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Register to Receive FNMA Single-Family E-mail Updates, Alerts, and Newsletters

Renovation Mortgage Plus — Thu, 02 Oct 2008 09:38:06 -0500

Register to Receive FNMA Single-Family E-mail Updates, Alerts, and Newsletters

To give you more options for receiving communications from Fannie Mae, they have enhanced their e-mail registration process. You can now register on eFannieMae.com to receive the latest single-family mortgage business updates, alerts, and newsletters by e-mail, including:

Selling Policy Updates: includes Guide Announcements and Lender Letters for originating, underwriting, and securitizing;
Servicing Policy Updates: includes Guide Announcements and Lender Letters;
Desktop Originator® Updates;
Desktop Underwriter® Updates;
Single-Family Hot Topics Alert; and
In The Loop Newsletter.
Please note that if you are currently subscribed to receive In The Loop, you must re-register to continue receiving it.

Single-Family Updates, Alerts, and Newsletters: E-Mail Registration on eFannieMae.com.

What can Renovation Mortgage Plus do for you...?

203K loans...Yes we do them!
HUD $100 down programs... Yes we do them!
Bank or FHA REOs with repair escrows...Yes we do them!
No seasoning on conforming refinances...Yes we do them!
Conventional Renovation Loans for Investors...Yes we do them!

Call me and see what else we can do to help your business!

What's in that big bailout bill? A first look

Renovation Mortgage Plus — Tue, 30 Sep 2008 15:09:57 -0500

Excerpt:

1) There's a mortgage insurance program, as pushed by House Republicans, but it's completely at the discretion of the Treasury Secretary. Institutions can ask for insurance, Treasury "may" grant it. Verdict: Not gonna happen, at least not much.

2) There's an oversight board, which consists of the Fed chairman, the Treasury Secretary, the SEC chairman, the director of the Federal Housing Finance Agency (it's listed in the bill as the "Federal Home Finance Agency"; here's hoping they fix that), and the HUD secretary. Update: Yay, they did fix the "Federal Home Finance Agency" error before actually introducing the bill today!

3) Treasury has to turn in a report by next April 30 recommending how financial regulation oughtta be revamped. I'd say whoever gets elected in November ought to get a task force working on that pronto.

4) 20% of any profits realized on the sale of assets go into the Housing Trust Fund and the Capital Magnet Fund

5) Treasury is encouraged to encourage servicers of the loans it buys to do workouts (that is, to change the terms of the loans to avert foreclosures).

6) If the Treasury Secretary buys securities directly from an institution and takes a "meaningful equity position," he must follow certain standards for executive compensation and corporate governance. Limit pay, ban golden parachutes, include clawback provisions in new contracts.

7) If the Secretary buys more than $300 million from any institution (that is, even if it was in an auction, and even if he hasn't taken a meaningful equity stake), he has to prohibit golden parachutes for any top executive hired after the purchase.

8) The Secretary must receive warrants or senior debt in return for purchases of troubled securities--unless the assets of the financial institution are $500 million or less, transactions with the institution add up to $100 million or less, or the institution is legally prohibited from issuing securities and debt instruments.

9) The authority starts at $250 billion. A written certification from the president gets it up to $350 billion. The president can then ask to jack it up to $700 billion, and if Congress doesn't like the idea it has 10 business days to pass a resolution stopping it. Also, it appears that Congress could at any time pass a joint resolution increasing the limit past $700 billion.

11) The SEC is given permission to suspend mark-to-market accounting if it wants to. (I'm pretty sure the SEC doesn't need Congressional permission to do that.)

12) Banks stuck with loads of now-almost-worthless Fannie and Freddie preferred shares can sell them and deduct the losses from ordinary income.

13) An earlier decision to exempt mortgage-debt forgiveness from income taxes is extended from 2010 to 2013.

Click here to read more

Converting Existing Homes to Rentals

Renovation Mortgage Plus — Tue, 23 Sep 2008 11:15:00 -0500

HUD has issued Mortgagee letter 2008-25 with new underwriting guidelines for borrowers who wish to keep their current home while financing the new home FHA. Effective with all FHA case numbers assigned on or after September 22, 2008, rental income may not be used to offset the current mortgage payment. There are only two exceptions to this guideline:

1) Relocations: The borrower is relocating with a new employer or being transferred by his/her current employer to an area outside reasonable commuting distance. In this case Towne will require ALL of the following:

A one year lease with a one month minimum security deposit verified by a cancelled check deposited into the borrower's account.
A comparable rent schedule on the property being leased (ordered through AMCSS (888)752-5143 or Dart appraisals (248)333-3036)
A minimum of 6 months reserves on the current home must be documented - must be liquid funds (no gifts, retirement accounts, stocks, etc)

2) Maximum 75% LTV on current property: LTV must be determined by either a current appraisal (no more than 6 months old) or by comparing the current unpaid balance to the original sales price of the home (from the original HUD I Settlement statement).

For more information go to http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/08-25ml.doc

$7,500.00 First-Time Home Buyer Tax Credit

Renovation Mortgage Plus — Sat, 20 Sep 2008 06:18:38 -0500

The Housing and Economic Recovery Act of 2008 authorizes a $7,500 tax credit for qualified first-time home buyers purchasing homes on or after April 9, 2008 and before July 1, 2009. The following questions and answers provide basic information about the tax credit. If you have more specific questions, we strongly encourage you to consult a qualified tax advisor or legal professional about your unique situation.

Who is eligible to claim the $7,500 tax credit?
First time home buyers purchasing any kind of home-new or resale-are eligible for the tax credit. To qualify for the tax credit, a home purchase must occur on or after April 9, 2008 and before July 1, 2009. For the purposes of the tax credit, the purchase date is the date when closing occurs.
What is the definition of a first-time home buyer?
The law defines "first-time home buyer" as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse. For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit. Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer.
How do I claim the tax credit? Do I need to complete a form or application?
Participating in the tax credit program is easy. You claim the tax credit on your federal income tax return. No other applications or forms are required. No pre-approval is necessary; however, prospective home buyers will want to be sure they qualify for the credit under the income limits and first-time home buyer tests.
What types of homes will qualify for the tax credit?
Any home purchased by an eligible first-time home buyer will qualify for the credit, provided that the home will be used as a principal residence and the buyer has not owned a home in the previous three years. This includes single-family detached homes, attached homes like townhouses and condominiums, manufactured homes (also known as mobile homes) and houseboats.
Instead of buying a new home from a home builder, I have hired a contractor to construct a home on a lot that I already own. Do I still qualify for the tax credit?
Yes. For the purposes of the home buyer tax credit, a principal residence that is constructed by the home owner is treated by the tax code as having been "purchased" on the date the owner first occupies the house. In this situation, the date of first occupancy must be on or after April 9, 2008 and before July 1, 2009.

