Homepath Mortgage

For the homebuyer, HomePath could be just what you or your client needs to move into a new home:

• Low down payment and flexible mortgage terms (fixed-rate and adjustable)

• No Mortgage Insurance

• No Appraisal Fee

• Borrowers may qualify even if their credit is less than perfect

• Available for owner-occupied, second and investments

• Single-family, condo, duplex, 4-plex all eligible

• Low down payment can be funded by:

     – Borrower’s own savings

     – A gift or grant

     – A loan from a non-profit organization, state or local government or employer

Give me a call today at (208) 287-1717. I know HomePath and REO properties. I can help you or your customers make the most of this unique program designed to help revitalize and stabilize neighborhoods.

The legislation will increase the guarantee fee for borrowers (but still allow it to be financed), which will make the program self-sufficient.  The legislation also increases the commitment authority so Rural Housing Service can formally guarantee loans (they had been providing conditional commitments).  We anticipate a notice from Rural Housing shortly after the President signs the bill.

Under a bill that’s passed the House and awaits Senate action, the Federal Housing Administration would be barred from insuring mortgages for those who previously ditched a mortgage they had the ability to pay.

Starting in October, Fannie Mae says, strategic defaulters will be disqualified for new Fannie Mae-backed loans for seven years after their foreclosures. Fannie also says it will go to court where it can to recoup outstanding mortgage debt from borrowers who strategically default.

Get-tough policies are forming at the same time that about a quarter of mortgage borrowers owe more than their homes are worth.

Fannie Mae buys about 40% of all mortgages and packages them for resale to investors. The FHA insures about 30% of home mortgages.

Briefly, if you sold a home because of “orders” between 1-1-09 and 4-30-10 and served at least 91 days extended duty, you will qualify for the homebuyer tax credit as long as income, sales price and age (18 years) requirements are met. You need to sign a contract by April 30, 2011 and close on your home by June 30, 2011.

Who qualifies?

• Member or spouse of “uniformed” services or the US Foreign Service
• Employee or spouse of the Intelligence Community

 To also qualify, you must also have served Extended Duty for 91 days between Jan. 1, 2009 and April 30, 2010:

via Growing Confidence Fuels Single Family Home Price Increases.

(Waterstone Boise)

“This IHFA exclusive financing option is a great tool for homebuyers as the housing market in Idaho continues its recovery,” said Gerald Hunter, IHFA president and executive director. “It offers another affordable lending option for low- to moderate-income homebuyers across the state.”

Affordable Advantage Loan
Features of the Affordable Advantage Loan include:
• As little as $1,000 needed from borrower to close
• A low-cost, 30-year fixed interest rate
• No mortgage insurance required, reducing a borrower’s monthly payment
• Financing to first-time homebuyers (including those who have not owned a home in the past three years) with good credit histories, requires a 680.  
• Income limits apply
• Loans are serviced in Idaho by IHFA

Home buyers should call me today at (208) 287-1717 to check their eligibility, or visit IdaMortgage  www.IdaMortgage.com

Waterstone Boise

FHA loans have surged in popularity. In 2005, government-backed FHA loans represented about 2.8% of total loans originated. Today, the number is closer to 30%. Over the past couple of years, as credit standards tightened, FHA loans have become the loan of choice for many homebuyers.

Contributing to the popularity of FHA loans is that the maximum loan amount limit has increased from $303,750 in Ada County to as much as $729,750 in Blaine County, maximum loan amounts depend on the county in which the home is located. (see http://fhaboise.com/fha-limits/)

Also, if you qualify for a loan, the loan-to-value (LTV) ratios are potentially higher than those for conventional mortgage loans. With FHA loans, a buyer can borrow up to 96.5% of the value of a home. The potential for a higher LTV also makes FHA loans an attractive option for homeowners wanting to refinance. And FHA loans come with fixed mortgage rates providing stable payments over the life of the loan. Also, FHA closing costs can be financed into the total amount of the mortgage.

Traditionally, FHA mortgages were used to assist first-time homebuyers who may not have otherwise qualified for a loan. But FHA loans are no longer just for first-time homebuyers. They are increasingly used by move-up buyers.

If you would like to learn more about the FHA loan process – and how it might help your clients move into a new home – please call me today. 208-287-1717

(Waterstone Mortgage Idaho)

The Home Affordable Foreclosure Alternatives (HAFA) Program provides additional options to avoid costly foreclosures and offers incentives to borrowers, servicers and investors who utilize a short sale or deed-in-lieu (DIL) to avoid foreclosures. HAFA alternatives are available to all HAMP-eligible borrowers who: 1) do not qualify for a Trial Period Plan; 2) do not successfully complete a Trial Period Plan; 3) miss at least two consecutive payment during a HAMP modification; or, 4) request a short sale or deed-in-lieu.

