Wednesday, April 21, 2010

Mortgage After Foreclosure: Fannie Mae Changes Make It Easier

Fannie Mae has announced that they will now lend you money for a mortgage in as little as two years after you have had a foreclosure.




With the record numbers of foreclosures happening, I had been wondering when their would come an announcement of guideline changes and I must admit it came a little sooner than I had expected.



Which will be a good thing for the housing market in general – because it will introduce a new class of buyer: the previously-foreclosed-upon segment.



Before this change, if you had a foreclosure, you were required to wait four years before being able to get a mortgage under Fannie Mae guidelines and two years if your home was sold in a short sale.



Now, if you have had a foreclosure or a deed-in-lieu of foreclosure you can buy a home and get a mortgage from a Fannie Mae approved lender as long as you have a 20% down payment.



When you apply for a mortgage, your loan officer typically uses Fannie Mae’s Desktop Underwriter (DU) software to determine whether your loan application meets the Fannie Mae guidelines. If you meet the guidelines, you are “approved” for a mortgage. If you do not meet the guidelines, you are not approved for a mortgage.



This software will be updated in June so that it has the latest foreclosure, short sale and deed-in-lieu policies in place — and as a result homeowners who had a foreclosure just two years ago and have a 20% down payment can now buy a home and get a mortgage that conforms to Fannie Mae guidelines starting with applications after June 30, 2010.



The message to homeowners who have been going through the foreclosure process?



Start saving your money for a down payment on your next home.

Contact The Mortgage Mark if you have any questions!!
 
http://www.themortgagemark.com/   mwilkins@capitalfmc.com

Monday, April 19, 2010

Philadelphia Home Prices and Home Values

According to Zillow's Real Estate Market Reports for February 2010, Philadelphia home values were down 0.4% compared to January 2010 and down 1.1% compared to February 2009.

http://www.zillow.com/local-info/PA-Philadelphia-home-value/r_13271//?scid=emm-2007288AprilLocalLender-bab



For more info contact me at mwilkins@capitalfmc.com or http://www.themortgagemark.com/ 

Wednesday, April 14, 2010

Alimony, Child Support and Separate Maintenance--Does it Count as Income?

Alimony, Child Support and Separate Maintenance--Does it Count as Income?


When you apply for an FHA home loan, you're required to certify your income, offer proof of employment and show that you're a good credit risk with a history of on-time bill payments for at least 12 months. Many people have no trouble with this set of requirements, but some are not sure what to write down when it comes to reporting child support payments, alimony and other income as a result of a separation or divorce. How do you include income from alimony payments and other financial support in your FHA loan application? More importantly, how does the your lender regard such payments?



DOCUMENTATION



The first step in getting many lenders to recognize income from alimony, child support, or maintenance payments as a legitimate source of income is by showing proof that such payments are happening on a regular basis. Many couples who enter divorce proceedings agree to informal child support arrangements or alimony payments; unfortunately the lender is not obligated to recognize such arrangements as a legitimate source of income. In fact, some financial institutions have issued recent guidance that in order for alimony or other payments to be considered as income, there must be a court order or other legal documentation showing that one party is legally obliged to pay the other party. A divorce decree, formal separation or court order is sufficient in most cases.



AMOUNTS



When you apply for an FHA mortgage and list alimony or child support payments as legitimate income, your loan officer will examine the ratio of your other income versus the amount of child support or alimony you receive. Depending on the amount and your lender's policies, certain requirements govern how that income is to be considered.



For example, some lenders stipulate if alimony or child support is 30% of the household income or less, the following standards apply:





•The party paying alimony or child support must be obligated in writing to pay.





•The payer must have paid for at least half a year before the loan application is filled out.





•The payer must be obligated to continue paying for a minimum of three years after closing the sale.





•There must be evidence of "stable receipt" of the full amount of alimony or child support for the most current six months prior to applying for the FHA home loan.

When the amount of alimony or child support is greater than 30% of the FHA borrower's income, the rules can change. Some lenders require the following;





•The borrower must receive alimony or child support for a full year before applying for the loan.





•The payer must be obligated to continue paying for three years after the loan has closed.





•There must be evidence of complete, on-time payments for a full year before applying for the home loan.



