The uncertainty and confusion surrounding the mortgage and real estate markets are quite extraordinary. Obviously questions arise on a daily basis from people regarding the actual truths. The media does not accurately portray the reality of the market; if you do not want to speak with me I highly suggest you speak with a mortgage professional that has experience to answer any questions. Some common questions lately:
• Can I still pull cash out on my primary residence?
• Can I pull cash out on an investment property?
• If my home has declined in value I cannot refinance?
• I am self-employed there are no loans for me?
• Is it too late for the First Time Homebuyer Credit?
• Can I do 100% financing?
• Can I buy a condo with an FHA loan if it is not an FHA approved building?

I will answer these as straightforward and accurately as possible to the exact time and day I write this. However in this volatile environment guidelines seem to change every nanosecond. Another reason to contact me to answer any questions you may have.

Can I still pull cash out on my primary residence?
Yes, if there is enough existing equity you can pull up to 80% loan to value, meaning leaving 20% equity in the house. For example if a borrower owes $300K and the home is worth $425K, the borrower can increase the current loan to $340K. There are specific rate adjustments related to credit score - but this is the general idea.

Can I pull cash out on an investment property?
Yes, up to a 75% loan to value, similar to the above situation.

If my home has declined in value I cannot refinance?
Not true at all! There are a few options depending on the specific situation. If a homeowner originally had 20%, but no longer, in the past mortgage insurance would have to be added. Now there are two options, depending if the loan is owned by either Freddie Mac or Fannie Mae. Mortgage insurance is not required in the refinance with the appropriate approval up to 95% loan to value with no significant rate hits.
Homeowners can check both these websites to see who owns their loan:
FANNIE MAE:http://loanlookup.fanniemae.com/loanlookup/
FREDDIE MAC:https://ww3.freddiemac.com/corporate/

I am self-employed there are no loans for me?
Actually as long as the last two years of tax returns support income after all adjustments, it is still possible. Issues arise if there is a serious decline in income from one year to the next, otherwise it is still possible. I always request to review tax returns prior to ensure income is sufficient.

Is it too late to take advantage of the $8000 First Time Homebuyer Credit?
Not necessarily, as of now this is set to expire November 30, however the Senate has approved an extension with a few additional nuances to the plan. The new plan extends the credit until April 30 to write a contract and closing must occur prior to June 30. In addition, current homeowners of the last 5 years can also qualify for a $6500 tax credit. The Senate bill would also raise the adjusted gross income cap to$125,000 for single filers and $225,000 for joint filers. We now await the House approval or amended plan.

Can I do 100% financing on a purchase?
Well close to it, FHA allows for a 3.5% down payment plan. This loan has been a powerful driver for first-time buyers, it is a 30 year fixed rate, no adjustments. The rates are at all time lows: 5%-5.5%, depending on the borrower. VA loans will allow for 100% financing as well, but obviously only veterans can use this.

Can I buy a condo in a non-FHA approved building?
As of now spot approvals are still allowed until December 7 of this year. Basically we can gather the pertinent building information and request for a single approval. These have worked beautifully thus far, hopefully it will continue.

HALLOWEEN AFTERMATH!

Well with bellies bulging and teeth aching from too much candy this Halloween, it’s time to refocus on the year to come. 2010 is looming as the beginning of the recovery: job increases, housing market improvement, new construction starts, steel mills opening (ok well maybe not on that one). Regardless of the validity of current conjecture, some things are worth mentioning.

As far as The Fed is concerned, according to their statement today, the economy is beginning a slow recovery period, with inflation at bay, even with a severely weakened dollar, and major support still stemming from the government to support lower interest rates.

