Greg 's Blog

Homebuyer Tax Credit Extended & Expanded!

Illinois Mortgage Lender Greg Zaccagni (www.MortgageAdvisor.info) — Sat, 07 Nov 2009 08:15:02 -0600

What is a Tax Credit?

A tax credit is a direct reduction in tax liability owed by an individual to the Internal Revenue Service (IRS). In the event no taxes are owed, the IRS will issue a check for the amount of the tax credit an individual is owed. Unlike the tax credit that existed in 2008, this credit does not require repayment unless the home, at any time in the first 36 months of ownership, is no longer an individual's primary residence.

How Much are First-Time Homebuyers (FTHB) Eligible to Receive?

An eligible homebuyer may request from the IRS a tax credit of up to $8,000 or 10% of the purchase price for a home. If the amount of the home purchased is $75,000, the maximum amount the credit can be is $7,500. If the amount of the home purchased is $100,000, the amount of the credit may not exceed $8,000.

Who is Eligible fort FTHB Tax Credit?

Anyone who has not owned a primary residence in the previous 36 months, prior to closing and the transfer of title, is eligible.

This applies both to single taxpayers and married couples. In the case where there is a married couple, if either spouse has owned a primary residence in the last 36 months, neither would qualify. In the case where an individual has owned property that has not been a primary residence, such as a second home or investment property, that individual would be eligible.

As mentioned above, the tax credit has been expanded so that existing homeowners who have owned and occupied a primary residence for a period of five consecutive years during the last eight years are now eligible for a tax credit of up to $6,500.

How Much are Current Home Owners Eligible to Receive?

The tax credit program includes a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.

Can Homebuyers Claim the Tax Credit in Advance of Purchasing a Property?

No. The IRS has recently begun prosecuting people who have claimed credits where a purchase had not taken place.

Can a Taxpayer Claim a Credit if the Property is Purchased from a Seller with Seller Financing and the Seller Retains Title to the Property?

Yes. In situations where the buyer purchases the property, even though the seller retains legal title, the taxpayer may file for the credit. Some examples of this would include a land contract or a contract for deed.

According to the IRS, factors that would demonstrate the ownership of the property would include:

1. Right of possession,
2. Right to obtain legal title upon full payment of the purchase price,
3. Right to construct improvements,
4. Obligation to pay property taxes,
5. Risk of loss,
6. Responsibility to insure the property, and
7. Duty to maintain the property.

Are There Other Restrictions to Taking the FTHB Credit?

Yes. According to the IRS, if any of the following describe a homebuyer's situation, a credit would not be due:

They buy the home from a close relative. This includes a spouse, parent, grandparent, child or grandchild. (Please see the question below for details regarding purchases from "step-relatives.")
They do not use the home as your principal residence.
They sell their home before the end of the year.
They are a nonresident alien.
They are, or were, eligible to claim the District of Columbia first-time homebuyer credit for any taxable year. (This does not apply for a home purchased in 2009.)
Their home financing comes from tax-exempt mortgage revenue bonds. (This does not apply for a home purchased in 2009.)
They owned a principal residence at any time during the three years prior to the date of purchase of your new home. For example, if you bought a home on July 1, 2008, you cannot take the credit for that home if you owned, or had an ownership interest in, another principal residence at any time from July 2, 2005, through July 1, 2008.

Can Homebuyers Purchase a Home from a Step-Relative and Still be Eligible for the Credit?

Yes. As long as the person they buy the home from is not a direct blood relative, the purchase would be allowed.

If a Parent (Who Will Not Live In The Property) Cosigns for a Mortgage, Will Their Child Still be Eligible for the Credit?

Yes, provided that the child meets the other requirements for the tax credit.

What Do Underwriters Use to Approve Your Mortgage Loan?

Illinois Mortgage Lender Greg Zaccagni (www.MortgageAdvisor.info) — Wed, 26 Aug 2009 20:45:37 -0500

The three Cs of underwriting are credit reputation, capacity, and collateral.

Credit reputation is basically your credit history, including past foreclosures, bankruptcies, judgments, and basically measures your willingness to pay your debts. These items will be reflected in your FICO credit score, which may halt furhter underwriting if you fall below a certain threshold.

Capacity deals with a borrower's actual ability to repay a loan, using things like debt-to-income ratio, salary, cash reserves, loan product and more. The underwriter wants to know that you can repay the mortgage you're applying for before granting approval.

Collateral deals with the borrower's down payment, property type, and property use, as the lender will be stuck with the home if the borrower fails to make timely payments.

All three must be considered simultaneously to understand the level of layered risk that could be present in said application. The underwriter must decide, based on all the criteria, if the borrower is an acceptable risk for the lender, and if the end product can be resold without difficulty to investors.

www.GregZaccagni.com & www.MortgageAdvisor.info

Rate & Term vs. Cash Out Refinancing

Illinois Mortgage Lender Greg Zaccagni (www.MortgageAdvisor.info) — Wed, 12 Aug 2009 20:38:17 -0500

You are replacing your old loan with an entirely new one with different interest rate and terms. Your new mortgage may come from the same lender or another. Since the new loan pays off your old mortgage it doesnt much matter whether you change lenders in a refinance.

Most borrowers choose to refinance their mortgage to take advantage of lower interest rates, consolidate higher (non-deductible) interest rate debt, or to cash out equity in their home.

