WASHINGTON – Aug. 9, 2010 – In an effort to help responsible homeowners who owe more on their mortgage than the value of their property, the U.S. Department of Housing and Urban Development (HUD) provided new details about a refinance program it announced earlier this year that helps responsible homeowners who owe more on their mortgage than the value of their property.

Starting Sept. 7, 2010, the Federal Housing Administration (FHA) will offer certain “underwater” non-FHA borrowers a new FHA-insured mortgage. To qualify, an owner must be current on his existing mortgage, and his lender must agree to write off at least 10 percent of the unpaid principal on the first mortgage.

“We’re throwing a lifeline out to those families … experiencing financial hardships because property values in their community have declined,” says FHA Commissioner David H. Stevens. “This is another tool to help overcome the negative equity problem facing many responsible homeowners who are looking to refinance into a safer, more secure mortgage product.”

Other details: A homeowner’s existing loan cannot be FHA insured, and the refinanced FHA-insured first mortgage must have a loan-to-value ratio no more than 97.75 percent. The owner must qualify for a new loan under standard FHA underwriting requirements and have a credit score equal of 500 or higher. The property must be the homeowner’s primary residence, and the new debt must bring the borrower’s combined loan-to-value ratio to no greater than 115 percent.

Interested homeowners should contact their lenders to find out if they’re eligible, and to determine whether the lender will write down a portion of the unpaid principal. If a homeowner qualifies, the U.S. Department of Treasury will provide incentives to existing second lien holders who agree to full or partial extinguishment of the liens. To be eligible, servicers must execute a Servicer Participation Agreement (SPA) with Fannie Mae, in its capacity as financial agent for the United States, on or before Oct. 3, 2010.

The FHA provided complete details in a six-page mortgagee letter that can be downloaded in PDF format. To read the letter, go to: http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/10-23ml.pdf

John Fenech’s
Lending Reminders:

FHA Financing
• FHA maximum loan in Tampa Bay $292,500
• FHA down payment needed from borrower 3.5%. All of this can come from a family gift.
• FHA seller concessions currently at 6% of purchase price
• FHA processing time for SLS is approximately 30 days.
• Owner occupied only

VA Financing
• Maximum loan amount in Tampa Bay $417,000
• 00000 money down required
• Closing costs and prepaids can be paid by seller to 4%
• Limit borrowers escrow money because normally no money allowed back.
• Owner occupied only

Conventional
• Maximum loan amount is $417,000.
• Minimum down payment is 95% loan to value
• Borrower MUST have their own 5% into the transaction prior to gifts being used unless the gift is 20% of the purchase price or more.
• Rate adjustments for loan to value and credit scores
• Owner occupied, second homes, investor loans.

For more info on lending requirements call John at 727-827-1818

While many home-buying hopefuls are racing to the bank to close their deals before the $8,000 tax credit disappears, not every potential home-buyer thinks the best deals are out there yet.

But the money one might save by looking for a better home price could pale in comparison to the huge cost of waiting if the mortgage market doesn’t hold steady, and most mortgage brokers & banks expect a rise in rates later this year.

“Rates are almost at an all-time low,” said John Fenech at Sunbelt Lending with Coldwell Banker in St. Petersburg. “We’re still at about 5% for a 30-year-fixed loan (for someone with good credit and a good job).”

John says even a 0.5% change in interest rates means a $56/mo. difference for someone looking at a $180,000 30-year fixed-rate home loan. That translates to $672 a year. And $20,160 over the course of a 30-year loan.

Click here to get approved on line

With inventory shrinking and supply at the 6 month mark a place we haven’t see in Pinellas County in 4 years buyer are starting to feel pressure they haven’t experienced in years. This translates to good news for sellers, and after the losses they have seen in the past 3 years it’s the light at the end of the tunnel for many.

If you were looking for a sign that right now maybe the best time to buy, “it is”. Here is your sign! Don’t put off buying the home a home.