In contrast, for newly-constructed homes bought from a home builder, eligibility for the tax credit is determined by the settlement date.
What is "modified adjusted gross income"?
Modified adjusted gross income or MAGI is defined by the IRS. To find it, a taxpayer must first determine "adjusted gross income" or AGI. AGI is total income for a year minus certain deductions (known as "adjustments" or "above-the-line deductions"), but before itemized deductions from Schedule A or personal exemptions are subtracted. On Forms 1040 and 1040A, AGI is the last number on page 1 and first number on page 2 of the form. For Form 1040-EZ, AGI appears on line 4 (as of 2007). Note that AGI includes all forms of income including wages, salaries, interest income, dividends and capital gains.

To determine modified adjusted gross income (MAGI), add to AGI certain amounts such as foreign income, foreign-housing deductions, student-loan deductions, IRA-contribution deductions and deductions for higher-education costs.
If my modified adjusted gross income (MAGI) is above the limit, do I qualify for any tax credit?
Possibly. It depends on your income. Partial credits of less than $7,500 are available for some taxpayers whose MAGI exceeds the phaseout limits. The credit becomes totally unavailable for individual taxpayers with a modified adjusted gross income of more than $95,000 and for married taxpayers filing joint returns with an AGI of more than $170,000.
Can you give me an example of how the partial tax credit is determined?
Just as an example, assume that a married couple has a modified adjusted gross income of $160,000. The applicable phaseout to qualify for the tax credit is $150,000, and the couple is $10,000 over this amount. Dividing $10,000 by $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time home buyer tax credit that is available to this couple, multiply $7,500 by 0.5. The result is $3,750.

Here's another example: assume that an individual home buyer has a modified adjusted gross income of $88,000. The buyer's income exceeds $75,000 by $13,000. Dividing $13,000 by $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $7,500 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,625.

Please remember that these examples are intended to provide a general idea of how the tax credit might be applied in different circumstances. You should always consult your tax advisor for information relating to your specific circumstances.
Does the credit amount differ based on tax filing status?
No. The credit is in general equal to $7,500 for a qualified home purchase, whether the home buyer files taxes as a single or married taxpayer. However, if a household files their taxes as "married filing separately" (in effect, filing two returns), then the credit of $7,500 is claimed as a $3,750 credit on each of the two returns.
Are there any circumstances for which buyers whose incomes are at or below the $75,000 limit for singles or the $150,000 limit for married taxpayers might not be able to claim the full $7,500 tax credit?
In general, the tax credit is equal to 10% of the qualified home purchase price, but the credit amount is capped or limited at $7,500. For most first-time home buyers, this means the credit will equal $7,500. For home buyers purchasing a home priced less than $75,000, the credit will equal 10% of the purchase price.
I heard that the tax credit is refundable. What does that mean?
The fact that the credit is refundable means that the home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. Typically this involves the government sending the taxpayer a check for a portion or even all of the amount of the refundable tax credit.

For example, if a qualified home buyer expected, notwithstanding the tax credit, federal income tax liability of $5,000 and had tax withholding of $4,000 for the year, then without the tax credit the taxpayer would owe the IRS $1,000 on April 15th. Suppose now that taxpayer qualified for the $7,500 home buyer tax credit. As a result, the taxpayer would receive a check for $6,500 ($7,500 minus the $1,000 owed).
What is the difference between a tax credit and a tax deduction?
A tax credit is a dollar-for-dollar reduction in what the taxpayer owes. That means that a taxpayer who owes $7,500 in income taxes and who receives a $7,500 tax credit would owe nothing to the IRS.

