Mark to Market

Here is an excellent piece that explains the Mortgage Crisis:

Courtesy of Mike Neill
American Alliance Mortgage Company

"The current economic crisis is the top news story for nearly every media outlet. But until recently, one of the most important factors that led to this challenging market has also been one of the least discussed. "

MARK TO MARKET

Yes, it is a little complicated, but every little bit of information helps us better understand.

Obama's Mortgage Relief

From Realty Times on February 26, 2009

Obama's Mortgage Relief Could Bailout 9 Million Homeowners
by Broderick Perkins

The President Barack Obama administration's "Homeowner Affordability and Stability Plan" could help as many as 9 million struggling homeowners, but largely those in lower-cost housing areas.

The $275 Billion Plan, with a March 4 rollout, includes a refinancing program for "responsible" borrowers who haven't missed payments and whose loans are larger than the value of their homes, and a loan modification provision with incentives for lenders to voluntarily modify certain mortgages.

Many Californians and others in high cost areas may not see much immediate relief but federal aid earmarked for those higher-cost areas could come later.

Refinancing

Under the refinancing provision, homeowners with less than 20 percent equity in their homes, who now find it difficult -- if not impossible -- to refinance, will be able to get new loans at lower interest rates provided the new note doesn't exceed 105 percent of the home's value.

A refinanced mortgage replaces the old loan with a new one. The provision targets 4 to 5 million homeowners.

Struggling homeowners in California and other high cost housing markets will benefit less from the plan because the provision only applies to mortgages held by Fannie Mae and Freddie Mac.

During boom times Fannie Mae and Freddie Mac loans were only up to a maximum of about $417,000. The limit was temporarily raised to $729,750 in 2008, when fewer people were buying. This year, the limit went back to $625,000. The latest federal economic stimulus package (American Recovery and Reinvestment Act), which Obama signed in February, returned the limit to $729,750, at least for 2009.

An estimated 60 percent of the home loans made in California in 2006 and 2007 were larger than Fannie and Freddie loan limits. During 2008 about 33 percent of home loans were above those so-called "conforming" levels, according to the California Association of Realtors. Other high-cost regions experienced varied levels of "non-conforming" loans.

"When I saw 'Fannie Mae and Freddie Mac' I said his (President Obama's) team needs to come to Silicon Valley," said Quincy Virgilio, president of the Santa Clara County Association of Realtors.

"This isn't going to help many people here," he added.

Virgilio said the bulk of California's home-owning population lives in major metropolitan areas where housing costs are high.

Loan modifications

The loan modification part of the plan targets 3 to 4 million "at-risk" homeowners, those with a high mortgage debt-to-income ratio and those with mortgages larger than the value of their home or "under water."

A loan modification, unlike a refinance, changes the terms of the existing loan without writing a new one and could serve higher-cost housing markets better than the refinance plan.

Also called a "workout," this provision is open to anyone including those who haven't missed payments, but may be at risk of missing payments. A modification is designed to get payments down to 31 percent of the homeowner's income. That could be accomplished by a reduction in the interest rates or principal, or an extension of the term of the loan, or perhaps a combination.

The modification plan is open to anyone with any loan that has a balance under Fannie Mae and Freddie Mac limits, which now as high as $729,750.

The modification program, also designed to standardize a hodge-podge of modification efforts by lenders, also comes with incentives for both homeowners and lenders.

Loan services get up to $4,000 for modifying mortgages and borrowers got a principal reduction of up to $5,000 over five years for paying on time.

Credit market boost

Obama's plan also calls for an infusion of $200 billion into the government-owned Fannie Mae and Freddie Mac. The bundle should help lower interest rates and spur more borrowing.

Ken Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at the University of California-Berkeley and the Rosen Consulting Group says more relief could come to high-cost areas.

Obama administration's plan also seeks to change bankruptcy rules to allow judicial mortgage modifications to reduce mortgage balances to fair market value provided the borrower sticks to a court-ordered payment plan.

National Association of Consumer Bankruptcy Attorneys (NACBA) applauded the judicial workout proposal.

"Ever since the mortgage foreclosure crisis erupted into the public view in 2007, a broad array of consumer, civil rights, housing, community, labor and other organizations, as well as economists, have advocated judicial mortgage modification relief as an effective approach to stemming the growing tide of foreclosures – a solution that, unlike every other solution being considered in Washington, comes at absolutely no cost to U.S. taxpayers," said NACBA president Carey Ebert of Fort Worth, TX, in a prepared statement.


Copyright © 2009 Realty Times. All Rights Reserved.

More from Broderick Perkins at DeadlineNews.com

Smaller Homeowner Bailout Already In Place

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From Realty Times of October 16, 2008

Smaller Homeowner Bailout Already In Place, by an old freind, Broderick Perkins


Don't wait for home owner bailout provisions to trickle down from the $700 billion "Emergency Economic Stabilization Act of 2008," (H.R. 1424) recently rushed through Congress.

When it comes to help from new federal legislation for distressed home owners, the $300 billion "Housing and Economic Recovery Act of 2008" (H.R. 3221), signed earlier this year, can provide more immediate relief.