A rate and term refinance trades in your old mortgage(s) without raising the loan amount. You may be permitted to see some (minimal) cash at close. Usually the lesser of two percent (2%) of the new mortgage amount or $2,000.

When consolodating mortgage loans (1st, 2nd etc..), they must have been originated at the same time to qualify for a rate & term refinance. If not, you may be able to exclude other mortgage loans to perform a rate & term refinance on your 1st mortgage loan alone.

A cash-out refinance allows homeowners to tap the equity in their homes, (property value minus all mortgage liens) and the amount is limited only by the lenders maximum loan to value (LTV) caps for this program. Because the new loan size is greater than before, lenders consider it higher risk and generaly charge higher rates for this loan type.

Consolodating higher interest 2nd loans & variable rate home equity lines may still make sense as most 2nd loans have even higher rates reflecting the higher risk 2nd lien position represents to the lenders. I recommend my clients consider opening a new home equity line with their new 1st mortgage so they may be eligable to consolodate it as a rate & term refinance if needed later.

www.GregZaccagni.com & www.MortgageAdvisor.info

Ch 13 vs. Ch 7 Bankrupcies

Illinois Mortgage Lender Greg Zaccagni (www.MortgageAdvisor.info) — Fri, 24 Jul 2009 14:14:04 -0500

Chapter 13 Bankruptcy & Mortgage Foreclosure

Mortgage companies continue to foreclose on American homes at an alarming rate. The real estate market boomed in the late 1990's and early 2000's. Property values soared and homeowners cashed in on their new found home equity. However, interest rates have climbed, the real estate market has cooled and homeowners realize it's a buyer's market. Some homes will sit on the market for six, nine or twelve months. The asking price goes down and homeowners inch closer to the edge of foreclosure.

Many consumers do not understand that the bankruptcy code can help them save their homes from mortgage foreclosure. Chapter 13 bankruptcy is a very powerful tool that can save your home if you have fallen behind on your mortgage payments and you want to rescue your home from mortgage foreclosure.

What is a Mortgage Foreclosure:

Foreclosure is the legal proceeding in which a bank or mortgage company takes title to real estate due to the homeowner's failure to make the agreed mortgage payments.

The downward spiral into foreclosure begins when your loan payment becomes 16 days overdue. At that point, your mortgage lender may try to contact you to work out a repayment schedule to bring your loan current. If your payments fall 90 days behind, the mortgage company will likely refer your mortgage to an attorney that will start formal foreclosure proceedings.

Chapter 13 Bankruptcy Stops Foreclosure:

Chapter 13 bankruptcy is designed to stop foreclosure. In fact, stopping mortgage foreclosures is the driving force behind many Chapter 13 bankruptcies. As soon as you file Chapter 13 bankruptcy an "automatic stay" goes into effect. This "stay" stops your mortgage company from continuing to foreclose on your home. Your mortgage company cannot contact you in regard to your pre-filing mortgage arrears (the amount you are behind on the mortgage) while you are in the Chapter 13 bankruptcy.

How Does Chapter 13 Bankruptcy Work:

Once you prepare a Chapter 13 plan with your attorney, you will file a Chapter 13 petition for relief and the foreclosure proceeding will stop. The bankruptcy trustee will then recommend your Chapter 13 plan for confirmation and the bankruptcy court will approve a repayment plan that allows you to get current on your mortgage over a three to five year period. You must make all current mortgage payments that come due after the Chapter 13 bankruptcy petition is filed.

Homeowners must make all mortgage payments that come due during the Chapter 13 plan. If you fail to make your post-filing mortgage payments the mortgage company can ask the bankruptcy court to lift the protection of the automatic stay and the mortgage company can resume the foreclosure proceeding if the judge agrees with the mortgage company. The possibility of refinancing your mortgage after you have gotten back on track with your Chapter 13 plan is a real possibility for many consumers

When Should You File Chapter 13 Bankruptcy to Stop a Mortgage Foreclosure:

Generally, the Chapter 13 bankruptcy must be filed before the mortgage company sells your home. However, if you find yourself behind on your mortgage payments you ought to call an experienced attorney to explore all of your options before the situation spins out of control. The Chapter 13 bankruptcy filing gives homeowners the time they need to catch up on their mortgage payments.

Who Can File Chapter 13 Bankruptcy:

You can file a chapter 13 bankruptcy to stop a mortgage foreclosure, provided you:

Are employed or have a steady source of income;
Have enough income to make your Chapter 13 plan payments, and your current mortgage payments after the chapter 13 is filed.

Chapter 13 plan payments are fixed so that you can meet all your living expenses first and then pay any surplus income to creditors.

Chapter 7 and Mortgage Foreclosure

Chapter 7 bankruptcy is a liquidation bankruptcy. A Chapter 7 will typically eliminate:

credit card debt;
installment loans;
pay day loans;
medical bills, and most other unsecured debt.

In most cases consumers will keep all of their property. If you are facing foreclosure on your home, the automatic stay created by your Chapter 7 filing serves as a temporary defense against foreclosure. As opposed to Chapter 13 bankruptcy, Chapter 7 will give you a fresh start, but will not provide you with the opportunity to catch up with your mortgage payments.

However, Chapter 7 bankruptcy will allow you to discharge, or eliminate, any deficiency balance owed to your mortgage company if your home is sold for less than the outstanding balance owed to the mortgage company.