It's important to remember that in all cases, if you apply for an FHA home mortgage and list maintenance, alimony, or child support, there must be legally binding paperwork acceptable to the FHA that spells out the amount of the payments and their duration. This helps document your actual income and gives the bank and the FHA a way to measure what you are able to reasonably borrow when shopping for an FHA mortgage.



Your financial institution has specific guidelines on these issues--don't assume terms are identical from one bank to another. It's best to ask up front about any sources of income from alimony and child support so you know how to properly budget for your FHA home loan.

Contact me at mwilkins@capitalfmc.com or visit http://www.themortgagemark.com/

Monday, April 12, 2010

Buying short sales with FHA home loans

With thousands of new home entering the foreclosure process every month in each market area the question arises ever more frequently, “Can I use an FHA loan to purchase a short sale property?”


For the readers not familiar with short sales let us first define the term as it applies to real estate. As “short sale” on real estate is when the existing lien holder(s) agree to accept a lower amount than is currently owed on the existing loan(s).

If you need an example suppose the home owner has only one mortgage for $350,000 (existing payoff) on a home. Perhaps that home is currently valued only at $275,000. The home owner cannot refinance, the lender has failed to modify and foreclosure is looming so the lender agrees to accept a sales price equal to the current appraised value even though it is a full $75,000 lower than (short of) the payoff.

Answering the question, “can an FHA loan be used to purchase a short sale”, really is too simple. The answer is “yes” provided the property and transaction fall within FHA insurance guidelines. Remember FHA has maximum loan amounts, guidelines for property type and guidelines for property use.

For more information visit http://www.themortgagemark.com/ or email me at mwilkins@capitalfmc.com

Friday, April 9, 2010



Thursday, April 8, 2010

Can I Still Get a First Time Homebuyer's Tax Credit?

If you seek an FHA loan, time is very short to take advantage of the First Time Home Buyer's Tax Credit. Current guidelines have the plan expiring at the end of April, 2010. According to current guidelines, as long as a binding sales contract has been signed no later than April 30, 2010, the buyer is able to claim the $8,000 tax credit.



WHEN TO CLAIM



If you purchased your home after November 6 2009, but before January 1, 2010, you can claim your tax credit when filing your tax paperwork for 2009. The current rules forbid you to amend your 2008 return to make the claim when the home was purchased between those dates. If you took out an FHA home loan and closed on the house in 2010 you can claim the tax credit on either your 2009 or 2010 income tax. To claim your tax break on your 2009 taxes, you may be required to file a paper tax return instead of an e-filed version. Check with your tax preparer or visit IRS.gov for more information.



INCOME REQUIREMENTS



The First Time Homebuyer's Tax Credit program has income requirements for single and married buyers. If you are taking out an FHA mortgage as a single person, your income must be no more than $125,000 per year to qualify for the full tax credit. Married borrowers must make no more than $225,000 per year. If you make $145,000 per year as a single person, you are eligible for a partial tax credit under the program. Married taxpayers who make no more than $245,000 a year are also qualified for partial credit.



There's one important exception to the April 30, 2010 deadline for the First Time Homebuyer's Tax Credit program; some military members get up to a full year of extra time to take out an FHA loan, VA home loan or conventional mortgage and claim the tax credit. If you are in the military and on "extended duty" outside the continental United States, you have until April 30, 2011 to buy and claim. Some federal employees are also eligible.
 
Contact The Mortgage Mark with any questions!
 
http://www.themortgagemark.com/
 
mwilkins@capitalfmc.com

Wednesday, April 7, 2010

Prepare to be a good Mortgage Candidate

In today’s challenging lending environment, loan applicants often try to be the best candidate possible by painting the most optimistic picture about their debt, credit and affordability goals.




While it’s important to put your best foot forward, it’s even more important to be honest, open and forthright so your mortgage adviser can customize a mortgage and financial plan that fits.



With that in mind, here are a few things that will help move your loan application forward and give you the best chances for success:



Be open about your entire debt portfolio.

Student loans, car loans, small business loans, personal loans and credit cards are some of the most common and high profile elements of a “debt portfolio.” Associated payoff amounts, loan terms and payment histories directly affect your credit worthiness.