“Conditions in financial markets were roughly unchanged, on balance, over the intermeeting period. Activity in the housing sector has increased over recent months. Household spending appears to be expanding but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit. Businesses are still cutting back on fixed investment and staffing, though at a slower pace; they continue to make progress in bringing inventory stocks into better alignment with sales.” (FOMC, Nov 09)

Well it could be worse, the tentative words and lack of any descriptions of future plans left investors and people alike, feeling, well status quo? Is that a good thing? Can we buy into this recovery? Ask the person next door who has not worked in over a year, the couple who planned on retiring this year, now postponed indefinitely, or the single mother who lost her health insurance benefits.

Recovery is just a word, albeit a positive word and a drastic improvement from its counterpart, recession; but when can we truly see the results of the recovery? In this humble opinion, in the small things: the local coffee shop whose doors seem just a little more full, the week that passes where you do not hear of someone losing a job, maybe even a person actually getting a job. These subtle signs of improvement continue to increase the so desired forward momentum this economy craves.

So enjoy another piece of Halloween candy, that innately evil candy lasting until New Years; just in time, of course to adamantly refuse the gluttonous indulgence ever again! Instead, take a minute to notice the subtleties of recovery and just maybe it will become reality.

Last week proved to be very busy week, with the end result being a very positive move in interest rates. The decrease in interest rates is due to negative data exceeding expectations for August's Existing Home Sales and New Homes Sales reports. Existing-home sales posted an unexpected 2.7% decline in August, to a 5.1 million-unit annual rate, the first reversal after four months of gains. However according to the National Association of Realtors®, Lawrence Yun, NAR chief economist, said the tax credit is working. “Home sales retrenched from a very strong improvement in July but continue to be much higher than before the stimulus.”

Something obscured by the negative data is: the actual supply of homes for resale actually fell by almost a month and new homes by .3 months. The decreased inventory reflects a positive shift in the market, even if the current sales trend may initially seem negative.

Case-Schiller reported a third month of gains for home sale prices. Tomorrow we have MBA purchase applications and the ADP employment report, plus later in the week jobless claims and other potential market movers. Rates are low today, but for how long depends on present expectations versus actual data this week! Stay tuned.

 

I just wanted to take the time to mention a friend and realtor who has chosen to take a unique perspective on the "Green Market" in Elmhurst. Laura Reedy Stukel of L.W. Reedy Real Estate not only created a "Reedy, Set, Green Homes" campaign , and, the 5x10 Challenge among a slew of other grass roots movements to benefit her neighborhood and local charities; she is also the recipient of the Better Homes and Garden "green improvements" winner of its biannual Home Improvement Challenge.

The Chicago Tribune also found her worthy of a full article in Sunday's real estate section - this article touches on what Laura has tried to convey from the inception of her Green Initiatives. Green improvements may not always be the most glamorous, but the focus on improving your home's energy efficiency will continue to provide a return on investment well into the future, more so than choosing bamboo flooring, for instance.

All of this in just one year! Congratulations on such an accomplishment already, I cannot wait to see what is next. Laura and her husband Ray were also able to qualify for my Green Solutions^TM Mortgage that rewarded their green improvements by giving a below market rate with zero lending costs on their refinance!

HVCC stands for Home Value Code of Conduct, it became effective May 1st, 2009. So what did it do?

All appraisals for Freddie Mac and Fannie Mae approved loans must be ordered in compliance with HVCC guidelines. This means as loan originators we have no contact or control of our appraisals anymore. We have to use a 3rd party company.

Industry Impact:
The real estate industry has faced an onslaught of issues from lack of comparable sales data to an increase in pre-foreclosure and foreclosures. These guidelines coupled with banks' newly tightened appraisal standards mandating comparable sales be from the last 3 - 6 rather than the last 12 months has had an impact on sales and overall home values.

In the beginning we utilized a variety of different appraisal management companies and finally identified a few great partners that adhere to our high level of standards. So although this regulation has hindered our progress, we have adjusted and continue to close loans. On the bright side, HVCC does not affect the FHA or portfolio Jumbo markets.