The Difference Between Chapter 13 and Chapter 7 Bankruptcy?

The biggest difference is that a Chapter 7 bankruptcy does not provide for the repayment of any debt. Chapter 7 cannot stop a mortgage company from foreclosing on property. Chapter 7 will temporarily delay the foreclosure proceeding, but it cannot provide the long-term protection of Chapter 13 because no plan to repay the mortgage delinquency is proposed.

Government Down Payment Assistance Today

Illinois Mortgage Lender Greg Zaccagni (www.MortgageAdvisor.info) — Fri, 24 Jul 2009 14:05:13 -0500

Q. Are there any no-down payment programs left?

Yes. While it's true that most of the popular no-down payment programs disappeared in the wake of the subprime mortgage collapse, there are still two longstanding government-backed programs that offer mortgages with no down payment: the USDA Rural Development Program and the VA Loan Program.

A USDA Guaranteed Loan is a government-insured, 100% purchase loan. This means there is no down payment required if you - and the house you intend to buy - qualify for the program. Not all areas qualify, but you'd be surprised at how many neighborhoods in your area do. There are income and other limitations, but if coming up with a down payment is challenging, you might want to consider this program.

If you or your spouse is a military veteran, you may qualify for a 100% financed loan from the US Department of Veterans Affairs. More than 29 million veterans and service personnel qualify for this service benefit. Give us a call to find out if you're one of them.

Q. Are there any other government-insured programs that can help someone struggling with a down payment?

Yes. In 1965, the federal government created the FHA loan programs to encourage homeownership throughout the country. FHA-insured mortgages offer many benefits, including a minimum down payment of 3.5%. FHA-insured loans have grown in popularity recently due to the seller's ability to pay closing costs up to 6% and a temporary increase in loan limits up to $729,750 in certain high-cost areas, which allows more potential buyers to utilize this program.

Q. May I use a gift from family members as part of my down payment?

Yes. In many cases, immediate family can provide monetary gifts to be used as a down payment. There are restrictions of course, and strict documentation will be required, but we will gladly walk you through the finer details of this process. Be sure to mention this option when you're filling out an application with us.

Q. May I use funds from my IRA for my down payment?

Yes. First-time home buyers can use funds from an IRA under certain circumstances for a down payment. The rules regarding this option, however, can be complicated, especially with a Roth IRA, and it's important to understand any and all tax implications before tapping into these accounts. Please talk to your tax professional before making any decisions. If you don't have one, we'll gladly refer you to one we work with on a regular basis.

Q. May I use the $8,000 tax credit as my down payment?

No. At the time of the writing of this article, qualified first-time home buyers do not have direct access to the $8,000 credit to use as a down payment. In May, HUD officials made an announcement to the contrary, but statements backing the announcement were quickly withdrawn from the HUD website. This doesn't mean that HUD and lawmakers will not allow this in the future. We're following this issue closely and will let you know if anything changes. Just keep reading our newsletters and other materials we send to you or give us a call and we'll let you know if any progress has been made.

Homebuyer Tax Credit Redefined

Illinois Mortgage Lender Greg Zaccagni (www.MortgageAdvisor.info) — Fri, 29 May 2009 21:53:21 -0500

The FHA appeard to be allowing homebuyers to use income tax credits for their entire 3.5% down payment but concerns this too closely resembled seller paid down payment assistance cause them to re-define this program.

Borrowers applying for an FHA loan will still be required to come up with a minimum 3.5 percent down payment, but will be able to use the tax credit for additional down payment or for other closing costs.

"Unlike seller-funded down-payment assistance, this program will allow homebuyers to shop for the best home price and services using their anticipated tax credit," HUD Secretary Shaun Donovan said in a statement.

Note: Consider using this as an alternative when seller are unwilling to pay closing costs for their buyers like short sales & REO's.

Mortgage tips from www.GregZaccagni.com & www.MortgageAdvisor.info

A Drinkers Guide to Understanding Mortgage Derivatives

Illinois Mortgage Lender Greg Zaccagni (www.MortgageAdvisor.info) — Tue, 26 May 2009 20:58:04 -0500

Heidi is a bar owner. She realizes that virtually all of her customers are unemployed alcoholics and can no longer afford to patronize her bar. To solve this problem, she comes up with new marketing plan that allows her customers to drink now & pay later. She keeps track of the drinks consumed on a ledger tab, thereby granting customers loans.

Word gets around about Heidi's "drink now pay later" no income loan programs and huge numbers of customers flood into Heidi's bar. Soon she has the largest sales volume for any bar in town!

By providing her customer's deferred payments Heidi gets no resistance when, at regular intervals, she substantially increases her prices for wine and beer, the most consumed beverages. Heidi's gross sales volume increases hugely!

A young and ambitious vice-president at the local bank lables Heidi's customer debts valuable future assets and increases Heidi's borrowing limit. He sees no reason for any undue concern, since he has the debts of the unemployed alcoholics as collateral.

At the bank's corporate headquarters, expert traders mix these loans with those of employed alcoholics and transform these customer loans into DRINKBONDS, ALKIBONDS and PUKEBONDS. These new securities are bundled and traded on international security markets. Naive investors don't really understand that the securities they think are AAA secured bonds are really mixed in with the debts of unemployed alcoholics. Nevertheless, the bond prices continuously climb, and the securities soon become the hottest-selling items for some of the nation's leading brokerage houses.