In a short sale, the servicer allows the borrower to list and sell the mortgaged property with the understanding that the net proceeds from the sale may be less than the total amount due on the first mortgage. Generally, if the borrower makes a good faith effort to sell the property but is not successful, a servicer may consider a DIL. With a DIL, the borrower voluntarily transfers ownership of the property to the servicer – provided title is free and clear of mortgages, liens and encumbrances. With either the HAFA short sale or DIL, the servicer may not require a cash contribution or promissory note from the borrower and must forfeit the ability to pursue a deficiency judgment against the borrower.

HAFA simplifies and streamlines the short sale and DIL process by providing a standard process flow, minimum performance timeframes and standard documentation.

• Complements HAMP by providing a viable alternative for borrowers (the current homeowners) who are HAMP eligible but nevertheless unable to keep their home.
• Uses borrower financial and hardship information already collected in connection with consideration of a loan modification.
• Allows borrowers to receive pre-approved short sales terms before listing the property (including the minimum acceptable net proceeds).
• Requires borrowers to be fully released from future liability for the first mortgage debt (no cash contribution, promissory note, or deficiency judgment is allowed).
• Uses standard processes, documents, and timeframes/deadlines.
• Provides the following financial incentives:
  • $3,000 for borrower relocation assistance;
  • $1,500 for servicers to cover administrative and processing costs;
  • Up to $2,000 for investors who allow a total of up to $6,000 in short sale proceeds to be distributed to subordinate lien holders, on a one-for-three matching basis.
• Requires all servicers participating in HAMP to implement HAFA in accordance with their own written policy, consistent with investor guidelines. The policy may include factors such as the severity of the potential loss, local markets, timing of pending foreclosure actions, and borrower motivation and cooperation.

There are also specific forms that must be used with HAFA…

• Home Affordable Modification Program – designed to enable borrowers that meet eligibility requirements to avoid foreclosure by modifying loans to a level that is affordable for borrowers and sustainable for the long-term.
• Second Lien Modification Program – designed to enable borrowers struggling with their mortgage to lower payments on second mortgages.
• Home Affordable Foreclosure Alternatives Program – provides borrowers that do not qualify for a HAMP modification with options to avoid foreclosure through a short sale or deed-in-lieu.
• Treasury FHA-HAMP – designed to enable borrowers with FHA-insured first lien mortgage loans, that are modified under FHA-HAMP, eligible for certain incentive payments under HAMP.

This week our industry lobby group met with staff for the Housing subcommittee in Congress to discuss our concerns regarding the Rural Housing guarantee program, and the imminent shortfall in funding authority. This follows up our letter to Congress of last week.

Here are the key points:

1. Members of the Committee understand the issue and want to resolve it.
2. There is no support for a supplemental appropriation — (i.e. additional spending bill). Congress is “spent out”, and there simply is no major spending bill on the horizon to which an RHS amendment might be added.
3. The Committee appears open to a resolution in which the guarantee fee would be raised — perhaps to 3.5% from the current 2%. While this would add costs, the advantage would be that it would allow the program to operate self sufficiently without having to go back to Congress again.
4. The sudden increase in the use of the RHS program is drawing scrutiny, including concerns by the administration about the zero down-payment feature of the program. There is concern that RHS is becoming a backdoor way to get around FHA in some areas. While this does not mean the administration would oppose self funding for the program, they may want to tie it to new program restrictions.

Real Estate professionals’ feedback and reaction to the prospect of an increase in the guarantee fee, as well as any other comments you may have are very welcome and encouraged. Please respond to this post.

Waterstone Boise

The Administration announced adjustments to Federal Housing Administration (FHA) programs that will permit lenders to provide additional refinancing options to homeowners who owe more than their home is worth because of large falls in home prices in their local markets. These adjustments will provide more opportunities for qualifying mortgage loans to be responsibly restructured and refinanced into FHA loans as long as the borrower is current on the mortgage and the lender reduces the amount owed on the original loan by at least 10 percent. This option should be available by the fall.

 The new FHA loan must have a balance less than the current value of the home, and total mortgage debt for the borrower after the refinancing, including both first and any other mortgages, cannot be greater than 115 percent of the current value of the home – giving homeowners a path to regain equity in their homes and an affordable monthly payment. This refinancing will help homeowners by setting monthly payments at affordable levels and decreasing the mortgage burden for families owing significantly more than their homes are worth. Keeping more responsible families in their homes should support the continued recovery of the housing market.

FHA Refinance Option 

1)    FHA Refinance Option for Underwater Loans –Encouraging Responsible Restructuring and Refinancing.

