Clarification on Short Sales
I have had a few calls this week from realtors asking about the availabity of housing finance after a client has completed a "short sale" on a previous mortgage. A Short Sale is usually referenced on the credit report as "settled for less than full amount owed" or similar wording. The FICO score and the mortgage rating on the credit report may or may not reflect any late payments. It generally does not show a reference to "foreclosure" and may not show the account as "pre-foreclosure.,"
With most major Investors (Chase, Bank of America, ...), a prior short sale requires a two-year waiting period from settlement date before obtaining a new mortgage. This applies to Conventional and FHA financing. On a FHA short sale, if HUD experienced any loss on a prior FHA loan with a "short" payoff, the borrower will not be eligible for another FHA loan until CAIVRS is cleared and HUD's elapsed time frame is met. This would also apply to USDA or any government loan where there was a previous government loss.
When I receive more information on this topic I will update you. There are a good deal of homebuyers looking to purchase a residence that were forced to short sale the home they can no longer afford due to economic circumstances out of their control.
Interest Rates:
Is the economy is rebounding? Last week's treasury auctions, signs of an improving economy, a boost in the stock market, raised consumer confidence, and next week there are more treasury auctions. Analysts that study the bond markets say we have seen the lowest of the mortgage rates. There is not a consistent level of optimism among all however and unemployment numbers are still too high. All this and more factor into the direction of mortgage rates. Mortgage rates took a big hit this week and rates under 5% are history for the moment. I am routing for a couple of good pricing days in the next 30 days, but not counting on it. At times like this, homebuyers are asking what the ARM rates are doing, although that product is not really advisable unless you are not planning on staying in the home over 5 years.
Best Conventional Conforming 30 Year Fixed Rate 5.375%*
Best Conventional Conforming 15 Year Fixed Rate 5.125%*
Best FHA 30 Year Fixed Rate 5.375%*
Best Conventional Conforming 5/1 ARM 4.625%*
Best Conventional Conforming 5/1 IO ARM 4.875%*
* Above Conventional rate quotes are as of 5/29/09 on a Conventional $250,000 loan amount, primary residence at 80% loan to value, with a 720 FICO score. APR includes $1,200 in lender fees and 980 in title charges (title charges may vary). FHA Quote assumes a $150,000 loan amount and a 680 FICO score, and a 96.5% LTV. Documentation of income and assets required. No origination or discount points.
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