Don’t forget to check out “Search the MLS” or the list of “Bank Owned Homes”

Here is the updated list from Fannie Mae on PERS approved condos as of March 1st. There are a few additions to the list since December. If you remember, Fannie Mae has a task force dedicated to examining projects across the State to get them appoved. Once approved it allows us to do 80% financing on a conventional basis, for not only owner occupied buyers but 2nd home and investor buyers as well.

Click on this link “Fannie Mae Condo Approval 3-01-10″

Let me know if you have any questions.

John Fenech
Sunbelt Lending Services
Regional Loan Manager
Ph: 800-858-5674 or 727-827-1818
Fax: 856-917-2610

FHA 203k streamline loan helps buyers of single family homes renovate and wrap up the renovation costs in to the loan. This is a great program for people buying distressed homes or dated property.

I recently completed my first 203k FHA loan with a young couple purchasing a home in Historic Kenwood, the deal wasn’t as simple as the story below. Our deal was a “short sale” and the buyers didn’t know about this program until after the home inspection revealed several problems that would have prevented our purchase with a normal FHA loan. This home needed electrical updates and plumbing issues as well as pealing paint on the out side of the home.

FHA sends out an inspector, if the home isn’t in good shape they will not fund the loan. In our case the seller wasn’t able to make the repairs so the 203k was our best option.

It did take several months to close due because we needed to renegotiate with the sellers lender on the sales price because of the updates and repairs needed. The FHA 203k loan was the only way they would have been able to buy this home so in the end it all worked out. (Just a FYI the 203k loan does take 90 days + & the cost of the loan is higher.)

If you’re finding all the homes in your price range need of updates (no structural work) the FHA 203k loan maybe a great option.

RisMedia story on a 203K loan

From John Fenech Sunbelt Lending

Some of you have asked me about the potential for rising rates. Here is something I read this week that reinforced my thoughts on the government’s continued help in this area:

Ask The Expert

Last year was a very challenging year. Many of my prospects, including previous customers who are homeowners, could not qualify for a new loan. Now I am hearing that rates will be going up after the Fed stops purchasing loans. I am actually scared that I will not make it. I need some advice but also encouragement. John from California

John, here is the good news. The industry, though rapidly changing, will be around for a long time. If anything this deep recession taught us is how important the real estate industry is to this country. At the beginning of the “sub-prime” crisis we had our government telling us that the economy was strong enough to withstand the issue. They were wrong. Real estate led us into this recession and it must lead us out. I expect the government to do whatever it can, from tax credit to foreclosure help, to right the ship. However, that does not mean that there will not be pain. There has been a lot of pain and there will be a lot more. We are on our way to recovery though.

John Fenech
Sunbelt Lending Services
Regional Loan Manager
Ph: 800-858-5674 or 727-827-1818
Fax: 856-917-2610

About 116,000 homeowners have had their loans modified to reduce their monthly payments, the Treasury Department said Wednesday. Only about $15 million in incentive money has been paid to more than 100 participating mortgage companies. That’s 0.02 percent of the $75 billion available.

Unemployment soared to 10 percent, and home prices continued to fall, especially in some states. 16 million homeowners nationwide now owe more to the bank than their properties are worth, according to Moody’s Economy.com.

Low interest rates and tax incentives have boosted home sales, but are ending soon. The $1.25 trillion program created by the Federal Reserve that has helped keep rates low is scheduled to end next month. The tax credits run out on April 30.

Obama’s plan had two main strategies: The government would channel $75 billion to banks to prod them into modifying the terms of mortgages for up to 4 million borrowers by the end of 2012. It would also relax rules to let up to 5 million homeowners refinance at lower interest rates.

Under the modification plan, borrowers can get their mortgage rates reduced to as low as 2 percent for five years and have the term of their loan extended to as long as 40 years. Borrowers must make three payments on time before the modification becomes permanent. Monthly payments for borrowers in the program have fallen to a median of about $835, down by about $520 a month.

Since the program started in March:

• 1 million people have entered the modification program, and almost 12 percent, or 116,000, have completed the process.