• Voluntary option encourages lenders and borrowers to work together, when appropriate, to restructure underwater mortgages. Because it is voluntary for lenders, not all underwater borrowers who meet criteria below will receive an FHA refinance loan.
• Enables refinancing into more sustainable loans that are no higher compared to the value of the home than the standard FHA refinance loan (97.75 percent).
• Lenders write down principal of the original first mortgage at least 10 percent to reduce the debt burden on borrowers, though we expect the average principal write-down to be significantly more than that.
• Enables refinancing to a reduced monthly payment at current low interest rates to facilitate affordable homeownership.
• Homeowner Eligibility

               i)       Homeowners must be current on their existing mortgage. They must occupy the home as their primary residence, fully document their income and have a qualifying credit score.

              ii)     As with any loan forgiveness, this short refinancing should be reflected as a negative feature on a borrower’s credit score.

              iii)   Option is available to homeowners with mortgages not currently insured by the FHA.

2)    Incentives for Principal Write-downs on Second Liens

• All mortgage debt including second liens must be written down to a maximum of 115 percent of the current value of the home to qualify for the refinance.

3)    Transparency on Impact of These Refinancings

• FHA will publish data on number of loans, average percentage written down and quantity of principal reduced quarterly.

4)    TARP Funded Support to Expand Impact of Refinance Option

• TARP funds will be made available up to a total of $14 billion to provide incentives to support writedowns of second liens and encourage participation by servicers, and to provide additional coverage for a share of potential losses on these loans.

The following information provides a brief overview of the key features of the refinance option. Detailed guidelines will be announced by FHA Mortgagee Letter.

1)    FHA Refinance Option for Underwater Homeowners – Encouraging Responsible Refinancings

• Voluntary option for lenders and borrowers
• Encourages lenders and borrowers to work together, when appropriate, to restructure debts

              i)       Qualifying first lien mortgage loans must have a minimum write-down of at least 10 percent and total mortgage loan to value on the home can be no greater than 115 percent after the refinancing

• Eligible underwater loans are refinanced into new FHA loans on FHA terms for full documentation, income ratios, and complete underwriting
• Terms of FHA refinancing:

              i)       FHA loan will be equal to no more than 97.75 percent of the value of the home

              ii)     Combined mortgage debt must be written down to a maximum of 115 percent of the current value of the home

              iii)   Standard FHA mortgage insurance premium structure will apply

• Mandatory principal write-down as part of refinance

              i)       Minimum write-down by lender of 10 percent of the unpaid balance of the original loan

• Affordable monthly mortgage payments to facilitate affordable homeownership

              i)       New monthly mortgage payment at current low FHA interest rate

              ii)     Total monthly mortgage payment, including for second mortgage, will not be greater than approximately 31 percent of income, and total debt service including all forms of household debt will not be greater than approximately 50 percent except for some borrowers with especially strong credit histories

• Existing lenders can retain second mortgages on the property, but only up to a combined 115 percent of the current value of the home

              i)       If there is an existing mortgage that is not extinguished, holders must agree to resubordinate and write off any amount over 115 percent of the current value of the home

              ii)     The existing first mortgage is refinanced into a fully documented FHA insured mortgage at no greater than 97.75 percent of the value of the home

• Homeowner Eligibility

              i)       Homeowners must be current on their existing mortgage payment

              ii)     Homeowner must occupy the home as their primary residence and fully document their income

              iii)   Homeowners must qualify under standard FHA underwriting guidelines

              iv)   Homeowners must have a FICO credit score of at least 500

              v)     Existing lenders/investors holding the first lien must agree to the principal write-down requirement. Thus, not all homeowners who meet above criteria will receive an FHA refinanced loan

              vi)   As with any loan forgiveness, the short refinancing should be reflected on borrowers’ credit score

• Performance of these refinanced loans will not count against lenders for their Credit Watch scores, if the above parameters are met

2)    Incentives for Principal Write-downs on Second Liens

• Incentives for immediate write-down of underwater second liens by lenders will be offered to encourage write-downs in connection with the FHA refinance.
• An extinguishment schedule will be implemented based on the below taking into account the likely distribution of the second lien lenders that will agree to immediate write-downs

Table: Extinguishment Price Schedule: Per Dollar of Unpaid Principal

3)    Transparency on Impact of These Refinancings

• FHA will publish data on numbers of loans refinanced in this way including average percentage written down and quantity of principal reduced quarterly 

4)    4. Up to a total of $14 billion in TARP funds to expand impact of refinance option

• TARP funds will be made available for incentives to support write-downs of second liens and encourage participation by servicers as well as the provision of coverage for some share of potential losses on loans. Total support provided through these three mechanisms will not exceed $14 billion
• TARP funds will be used to provide coverage for a share of losses on loans up to a specified amount. The FHA will provide remaining loss coverage up to the maximum insurance coverage. Thus, the new lender will have a loan that is backed by the United States for up to 97.75 percent of the home value, as with other FHA refinance loans
• TARP will purchase a letter of credit that will provide this loss coverage