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Archive for the 'Mortgage & finance' Category

Some new rules will change the mortgage process

 Getting ready to buy a new home? The federal government has come up with a new set of rules that may have an impact on your mortgage. The new rules, from the Federal Reserve, go into effect at the end of this month.
Here are the high points:
– Lenders must provide you a mortgage cost disclosure within three business days of the date you apply for the mortgage. If they don’t you can walk away from the deal.
– Lenders can’t collect fees until you get that aforementioned cost disclosure statement. The only exception is a reasonable fee for checking your credit. It has been fairly common for lenders to ask for money up-front to cover appraisals, credit checks and other fees. No more.
– Once the lender provides the mortgage cost disclosure, there must be a seven-day waiting period before the closing.
– The appraisal must be delivered by the lender to the borrower at least three business days before the loan closing. Borrowers have always had a right to see the appraisal, but they often didn’t know they had that right, and they often didn’t request it because they didn’t know they were entitled to it. Now, the closing can’t happen until you’ve received it.
– If the annual percentage rate of the loan goes up more than one-eighth of one percent between the time you get the early cost disclosure and the closing, the lender must re-disclose all the costs and provide an additional seven days for you to consider the deal.
It is all meant to make the mortgage transaction more transparent and give borrowers more confidence about the deal they are signing.

Home refinance program expanded

     We’ve written here in the past about tax credits and about government programs aimed at saving homes from foreclosure and making home payments more affordable. Now, it looks as though the Obama Administration wants to expand those programs to make them apply to more borrowers than before.
 

    Until now, those government programs have been available to people whose mortgage amounts are up to 105 percent of a home’s value. This week, the administration announced that it wants to raise that limit to 125 percent of value.
Here are some of the conditions that apply:

• The mortgages in question must be owned or backed by Fannie Mae or Freddie Mac.
• The applicants for new financing must be current on their mortgage payments.

     It is estimated that 30 percent of all mortgages are for amounts that exceed their homes’ values.
     The expansion of this federal home refinance program is an acknowledgement that the original program fell far short of expectations. When it was announced in March, the Obama Administration said it hoped that it would help 4-5 million homeowners who were upside-down on their mortgages. But in the middle of June, the administration admitted that only about 20,000 homeowners had applied to refinance their mortgages under the plan.
One problem has been rising interest rates. Current rates are around 5.5 percent, up from 4.84 percent in April. That rate increase has put a damper on refinances. The government hopes that the new expansion will encourage more homeowners to refinance their homes, and those refinances will make the homeowners less likely to default on their mortgages.
     Got a home in Palm Harbor, Dunedin, Clearwater, or anywhere else in Pinellas County with a mortgage bigger than the home’s value? This expanded program may be for you.

Tags: making home affordable, mortgages, pinellas county, refinance

Bills would extend tax credits beyond first time home buyers

The real estate market is getting a bit better, and much of the action is taking place among first-time home buyers.

And why not? There are some really great deals at the less-expensive end of the market; first-time buyers usually don’t have an existing home that they have to unload before buying a new one; and let’s not forget that very attractive $8,000 first time home buyer tax credit from the federal government.

“But wait!” you say.  “What about me?  I’m not a first time home buyer, but why shouldn’t I get that $8,000 tax credit, too?”

Well, maybe you’re right. At least that’s what two members of Congress from the Dallas area think.  They have introduced legislation that would make the $8,000 credit apply to everyone and all houses. Not only that, but they would extend the tax credit all the way into 2010. The current tax credit only applies to homes purchased by Nov. 30 of this year.

The legislation comes from Rep. Kenny Marchant, a Republican, and Rep. Eddie Bernice Johnson, a Democrat. They have filed separate bills to expand the reach and the time limit for the tax credits. Marchant’s bill also includes a $3,000 credit that could be used by people refinancing their existing loans.

You would think that home builder and realtor lobbying groups would be all for these new bills. But they are acting cautiously because they don’t want anything to undermine the current tax credit which expires at the end of November.

There is plenty of legislative business already on the House calendar, so don’t expect fast action on these bills.  But that may change later in 2009, after members return from their summer recess.

Tags: tax credits

Higher interest rates may slow housing market recovery

What’s the biggest (and latest) threat to a recovery in the housing market? Probably rising interest rates, which have jumped up noticeably in the past couple of weeks.

At midweek, the rate on a 30-year fixed-rate mortgage had climbed to 5.79 percent, up from just 5 percent two weeks ago. That may not seem like a huge increase, but experts are saying that the increase is already having a dampening effect on refinances. Some say that the increase from 5 percent to 5.79 percent may mean that refinance applications are likely to be cut in half.

The major culprit seems to be interest rates on Treasury notes. The Federal Reserve is trying to combat the increasing interest rates by buying up Treasury notes. So far, however, that strategy doesn’t seem to be having much of an affect.