One day, even though the bond prices are still climbing, a risk manager at the original local bank decides that the time has come to demand payment on the debts incurred by the unemployed drinkers at Heidi's bar but they cannot pay back their drinking debts. Since Heidi cannot fulfill her loan obligations she is forced into bankruptcy. The bar closes and the eleven employees lose their jobs.

Overnight, DRINKBONDS, ALKIBONDS and PUKEBONDS drop in value by 90%. The collapsed bond asset value destroys the banks liquidity and prevents it from issuing new loans, thus freezing credit and economic activity in the community.

The suppliers of Heidi's bar had granted her generous payment extensions and had invested their firms pension funds in the various BOND securities. They find they are now faced with having to write off her bad debt and with losing over 90% of the presumed value of their bonds. Her wine supplier also claims bankruptcy, closing the doors on a family business that had endured for three generations, Her beer supplier is taken over by a competitor, who immediately closes the local plant and lays off 150 workers.

Fortunately though, the bank, the brokerage houses and their respective executives are bailed out by a multi-billion dollar no-strings attached cash infusion from the Government.

The funds required for this bailout are obtained by new taxes levied mainly on employed, middle-class, non-drinkers.

www.GregZaccagni.com

Mortgage Humor

Illinois Mortgage Lender Greg Zaccagni (www.MortgageAdvisor.info) — Tue, 05 May 2009 20:25:55 -0500

Is it "possible" one offer had anything to do with the other?

www.CountrywideBancorp.com

US Treasury announces 2nd loan help program

Illinois Mortgage Lender Greg Zaccagni (www.MortgageAdvisor.info) — Tue, 28 Apr 2009 18:13:18 -0500

The Treasury today announced details of the "Second Lien Program," which will work in tandem with the existing Home Affordable Modification Program to ensure more borrowers receive the assistance they need.

"Up to 50 percent of at-risk mortgages have second liens, and many properties in foreclosure have more than one lien," the Treasury said in a statement.

"Under the Second Lien Program, when a Home Affordable Modification is initiated on a first lien, servicers participating in the Second Lien Program will automatically reduce payments on the associated second lien according to a pre-set protocol."

Alternatively, loan servicers can extinguish the second mortgage in return for a lump sum payment under a pre-set formula determined by the Treasury, which could be as little as three cents on the dollar.

For fully amortizing loans, Treasury will share the cost of reducing the interest rate on the second mortgage to one percent (down to 2 percent for interest-only loans) and extend the term to match the modified first mortgage.

Participating servicers will also forbear principal in the same proportion as any principal forbearance on the first mortgage, and after five years, the interest rate on the second mortgage will rise to the rate on the modified first.

The Second Lien Program will have a pay-for-success structure similar to the first lien modification program, offering $500 in upfront payments to servicers, and $250 per year for three years if borrowers stay current.

Borrowers will also receive "success payments" of up to $250 per year for as many as five years, which will go towards the principal balance on the first mortgage so long as they stay on top of payments.

In an effort to help more underwater borrowers, the Hope for Homeowners program will now be included in the Making Home Affordable Program.

Loan servicers will be required to evaluate if a borrower qualifies for a Hope for Homeowners refinance and must extend the option at the same time a borrower is offered a trial loan modification.

In return, servicers can receive up to $2,500 as an upfront incentive payment for a successful refi and $1,000 per year for up to three years if the loan remains current.

The Hope for Homeowners program has allegedly only helped a single borrower to date, prompting officials to make big changes to entice servicers to get onboard.

www.MortgageAdvisor.info & www.GregZaccagni.com

First Time Homebuyer Tax Credit Explained

Illinois Mortgage Lender Greg Zaccagni (www.MortgageAdvisor.info) — Wed, 15 Apr 2009 23:51:06 -0500

Congress has enacted legislation providing a tax credit of up to $8,000 for first-time home buyers in its efforts to stimulate the economy and revive the housing market,

Time is of the essence for buyers who want to take advantage of this opportunity. Only homes purchased on or after January 1, 2009 and before December 1, 2009 are eligible. Use this link below to find out more about the tax credit.

www.GregZaccagni.com & www.MortgageAdvisor.info

Reverse Mortgage Loan Volumes Reach Record High Levels!

Illinois Mortgage Lender Greg Zaccagni (www.MortgageAdvisor.info) — Wed, 15 Apr 2009 23:47:52 -0500

Reverse Mortgage volume hit a new record high last month, according to the Department of Housing and Urban Development (HUD).

Home Equity Conversion Mortgages (HECM), allow homeowners aged 62 and older to pull equity out of their homes without making mortgage payments, increased 24% from February, setting a new record of 11,261 endorsements.

Recently, the maximum loan amount for reverse mortgages was increased to $625,500 from $417,000, and the loans can now be used to PURCHASE a new primary residence.

New legislation capped reverse mortgage fees and counseling fees can no longer be paid for by lenders or brokers in an effort to promote more unbiased information to consumers.

Reverse mortgages have become a valuable retirement planning tool for many older Americans," said Eric Bachman, founder and CEO of Golden Gateway Financial.

