Loans

Controversial Rate Checker Tool Tweaked

OD_BloggerUnder strong criticism from the Mortgage Bankers Association and other industry trade groups, the Consumer Financial Protection Bureau made tweaks to its controversial Rate Checker consumer tool.

But MBA President and CEO David Stevens said the tweaks do nothing to resolve “fundamental flaws” with the tool and continue to provide “misleading” information to consumers. 

On January 13, the CFPB unveiled this new borrower education tool on its website (Click Here for Rate Checker) ostensibly to help consumers be better informed of rates and other costs when shopping for a home loan. CFPB said this Rate Checker tool will allow consumers to “see what interest rates people with similar financial situations have been offered.”

The tool uses a credit score, state; property location and a down payment percentage to generate an estimate for a borrower of rates available.

The website which indicates rate information for the rate checker is provided by a private firm who collect data from “actual lenders and is updated every business day.” “When the imprimatur of the government is associated with particular data, the public assumes the data are complete and accurate. However, the lenders’ rates incorporated in the tool include only a mix of large banks, regional banks and credit unions. Notably, rates from independent mortgage banks do not appear to be included in the data. Similarly, discount points, origination fees and mortgage insurance are not included, yet are a significant part of the cost of residential finance–and are critical for any website that purports to be a comprehensive borrower decision tool.” 

Source: Mortgage Bankers Association

 

Previous Owners Buy–Back Repossessed Homes at Present Market Value

icon_search_croped

Fannie Mae and Freddie Mac directed to change policies relating to the sale of real estate owned (REO) properties in their current inventory by the Federal Housing Finance Agency (FHFA). The change requires real estate owned properties (REOs) to be sold to any qualified purchasers at the property’s fair market value.

Under the new policy foreclosed homeowners or a third-party purchasing on their behalf may do so at the value that applies to other purchasers. Prior to this change foreclosed homeowners or a third-party buying on owners behalf had to pay the entire amount owed on the mortgage.

This policy change is limited to Fannie Mae and Freddie Mac existing single family REO inventory of approximately 121,000 properties. Property exclusion may apply on a case by case basis. The purchase of an REO property for the benefit of the previous owner must also still be intended for use by that owner as their principal place of residence.

For more information on purchasing REOs contact: iRealtyServices

——————————————————————————-

The Federal Housing Finance Agency regulates Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks. These government-sponsored enterprises provide more than $5.6 trillion in funding for the U.S. mortgage markets and financial institutions.

Their mission is to ensure that Fannie Mae, Freddie Mac and the Federal Home Loan Bank System are operating in a safe and sound manner so that they can serve as a reliable source of liquidity and funding for housing finance and community investment.

Source FHFA Media Release

Delayed Home Loans For Cash Buyers

icon_sellersGood news for cash homebuyers wanting to get home loans quickly after purchasing a home. You can get a cash-out refinance almost immediately, thanks to a little known Fannie Mae program. The delayed financing program allows all-cash homebuyers to refinance and take equity out as soon as they close on the home purchase.

That’s good news for homebuyers in all-cash purchases, many of which are investors or baby boomers trading down to more manageable homes. The delayed financing program gives them the option to take home even more cash while enjoying historically low interest rates on a conventional home loan.

The program comes with rules such as the sale must have been “arm’s length” (no parents selling to children), the owner can’t have more than 10 financed properties and there can’t be any other liens against the property. Why would a homeowner use the delayed financing program instead of waiting the six months to tap equity?

  • A property may be in such disrepair that a lender won’t underwrite it. With this program, a homebuyer can buy the property, make quick repairs and take money out of it before six months elapse.
  • The chain of buyers and sellers might have irreconcilable timing issues.
  • It can be used as a tactical advantage in a hot market. Many sellers would rather accept cash offers over those with a financing contingency, sometimes even when the cash offer is lower. The program allows homebuyers to present a cash offer, then replenish their liquidity once the deal is done.