A tax deduction is subtracted from the amount of income that is taxed. Using the same example, assume the taxpayer is in the 15 percent tax bracket and owes $7,500 in income taxes. If the taxpayer receives a $7,500 deduction, the taxpayer's tax liability would be reduced by $1,125 (15 percent of $7,500), or lowered from $7,500 to $6,375.
Can I claim the tax credit if I finance the purchase of my home under a mortgage revenue bond (MRB) program?
No. The tax credit cannot be combined with the MRB home buyer program.
I live in the District of Columbia. Can I claim both the DC first-time home buyer credit and this new credit?
No. You can claim only one.
I am not a U.S. citizen. Can I claim the tax credit?
Maybe. Anyone who is not a nonresident alien (as defined by the IRS), who has not owned a principal residence in the previous three years and who meets the income limits test may claim the tax credit for a qualified home purchase. The IRS provides a definition of "nonresident alien" in IRS Publication 519.
Does the credit have to be paid back to the government? If so, what are the payback provisions?
Yes, the tax credit must be repaid. Home buyers will be required to repay the credit to the government, without interest, over 15 years or when they sell the house, if there is sufficient capital gain from the sale. For example, a home buyer claiming a $7,500 credit would repay the credit at $500 per year. The home owner does not have to begin making repayments on the credit until two years after the credit is claimed. So if the tax credit is claimed on the 2008 tax return, a $500 payment is not due until the 2010 tax return is filed. If the home owner sold the home, then the remaining credit amount would be due from the profit on the home sale. If there was insufficient profit, then the remaining credit payback would be forgiven.
Why must the money be repaid?
Congress's intent was to provide as large a financial resource as possible for home buyers in the year that they purchase a home. In addition to helping first-time home buyers, this will maximize the stimulus for the housing market and the economy, will help stabilize home prices, and will increase home sales. The repayment requirement reduces the effect on the Federal Treasury and assumes that home buyers will benefit from stabilized and, eventually, increasing future housing prices.
Because the money must be repaid, isn't the first-time home buyer program really a zero-interest loan rather than a traditional tax credit?
Yes. Because the tax credit must be repaid, it operates like a zero-interest loan. Assuming an interest rate of 7%, that means the home owner saves up to $4,200 in interest payments over the 15-year repayment period. Compared to $7,500 financed through a 30-year mortgage with a 7% interest rate, the home buyer tax credit saves home buyers over $8,100 in interest payments. The program is called a tax credit because it operates through the tax code and is administered by the IRS. Also like a tax credit, it provides a reduction in tax liability in the year it is claimed.
If I'm qualified for the tax credit and buy a home in 2009, can I apply the tax credit against my 2008 tax return?
Yes. The law allows taxpayers to choose ("elect") to treat qualified home purchases in 2009 as if the purchase occurred on December 31, 2008. This means that the 2008 income limit (MAGI) applies and the election accelerates when the credit can be claimed (tax filing for 2008 returns instead of for 2009 returns). A benefit of this election is that a home buyer in 2009 will know their 2008 MAGI with certainty, thereby helping the buyer know whether the income limit will reduce their credit amount.
For a home purchase in 2009, can I choose whether to treat the purchase as occurring in 2008 or 2009, depending on in which year my credit amount is the largest?
Yes. If the applicable income phaseout would reduce your home buyer tax credit amount in 2009 and a larger credit would be available using the 2008 MAGI amounts, then you can choose the year that yields the largest credit amount.
Is there any way for a home buyer to access the money allocable to the credit sooner than waiting to file their 2008 tax return?
Yes. Prospective home buyers who believe they qualify for the tax credit are permitted to reduce their income tax withholding. Reducing tax withholding (up to the amount of the credit) will enable the future home buyer to accumulate cash by raising his/her take home pay. This money can then be applied to the downpayment. Buyers should adjust their withholding amount on their W-4 via their employer or through their quarterly estimated tax payment. IRS Publication 919 contains rules and guidelines for income tax withholding. Prospective home buyers should note that if income tax withholding is reduced and the tax credit qualified purchase does not occur, then the individual would be liable for repayment to the IRS of income tax and possible interest charges and penalties.

Reinstatement Update: Down Payment Assistance

Renovation Mortgage Plus — Tue, 16 Sep 2008 16:22:00 -0500

H.R. 6694 is approved by key Congressional Committee

Bipartisan legislation would reauthorize downpayment assistance

GAITHERSBURG, MD - Ann Ashburn, President of AmeriDream, issued the following statement today after the House Financial Services Committee adopted H.R. 6694, legislation designed to reauthorize and reform downpayment assistance programs that the Bush Administration banned in July.

"Today's committee vote was a positive step toward preserving downpayment assistance, but our work is far from over," said Ashburn. "Now more than ever, members of Congress need to know that Americans are watching their vote on H.R. 6694. I encourage members of the public to tell their representatives in the House and the U.S. Senate that a vote for H.R. 6694 is a vote for the next generation of homeowners."

H.R. 6694 would reinstate FHA seller downpayment assistance for persons with certain credit scores. Learn more about H.R. 6694 by visiting www.supporthomeownership.com.

Quick Note Regarding FHA Mortgage Insurance.

Renovation Mortgage Plus — Tue, 16 Sep 2008 16:18:30 -0500

The FHA risk based pricing grid that went into effect July 14th will end October 1st. After October 1st, the old premium schedule will go back into effect with a few changes - notably a higher upfront premium of 1.75%

See Mortgagee Letter:

http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/08-22ml.doc

Revised Downpayment and Maximum Mortgage Requirements

Renovation Mortgage Plus — Fri, 12 Sep 2008 10:35:39 -0500

HUD sent out a new Mortgage Letter - ML 2008-23 - dated September 5^th, that details new polices regarding down payment on purchases, LTV limits, seller concessions, and other information. Please be aware these changes take place October 1, 2008.

The Housing and Economic Recovery Act of 2008 revised the National Housing Act to:

• Require that the mortgagor "shall have paid, in cash or its equivalent...an amount equal to not less than 3.5 percent of the appraised value of the property....";

• Eliminate the variable loan-to-value limits that were based on the combination of the property value and the average closing costs of the State where the property is located (also known as "downpayment simplification"); and

• Limit the total FHA-insured first mortgage to 100 percent of the appraised value, and require the inclusion of the upfront mortgage insurance premium (UFMIP) within that limit.

Additional Information Regarding the Revised Downpayment/Maximum Mortgage Requirements and Downpayment/Mortgage Amount Calculation Examples:

• Effective Date: The revised downpayment requirement as described throughout this mortgagee letter takes effect with all new FHA case number assignments on or after January 1, 2009.

• Closing costs: Closing costs may not be used to help meet the minimum 3.5% downpayment requirement. Closing costs are not considered in the mortgage amount/downpayment calculation for purchase money mortgages.

• LTV: For purchase money mortgages, the LTV is 96.5 percent, i.e., the reciprocal of the 3.5 percent downpayment requirement. The examples that follow will use 96.5 percent and apply it to the lesser of the appraiser's estimate of value or the adjusted sales price. The examples do not include UFMIP or closing costs to be paid by the borrower.

• Combined loan-to-value ratio (CLTV): When combined with the FHA first mortgage, government subordinate liens are not limited to 100 percent. When a unit of government or an instrumentality of one is offering downpayment and/or closing costs assistance in the form of secondary financing, the CLTV can exceed 100 percent of the appraised value. The guidance in paragraph 1-13 of handbook HUD 4155.1 REV-5 remains in effect

• Seller Concessions: Sellers are still permitted to provide financing concessions up to 6 percent of the sales price. Amounts exceeding six percent must be subtracted from the sales price (or value, if less) before applying the downpayment percentage multiplier. Other inducements to purchase, as described in the mortgage credit analysis handbook (HUD-4155.1 REV-5) must also be subtracted from the sales price or value, as appropriate, in calculating the maximum mortgage amount/downpayment. In such cases, the actual downpayment is increased by the amount of the inducement.