A few weeks ago, interest rates had fallen below 5 percent, which was the lowest level in more than 50 years. Those very low rates, along with low purchase prices, seemed to be providing enough momentum to get the sluggish housing market moving again. But higher interest rates could let the air out of that momentum.

Tags: Palm harbor real estate, Pinellas County real estate, rising interest rates

More FBI agents will investigate mortgage fraud

Here’s something I hear all the time:

“Those lenders who made all those bad loans just to line their own pockets ought to be in jail.  Why haven’t those people been prosecuted for fraud?”

Well, thanks to the U.S. Congress, you may finally get your wish.

Congress has provided the funding to double the number of mortgage fraud task forces from 26 to 50 and perhaps more. The bill contains $75 million to hire almost 200 special agents as well as another 200 forensic analysts and support staffers.

The U.S. Attorney’s Office received another $90 million to pay for the prosecutions of those that the FBI arrests.

The bill contains new language that extends the law to cover mortgage lenders who are not directly regulated by the federal government. Those lenders were responsible for nearly half the residential mortgage market before the economy collapsed.

The bill is also designed to protect the economic stimulus package as well as the Troubled Asset Relief Program (TARP) from fraudulent schemes.

The funding provided by Congress also will fund a new 10-member Financial Crisis Inquiry Commission, which will examine the current economic crisis and provide Congress with advice as to how it may come up with additional reforms.

Tags: FBI, mortgage fraud

Are we bailing out the bad lenders?

Banks are getting billions of dollars from the federal government to prop them up following the melt-down of the U.S. housing industry. The melt-down was caused in large part by poor lending practices, especially among sub-prime lenders. And who owned those sub-prime lenders? The very banks that are now getting bail-out money.

That’s the finding of a new report released by the Center for Public Integrity. And a not-insignificant number of those loans financed homes right here in Pinellas County.

Many banks that have been hit the hardest by the economic melt-down have portrayed themselves as victims of the sub-prime lending industry — companies that were too easy about lending money to people with little cash, poor credit or low incomes. But the director of the Center for Public Integrity says the banks not only knew about those questionable practices, they owned the very lending companies that behaved so irresponsibly.

“The mega-banks that funded the sub-prime industry were not victims of an unforeseen  financial collapse, as they have sometimes portrayed themselves,” said Bill Buzenberg. ”These banks were deliberate enablers that bankrolled the type of lending that’s now threatening the financial system.”

The Center looked at 7.2 million sub-prime loans made between 2005 and 2007.  It said that banks based in the U.S. and Europe poured vast amounts of capital into the sub-prime industry in pursuit of big profits. And it says that at least 21 of the 25 biggest sub-prime lenders  received their financing from banks that are now getting bailout money from the U.S. government.

The Center for Public Integrity describes itself as a non-profit organization “dedicated to producing original, responsible investigative journalism on issues of public concern.”

Tags: Add new tag, home finance, pinellas county, sub-prime

Pinellas homeowners: New program makes refinancing possible

Would you like to refinance your home, but find that you can’t because the value of your property has declined? You may be able to refinance anyway under the federal government’s new Making Home Affordable program.

This is good for some homeowners in Pinellas County and in Tampa Bay, where foreclosures and declining values are among the highest in the nation.

Making Home Affordable has two parts – one allows for the modification of existing mortgages, while the other offers opportunities for home refinancing, if the home mortgage is owned or guaranteed by Freddie Mac or Fannie Mae.

Let’s look at the refinancing function of Making Home Affordable:

• To qualify, borrowers must occupy their homes. The home may have up to four units, but the owner has to occupy one of them.

• Interest rates under Making Home Affordable are “market rates,” but it is a little unclear what that means exactly.

• Loan balances may be as much as 105 percent of the current value of the home. Otherwise, borrowers have to comply with all the other usual underwriting demands, things like all payments must be current, income has to be high enough to cover the new payment amounts, and there can’t be more than a single late payment during previous 12 months. 

• Mortgage insurance on the old loan will carry over to the new loan – a little unusual, because generally mortgage insurance policies end when the loan is paid off; then a new policy gets issued for the new mortgage.

• It’s okay to have a second mortgage on the property as long as the second mortgage holder has agreed to remain in the second position lien-wise.

• Cash cannot be withdrawn during the transaction, but closing costs can be included in the mortgage amount.

To learn more, visit http://www.MakingHomeAffordable.gov

Tags: making home affordable, pinellas county, refinancing

HUD is thinking about energy rating system for homes

Shaurn Donovan

When you buy a new car, you know what that vehicle’s fuel economy will be because that information is contained on a window sticker. Do you think the same sort of information ought to be made available when you buy a new home?
That’s the thinking of the Obama administration. Shaun Donovan, who is secretary of Housing and Urtban Development, says that making energy efficiency information available about new homes would give buyers some important facts when they are shopping for a home. And he says that government-insured mortgages could make additional money available for retrofitted energy-efficient features. The rates on those mortgages could be adjusted downwards, he says, for homes that are energy-efficvient.
Donovan says his thinking applies to new homes as well as older homes that are up for re-sale. He says his department is trying to come up with a scoring system that would help buyers quickly understand the energy efficiency of the home they are considering purchasing. That scoring system would also help lenders decide the rate that should be applied to the mortgage.
And Donovan says there might be other factors that could be incorporated into the scoring system, such as distance from the home to  employment centers. he said that a low-priced home in a distant suburb isn’t much of a bargain if the homeowner has to spend big dollars getting back and forth to work.

