Government To Streamline Mortgage Modification Paperwork

A new and more streamlined process to simplify the paperwork for people seeking lower home-mortgage payments through mortgage modifications is on the way.

Through the backing of the Presidential Administration, the Treasury outlined new guidelines aimed at streamlining requirements for mortgage modifications under the administration's Home Affordable Modification Program launched a year ago.

Under the new plan, guidelines specify that borrowers must provide three items to their current loan servicers, the companies that they pay mortgage payments to:

•1)   A form requesting a loan modification

•2)   Authorization for the servicer to seek tax information from the Internal Revenue Service

•3)   Evidence of income, such as two recent pay stubs and W-2's

This eliminates recent documentation requirements that lenders had been requesting, including full tax returns that homeowners had to fax in. As it had been noted that with the large volume of paperwork requested, lenders were losing paperwork from borrowers.

In addition, the Treasury also said that, effective June 1, 2010, servicers must collect the information before starting borrowers on three-month "trial" loan modifications, during which borrowers must show they can make the payments before being granted a permanent reduction in their loan costs.

In the past, many servicers had been starting trial modifications based on unverified information provided orally by the borrower, only to find later that the borrower wouldn't or couldn't provide documentation.

As of Dec. 31, about 900,000 borrowers had been given trial modifications but only 66,465 had been converted to a permanent fix. That largely reflects problems getting documentation. The Treasury acknowledged that some of those 900,000 borrowers won't end up qualifying for a loan modification through the program.

For more information on home purchase loan or refinance programs for existing and potential home owners, please contact Bill Kamboukos of Strategic Mortgage at (480) 219-3682 or by emailing: info@strategicmtgaz.com or online at www.strategicmtgaz.com

No New Mortgage Products From Fannie Mae & Freddie Mac

Fannie Mae and Freddie Mac, the two now government controlled mortgage giants will not be allowed to introduce new loan products in the mortgage market while they are under the control of the U.S. government. That is the recent news that federal regulator announced in a letter to Congress.

In reality, since this past summer, Fannie and Freddie had been allowed to submit new loan products for review through a process established by the companies' federal regulator, the Federal Housing Finance Agency. However, no new products were submitted during that time and now due to the both companies large financial losses and impending changes for both companies, they have been blocked future product submissions.

Edward DeMarco is the FHFA's acting director and he said that he "concluded that permitting the enterprises to engage in new products is inconsistent with the goals of conservatorship." He cited the "critical and substantial resource requirements" from the companies' current efforts to stem ballooning loan losses and the fact that the companies operate today "only with the support of taxpayers."

However, this block of new products will not apply to foreclosure prevention efforts, which are considered separate from new product offerings.

This is just the latest in a host of changes that have occurred at Fannie Mae and Freddie Mac since the government has had to step in to take over these two companies to keep the mortgage market for conventional loans in place. With no immediate end in sight from government control of these companies it appears that no new mortgage products will become available anytime soon from Fannie and Freddie.

For more information on home purchase loan or refinance programs for existing and potential home owners, please contact Bill Kamboukos of Strategic Mortgage at (480) 219-3682 or by emailing: info@strategicmtgaz.com or online at www.strategicmtgaz.com

FHA To Raise Mortgage Insurance Premiums & Reduce Closing Costs

Home owners and home buyers obtaining FHA loans will soon have to pay increased mortgage insurance fees and have less availability for closing cost assistance on these types of loans. These changes are part of a host of updates that are to be implemented by the Federal Housing Administration this coming spring.

Currently, when obtaining an FHA loan buyers must obtain an upfront mortgage insurance premium set at 1.75% of the total loan amount. This premium can be rolled into the loan, but the FHA is now set to raise that fee to 2.25% of the total loan amount. This will be the second increase in the past two years and will serve to help capitalize the FHA going forward.

In addition the Federal Housing Administration has asked Congress to increase the annual mortgage insurance fees that borrowers pay, but whether that will happen or not is yet to be determined.

One thing that will not change is that the FHA will keep minimum down payments at the current 3.5% level for borrowers.

However, the Federal Housing Administration will also reduce the amount that sellers are allow to pay toward a buyers closing costs from the current level of 6% of the sales price to 3% of the sale price. This may have some effect for buyers purchasing less expensive where certain fixed costs do not change regardless of purchase price and where 3% may not cover all the closing costs.

These changes are set to take effect this coming spring and the Federal Housing Administration is said to continue to evaluate its overall offerings going forward. As additional becomes available we will of course present it.

