time. With many refinance lenders easing the guidelines for the 30-year mortgage it has become a natural progression for new homeowners to refinance when the rates fall and the guidelines improve.

By now, most consumers understand that mortgage refinance loans cannot be this attractive forever. Expect to see interest rates jump when the housing crisis is visible in the rear-view mirror or if defaults begin to mount again. At the end of the day 2012 will be remembered for high unemployment and historic interest rate opportunities for mortgage refinance loans.

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In the media “blame game”, Fannie Mae and Freddie Mac have taken a lot of heat for fueling the housing crisis and mortgage bail-outs over the last five or six years. Fixed 15 year rates fell below 3% for the first time ever last week and home refinancing applications continue to soar.

The Federal Housing Finance Agency, the entity that regulates Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks announced yesterday that the government mortgage powers, Freddie Mac and Fannie Mae completed over 2.3 million foreclosure prevention actions since the mortgage reform laws were passed in 2008. This included 1.1 million loan modifications that were deemed “permanent.” These mortgage relief initiatives were created to encourage homeowners to maintain their homes.

Fannie and Freddie Are Saving Homes with Aggressive Government Refinancing

People Forget the Fannie Mae and Freddie Mac have led key campaigns like the Rapid Refi and the Home Affordable Refinance Program that may end up helping millions of families keep their home.  Read the Freddie Mac Fact Sheet on Making Homes Affordable.

The FHFA detailed the good home financing news that was published in their first quarter 2012 Foreclosure Prevention Report. This report features an interactive Borrower Assistance Map for Fannie Mae and Freddie Mac owned home loans, with information as of March 31, 2012 on loan delinquencies, foreclosure prevention activities, REO properties and home loan refinances in each state. This FHFA report outlined crucial facts in regards to the largest 5-year drop in home prices and the biggest jump on seriously delinquent mortgages. FHFA went on to promise a “Refinance Report” that will provide specific details in regards to publishing data in regards to mortgage refinancing in the United States more quickly.

Homeowners Can Get More Advice from These Popular Nationwide Articles:

More specifics in the recent FHFA report:

  • Nine months after modification, less than 15% of home mortgages that received a note modification in the 2nd quarter of 2011 had missed two or more loan payments.
  • 50% of all borrowers who had their loans modified in the 1st quarter had their monthly mortgage payments reduced by over 30% and one-third included principal forbearance.
  • The top five states ranked by the percentage of the Enterprises’ single-family mortgages more than one year delinquent are: Florida, New Jersey, Georgia, New York and Maine.
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