It’s important to divulge the entirety of your debt portfolio so your mortgage adviser can guide you through the loan application process. Surprise debts can slow down the process and could jeopardize a potentially great loan!



Know your credit score.

In a challenging lending market, your credit score is the single most important factor in determining your credit worthiness. For the potential lender, it’s the most accurate demonstration of your debt-to-income ratio and your ability to pay down debt effectively and on time. Your mortgage advisor will check your score with a “merged” report from all three credit rating agencies – Equifax, TransUnion and Experian. This gives you the most accurate overlay of credit information – and will eliminate any potential hiccups!



Express your lifestyle intentions and financial goals.

People buy homes for many different reasons. Some may purchase a single-family home in order to raise a family while others might buy a condominium with the intention of buying a house a few years later. Still, others might buy a townhome purely for long-term investment purposes. No matter the reason, it’s important to express your intentions to your mortgage adviser to help them guide you to the appropriate loan package.



For instance, if you’re a newly married couple planning to raise a family, you may be looking to establish good credit knowing that you’ll quickly outgrow your first condominium. Hence, a more aggressive, variable rate loan program might best serve your short-term needs. A 5/1 ARM, for example, keeps your interest payments low for the first few years of wedded bliss – making it easier to buy a home when the tots arrive!



Gather the appropriate documentation prior to application.

The loan process takes a little longer than it did a few years ago. And since most loan locks last for 30 days, it’s a good idea to have all of your documentation at the ready. That way your mortgage adviser can strike when fluctuating mortgage rates are most favorable to you and your needs.



Prepare the following documents:



• Recent paystubs

• Two years of year-end W-2’s

• Recent bank and asset statements (Note: be sure to include all pages. Believe it or not, this includes the one that says “this page intentionally left blank.”)

• A copy of your driver’s license

• Copy of purchase agreement (if applicable)



Try to get the cleanest copies of all your documentation. A smudged, blurry or faded copy or fax will slow things down!



These items will help you prepare for the loan application process. If you have any questions or wish to get started in earnest, call your mortgage adviser for a free, in-depth consultation.


Contact Mark Wilkins if you have any questions. 


http://www.themortgagemark.com/

mwilkins@capitalfmc.com

FHA Refinance Questions You Should Be Ready To Answer

FHA Refinance Questions You Should Be Ready To Answer


When you decide to apply for an FHA refinance loan, there are several questions you’ll need to answer to set the approval process in motion. Some questions are about planning issues, others are directly related to whether or not an FHA refinance loan is for you.

WHAT KIND OF FHA REFINANCING DO I NEED?

If you have a conventional home loan, an FHA refinancing mortgage is the product for you. If your home loan is an FHA mortgage, you can apply for an FHA Streamline mortgage. These FHA loans are much faster and easier to apply for since you are already in the FHA loan system. You don’t need to go shopping for a conventional home mortgage refinancing package if you qualify for an FHA Streamline loan.

IS MY LENDER WILLING TO HELP ME REFINANCE OR SHOULD I SHOP AROUND?

FHA refinancing loans are offered by participating lenders—they aren’t available at every bank. If your loan officer says your current bank doesn’t want to pursue FHA refinancing options in your case, shop around for a participating lender who can help.

HAVE I EVER FILED FOR BANKRUPTCY?

If you have filed for bankruptcy, don’t assume you can’t be approved for an FHA refinancing loan or an FHA Streamline loan. While filing for Chapter 7 or Chapter 13 bankruptcy doesn’t look good on a credit report, in many cases if you have made your payments on time and have lived up to the terms of your bankruptcy agreement, an FHA refinancing loan may still be possible. Never assume your case is hopeless. Make your payments on time, stay current, and talk to your loan officer about your specific circumstances. You might be surprised at what you learn.

WHAT IS MY CREDIT SCORE?

When applying for an FHA refinance mortgage, some lenders will ask you to rate your own credit, while others may simply do a credit check. If you have bad credit, you aren’t automatically disqualified from an FHA refinance loan. FHA mortgages are intended to help people get into and keep their homes; if you have been making on-time payments and your overall pattern of credit shows you’ve been diligent, you can still be considered for a refinancing loan through the FHA. Those who fell on hard times when the economy grew bad may find a second chance thanks to an FHA mortgage refinancing package. Don’t assume you shouldn’t apply—let your loan officer work with you to determine the best way to proceed.