For more information on home purchase loan or refinance programs for existing and potential home owners, please contact Bill Kamboukos of Strategic Mortgage at (480) 219-3682 or by emailing: info@strategicmtgaz.com or online at www.strategicmtgaz.com

FHA To Waive 90 Day Flip Rule

In the current marketplace home buyers are prevented from obtaining an FHA loan for the purchase of a home that had been acquired in the past 90 days buy the seller. In essence, a buyer was unable to purchase a flipped property, or one that was bought and sold quickly. However, come February 1, 2010 this rule will change to allow for home buyers, with certain restrictions, to buy these type of properties. The new 90 day flip waiver complete information has already been released by the FHA and will be in place for the next 12 months. Below is an excerpt from the official release of this new program waiver. Of Course as always we will provide additional updates on this program, including when lenders will officially start allowing this type of financing again as well.

"In today's market, FHA research finds that acquiring, rehabilitating and the reselling these properties to prospective homeowners often takes less than 90 days. Prohibiting the use of FHA mortgage insurance for a subsequent resale within 90 days of acquisition adversely impacts the willingness of sellers to allow contracts from potential FHA buyers because they must consider holding costs and the risk of vandalism associated with allowing a property to sit vacant over a 90-day period of time.

The policy change will permit buyers to use FHA-insured financing to purchase HUD-owned properties, bank-owned properties, or properties resold through private sales. This will allow homes to resell as quickly as possible, helping to stabilize real estate prices and to revitalize neighborhoods and communities.

The waiver will take effect on February 1, 2010 and is effective for one year, unless otherwise extended or withdrawn by the FHA Commissioner. To protect FHA borrowers against predatory practices of "flipping" where properties are quickly resold at inflated prices to unsuspecting borrowers, this waiver is limited to those sales meeting the following general conditions:

•All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.

•In cases in which the sales price of the property is 20 percent or more above the seller's acquisition cost, the waiver will only apply if the lender meets specific conditions."

For more information on home purchase loan or refinance programs for existing and potential home owners, please contact Bill Kamboukos of Strategic Mortgage at (480) 219-3682 or by emailing: info@strategicmtgaz.com or online at www.strategicmtgaz.com

Delays In Claiming Home Buyer Tax Credit in 2010

If you purchased a home after November 6, 2009 you may be seeing a delay in receiving your homebuyer tax credit from the government.

Since last February when Congress approved the tax credit, almost 1.5 million buyers taken advantage of the credit, according to the IRS.

In order for buyers to take advantage of the tax credit all they had to do was file an amendment to their 2008 tax returns and claim the $8,000 tax credit.

However, on November 6^th, that rules changed, because of the new extended and expanded version of the homebuyer tax credit that was put into effect.

The new version of the tax credit now includes contracts signed by April 30 and closed by June 30.  In addition, It also allows up to a $6,500 tax credit available to existing homeowners purchasing a new home. And because of that the IRS handling of the tax credit had to be changed.

Homeowners who closed their sale before November 6, 2009 use Form 5405 to claim the credit right away. However, those closing after that date are now in limbo because no form yet exists for them to file.

The IRS had been expected to come out with a revised form by early January, but it has yet to release anything.

This delay may be the result of numerous parties, including the Treasury Department, having to agree on how to process all the new documentation that the expanded tax credit requires. Previously all you did was file a form saying you'd bought a house and were a first time buyer.

However now, repeat buyers must provide proof that they owned and resided in their claimed home for at least five of the past eight years.

In addition, even after the new form is ready, new filers will still face delays. Anyone who wants to claim their first-time homebuyer tax on their 2009 taxes will not be able to e-file their taxes. Instead, paper filing of taxes will be their only option.

Part of that change is because the IRS has become more concerned about fraud as it discovers more people claimed the tax credit without actually purchasing property.

The IRS, will now begin requiring a signed copy of the settlement statement ( HUD-1), plus a signed mortgage statement with the new address and a copy of either the taxpayer's driver's license, bank statement or pay stub, showing the new address. This will of course also slow the process for the tax credit being processed as well.

Therefore, it appears homebuyers who purchased a home after November 6, 2009 will have to deal with delays in receiving their home buyer tax credits. As more information becomes available we will of course provide updates.