• A third of homeowners who made the three monthly trial payments on time have now fallen behind.

• More than 61,000 homeowners have dropped out, and hundreds of thousands more are expected to do so in the coming months.

• About 220,000 homeowners whose homes have plummeted in value have refinanced.

The process has been time-consuming, bureaucratic and fraught with communication mistakes. Borrowers often feel lost in a maze. When denied by their bank, they often don’t get a clear explanation of why.

To qualify, borrowers need to provide two pay stubs and a letter describing the reason for their hardship. They must give the Internal Revenue Service permission to give out their tax returns to their mortgage company.

Faced with poor results last summer, the Obama administration pressured mortgage companies. Treasury officials summoned key executives from lenders, including Bank of America, Wells Fargo and JP Morgan Chase, to Washington. The industry was given strict orders: Sign up at least 500,000 borrowers by Nov. 1.

To meet that goal, most companies allowed homeowners to enroll in the program without proof of income. That was the same low standard that lenders used when they made some of the riskiest loans that fueled the housing frenzy.

Getting the documents in advance would have been a better idea, Heid said. That’s because lenders have struggled to get homeowners to complete all the required documentation. Many don’t comply, despite repeated phone calls, mailings and even in-person visits by notaries.

It’s a problem that has perplexed and frustrated industry executives. “Borrowers didn’t understand that if they didn’t send the documents in, they would fail to qualify,” said Sanjiv Das, Citigroup’s top mortgage executive.

Last month, the Obama administration made key changes. It reduced the paperwork requirements and announcing that homeowners will be required to provide proof of their incomes upfront starting June 1.

The Problem:►
►Wall street got too greedy.
►ARM, Alt-A ARM, Option ARM, Prime ARM, Sub-prime ARM, these adjustable rate
mortgages will continue reset to higher monthly payments which many homeowners will
not be unable to afford.
►Millions of mortgage brokers originated these types of loans across the nation.
►Now the banks are literally overwhelmed and don’t have enough people to clean up
the mess.

The Numbers:
►More than $250 billion in 2008 another 350 billions in 2009 and another $700 billion
will reset in 2010 and beyond, this is according to a First American study.
►Now here is the recipe for disaster.
►It’s estimated that 60% of all arms borrowers pay only the minimum payment and can
not afford a higher payment.
►According to Freddie Mac 62% of all loan modifications become delinquent within 60
days after a modification takes place.
►Loan modification is a disaster; it’s PROVEN it doesn’t work without principal
reduction.
►Right now according to credit Suisse banks have approximately 900 thousands
properties in their books. Not listed for sale with an agent.
►As per Credit Suisse banks and GSE’s must avoid foreclosure in 4.2 million loans
until the end of 2010 in order to have a recovery.
►Highest unemployment rate in over 30 years.

The FDIC is selling off failed Bank and making crazy deals with the new owners, like this deal with failed IndyMac Bank to OneWest Click to Watch This Video Why would these banks want to help the average homeowners who is fighting to keep their homes when they can make more money doing short sales. Does this seem right to you?

Let me know your thoughts..

OK, there are some interesting changes which will take pace later this year to FHA financed loans. The government has been facing higher defaults with FHA insured loans over the past couple of year’s, in order to build up reserves they are making some changes.

If you are looking to buy a home using FHA financing the window to closing and avoid higher fees is closing quick.

Also, I hear the government is going to adjust the key interest rate at which they loan money to banks this will adjust the interest rate you will be able to get when buying a home. Just a 1% jump in interest rates, is like seeing a 10% increase in the price of a home. My advice would be don’t delay, if you find a home you love and plan on living there for 3+ years you should buy now.

Future changes with FHA:

FHA financing requirements, change from time to time to match the market and the risk of loss. Since the collapse of the financial markets in 07,08 FHA financing has been the primary source for home buyers to obtain a real estate loan with a low down payment. This is the reason for the changes you are about to see.