• Specialty products with higher LTVs: Section 203(k), Section 203(h) for disaster victims, and FHA's Energy Efficient Mortgage (EEM) programs are not affected by the LTV limit. All existing policy guidance regarding the rehabilitation program under Section 203(k), including streamlined (k), mortgage insurance for disaster victims, and the EEM program remain in effect. (Please note that a separate mortgagee letter announcing higher EEM loan limits will be published.)

• Refinance transactions: Refinances, including FHASecure refinances, are not subject to the 3.5 percent downpayment requirement since there is no "downpayment" on a refinance. The LTV will be calculated, as it has been, by dividing the loan amount prior to adding the UFMIP by the appraiser's estimate of value. However, the loan amount, including the UFMIP, may not exceed 100 percent of the appraiser's estimate of value for all new case number assignments made on or after January 1, 2009; this will result in various refinancing products including rate-and-term, FHASecure (including refinances of both non-delinquent and delinquent mortgages), streamlined refinances, and cash-out refinances having possibly different LTVs before adding the upfront mortgage insurance premium.

Breaking News about Downpayment Assistance from Nehemiah Coporation

Renovation Mortgage Plus — Tue, 09 Sep 2008 21:13:59 -0500

Chairman Frank and HUD Secretary Preston Negotiate DPA Agreement

Chairman of the House Financial Services Committee, Barney Frank, has discussed publicly the fact that he has negotiated an agreement with HUD Secretary Steve Preston that will provide for the continuation of privately funded downpayment assistance.

The agreement allows HUD to impose risk-based pricing on downpayment assistance transactions which provides Secretary Preston the fiscal protection he seeks for the FHA insurance fund.

According to an Inman News article published today, Chairman Frank is quoted as saying "The FHA loved the ban on down-payment assistance (but) hated the ban on risk-based pricing," Frank said at Saturday's hearing. "That seemed to me to offer an opportunity. So (HR 6694) will replace both bans with middle ground -- and it will pass the House, I can guarantee you. What you want to do now obviously is talk to your senators. We think it will go through there -- it has the approval now of the Secretary of HUD."

Thanks to the advocates of downpayment assistance, there is significant momentum in this direction. Nehemiah urges all supporters to continue their campaign to save DPA by contacting their Senators and request a swift passage of pro-DPA legislation.

Read the entire article:http://www.inman.com/news/2008/09/10/congress-weighs-reprieve-seller-funded-gifts

More exciting developments: join Scott Syphax, President and CEO of Nehemiah Corporation of America, for a 30-minute virtual town hall meeting on Thursday, September 11, at 10:00 AM Pacific / 1:00 PM Eastern. Visit the Events page on www.DPAGroundSwell.org for more information.

Fannie Mae/Freddie Mac: What you should know

Renovation Mortgage Plus — Mon, 08 Sep 2008 15:49:54 -0500

Given the extraordinary move by the Federal Reserve to take the driver's seats at Fannie Mae and Freddie Mac this past weekend, we thought we would share some information we have gathered and provide some color on the action.

The most succinct we have seen is Cantor Fitzgerald's summary (see attachments also). It reads as follows:

The government's action on FNMA and FHLMC (collectively Government-Sponsored Entities, GSEs) has four basic points of action:

First: The Federal Housing Finance Agency will become conservator of each firm - effectively running the firms under new management. It will be "business as usual" for the firms for the time being.

While there is no explicit guarantee on agency debt, given that government's equity position, it is likely that the debt of the agencies will trade tighter.

Second: The US will take a position in newly issued Senior Preferred equity in both firms. This position will be senior to current equity and preferred holders. The initial position will be $1 billion with capacity of $100 billion each. These preferred shares come with a 10% coupon and include warrants to purchase up to 79.9% of the common of each firm.

As a part of this, the current common and preferred equity will remain outstanding, although, there will be no dividends paid and losses will flow through these positions before the new senior preferred is hit.

Depositories that hold agency preferred should have already been marking the positions to market through equity and should continue to do so. If such a charge result in too large a reduction in capital, the FDIC is prepared to work with depositories to "develop capital-restoration plans pursuant to the capital regulations and the prompt corrective action provisions of the Federal Deposit Insurance Corporation Improvement Act".

Third: The Treasury will provide a credit facility to the agencies to facilitate short-term liquidity needs. These borrowings will be collateralized by agency MBS holdings.

This facility is also available to the Federal Home Loan Banks. Any use by the FHLB's will be collateralized by advances.

Four: The Treasury will purchase agency MBS in the open market in an undetermined amount.

This is being done to increase liquidity and bring in spreads on FN/FH mortgage loans - a very big, new buyer in the space.

Below are our thoughts. We welcome your comments.

Overview

We believe that Treasury Secretary Paulson and the Bush Administration determined Fannie Mae and Freddie Mac were unable to perform their housing missions at a time when they were most needed because the GSEs were trying (unsuccessfully) to address safety and soundness issues associated with raising capital. As a result of this plan, Treasury has indicated that the GSEs will now not be under any pressure to sell assets.

In the short-term, we expect mortgage liquidity should improve. Rates should decline as the risk spreads built into the GSE pricing (due, in part, to fear of potential GSE failure) should be reduced if not eliminated. The extent of the decline will depend on what happens to Treasury yields in the coming days.

Without capital constraints in the near term and based on Secretary Paulson's comments (see below) , we believe the new Fannie and Freddie will likely rollback at least some of their price increases and loosen underwriting requirements to some extent. It will be curious to see the MI reaction to this government intervention as their tightening of guidelines will now be "front and center" in the effort to expand mortgage financing availability.

On a longer term basis, there will be a "heavyweight" debate next year and beyond about the future size and structure of the GSEs (e.g. public or private entities). That debate will not occur until the new Congress and Administration take office next year.

Why did Treasury/FHFA take this action?

It appears to us that Treasury/FHFA lost confidence in Fannie Mae and Freddie's Mac's ability to support the housing recovery while, at the same time, addressing their safety and soundness responsibilities by preserving and raising capital. Below are some of Secretary Paulson and Director Lockhart's remarks which lead us to this conclusion.