Source: Mortgage Daily

Mortgage Rates Soars After Bernanke’s Speech

We woke up this morning to the highest mortgage rates of the year after Fed Chairman Ben Bernanke signaled that the years of low interest rates may be ending soon. Ben Bernanke in a speech on Wednesday said the federal reserve may start slowing its economic stimulus programs later this year.

The Fed’s in a massive effort to restart the housing market has implemented various economic programs which resulted in historically low mortgage rates over the past few years. However, there has been clear signals that the Fed were throttling back on the stimulus programs. Then came the clearest signal of all the Fed’s Chair speech on Wednesday.

Thursday May 20th 2013 one day after Bernanke’s speech, American families woke up to mortgage rates above 4% which rose by .375% by the end of the day. In real terms the monthly cost of paying a $200,000 mortgage loan increased by $45 today.

To end on an optimistic note, by historical standard mortgage rates are still very low and unlike most consumer loans are tied to long term interest rates. While rates are unlikely to fall back to the historic lows of the past few years, the rapid increase will probably slow over the next few days.

Mortgage Forgiveness Debt Relief Act Extended Thru 2013

The Federal Government extended the Mortgage Debt Relief Act of 2007.  Tax relief under this law was intended to be temporary lasting through the end of 2012; however, Congress has elected to extend this benefit thru 2013.

Homeowners who are still upside down on home mortgages may now complete short sales or modifications resulting in a portion of the debt been written off without worrying about the tax ramifications. Home owners with deficiency balances written off after foreclosures also benefit from the extension of this law.

This is good news for Florida homeowners as short sales and foreclosures are still a large section of the home market. Many homeowners still under-water with mortgages can now seek resolution thru foreclosure or short sale without the added burden of paying taxes on the debt write-off.

Under normal circumstances the Internal Revenue Service classifies any debt that is written off as taxable income.

Learn More About Foreclosures and Relocation Assistance

Home Affordability Foreclosure Alternative also known as “HAFA” is a Federal program designed for homeowners who are unable to obtain loan modifications. HAFA provides financial incentives to lenders who approves short sales or take a deed-in-lieu of foreclosure.

A short sale occurs when a property is sold for less than the mortgage balance owed. Buyers get clear title to properties because lenders agree to release mortgage liens even though the sale proceeds are not sufficient to pay off the mortgage loans. The remaining balance of the loan is called a “deficiency”. Lenders may obtain  “deficiency judgments” court orders requiring sellers to repay the outstanding mortgage balance after the sale of the home. The HAFA program requires lenders to wave the rights to deficiency judgments.

A deed-in-lieu of foreclosure is also supported by the HAFA program. In this case, borrowers transfer ownership of properties to lenders by signing a deed in lenders favor. Under HAFA lenders would also wave the rights to deficiency judgments on unpaid balances.  

Eligibility requirements must met in order to be considered for short sales or deed-in-lieu of foreclosure  using the HAFA program. Borrowers may also be eligible for relocation compensation.

Should you be interested in learning more about short sales or deed-in-lieu of foreclosures, please post your questions in or comment section below or contact one of our foreclosure experts.

HUD Clampdown on Delinquent Tax Debtors

The Federal Housing Administration (FHA) appears ready to institute a policy that would require lenders to identify delinquent tax debtors before endorsing loans requiring FHA mortgage insurance.

The U.S. Government Accountability Office (GAO) found that many first time home buyers with delinquent tax debts had been granted loans with FHA insurance in violation of FHA policy. Federal policy makes delinquent tax debtors ineligible for FHA mortgage insurance unless they repay the debt or are in a valid repayment agreement with the IRS.

The GAO made two policy recommendations:

  1. New requirements for lenders to collect IRS documentation for identifying unpaid federal tax
  2. Clarification of the requirement that lenders investigate indications of tax debt.

HUD/FHA has agreed with the recommendations.

Technorati Tags: , ,