For more information on home purchase loan or refinance programs for existing and potential home owners, please contact Bill Kamboukos of Strategic Mortgage at (480) 219-3682 or by emailing: info@strategicmtgaz.com or online at www.strategicmtgaz.com

New Good Faith Estimate Form For Borrowers

With 2010 here now, many new changes are on the horizon in the mortgage market and one is here already right now. The federal government has redesigned some of the initial paperwork lenders give you when you apply for a mortgage, specifically the good faith estimate.

The good faith estimate of closing costs, or GFE, is an itemized list of the fees, taxes, insurance premiums, commissions and points associated with getting a mortgage.

The new Good Faith Estimate is designed to be more consumer-friendly, whether or not it reaches these goals is of course to be determined. Here is what the new good faith estimate changes.

First, in regard to certain fees that lenders can charge, such as origination and document preparation fees, for example and lender must abide to their exact estimates for each of those fees.

Next, in regard to third-party fees, such as title insurance and appraisal, for example, lenders must be close to exact with these fees. When you add all these third-party fees together, the final bill can't be more than 10 percent higher than the estimate.

Finally, the new GFE is a much longer document then its predecessor and presents information in a much different format then most borrowers and even lenders are used to seeing it in.

While, the changes to ensure that certain fees that are quoted are actually abided by is a good move. There is also concern that perhaps the new GFE can also cause some confusion for borrowers as well. Only time will tell as the new GFE begins to take effect and consumers and lenders are presented with a new way of looking at the costs of a home loan. As always we will provide additional information and analysis as it is needed.

For more information to questions on home loan purchases or refinancing in the current market, please contact Bill Kamboukos of Strategic Mortgage at (480) 219-3682 or by emailing: info@strategicmtgaz.com or online at www.strategicmtgaz.com

Interest Rates To Reach 6% By The End Of The Year?

Mortgage rates on home loans reached levels near all-time low in early December, however according to the latest report from Freddie Mac interest rates could climb to 6 percent by the end of 2010.

This news comes a result of the latest survey released by the government controlled mortgage giant. These results are noteworthy because rates are a full percentage point lower than that currently and this would be a sharp rise over the course of this year.

Amy Crews Cutts, deputy chief economist at Freddie Mac, said that interest rates were bound to rise to 6 percent by the end of 2010 because private buyers would demand a higher rate of return on the securities than did the Federal Reserve, the U.S. central bank. In turn, lenders may have to raise the rates they charge to consumers in order to make that happen.

"Extraordinary resources have been put into keeping the rates down and supporting the mortgage markets and it's hard to imagine that the rates can go much lower than they are," Crews Cutts said. "Anything we get at or below 5 percent is a gift at this point."

This is certainly interesting news to ponder as we move into 2010 and buyers and homeowners decide the right time to buy or refinance. It looks like by the end of the year that will become quite a bit pricier. As we begin to see movements in the market and mortgage information develops we will as always provide updates.

For more information to questions on home loan purchases or refinancing in the current market, please contact Bill Kamboukos of Strategic Mortgage at (480) 219-3682 or by emailing: info@strategicmtgaz.com or online at www.strategicmtgaz.com

In an update to recent postings provided about the future of FHA financing comes news that perhaps the FHA will consider a down payment increase from 3.5% to 5% in the coming year. Recent news had been centered around the fact that the FHA may make borrowing more expensive through increased mortgage insurance premiums and credit requirements.

Now the latest news is that HUD Treasury Secretary Shaun Donovan is asking the Government to consider a possible increase in down payment on FHA loans in the coming year from 3.5% to 5%. This is far from actually occuring, but this is first time that someone from HUD, who regulates FHA financing has spoken about a potential increase to down payment. What actually does happen to FHA financing is unknown, but we will of course provide more information as the story develops.

FHA Loan Limits & Down Payments Hold Steady For 2010

As we wind down 2009 and head into 2010, Federal Housing Administration (FHA) loans continue to play an increasingly important role in mortgage financing in Arizona and across the country. The good news is that the current local loan limits in 2009, will remain in 2010. What that means is that the Phoenix metropolitan area will keep its current loan limit of $346,250 on single family residences. While the Tucson metropolitan area will keep its current loan limits of $316,250, as will the Flagstaff area keep its higher limit of $450,000.

In addition, FHA financing will continue to have some of the lowest down payment requirements of all loans at 3.5% of the purchase price for a home purchase.  While also allowing higher loan to values for borrowers looking to refinance their home.

However, as we recently wrote about things such as insurance premiums and upfront mortgage insurance premiums may rise for FHA financing in the coming year.