Director Lockhart said:

(bold and italics added)

"Their market share of all new mortgages reached over 80 percent earlier this year, but it is now falling. During the turmoil last year, they (the GSEs) played a very important role in providing liquidity to the conforming mortgage market. That has required a very careful and delicate balance of mission and safety and soundness. A key component of this balance has been their ability to raise and maintain capital. Given recent market conditions, the balance has been lost. Unfortunately, as house prices, earnings and capital have continued to deteriorate, their ability to fulfill their mission has deteriorated. In particular, the capacity of their capital to absorb further losses while supporting new business activity is in doubt. Today's action addresses safety and soundness concerns. ... The result has been that they have been unable to provide needed stability to the market. They also find themselves unable to meet their affordable housing mission. Rather than letting these conditions fester and worsen and put our markets in jeopardy, FHFA, after painstaking review, has decided to take action now. "

Secretary Paulson said:

"I attribute the need for today's action primarily to the inherent conflict and the flawed business model imbedded in the GSE structure and the ongoing housing correction". He added that he has "long said the housing correction poses the biggest risk to the economy"

"Our economy and our markets will not recover until the bulk of this housing correction is behind us. Fannie Mae and Freddie Mac are critical to turning the corner" and that "the primary mission of these enterprises will now be to proactively work to increase the availability of mortgage finance including by examining the guaranty fee structure with an eye toward mortgage affordability".

Comment

We have all seen the steps that Fannie Mae and Freddie Mac have taken to preserve and raise capital throughout this year. These measures have included raising prices on mortgages and tightening underwriting guidelines. As some of you may also be aware, they have been aggressively trying to put back loans to seller-servicers who, in turn, are going back to originators.

Secretary Paulson in particular appeared to conclude that GSEs cannot serve two masters (i.e. its housing mission and its shareholders) during the housing crisis.

What does this mean?

To state the obvious, we are in uncharted waters. This plan is not a "silver bullet" that will address the underlying problems (i.e. record mortgage delinquency and foreclosures) that caused the need for this unprecedented action. MBA's National Delinquency Survey last week indicated that over 9% of all mortgages are either delinquent or in the foreclosure process. While the new GSE approach to mortgage availability will increase the number of potentially eligible borrowers, it will likely not have any significant impact on affordability (borrowers must still qualify and make downpayments) in those markets where house prices increased the most during the "housing bubble" until house prices and borrower incomes are in line. With this as a caveat, below are our immediate thoughts.

· Short term goals

Two of the immediate goals of this action are: 1) "to increase the availability of mortgage finance" as Secretary Paulson said and 2) to lower mortgage interest rates through the Government guarantee of GSE debt.

· Long term objectives

On a longer term basis, the Government's action yesterday raises the fundamental question about the government's role in housing going forward. Secretary Paulson deferred the discussion of this question and the "flawed GSE business model" (i.e. serving two masters ---public and private objectives) to the next Administration and Congress.

In this update, we will focus on short-term impact since the debate about the GSEs' future structure and size will depend on who wins the election and the make-up of the Congress.

Short term Impact

For the housing industry, the short-term impact of the Government takeover appears to be positive.

· Mortgage rates should decline

· Liquidity should be increased

o GSEs should loosen standards (somewhat)

o GSEs should reduce fees

· Some housing experts feel house prices may stabilize sooner and the level of further house price decline will be moderated as a result

Potential Impact

· There could be a mini-refinance boom if the rate decline materializes.

o Hedging of servicing portfolios and pipeline problems will have to be addressed

· More aggressive GSEs could slow down FHA's growth

o FHA appeared on the way to 50% market share later this year.

o What will be the impact on pricing?

There are many questions to be answered in the coming days and weeks. We felt the biggest is how the mortgage insurance companies will react. We will be watching and let you know of changes as they occur.

Thanks

FHA 203K CE Course

Renovation Mortgage Plus — Mon, 08 Sep 2008 08:39:44 -0500

Online Event Registration - Powered by www.eventbrite.com

Interesting Atlanta Info

Renovation Mortgage Plus — Thu, 21 Aug 2008 15:13:55 -0500

News

Economic Indicators
Atlanta Area Job Growth, Building Products and More
Learn More

Free Report on Atlanta Real Estate Market
Video and Accompanying Written Report Available Online
Learn More

ARC Releases Latest Cost of Living Report
Regional Snapshot Shows Metro Atlanta Has Low Cost of Living
Learn More

Atlanta's Affordable Housing Initiative Receives a Boost
Multifamily Developers Can Now Access Federal Money
Learn More

NAHB Housing Economics
State, Regional and National Economic Data Available
Learn More

Helpful Links
Additional Sources for Economic Data
Learn More

Fannie Mae Policy Changes

Renovation Mortgage Plus — Tue, 12 Aug 2008 09:05:13 -0500

***Attention***

Fannie Mae released the following policy changes effective August 1^st:

Bankruptcy Policy:

Chapter 7: 4 years from the date of discharge or dismissal

Chapter 13: 2 years from the date of discharge or 4 years from dismissal date

Foreclosure: 5 years from the date of completion (sale date). In addition, for up to 7 years after sale date, a minimum up 10% down and a minimum FICO of 680 required to purchase a principal residence. Purchase of a second home or investor property is not allowed.

Do It Yourself at www.creditfico911.com

Renovation Mortgage Plus — Mon, 11 Aug 2008 15:04:31 -0500

I've been getting a lot of calls from Credit Repair Companies. They are always inquiring about a list of people that may need more time to improve their credit before purchasing a home. It's apparent that they want the people in my contact list to subscribe to a repair service. I've made an attempt to use repair companies before however I am constantly assisting lient's with getting their money back.

I am very familiar with credit improvement techniques and am an advocate for Do-It-Yourself Credit Improvement as most will learn a lot by improving their credit which will help in low-credit score prevention. I've developed a site www.creditfico911.com

The site is for consumers from 400-839 who would like to improve their credit rating. No cost to join or maintain membership. No soliciting for leads or junk email programs. It is strickly for information purposes only.

RALLY FOR HOMEOWNERSHIP

Renovation Mortgage Plus — Thu, 07 Aug 2008 06:35:42 -0500

Your help is needed! On July 31, several members of Congress introduced H.R. 6694 which would save Downpayment Assistance...indefinitely! If we continue to work hard together, DPA could be reinstated by the October 1st deadline that's currently in place.