Reverse mortgages are a powerful way for those facing foreclosure or in financial jeopardy to generate additional cash regardless of a credit score or income requirements.

www.GregZaccagni.com & www.SeniorMortgageLender.com

Reverse Mortgage Loan Volume Surge to All Time High's

Illinois Mortgage Lender Greg Zaccagni (www.MortgageAdvisor.info) — Wed, 15 Apr 2009 22:06:28 -0500

Reverse Mortgage volume hit a new record high last month, according to the Department of Housing and Urban Development (HUD).

Recently, the maximum loan amount for reverse mortgages was increased to $625,500 from $417,000, and the loans can now be used to PURCHASE a new primary residence.

New legislation capped reverse mortgage fees and counseling fees can no longer be paid for by lenders or brokers in an effort to promote more unbiased information to consumers.

Reverse mortgages have become a valuable retirement planning tool for many older Americans," said Eric Bachman, founder and CEO of Golden Gateway Financial.

Reverse mortgages are a powerful way for those facing foreclosure or in financial jeopardy to generate additional cash regardless of a credit score or income requirements.

www.GregZaccagni.com & www.SeniorMortgageLender.com

Leading Cause of Mortgage Loan Defaults identified as Depreciating Home Values

Illinois Mortgage Lender Greg Zaccagni (www.MortgageAdvisor.info) — Mon, 13 Apr 2009 22:26:16 -0500

A report released by the Boston Fed last week challenges the common arguments that attribute rising delinquencies to unaffordable mortgage payments.

"We find that the DTI ratio at the time of origination is not a strong predictor of future mortgage default," the report said. "A simple theoretical model explains this result."

The economists estimated that a 10 percentage-point increase in the debt-to-income ratio increases the probability of 90-day delinquency by just seven to 11 percent.

Conversely, a one percentage-point increase in unemployment rate raises this probability by 10-20 percent, and a 10 percent fall in house prices raises it by more than half.

Their findings are important, given the fact that streamlined loan modification programs focus on getting a struggling borrower's housing payment down to a more traditional debt to income ratios.

www.GregZaccagni.com & www.MortgageAdvisor.info

How does Payment Shock apply to 1st time homebuyers & Renters seeking to Purchase?

Illinois Mortgage Lender Greg Zaccagni (www.MortgageAdvisor.info) — Sun, 29 Mar 2009 18:26:10 -0500

You may have heard the phrase "payment shock" get thrown around by your loan office or broker, and for good reason. It plays an important role in the underwriting and eventual outcome of your mortgage application, and can make or break your chance of approval.

Payment shock can be defined in a number of ways, but it is essentially any significant increase in monthly liability that heightens the risk of loan default. In simple terms, the more you need to pay out each month to creditors, the higher the chance you'll be unable to make a payment, especially if you're not used to making such large payments.

So let's assume your only history of carrying debt involves a car payment of $199 a month. If you applied for a home loan that carries a payment of $4,000 a month, payment shock would occur as you wouldn't be used to shelling out such a large amount of money each month. And this alone could be reason enough to get denied.

Many banks and mortgage lenders have a certain payment shock threshold that they allow, which can be dependent on things like documentation type and other compensating factors. Typically, max payment shock may be set at 200%, meaning your monthly mortgage payment can be no more than double your current housing payment. So if you currently pay $1,000 in rent each month, your max mortgage payment cannot exceed $2,000, or it may be subject to review or denial.

FHA Insured Mortgage loans help to aleviate this concern and can be a good solution for Owner Occupied home buyers.

www.MortgageAdvisor.info & www.GregZaccagni.com

Mortgage Application Surge as 30 Year Hits Record low Rates!

Illinois Mortgage Lender Greg Zaccagni (www.MortgageAdvisor.info) — Thu, 26 Mar 2009 18:46:00 -0500

News of the Fed's pledge to buy up more mortgage-backed securities and treasuries, sent mortgage rates sharply lower.

Home loans apps jumped 32.2 percent on a seasonally adjusted basis compared to one week earlier, 31.4 percent unadjusted, and were up 18 percent compared to the same week a year ago.

It was all about the refinances, which increased 41.5 percent from the week prior, though purchase activity and FHA lending saw mild gains as well.

The refinance share of mortgage activity increased to 78.5 percent of total applications, up from 72.9 percent a week earlier as rates plummeted.

The 30-year fixed-rate mortgage averaged 4.63 percent, down from 4.89 percent, its lowest point in survey history, which began back in 1990.

The 15-year fixed slipped to 4.48 percent, while the one-year ARM increased to 6.22 percent.

"Mortgage rates fell sharply to low levels not seen in six decades following the Federal Reserve's announcement on the Treasury bond and mortgage-backed securities purchase programs," said Orawin Velz, Associate Vice President of Economic Forecasting.

"The drop offered a sizable refinance incentive for most homeowners sparking a pickup in refinance activity."

The lowest in history may just be "as good as it gets." Call NOW for your confidential analysis.

www.GregZaccagni.com & www.MortgageAdvisor.info

FHA Lowers Cash out to 85% Loan To Value :(

Illinois Mortgage Lender Greg Zaccagni (www.MortgageAdvisor.info) — Mon, 16 Mar 2009 19:58:12 -0500

The FHA plans to lower the maximum loan-to-value associated with cash-out refinances from 95 to 85%beginning April 1 2009.

"Effective for case number assignments on or after April 1, 2009, the loan-to-value (LTV) of any cash-out refinance to be insured by FHA may not exceed 85 percent of the appraiser's estimate of value," said Brian D. Montgomery, FHA Commissioner.