HOW MUCH OF MY INCOME GOES TOWARD MY CURRENT MORTGAGE?

The amount of your current income and the amount you pay for your existing mortgage are very important. Be ready with exact figures and don’t forget to include any extra income you might be bringing in from a part-time job or your spouse’s income.

WHAT KIND OF PROPERTY DO I OWN?

One requirement for an FHA refinance loan is that you occupy the property you are refinancing. This requirement isn’t an issue when you take out a typical mortgage on a property, but once you begin applying for FHA loans and refinance loans, you’ll find the occupancy requirement is a key issue. In some case you may be able to get refinancing on a multiple-occupant home such as a duplex or condominium; these instances are covered by rules specific to each FHA refinancing program.

There are many differences between FHA Streamline refinancing and refinancing from a non-FHA mortgage into an FHA loan. Streamline loans, for example, may not require a new appraisal while an FAH refinance loan on a property purchased with a conventional mortgage may require a re-appraisal in some cases. Ask your lender about your specific needs.


Contact The Mortgage Mark if you have any questions!

mwilkins@capitalfmc.com

http://www.themortgagemark.com/

Tuesday, April 6, 2010

Up Front Mortgage Insurance Premium Changes for FHA Loans

When buyers are approved for FHA home loans, they are required to carry mortgage insurance. That includes both a Mortgage Insurance Premium (MIP) and an Up Front Mortgage Insurance Payment (UFMIP). The Upfront Mortgage Insurance Premium payments go into an escrow account set up by the U.S. Treasury Department and the funds are used to protect the government in case the borrower defaults on the FHA loan.




In the past the UFMIP on some FHA loans was as low as 1.5 percent, but effective April 5, 2010, the FHA has new amounts for Up Front Mortgage Insurance Premiums on many traditional and refinance loans from the FHA.



All affected FHA loans with case numbers assigned after April 5, 2010 will incur an Upfront Mortgage Insurance premium of 2.25 percent.



This change means an increase in premiums for those looking for purchase money loans, plus existing FHA mortgage holders interested in refinancing. The increase affects FHA-to-FHA and “non-credit qualifying” refinancing.



The FHA says these changes do not affect annual premiums at this time; the latest policy information from the FHA says for traditional and refinance loans, the annual premium is to be paid monthly and is charged according to the length of the FHA loan, and loan-to-value ratio. Check with your loan officer for payment schedule information for your specific FHA home loan. Most FHA loans are affected by the new 2.5 percent UFMIP, but there are a few exceptions.



TITLE I, HECM, AND HOPE FOR HOMEOWNERS



The increase in UFMIP does NOT affect Title I mortgages or Home Equity Conversion Mortgages, also known as HECM loans. Hope For Homeowners loans are also unaffected by the UFMIP increase.



OTHER LOANS



If you have a Section 247 (Hawaiian Homelands), a Section 248 (Indian Reservations) your loan is unaffected by the UFMIP change. Section 223(e) (declining neighborhoods) and Section 238(c) (Military Impact areas in New York ad Georgia) are also unaffected.



HOW DO UPFRONT MORTGAGE INSURANCE PEREMIUMS WORK?



The FHA charges an insurance premium up front, which is equal to a percentage of your mortgage. For purchase money FHA loans and full credit qualifying refinance FHA loans, the amount is 2.25 percent. FHA Streamline refinance loans are also charged a UFMIP of 2.25 percent.



HOPE for Homeowners pay 2.0 percent and Home Equity Conversion Mortgages are also charged 2.0 percent according to the new guidelines.

Any questions please contact Mark Wilkins at mwilkins@capitalfmc.com 
 
http://www.themortgagemark.com/

A consumer watchdog for your wallet

You've heard talk about a consumer financial protection regulator, the signature part of proposed legislation to prevent the next Wall Street crisis.


But amid the hundreds of pages of the House and Senate bills are some new powers the watchdog could wield that would directly impact your wallet.

The new regulator could ban penalty fees charged when high-interest mortgages are paid off early. It could let you take credit card disputes to court rather than be forced into mediation. And it could start a financial literacy drive to warn seniors about financial fraud and teach veterans to shop and compare auto loans.