For the next 5 weeks, Congress will be out of session and we will have a unique opportunity to see them at their home offices and convince them to support H.R. 6694. We're targeting Senators because historically, they have not understood the value of Downpayment Assistance to homebuyers and the current economy. Here's how you can most effectively influence your Senators.

Go to RallyForHomeownership.org (even if you've been there before) and ask Congress to specifically pass H.R 6694.

Call your State Senators and tell them why they need to support H.R. 6694. Get Your Senators' Phone Numbers HERE!

Get a group of people together and visit your Senators at their local offices and tell them why they need to support H.R. 6694. Get Your State Senators' office addresses and tips on setting up an appointment HERE!

THE NEW DPA BILL

Renovation Mortgage Plus — Tue, 05 Aug 2008 15:20:17 -0500

August 6 Town Hall with Scott Syphax, President and CEO of Nehemiah Corporation

Space is limited!

You are invited to join Scott Syphax, President and CEO of Nehemiah Corporation of America, for a 30-minute virtual town hall meeting on Wednesday, August 6, at 10:10 AM PST / 1:10 PM EST.

You are receiving this email because you are on our town hall call list. We will be placing a call to you approximately 5-10 minutes prior to the actual start of the event. To join the live virtual town hall simply stay on the line to be connected.

Topics will include: the introduction of a new bill, the FHA Seller-Financed Downpayment Reform and Risk-Based Pricing Authorization Act of 2008 and what you can do to help convince Congress to pass H.R. 6694 that will allow downpayment assistance to continue indefinitely.

If you do not receive or miss our call, the dial-in number is 1-877-269-7289 and pin is 13908. Space is limited; if you receive a busy signal the meeting has reached capacity. Watch for additional town hall meetings this month. If you would like to be placed on the call list for the next town hall, send an email to marketing@getdownpayment.com.

There is no obligation for you to join this town hall, we do feel this is a very important time in our industry and your participation would be greatly appreciated. There is no charge to you for this event and your questions and feedback will be welcomed.

Should you have any questions, please contact Customer Service at 877-634-3642 or your Nehemiah Representative.

NEW BILL TO SAVE DPA!

Renovation Mortgage Plus — Mon, 04 Aug 2008 15:10:27 -0500

Support New Bill (H.R. 6694) to Reform and Save DPA!

Take Action Now

As we mentioned earlier this week, the President signed H.R. 3221, Housing and Economic Recovery Act of 2008, into law. The bill contains a provision (SEC. 2113) that forbids FHA from insuring mortgages in which the downpayment comes directly or indirectly from an interested third party (such as the seller), beginning October 1, 2008. As of this date, the minimum downpayment will be increased from 3% to 3.5%.

We are pleased to announce that a new bill, The FHA Seller-Financed Downpayment Reform and Risk-Based Pricing Authorization Act of 2008 (H.R. 6694) was introduced by several members of Congress on Thursday, July 31, 2008. Representatives Maxine Waters, Gary Miller, Al Green and Christopher Shays sponsored this bill that if passed and signed into law will allow downpayment assistance to continue indefinitely.

Scott Syphax, President and CEO of Nehemiah Corporation of America praised this group earlier today.

"Maxine Waters, Gary Miller, Al Green and Christopher Shays have demonstrated the willingness to understand all sides of this issue and the courage and leadership to follow their conscience. All those who understand the importance of working class American's having their shot at homeownership, need to work together to encourage our elected officials to pass this bill."

"There are dire consequences to America waking up on October 1st without downpayment assistance. In fact, 300,000 working class families will be locked out of homeownership in the next year alone."

In order to save downpayment assistance, we need to come together NOW to convince Congress to pass H.R. 6694 that allows downpayment assistance to continue.

Two Ways To Take Immediate Action...

Write Your Elected Officials
Please take a minute to submit your comment regarding the urgent need to pass H.R. 6694 that allows for downpayment assistance to continue indefinitely.

Submit your comments through our Legislative Alerts and Updates page.

Call Your Elected Officials
A phone call to your U.S. Senators and House Representative will make a huge impact to save private downpayment assistance programs.

Locate your elected officials

Go to Elected Officials
Enter Your Zip Code and click "Go".
Click on the link of the Representative you would like to call and then click on the Contact tab to find their Washington D.C. and District office phone number.

WHAT YOU NEED TO KNOW ABOUT THE NEW BILL

Renovation Mortgage Plus — Thu, 31 Jul 2008 10:17:56 -0500

Key facts of the new housing legislation include:

For homeowners in danger of losing their homes:

·The Federal Housing Administration will insure and refinance up to $300 billion in mortgages to qualified homeowners. Existing mortgages would be canceled in favor of 30-year, fixed-rate loans for up to 90 percent of the home's current value. The program will run from Oct. 1 to Sept. 30, 2011.

·Lenders must wait nine months, not the current three months, before starting foreclosure proceedings against a returning soldier.

For home buyers:

·A $7,500 tax credit is available to buyers who have not owned a home for three years and who have modified adjusted gross income of less than $75,000 for one person or $150,000 for a married couple.

·FHA loans will require a down payment of 3.5 percent, rather than the current 3 percent.

·The maximum loan amount for FHA-insured loans will be increased to as much as $625,000, depending on the area, making FHA loans an option for more expensive properties.

·Seller-funded down payment assistance programs will no longer be allowed for FHA loans.

·Lenders must disclose to borrowers the maximum monthly payments that are possible under their loan.

Online:

For more information on the bill and what it means for consumers, look to:

· www.federalhousingtaxcredit.com

·http://banking.senate.gov/public/_files/Hous ingandEconomicRecoveryActSummary3.pdf

·http://www.house.gov/apps/list/press/finan cialsvcs_dem/hr3221_bill_text.pdf

Housing Bill erases DPA October 1st.

Renovation Mortgage Plus — Wed, 30 Jul 2008 13:10:28 -0500

Act Now to Save Downpayment Assistance!

Take Action Now

This week the President signed H.R. 3221, Housing and Economic Recovery Act of 2008, into law. The bill contains a provision (SEC. 2113) which forbids FHA from insuring mortgages in which the borrower's downpayment comes from a private downpayment assistance provider, beginning October 1, 2008. As of this date, the minimum downpayment will be increased from 3% to 3.5%.