"Given the continued deterioration in the housing market, and FHA's need to limit its exposure to undue risk, this reduction to the maximum LTV for cash-out refinances is being instituted on a temporary basis while FHA further analyzes the housing and mortgage industry as well as its own portfolio to determine whether permanent measures should be taken."

Last summer, Montgomery said the FHA saw $4.6 billion in "unanticipated long-term losses" thanks largely to seller assisted down payment programs. these types of loans were three times more likely to go into foreclosure than loans where the borrower provided the down payment themselves.

And just this past week, the WaPo reported that early defaults on FHA loans have nearly tripled, troubling considering their market share has grown rapidly to more than 20 percent in the past year.

James Heist, assistant inspector general for audit with the Department of Housing and Urban Development, recently pleaded for FHA reform before the House Financial Services Committee.

He noted that the agency's large share of origination volume called for increased personnel, training, and oversight, especially in new areas of the country opened up by higher loan limits.

The FHA has never relied on appropriations to operate in its 75-year history, but that could end soon.

www.MortgageAdvisor.com & www.GregZaccagni.com

The Mortgage "Blame Game"

Illinois Mortgage Lender Greg Zaccagni (www.MortgageAdvisor.info) — Fri, 13 Mar 2009 15:24:08 -0500

JP Morgan Chase CEO Jamie Dimon is hearing it from the National Association of Mortgage Brokers after making an ill-advised comment at the U.S. Chamber of Commerce's 3rd Annual Capital Markets Summit yesterday.

"My biggest mistake, probably of my whole career, was not closing down our mortgage broker business sooner," Dimon said, while citing loss rates two to three times higher on broker-originated loans versus those originated by retail employees.

NAMB president Marc Savitt responded in kind, saying, "It is disappointing to once again refute senseless attacks on the mortgage brokerage industry based on misinformation. Mr. Dimon's comments clearly reflect his poor understanding of the mortgage industry and the role of the mortgage broker."

"NAMB urges Mr. Dimon to recognize that mortgage brokers do not create loan products, do not determine the automated underwriting systems used to qualify borrowers, do not underwrite the loans, and do not approve borrowers for those loans - Wall Street investment banks ‘who are now out of business' did that."

"Furthermore, Mr. Dimon's remarks on U.S. economic outlook to the Economic Club of Washington acknowledges the real problem was a failure of management saying, "Bad underwriting was totally to blame, however we didn't see the results because the housing market was so good and we didn't see any losses." Underwriting is the fundamental role of his bank and his management and any bad underwriting is due to their poor judgment."

"I understand the need to blame someone outside the financial institutions for the failures of leadership and accountability to their respective Boards of Directors" Savitt added, "but Mr. Dimon should admit to the world that they created mortgage products and sold them through all origination channels - banks, lenders, credit unions, homebuilders, mortgage brokers - based on Wall Street's determination that they could be securitized and sold to investors across the globe."

"Most Wall Street investment banks owned the largest of the sub-prime lenders, a fact Mr. Dimon failed to disclose in his remarks."

www.MortgageAdvisor.info & www.GregZaccagni.com

Bad Economy GOOD for Mortgage Rates!

Illinois Mortgage Lender Greg Zaccagni (www.MortgageAdvisor.info) — Thu, 12 Mar 2009 19:33:54 -0500

Mortgage rates dropped "thanks" to a weak jobs report, mortgage financier Freddie Mac reported today.

The 30-year fixed averaged 5.03 percent during the week ending March 12, down from 5.15 percent last week and 6.13 percent a year ago. That's very close to January's all time recorded low of 4.96 percent. Rates have drifted up and down only by about one-quarter of a percent in the first months of this year.

The 15-year averaged 4.64 percent, down from 4.72 percent a week earlier and 5.60 percent this time last year. A weaker jobs market may slow consumer spending and keep inflation at bay," said Frank Nothaft, Freddie Mac vice president and chief economist.

Jumbo loans continue to price about one-and-a-half points higher than conforming loans.

Freddie's weekly interest rate survey covers conforming mortgages with a loan-to-value of 80 percent.

www.MortgageAdvisor.info & www.GregZaccagni.com

New FICO Scores for Mortgage Lenders

Illinois Mortgage Lender Greg Zaccagni (www.MortgageAdvisor.info) — Wed, 11 Mar 2009 21:43:02 -0500

Fair Isaac aka FICO unveiled a new credit score today designed specifically for mortgage lenders.

The "BEACON® Mortgage Score" aims to provide better decisioning results addressing the lending risk for both homeowners and buyers.

The new model includes 15 additional score codes to help mortgage lenders make sense of the scoring so better choices are made when it comes to providing new financing and loan modifications.

Testing showed the new score identified 25 percent more mortgages and Helocs that later became delinquent when compared with the current model. That could save the industry $1 billion in foreclosure costs.

www.MortgageAdvisor.info & www.GregZaccagni.com

New Home Affordable Questions & Answers

Illinois Mortgage Lender Greg Zaccagni (www.MortgageAdvisor.info) — Fri, 06 Mar 2009 09:46:20 -0600

Who is eligible?