Now HERA: Not Zeus's wife either. It actually stands for Housing and Economic Recovery Act and becane effective July 30, 2009. The basics are as follows:

1). The earliest any purchase transaction can close is 7 business days after the homebuyer is issued mortgage disclosure from the lender.

Industry Impact:
Really only lenders who did not issue proper disclosure statements as part of the application process over the years will experience issues.

2). Upfront fees cannot be collected until the disclosures are received.

Industry Impact:
There is a time frame allowed for disclosures to reach the applicant. Face to face, overnight, or standard mail. It appears many lenders are using the standard mail policy which will delay the ordering of the appraisal by approximately 4 days. This may impact the borrower trying to close within 30 days.

3). Three days prior to closing of a transaction the borrower must have sufficient notice of appraisal content.

Industry Impact:
Lenders are required to supply the borrower with a copy of the appraisal they paid for. Sounds fair to me.

4). An increase in APR (annual percentage rate) of more than .125% on fixed rate loans from the initial Truth in Lending disclosure statement will require re-disclosure and an additional 3 day period to review the new terms and conditions.

Industry Impact:
In most cases this will not be a big issues, however, certain triggers can cause a change to the TIL (Truth-In-Lending Disclosure). Some potential triggers are as follows: loans not locked at least 7 days prior to close, change in loan amount, change in product, change in interest rate (up or down), change in closing date, or major change in fees. Please be advised that .125% in APR is significant. It is almost $1,250 per $100,000 in loan amount.

Overall Impact of the HERA on the Real Estate Industry
Great News for Corby Mortgage

I don't welcome regulation and I find these guidelines annoying and truth be told, I don't believe they create the layer of protection desired by the government. What they did do is help secure my position as a lender. I believe a Corby Mortgage loan originator is well positioned for these changes as we have always sent early disclosure to our borrowers, we are not in the practice of floating loans until just days before closing, we are not in the practice of increasing fees or delivering higher than expected interest rates at closing, and we understand local fees and prepare our clients extremely well for closing.

Can I still close in 30 days?

Yes. You can still close in 30 days if the borrower secures my services when the contract is written, if there are no appraisal issues, no condo issues, the client agrees to lock the loan at least 7 - 10 days prior to close and the borrower supplies all required documents on time. Overall, I do see the overall industry average moving closer to 45 day mark.

I have almost 10 years in residential lending experience in the Chicago land area. I have always disclosed my own TIL, Good Faith Estimates and other required forms. It is my job to follow through on my loans from beginning to end. Other than a short delay in ordering an appraisal and me performing a pre-closing audit 10 days prior to close it will be business as usual.

The Federal Housing Administration, commonly known as, FHA, provides mortgage insurance on loans made by FHA approved lenders. It is the largest insurer of mortgages in the world, with well over 34,000,000 insured properties. FHA simply provides this insurance to protect lenders against losses due to foreclosure. FHA is a government agency and the only one that costs the tax payers nothing and is completely self-funded.

Unlike a conventional loan, this insurance requires very little cash investment, because the loan itself is well insured. Since the loan is so well insured, the underwriting guidelines, income requirements, credit score and payment ratios are a bit more flexible than conventional loans offering itself as an excellent alternative in today's market place.

More information is available online: www.hud.gov/groups/lenders.cfm

What FHA Isn't
FHA insured loans are not sub-prime loans. These are prime loans and do require a 620 credit score and full documentation of income and down payment. In order to get FHA insurance, guidelines have been established to insure homeowners can afford the investment. I think FHA loans have been deemed in the marketplace as a sub-prime loan and these origins stem from the 1930's when FHA loans first hit the mortgage world to help the millions of Americans without jobs afford homes.


Mortgage Insurance
Home Buyers will pay an UFMIP (Up Front Mortgage Insurance Premium) of 1.75% of the loan amount. This fee typically financed into the loan. In addition, a monthly premium of .55% of the loan amount will be paid monthly, this premium generally lasts a term of 5 years or when the loan to value reaches 78%, whichever is longer.