The consequences will be devastating! By FHA's own estimates, DPA comprises nearly 40% of FHA's volume. This means more than 300,000 working class families will be locked out of homeownership in the next year alone. Communities across America will take the brunt of the $50 billion in lost real estate sales, not to mention the indirect impact on the real estate, mortgage and building sectors that will be forced to shed tens of thousands of jobs due to this dangerous legislation.

In order to save downpayment Assistance, we need to come together NOW to convince Congress to introduce and pass a bill that allows downpayment assistance to continue indefinitely.

Two Ways To Take Immediate Action...

Write Your Elected Officials
Please take a minute to submit your comment regarding the urgent need for legislation that allows for downpayment assistance to continue indefinitely.

Submit your comments through our Legislative Alerts and Updates page.

Call Your Elected Officials
A phone call to your U.S. Senators and House Representatives will make a huge impact to save private downpayment assistance programs.

Locate your elected officials

•1. Go to Elected Officials

•2. Enter Your Zip Code and click "Go".

•3. Click on the link of the Representative you would like to call and then click on the Contact tab to find their Washington D.C. and District office phone number.

Stay Informed
Sign up to receive future email updates as they become available.

Should you have any questions, our Customer Service Department is available at 877-634-3642 from 9:00 a.m. - 8:00 p.m. EST to answer your questions.

Nehemiah Corporation of America
424 N 7th Street, Suite 250
Sacramento, CA 95811

Toll Free: 1-877-634-3642
(877) NEHEMIAH
getdownpayment.com

RMP BRINGS RENOVATION LENDING CE COURSES HOME

Renovation Mortgage Plus — Wed, 30 Jul 2008 09:02:02 -0500

What's your goal for your clients? Even in these times, Renovation Mortgage Plus can help, just ask Diane Coombs a Real Estate Agent at Solid Source Realty.
Ms. Coombs contacted Renovation Mortgage Plus with the idea of conducting a Renovation Lending CE Course inside of one of her listings and we bent over backwards to make it happen. It just so happened that the house was perfect, it did not need any repairs however anyone could come and upgrade the kitchen, bathroom, bedrooms, etc. to their individual taste...hence our excitement. RMP immediately teamed up with the pretigious firm of Hudnall Cohn Fyvolent & Shaver and went to work. The result...a packed house, 3 CE Credits for each agent, amazing visibility and awareness for the listing. What an incredible WIN-WIN!

Please call us direct at 770-753-6239, or send email to rmpservices@renovationmp.com to discuss our lending programs and CE Course. We look forward to speaking with you. You can also click here for more information. To see the inside of the 2424 Winrush Ct. SW CLICK HERE

Down Payment Assistance - Virtual Town Hall

Renovation Mortgage Plus — Wed, 30 Jul 2008 08:58:50 -0500

Town Hall with Scott Syphax, President and CEO of Nehemiah Corporation

You are invited to join Scott Syphax, President and CEO of Nehemiah Corporation of America, for a 30-minute virtual town hall meeting on Wednesday, July 30, at 10:00 AM PST / 1:00 PM EST.

We will be placing a courtesy call to you approximately 5-10 minutes prior to the actual start of the event. While there is no obligation for you to join this town hall, we do feel this is a very important time in our industry and your participation would be greatly appreciated. There is no charge to you for this event and your questions and feedback will be welcomed.

Topics will include: the latest developments on the passage of housing bill, H.R. 3221, that bans private downpayment assistance on October 1, 2008 and what you can do to help convince Congress to pass a new bill that allows downpayment assistance to continue indefinitely.

Again, we will place a courtesy call to you approximately 5-10 minutes prior to the town hall, which is scheduled to begin at 10:00 AM PST / 1:00 PM EST on Wednesday, July 30. We look forward to you joining the town hall...your participation will make a difference.

Should you have any questions, please contact your Nehemiah Representative. http://www.getdownpayment.com/outreach/RegionalMap.asp?tab=2

TAKE ACTION

Renovation Mortgage Plus — Tue, 22 Jul 2008 14:25:49 -0500

Letter from Nehemiah

Housing Bill an Immediate Threat to Downpayment Assistance!

Dear Friend,

I am turning to you in the 11th hour, urging you to take action to oppose a housing bill that will eliminate downpayment assistance. The Senate and House of Representatives are fast-tracking this bill. See the Washington Post article below. Upon the President's signature, downpayment assistance will be shut down in the United States. Failure to act now will ensure the immediate death of downpayment assistance.

In recent weeks, I have come to you requesting your help in defeating HUD in their attempt to eliminate downpayment assistance. HUD and the Senate are now attempting to circumvent the rule making process by going after downpayment assistance via legislation. This course of action is being pursued in spite of the strong support of the Congressional Black Caucus, the Congressional Hispanic Caucus, the U.S. Conference of Mayors and Congresswoman Maxine Waters.

The consequences will be devastating! By FHA's own estimates, DPA comprises nearly 40% of FHA's volume. This means more than 300,000 working class families will be locked out of homeownership in the next year alone. Communities across America will take the brunt of the $50 billion in lost real estate sales, not to mention the indirect impact on the real estate, mortgage and building sectors that will be forced to shed tens of thousands of jobs due to this dangerous legislation.

Act now! Please call your Congressional Representative, Senators, trade associations and community groups IMMEDIATELY to voice your support for downpayment assistance and your opposition to this bill. Urge your legislators to oppose these provisions that would ravage your local economy by bringing the housing sector to a screeching halt.

Locate your elected officials.
1. Enter Your Zip Code and click "Go".
2. Click on the link of the Representative you would like to call and then click on the Contact tab to find their Washington D.C. office phone number.

Sincerely,

Scott C. Syphax
President & CEO
Nehemiah Corporation of America

Congress Is Set to Limit Down-Payment Assistance

By Dina ElBoghdady
Tuesday, July 22, 2008
Washington Post Staff Writer

Mortgage programs that helped nearly 79,000 people buy homes using government-insured loans last year would be eliminated as part of a broader housing package that Congress expects to pass this week, key lawmakers said.