To apply for a Home Affordable Modification, you must:

Own and currently occupy a one- to four-unit home.
Have an unpaid principal balance that is equal to or less than $729,750 (for one unit properties).
Have a loan that was originated before January 1, 2009.
Have a mortgage payment (including taxes, insurance, and home owners association dues) that is more than 31% of your gross (pre-tax) monthly income.
And, have a mortgage payment that is no longer affordable, perhaps because of a significant change in income or expenses.

If you answered YES to all of these questions, you may be eligible for the Modification Initiative.

Am I eligible if I missed some mortgage payments?

Yes. If you missed two or more mortgage payments and answered "yes" to the Modification Initiative requirements above, you may be eligible for a loan modification.

Do I need to be behind on my mortgage payments to be eligible for a Home Affordable Modification?

No. Responsible borrowers who are struggling to remain current on their mortgage payments are eligible if they are at risk of imminent default. Examples of being "at risk" include facing a significant increase in your mortgage payment or a reduction in your income. Contact me to discuss your specific situation.

I have a second mortgage. Am I still eligible?

Yes, but only the first mortgage is eligible for a modification.

I have an FHA loan. Can it be modified under this program? Are all loans eligible?

Most conventional loans including prime, subprime, and adjustable loans; loans owned by Fannie Mae and Freddie Mac as well as private lenders; and loans in mortgage backed securities are eligible for a modification. Contact me to discuss your specific situation.

I have a mortgage on a duplex. I live in one unit and rent the other. Will I still be eligible?

Yes. Mortgages on two, three and four unit properties are eligible as long as you live in one unit as your primary residence.

What does the Modification Initiative do?

If you are eligible for this plan and are approved, you will be put on a trial modification for three months at a new interest rate and payment.

If you successfully make the payments and are current at the end of the three-month trial period, your servicer will execute a permanent modification agreement that will lower your interest rate to a fixed rate for five years.

What happens after five years?

Beginning in year six, the rate may increase no more than one percentage point per year until it reaches the "rate cap" in your modification agreement, which is basically the market interest rate on the date the modification is finalized.

That means your rate can never be higher than the market rate on the day your loan is modified. This is great news because rates are currently at historic lows... and you can lock in now.

How low can my interest rate go?

Treasury is providing incentives to your investor to write the interest down as low as 2%, if necessary to get to a payment that you can afford based on your income.

What happens if that is not enough to get to an affordable payment?

If a 2% interest rate is not enough to bring your payment down to 31% of your gross monthly income, your servicer can extend your payment term--for example, give you a 40-year loan rather than a 30-year.

If that is still not sufficient your servicer will defer repayment on a portion of the amount you owe until a later time. This is called a principal forbearance. A portion of the debt could also be forgiven. This is optional on the part of the investor. There is no requirement for principal forgiveness.

Are there any other benefits to this program?

Yes. For every month you make a payment on time, Treasury will pay an incentive that reduces the principal balance on your loan. Over five years the total principal reduction could add up to $5,000.

How much will a modification cost me?

There is no cost to borrowers for a Home Affordable Modification. You will not be asked for any money.

If there are costs associated with the modification--such as payment of back taxes--your servicer will add those costs on to the amount you owe. Your servicer will also forgive any late fees.

Is housing counseling required under this program?

Borrowers are strongly encouraged to contact a HUD-approved housing counselor to help them understand all of their financial options and to create a workable budget plan.

However, housing counseling is only required for borrowers whose total monthly debts are very high in relation to their incomes (55% of your gross monthly income).

If you would like to speak to a housing counselor, call 1-888-995-HOPE (4673).

How do I apply for the Modification Initiative?

If you meet the general eligibility criteria for the program, you should gather the following information:

Recent pay stubs to help determine your gross (before tax) household income.
Your most recent income tax return.
Information about your assets.
Information about any second mortgage on your house.
Account balances and minimum monthly payments due on all of your credit cards.
Account balances and monthly payments on all other debts, such as student loans and car loans.
A letter describing the circumstances that caused your income to be reduced or expenses to be increased (for example: job loss, divorce, illness, etc.).

Once you have this information, call your mortgage servicer and ask to be considered for a Home Affordable Modification. The number is on your monthly mortgage bill or coupon book.

My loan is scheduled for foreclosure soon. What should I do?

If your mortgage has been scheduled for foreclosure or if you have missed one or more mortgage payments, should contact your servicer immediately.

Still have Questions? Contact www.GregZaccagni.com

Making Home Affordable Guidelines Released Today!

Illinois Mortgage Lender Greg Zaccagni (www.MortgageAdvisor.info) — Wed, 04 Mar 2009 21:35:20 -0600

The new "Making Home Affordable" loan modification plan aims to help seven to nine million homeowners get their hands on more sustainable mortgage loans.

The "Home Affordable Refinance" program will be available to roughly four to five million homeowners with "solid payment history" on existing Fannie Mae or Freddie Mac loans. Borrowers must provide a letter of hardship, explaining a change in circumstances or a rise in payments that will lead to foreseeable default.

The "Home Affordable Modification" will help three to four million at-risk homeowners facing foreclosure by reducing monthly mortgage payments to as low as two percent.

- There is no minimum or maximum LTV ratio for eligibility purposes.
- Loans can be refinanced or modified up to the current high-cost jumbo loan limit
- Loans originated on or before January 1, 2009 are eligible
- Borrowers must fully document income, sign an IRS 4506-T, provide two most recent pay stubs, most recent tax return & sign affidavit of financial hardship
- Loans must have been originated on or before January 1, 2009

The Home Affordable Refinance program ends in June 2010, while the loan modification program will run from now until December 31, 2012 (loans can only be modified once).