"We need to make it easier for families to take better control of their financial lives," said Assistant Treasury Secretary Michael Barr.

The next step for the regulatory overhaul legislation is a final Senate vote in coming months, followed by a hashing out of differences with the House. Passage is by no means certain.

Mortgage prepayment penalties

Generally, the bills leave a lot of leeway for the proposed consumer regulator to figure out what practices should be stopped or limited. However, Congress is more prescriptive in one case: Cracking down on penalty fees for paying off mortgages early.

Free credit reports: Not so free

The new consumer regulator must prohibit these penalty fees for subprime mortgages, and cap and phase out the fees for more traditional mortgages, according to the legislation.


More common in subprime markets, the fees are charged when a loan is repaid or refinanced in the first three to five years. The penalty can run 5% of the loan or several months of interest payments. Consumers often agree to risk the fee, because it allows them to lock in a comparatively lower subprime rate.



The banking industry says the penalties allow them to guarantee investors a return, while helping risky borrowers.



"If properly disclosed, the penalties allow consumers to make better choices," said Tom Koonce, chief lobbyist for the Mortgage Bankers Association. "It's a valuable tool for lowering rates. And if you take that away, you're going to risk rates going higher."



However, the penalties can trap some subprime borrowers into loans as their credit scores improve, preventing them from getting cheaper loans, said Mark Flannery, finance professor at the University of Florida Graduate School of Business.



"These penalties are going to make it unlikely that somebody repays the mortgage early," Flannery said. However, he agreed that doing away with penalties could result in higher mortgage rates.



The proposal goes beyond the Federal Reserve's 2008 effort to limit penalties on subprime mortgages and is being hailed by consumer advocates for nixing a "key ingredient to the subprime mortgage crisis," said Center for Responsible Lending spokeswoman Kathleen Day.



Arbitration contracts

Many mortgages, credit cards, gift cards and auto loans force the buyer and seller to hash out disputes before a neutral party called an arbitration panel.



These arbitration contracts prevent disputes from going to court, with an eye toward forcing parties to work things out and cut down on lawsuits.



But consumer advocates and Treasury officials don't like the mandatory part of the contracts. They want consumers to be able to choose between arbitration and court.



The House bill directs the consumer regulator to consider banning forced arbitration for sales of financial products such as credit cards. The Senate says the watchdog needs to study the issue before banning or limiting them.



"If you can't go to court or join a class action lawsuit, that perpetuates unfair practices," said Ed Mierzwinski, national consumer program director at Public Interest Research Groups (PIRG). "Companies can ignore consumer complaints because they know they won't escalate to litigation."



Industry groups say the mandatory arbitration contracts lower the cost of providing products and services, by cutting back on lawsuits.



"These efforts are really a Trojan horse for more lawsuits," said Bryan Quigley, spokesman for the U.S. Chamber Institute for Legal Reform.



He said that many attorneys won't take smaller-dollar credit card cases. "Most people won't have access to justice at all. Instead of having an arbitration outlet, they're going to be forced to sue," Quigley said. "But if they can't find a lawyer, they can't sue."



Financial literacy

A major role for the proposed consumer financial protection watchdog is to teach Americans to be more financially literate.



The Senate version creates an Office of Financial Literacy and the House creates an Office of Financial Protection for Older Americans. In both cases, the agencies create or embrace programs that teach Americans about savings, loans, liens and fees.



The agencies would set best practices standards for financial advice programs, preventing Americans, particularly seniors, from becoming victims of scams or from being steered to buying certain financial products.



Economist's cry: Break up the banks!

"With everything that's happened with the economic crisis, you'd think there's so much economic education around. But there isn't," said Cindy Housell, president of the Women's Institute for a Secure Retirement.



The financial literacy agency would also streamline existing programs across agencies. For example, the Department of Defense has programs to train soldiers to watch out for abusive financial products. Under this proposal, the consumer agency and Defense Department would work together.



"We're worried about situations where consumer finance companies and auto lenders take advantage of young military families, which is bad for families, bad for the military and bad for military security," Barr said. "The financial literacy programs would continue, but with the help of the (consumer regulator) to convey best practices."


For more inforamtion contact The Mortgage Mark.   mwilkins@capitalfmc.com

http://www.themortgagemark.com/