Appraisal Standards
In order to obtain FHA Insurance, the home must be deemed in good operating condition. A few key areas of concern are chipping and peeling paint, loose railings systems, poor roof conditions or anything else which can affect the safety of the home owner.

Rates
Rates on FHA loans generally mirror conventional financing and are often times much better because they: 1) do not have credit score adjustments or if they do, they are very slight, and 2) do not have the 75% condo adjustment currently in place for all Fannie/Freddie loans with loan to values greater than 75%.

Loan Costs
FHA underwriting fees are no more or less expensive than conventional financing. On average, the fees range from $400 - $1,300 plus appraisal, title, attorney, and points can be paid up to 1%. UFMIP is added to the loan amount and not generally considered an underwriting cost but is a closing cost.

Condominiums
FHA requires that all condos are approved. Check if a project is approved online:
https://entp.hud.gov/idapp/html/condlook.cfm

Generally these are larger developments greater than 4 Units.

If a condominium development is not FHA approved, a Spot Approval can be obtained by your lender. In order to obtain a Spot Approval I suggest the following basic guidelines:


The legal documents do not contain the right of First Refusal
- The project is not a cooperative
- The HOA has been turned over for at least 1 year
- The common elements are complete - not subject to add'l phasing
- No Special Assessments are pending
- No legal action is pending against the Association
- 90% of the units are sold
- 51% of the total units are owner occupied
- No single entity owns greater than 10% of the total units
- The Association has a reserve fund for deferred maintenance = 3 months operating    budget
- Other restrictions apply:
Smaller Condominium Projects (4-10 Units) can meet the Spot Approval Guidelines. I see the common area of concern being the reserve fund for deferred maintenance. I suggest you contact us to review each non-FHA approved condominium and we can email you a Spot Approval form to be completed for review.

So some of the most commonly asked questions I recently encountered: 

• Do I need 20% down?
• Do my credit scores have to be above 720 to get the best rates?
• Do condos without 25% equity disqualify me from the best rates?
• Who qualifies for the $8000 tax credit?
• What are the restrictions to the tax credit?

FHA answers many of these issues:

To clear the myths, most of these questions have reasonable solutions. FHA has become a viable option not only because you only need 3.5% down, but it also eliminates the Fannie and Freddie condo hit of .75%. So a borrower can still capture extremely low rates. FHA also avoids the pitfalls of credit scores between 680-720, there are no penalties in rate.

Now the Tax Credit...

The new $8000 Tax Credit has confused many people and rightfully so! Here are some main points and criteria that should clear some of the uncertainty surrounding this.  This link has the tax credit made simple for you, commonly asked questions, qualifiers, and more...

In a brief summary, first time homebuyers qualify for a $8000 tax credit that does not have to be paid back. This is for purchase of a primary residence between January 1, 2009, and December 31, 2009. The best part about this credit is that it does not work as a tax deduction - to clarify, if a person owes the IRS $8000 for their 2009 return, they would now owe nothing. You can also add to a refund, for instance if a person receives a $2500 tax refund, they will now receive $10,500. This is the absolute best time for first time homebuyers to jump into the real estate market!

 What Really Affects Interest Rates?   Mortgage Backed Securities!                  

In a surprise move, the Federal Reserve allocated an additional $750 Billion to the purchasing of mortgage-backed securities, this is in addition to the $500 Billion already pledged. Not only this, the Fed will also double their purchasing of Fannie Mae and Freddie Mac's debt - up to $200 Billion. So what does all this gibberish actually mean? Well,

• Ideally this will drive interest rates lower, below the 5% mark, and I do stress ideally. It is working for the moment!
• Aside from debating the future generations exposure, this aggressive purchasing by the Fed hopes to improve home purchases for 2009.
• Currently we are on pace for over a 60% refinance share of mortgage originations this quarter(Inside Mortgage Finance 2009).
• The Fed is also pledging $300 Billion to the purchase of Long Term Treasuries - which also positively influences mortgage rates.
• As of today, rates are between 4.875%-5% on a 30 Year Fixed, depending on the lock period!