Under these programs, nonprofit groups provide buyers with money for down payments. Home sellers then reimburse the organizations and pay an administrative fee. More than half a million people -- including many first-time home buyers, minorities and single mothers -- have bought homes this way in the past decade using loans insured by the Federal Housing Administration.

But the FHA said seller-funded down payments present the single biggest challenge to its solvency. Borrowers who take part in these arrangements go to foreclosure at nearly three times the rate of borrowers who put their own money down, according to the agency.

The fate of these seller-funded down-payment-assistance programs has been in limbo for weeks. The Senate version of the housing bill would have banned them. The House version would not. Negotiators crafting a compromise bill have agreed to the Senate's position, which also is supported by the Bush administration.

"We're going to yield to the Senate on that," said Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee and a supporter of the programs. "There are a lot of trade-offs in the bill."

The administration has tried for years to end the programs but failed to overcome legal challenges. "No insurance company can sustain that amount of additional costs year after year and still survive," Brian D. Montgomery, the FHA commissioner, said in a recent speech.

But supporters of this kind of assistance said it meshes with the FHA's mission to serve low- to moderate- income people. While the system may have its problems, they say, it should be fixed, not abandoned, so that people like Tanika Warrior are not shut out of the market.

Warrior and her husband, Jimmy Hicks, suffered housing sticker shock when they moved to the Washington area from Arkansas a few years ago.

The couple, recent college graduates, had depleted their savings on tuition and care for their newborn son. But they had steady jobs and did not want to keep sinking money into rent, Warrior said. They also did not want to put off buying a home because they were not convinced that their finances would be stronger in a few years.

"We don't want to throw money in a hole," said Warrior, 24, a federal patent examiner. "My thing is we pay our rent every month and we've never been late, not once in five years. If we can pay our rent every month, we can pay our mortgage every month."

The couple worked with Nehemiah, the nation's largest down-payment-assistance charity. Nehemiah provided the 3 percent down payment the FHA requires. The couple secured a 30-year, fixed-rate loan for a townhouse in Herndon through First Savings Mortgage. Their monthly mortgage payment is now about $400 more than what they paid in rent, with taxes and insurance included, Warrior said.

Scott Syphax, president and chief executive of Nehemiah, which is based in California, has been in Washington pushing to save the programs. After he got word yesterday of the agreement to ban seller-funded down payments, he said he was "angry and saddened" about the fallout for "families and communities who obviously did not get a seat the table as these harmful policies were conceived."

Syphax and the FHA disagree about the most basic statistics on these loans. Syphax maintains that the agency's assessment is skewed. He said it has undercounted the number of loans made while properly capturing the number of foreclosures it has had to pay for -- thus inflating the percentage of bad loans.

The FHA strongly denies that. It also maintains that programs backed by Nehemiah and other nonprofit groups aim to skirt its policies that prohibit a seller from directly financing a buyer's down payment. Seller assistance distorts "the fundamental economics of a mortgage agreement," Steven Preston, secretary of housing and urban development, said in a letter to Congress.

Sellers who reimburse the cost of a down payment and shell out related fees of $400 or more try to recoup that money by raising prices on the homes they're selling, government officials said.

Those higher prices result in larger mortgage loans, making it more difficult for buyers to keep up with their payments, they said. The inflated prices also make it tough for buyers to refinance or sell if they lose their jobs, get ill or face some other financial setback -- hence the high foreclosure rates.

"While the seller and lender are able to close a transaction, it is the home buyer and general taxpayer who ultimately bear the long-term risk," Preston said in his letter.

It's unclear how quickly the new policy would kick in if it's enacted.

Supporters of seller financing, including members of the Congressional Black Caucus and the Congressional Hispanic Caucus, said they will push to revive it, perhaps under another administration.

"The Bush administration does not have a lock on history," said Rep. Al Green (D-Tex.), a member of the black caucus. "They only have a lock on the moment."

The administration is not getting all it wants on the FHA front. While the compromise bill would get rid of seller assistance, Frank said, it also would wipe out a new FHA initiative under which the agency charges borrowers insurance premiums based on credit risk, instead of one flat rate.

Salmineo Sherman Sr., who recently used seller assistance to buy his first home, is not tuned in to the horse trading on Capitol Hill.

But yesterday, he said he felt lucky that he bought his seven-bedroom house in Clinton this month. Without seller assistance, he and his wife would not have been able to close the deal. They have six children, two of them grown.

"I do not see myself as any risk at all because I'm not stretching with this house," Sherman said. "We can afford the monthly payments. . . . We're staying put, right in this house."

RMP Brings Renovation Lending CE Courses Home

Renovation Mortgage Plus — Sat, 19 Jul 2008 07:35:41 -0500

Declining Markets Zip Codes

Renovation Mortgage Plus — Tue, 15 Jul 2008 12:50:32 -0500

AIG United Guaranty - has just told me that the "Homestyle Remodeler" rehab product through FNMA will no longer be insurable (LTV >80%) in areas designated as a "Declining Market". If you are not sure if a property is in a declining market, here is a link to UG's ZIP code finder:

https://www.ugcorp.com/rates/DecliningMarketsZIPCodeSearch20080326.xls

Real Estate Resources

Renovation Mortgage Plus — Tue, 15 Jul 2008 11:49:31 -0500

Here are some resources for staying current on the real estate market, financing, trends, laws and taxes.

www.bankrate.com - News about the real estate market, tips, changes in the laws, local mortgage rates, as well as a variety of calculators such as amortization and payment, renting versus buying, credit score estimator, home equity versus lines of credit, and much more.

www.interest.com - News and tips on getting the best loans, buying foreclosures, avoiding mortgage mistakes, as well as various calculators including mortgage rates, renting versus owning and more.

www.realtytrac.com - News and tips related to buying foreclosures, as well as listings arranged by geographic area.

www.landlord.com, www.rentalprop.com - News and tips on owning and managing rental property.

www.irs.gov/publications/p936/ar02.html#d0e187 - Internal Revenue Service information about real estate-related deductions.

www.zillow.com - Information on home values and taxes.

www.homebuyerpark.com- The Real Estate Resource for Homebuyers and Investors.