"Treasury announced that the Making Home Affordable program will include additional incentives to extinguish second liens on loans modified under this program."

"Extinguishing second liens will make mortgages more affordable, improve loan performance, and help prevent foreclosures."

Second mortgages will not be included in the front-end debt-to-income ratio, making it a whole lot easier to get the housing payment down to the desired target of 31 percent.

Find out if you are eligable for these programs (click here).

www.GregZaccagni.com & www.MortgageAdvisor.info

What Are Seller Concession Offers?

Illinois Mortgage Lender Greg Zaccagni (www.MortgageAdvisor.info) — Thu, 26 Feb 2009 18:05:40 -0600

Seller's Concessions/Buyers Assist is where the seller agrees to pay part or all of the buyers closing costs. The seller must agree to the seller assist and it must be stated in the sales contract.

Most banks allow 3% seller concessions. Some lenders will limit the seller concession based on the amount financed. If you are taking a loan for more than 90% then the lender may only allow a 3% max seller concession. Under 90% they may allow 6%.

The seller assist is not a part of the loan and cannot be financed. The seller is lowering their gain from the sale to pay buyers closing costs and for that reason buyers seeking seller concessions are advised to ask for them in their 1st offer.

For example:

If a house is selling for $100,000 and the seller gives you a 6% seller concession the seller agrees to pay up to $6,000 in closing costs and recieve $94,000 at close. If buyers closing costs are less any money left over usually goes back to the seller as they cannot contribute toward buyer's down payment.

Sellers seeking to net a certain amount and offer buyers money towards closing as incentive should understand raising their asking price to include seller contributions risks bumping their head on the ceiling if it doesn't all fit within the appraised amount for the property's value.

www.GregZaccagni.com & www.MortgageAdvisor.info

Jan 2009 - What's happening with Mortgage Rates?

Illinois Mortgage Lender Greg Zaccagni (www.MortgageAdvisor.info) — Fri, 30 Jan 2009 16:34:06 -0600

Mortgage rates remained relatively flat this week, according to the latest weekly survey from mortgage financier Freddie Mac.

30-year fixed averaged 5.10 percent for the week ending January 29, down from 5.12 percent last week and 5.68 percent a year ago.

15-year fixed averaged 4.80 percent, unchanged from last week and five basis points below its year-ago average of 5.17 percent.

Five-year ARM inched up to 5.27 percent from 5.24 percent last week and 5.32 percent a year ago.

One-year ARM slipped two basis points to 4.90 percent, sticking below its year-ago average of 5.05 percent.

These interest rates are for conforming mortgages with a loan-to-value of 80 percent.

"Both the S&P/Case-Shiller® 20-city composite index, which registered an 18 percent annual decline through November, and the National Association of Realtors® (NAR) sales data, down 15 percent in December from a year ago, indicate sharply lower house prices across many U.S. metropolitan areas," said Frank Nothaft, Freddie Mac chief economist.

Interest rate for 30-year fixed-rate mortgages reached a 50-year low toward the end of December. These two factors contributed to housing affordability reaching its highest level since 1973, as measured by the NAR's monthly affordability index and help to explain the 7.0 percent increase in existing home sales in December."

Jumbo loans are still much higher than their conforming brethren, with a 30-year fixed pricing in the 7-8 percent range.

Purchase applications are still quite flat, aside from distressed sales, and refinance applications plunged last week after what looked to be a resurgence in lending.

www.GregZaccagni.com & www.MortgageAdvisor.info

Home Builders Lobby for 2.9% Mortgage Rates for New Home Buyers

Illinois Mortgage Lender Greg Zaccagni (www.MortgageAdvisor.info) — Fri, 19 Dec 2008 17:27:45 -0600

The chief executive of the National Association of Home Builders NAHB wants a government program launched to lower interest rates on home loans to 2.9 percent, along with an expanded homebuyer tax credit.

Their proposed program would only be available to new homebuyers, and not those currently struggling to keep up with their monthly payments.

NAHB boss Jerry Howard believes the glut of unsold housing inventory could be off the market in six to 12 months. He believes predicted 4.5 percent mortgage rates aren't enough to really stimulate housing, as evidenced by recent builder promotions that have done little to stem flagging sales.

Although mortgage rates have already fallen to some of the lowest levels in years, many homeowners are still struggling to find affordable refinancing options, thanks to issues like negative equity and harsher underwriting requirements.

What do you think of a proposal for a government subsidized program giving "special rates" just to new home buyers? I would really like to read your opinions in the comment section of this blog.

www.MortgageAdvisor.info & www.GregZaccagni.com

Government Says Home Builders Cannot Require you use their lender to receive incentives

Update:

Toll Brothers offers 3.99% Fixed Rates on New Home Purchase

Huge Declines in Subprime Mortgage Lending Volume!

Illinois Mortgage Lender Greg Zaccagni (www.MortgageAdvisor.info) — Tue, 09 Dec 2008 22:15:42 -0600

Subprime lending volume was relatively modest in 1995 and 2000, but surged in 2005 and 2006, before easing in 2007 and completely dropping off this year.

It's forecasted that 2008 subprime originations will total just $10 billion, making up a mere 0.58 percent of the estimated $1.7 trillion in total residential lending volume.