Tags: energy, homes, mortgages

Buying a house in North Pinellas? Interest rates are DOWN again

This week the magic number is 4.78, the lowest in history. Last week it was 4.85, and THAT was the lowest in history, too.
What is it? Why, the interest rate on 30-year fixed-rate mortgages, of course.
Average rates on a 15-year, fixed-rate mortgage dropped to 4.52 percent; rates on five-year, adjustable-rate loans fell to 4.92 percent from 4.96 percent.
The Federal Reserve has been trying to do what it can to make homes more affordable. Its efforts have driven mortgage interest rates to their lowest point in the history of Freddie Mac, which dates back to 1971. The rates are a full percentage point lower than they were just one year ago.
The low rates mean that more homeowners are refinancing their home mortgages. The Mortgage Bankers Association keeps an index of mortgage applications, and that index showed a three percent increase in applications for the week ended March 27. The week before was even more dramatic – 30 percent. The Mortgage Bankers Association says that fully 80 percent of all those applications were for refinances.
Last month, the Federal Reserve announced it planned to buy $1.2 trillion in mortgage-backed securities as well as $300 billion in long-term government debt. All of that has forced interest rates lower.
I’m not sure I would call this a “down side,” but the other side of the coin is that lenders are tightening up their lending standards. So while rates are going lower, they are increasingly only available to people with spotless credit.

Tags: federal reserve, interest rates, north pinellas

Five ways to find down payment money when you’re broke

What’s the biggest single obstacle to home ownership? A lot of people would answer, “The down payment — or lack of it.”

For several years now, we ‘ve had the benefit of some pretty easy no-down or little-down financing.  But with the way things are right now, we’re probably not going to see those days come back any time soon.

That means 10 percent or more down loans are much more the norm than they used to be.  But don’t worry — there are a number of easy ways (or sort of easy ways) to raise that down payment money.  Here are a few ideas:

1. SAVE THAT TAX REFUND CHECK

That annual tax refund check from Uncle Sam is always welcome, but how many of us actually earmark that money for a single purpose? Instead of using it to finance a shopping trip to the mall, or using the money for a down payment on a new car, stash it in a savings account, and then do the same thing all over again next year. In very little time you may have all the money you need to buy a new place for yourself.

2. UP YOUR WITHHOLDING

Are your tax refund checks too pitifully small to add up to very much? Or, even worse, are you getting a bill from the IRS instead of a check? There’s an answer for that — march yourself down to your Human Resources Department and ask them to withhold more money from your weekly paycheck.  If you can live with $100 less per week, that’s $5,200 dollars that will be coming your way next year. If that’s a little rich for your blood, $60 per week will give you $3,120 at the end of the year.

3. ASK YOUR RELATIVES FOR MONEY

Tell your parents that you want to buy a home, but that you don’t have enough money for the down payment.  They may surprise you — they may even applaud your maturity in wanting to own your own place. If they won’t give you the money, maybe they will LEND it to you. Be businesslike, and give them decent terms.

4. SELL SOME STUFF

Let’s face it, most of us have plenty of stuff we don’t need. If that describes you and your bulging garage, have a yard sale or a garage sale and turn those musty old items into cash. If you have some things that actually have some real value, you might try selling them on eBay.  You’d be amazed what people will pay for old car parts or 20-year-old Playboy magazines. If you have a sale and end up cleaning out your own garage, offer to sell some stuff for friends and family members, and offer to split the proceeds with them.  Who knows, you may discover a new career as a garage sale expert.

5. INVESTIGATE GOVERNMENT PROGRAMS

Did you spend time in the military? The Veterans Administration may have a no-money-down loan program for you.  Are you a first-time homebuyer?  There may be programs available for you, as well. There are still a surprising number of no-money-down programs out there; your realtor should be able to help you find them. Also, feel free to call me at 727-643-7100.

I know, I know, I said “Fives Ways…” But here’s a bonus idea for you:

SPECIAL BONUS STRATEGY

Get a second job. I know, this isn’t everybody’s idea of heaven. But do it with a short-term rather than a long-term time schedule in mind. I know someone who had a special financial need, and she financed it by signing up as a host of in-home jewelry parties. I know someone else who works every Christmas season at his local Post Office. There are all kinds of seasonal jobs out there. And if you have a special talent or ability, give some thought to who might like to pay for those skills on a part-time or occasional basis. When you get sick of working those additional hours, quit.

I’ll bet you have some make-money ideas of your own. If you do, hit the “comment” button at the top of those post and share them with us.

Tags: down payment, home financing