Imagine the market slips by another 5-10% and the unemployment numbers go about 10%, many borrowers who used FHA financing in the past 3-4 years could find them selves in foreclosure or needing to do a short sale to get out of their home because they have little to no equity in their home. FHA being the #1 source for finding for these low down payment loans could find them selves in a very bad situation. The tax payers could also be facing another bailout. So in order to protect government backed loans and us the tax payers these are the latest rounds of changes.

Initial up-front MIP increase will be raised by.50 to 2.25% will be released in a Mortgagee Letter tomorrow Jan 21 and will go into effect in the spring (example $200,000 loan will now costs the borrower $1,000 more, this is to help cover the losses already seen by FHA)

Borrower will be required to have a min credit score of 580 to qualify for 3.5% down, if score less than 580 must have 10% down this will go into effect in early summer

Seller concessions will be reduced from 6% to 3%, will be posted in February will go into effect in the early summer.

Lender performances, Neighborhood watch will be available on HUD website on February 1

Enhanced monitoring of lender performance, implement credit watch termination through lender underwriting ID in addition to origination ID will be released in Mortgagee Letter tomorrow Jan 21 and is effective immediately

Pursuing authority to increase enforcement on lenders to assume liability for all the loans they originate and underwrite

Legislative authority permitting HUD flexibility to establish areas of review and termination to withdraw originating and underwriting approval for lender nationwide on the basis of the performance of its regional branches.

FHA financing is still the only program that allows a borrower to purchase a home with 3.5% down payment. These changes could effect your ability to qualify for a loan so check with your lender to make sure you will meet the minimum requirements before you make an offer.

WASHINGTON – Jan. 25, 2010 – At-risk homeowners with FHA-insured mortgage loans are now eligible for loss mitigation assistance before they fall behind on their mortgage payments. Previously, homeowners weren’t eligible until they missed payments.

The Helping Families Save Their Home Act of 2009 expanded FHA’s authority to use its loss mitigation tools to assist FHA borrowers avoid foreclosure, including those facing “imminent default” as defined by the Secretary.

“Loss mitigation assistance is beneficial to both borrowers and FHA because it helps borrowers retain their homes while protecting the FHA insurance fund from unnecessary losses,” says FHA Commissioner David Stevens. “Now servicers will have additional options for those borrowers who seek help before they go delinquent.”

The change is effective immediately under FHA’s Home Affordable Modification Program (FHA-HAMP) (http://www.hud.gov/offices/hsg/sfh/nsc/rep/hampfact.pdf) with the following rules:

• FHA defines “FHA borrower facing imminent default” to be current or less than 30 days past due on the mortgage obligation and experiencing a significant reduction in income or some other hardship that will prevent him or her from making the next required payment on the mortgage.

• A forbearance agreement allows the loan servicer to postpone, reduce or suspend payments due on a loan for a limited and specific time period.

• FHA-HAMP allows qualified FHA-insured borrowers to reduce their monthly mortgage payment to an affordable level by permanently reducing the payment through the use of a partial claim combined with a loan modification. The partial claim defers the repayment of a portion of the mortgage principal through an interest-free subordinate mortgage that is not due until the first mortgage is paid off. The remaining balance is then modified through re-amortization and, in some cases, an interest rate reduction.

The borrower must be able to document the cause of an imminent default, which may include, but is not limited to, one or more of the following types of hardship:

1. A reduction in or loss of income that was supporting the mortgage loan, e.g., unemployment, reduced job hours, reduced pay, or a decline in self-employed business earnings. A scheduled temporary shutdown of the employer, (such as for a scheduled vacation), would not in and of itself be adequate to support an imminent default.

2. A change in household financial circumstances, e.g., death in family, serious or chronic illness, permanent or short-term disability.

Loan servicers must document the basis for its determination that a payment default is imminent and retain all documentation used to reach its conclusion. The servicer’s documentation must also include information on the borrower’s financial condition.

Additional information and guidance can be found on HUD’s website. (www.hud.gov).