With all this said, the Fed is doing everything in their power to stimulate a stagnant real estate sector - it remains to be seen if this aggressive move will hold steady and keep rates below 5%, or be a temporary fix to no avail.

The point? If anyone is contemplating buying a home or refinancing, there truly is no better time interest rate wise. Obviously many aspects affect a mortgage application, but it is time to get off the fence and explore the opportunities! 

The last two weeks have been a whirlwind of social media! I still do not have a full grasp but will share the progress I have made thus far. Check out my blog to see my progress on widgets, add-ons etc... www.greensolutionslending.com

This will just address my Twitter progress and hopefully make the whole Twitterverse a little less daunting.

TWITTER:

Twitter is by far my greatest social media accomplishment thus far, I have 877 followers, following 1200 tweeps, and continue to grow thanks to twengager.com! I have also connected with extremely viable mortgage prospects. There are over 200 applications designed by separate entities to help navigate the Twiitterverse. Notice all of my new lingo already as well! Here are a few apps. that have been essential in my first few weeks of success:

Twengager.com- this allows you to plug in key words and automatically follow people that match your choices. The application is free up to 50 new followers, then you have a choice of one-time payment fees.

Twitter Search- this is the mini-google of twiitterland. This allows you to see real time conversations concerning any topic you choose, plus the most popular. The actual site is http://search.twitter.com/

Twitturly.com- "Twitturly is a service for tracking what URLs people are talking about as they talk about them on Twitter."

TweetDeck - This enables the user to organize tweets into favorites, groups, and systemic viewing. This truly helps decrease the massive overload one experiences during the introductory period of tweeting.

So all of this in just a couple of weeks, I cannot imagine what I will learn next! I will be sure to keep you posted of course. There is also a great beginners article in the WSJ today - http://tinyurl.com/aklena

Are you wondering what the tinyurl actually is? Another thing Twitter has revealed to me! Are you always cut and pasting long links? Well this great little site www.tinyurl.com - shortens your links for you. It is essential in Twiitterverse!

I have also found great add-ons, widgets and more to link my blog, websites, Facebook, Linked In and more!  I will continue to tweet and post my progress here! I think this is enough for one day! If you would loke to follow me just go to : http://twitter.com/MortgageErin, my Facebook profile is: http://profile.to/eringriffin-mortgage - feel free to follow me and be my friend!

 To Come... Twitter Groups - have not figured out the whole # thing yet - and much more!

There is an abundance of confusion surrounding the stimulus bill right now; which is understandable. Here are a few basic premises to understanding this tax credit and what it actually means for first-time buyers.

Originally the government offered a $7500 tax credit that mandated repayment within 15 years at no interest. This was intended to stimulate the housing market, but the lack of information and repayment issues basically negated the effectiveness of this caveat. So will the homeowners who purchased in 2008 be able to amend their tax returns and take advantage of the new tax credit? Unfortunately, no; the new tax credit is a separate legislation, not related to the Housing Recovery Act passed last summer (CNN, 2009).

First-time buyers can claim a credit worth $8,000 - or 10% of the home's value, whichever is less - on their 2008 or 2009 taxes. Now the 2008 tax credit is not a loan, this is an automatic tax credit directly applied to the tax liability. Robert Dietz, National Association of Homebuilders, offers this explanation: "Think of it as a dollar-for-dollar reduction in your tax liability that continues beyond zero." If new homeowner's tax liability is $5000, the tax government will actually owe the tax payer $3,000.

Hopefully with this increased publicity, information, and favorable conditions for first time homebuyers, borrowers will begin to consider applying for mortgages again! This credit is only valid for homes purchased between January 1, 2009 and November 30, 2009.