Of course as we know with the home buyer tax credit extended through April 30, 2010, FHA loans continues to be the home loan of choice for first time home buyers looking to purchase new homes. As additional changes on home loan guidelines become available in the area of FHA financing we will provide details, but for now the good news is that there are no changes on loan limits or down payment on the horizon for FHA loans.

For more information on current programs for existing and potential home owners, please contact Bill Kamboukos of Strategic Mortgage at (480) 219-3682 or by emailing: info@strategicmtgaz.com or online at www.strategicmtgaz.com

Interest Rates Remain Low, But Is It Time To Refinance?

Answers To Commonly Asked Refinance Questions

With interest rates at their lowest rates in a generation we have seen many home owners have begun to contemplate the process of refinancing. Borrowers will find slightly tougher lending standards and decreased home values as their biggest barriers to actually being able to take advantage of lower rates. Once you are qualified however, there are other questions that are looked in determining whether now is the time to refinance. Below you will find answers to some of the most common questions we receive in regard to refinancing into a new home loan.

Should my new rate be 2 percent lower than my current rate to make it worthwhile?

The quick answer to this is, no. You do not have to wait until mortgage interest rates drop by 2 percent before you consider refinancing your mortgage.

The decision to refinance your home is dependent on many things, including how long you plan to be in the house, how much lower the interest rate will be on your new loan, the closing costs for the new loan, your equity position in the home and whether you plan to do a cash-out refinancing.

With a regular refinance, you're trying to take advantage of lower interest rates to lower your monthly payments. If you have enough equity in your home, you may even have a side benefit of being able to stop paying private mortgage insurance.

In order, to take advantage of a lower rate you'll have to close on a new loan and pay the closing costs associated with that loan. This is true even if you opt for a no-cash or low-cash closing. With a no-cash or low-cash closing, the costs still are there; they just are paid for either with a higher interest rate or are included in the principal balance of the loan. (There's truly no such thing as a free lunch.)

If you don't plan on being in the house very long, then the lower payments associated with the refinancing won't cover these closing costs. So you must weigh the options, but the bottom line is that you do not need a 2 percent interest rate deduction to make refinancing worthwhile.

Should I refinance with my current lender or use the services of a mortgage broker?

The question of using your existing lender versus a mortgage broker is one that many homeowners looking to refinance have. On one hand, the borrower believes that having an established relationship and paying their mortgage on time will allow them to receive better terms and fees for their lender to keep their business, rather than lose it to a refinance. This same notion is often also perceived by many borrowers in relation to a bank or credit union that they may have a relationship with as well. The unfortunate situation in today's economic environment is that this does not necessarily mean better rates and fees. A mortgage broker has the ability to shop the mortgage around for you, especially in an environment of lower rates and find the best terms on a mortgage for your specific situation. This will allow you in the end to see all possible options available and not just the options available at one lender. It is however important to make sure you are dealing with a reputable mortgage brokerage with professionals such as Strategic Mortgage.

What is the difference between the rate and the APR?

Another common question received is the difference in the actual interest rate and the APR. The annual percentage rate adjusts the mortgage interest rate to reflect estimated closing costs, including points paid at closing and mortgage insurance.

The Truth in Lending Act requires lenders to provide the APR when advertising a mortgage loan and provide prospective borrowers with the loan's APR upon request. APRs aren't perfect, since closing costs are estimated and the lender can round off by up to a quarter-percent.

Therefore, the APR is not your actual interest rate paid on the loan, but factors in the cost of obtaining a loan and lists that as an interest rate as well on the loan disclosures.

If I have low rate on an adjustable rate mortgage should I refinance to a fixed rate now?

Many homeowners with lower rates on their adjustable rate mortgages have held off refinancing to fixed rates as interest rates have hovered around 6%. Now with rates a full percentage point lower, many homeowners are wondering if now is the time to refinance into a fixed rate mortgage for the long term. The answer, more often than not, is yes.

With interest rates at near historic lows, now may finally be the time to refinance to a fixed rate. Many homeowners have been content to take a wait and see approach and while some believe that rates may decline lower, if housing and the mortgage market has taught us anything, it is to expect the unexpected. Now may be your best opportunity to lock into a fixed rate for the long term and refinance out of your adjustable rate mortgage.

  

For more information to questions on refinancing in the current market, please contact Bill Kamboukos Strategic Mortgage at (480) 219-3682 or by emailing: info@strategicmtgaz.com or online at www.strategicmtgaz.com