The $300 billion recovery act has both a mandated mortgage modifying provision and a voluntary "Hope For Homeowners" (H4H) refinance program, for home owners who qualify.

President Bush signed the larger $700 billion stabilization act on Oct. 3, 2008, but it is, in-part, "stay tuned" legislation. Exactly how it will be implemented to help home owners -- or the economy at large, for that matter -- isn't fully clear.

In part, the stabilization act calls for federal agencies holding mortgage and mortgage securities to identify loans that can be modified and work toward modifications. The stabilization act also allows the U.S. Secretary of the Treasury to use loan guarantees and credit enhancements to help home owners avoid foreclosures. And the stabilization deal calls for shoring up the H4H program. How any of those provisions will be implemented, however, is still under consideration.

Loan modifications

On the other hand, the older recovery act, signed in July came with one provision ready to go. It mandated that mortgage servicers modify loans for certain home owners to help them avoid foreclosure as long as three requirements are met:

A default on the mortgage either has already happened or is "reasonably foreseeable."

The home owner lives in the property as his or her primary residence.

The lender is likely to recover more through the loan modification or workout than by forcing the home owner into foreclosure.

It's up to the home owner to prove, in writing, his or her case to the lender. That could mean some back and forth negotiating, even legal wrangling. To that end, an accredited mortgage, banker and broker certifier, CMPS Institute, offers a sample letter containing more assistance, and tips to help home owners negotiate a loan modification.

The institute further advises:

1. Your hardship letter should demonstrate job loss, a serious health condition, an ensuing balloon payment, a coming adjustable rate reset or some other financial calamity that will preclude you from making your mortgage payments as scheduled.

2. Send the letter along with documented evidence -- your financial statements, employment records, tax returns and bank statements and other evidence that demonstrates how you can afford a modified loan under your present financial circumstances. Also send the lender a current appraisal of your home or otherwise document the current value of your home.

3. Deal directly with a representative of the lender's "loss mitigation" or workout department-- not a broker, loan originator or other mortgage staffer.

FHA refinancing

Newly effective Oct. 1, 2008 a second provision of the recovery act allows troubled mortgage holders to avoid foreclosure by refinancing into smaller, more affordable, Federal Housing Administration (FHA)-backed mortgages, provided Uncle Sam gets a piece of the equity-growth action and provided the lender voluntarily agrees to the deal, which includes writing down or reducing loan balances.

U.S. Department of Housing and Urban Affairs' (HUD) "Hope For Homeowners"fact sheets spell out the details.

The refinanced, 30-year, fixed rated FHA mortgages in the H4H program are for home owner-occupants having difficulty making their payments.

The existing mortgage must have been originated on or before January 1, 2008, and the owner must have made at least six payments.

Banks can volunteer to write down an existing mortgage to 90 percent of the new appraised value of the home. To get the deal to fly, any holders of existing mortgage liens must release the liens and waive all prepayment penalties and late payment fees. The existing first mortgage holder has to accept the H4H loan as full settlement of all outstanding indebtedness.

As of March 2008, the home owner's total monthly mortgage payments due must be more than 31 percent of the household's gross monthly income.

The loan amount on the new H4H mortgage cannot exceed $550,440. The amount can include a financed 3 percent "Upfront Mortgage Insurance Premium" and other loan costs. The home owner must also pay a 1.5 percent annual mortgage insurance premium.

The home owner cannot take out a second mortgage for the first five years of the new loan, except under certain emergency conditions.

The borrower must agree to share equity with the FHA, both the equity created at the beginning of the new mortgage and future appreciation in the value of the home. If the home is sold or refinanced, the homeowner will share the equity with FHA on a sliding scale ranging from a 100 percent FHA share after the first year to a minimum of 50 percent after five years. The FHA will share a portion of its equity earnings, when available, with past lien holders until any available appreciation is exhausted. Any left over appreciation goes to the FHA on the sliding scale.
More help for home owners: "Foreclosure Prevention Efforts Grow.

Copyright © 2008 Realty Times. All Rights Reserved.

Broderick has done a great job sorting through the Govt lawyer language to explain an important program available NOW. Visit his website at

DEADLINENEWSROOM


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Troubled Asset Relief Program

From Realty Times -

Washington Report: Paulson and Neel Kaskari by Kenneth R. Harney .. 10-13-08

Most people call it the $700 billion bailout, but in Washington it goes by the unglamorous name: TARP.

That stands for Troubled Asset Relief Program, and it's the centerpiece of the federal government's effort to take bad mortgages and other toxic financial products off the books of banks.

The idea is that by buying those assets at a fair market price, the banks will have the capital and confidence to begin making loans again to small businesses, home builders and individual consumers - thereby helping to ease the current credit freeze.

TARP is barely a week into official operation, but there are important developments underway that anyone interested in real estate ought to know about.

Treasury Secretary Paulson picked a 35-year-old whiz kid from his former Wall Street firm, Goldman Sachs, to run the entire program. His name is Neel Kaskari and he's an aeronautical engineer by training who used to work on satellite designs for NASA.

High on Paulson's and Kaskari's priority list will be to quickly start buying up defaulted "acquisition, development and construction" (ADC) loans made by local and regional banks to home builders. That's potentially huge for real estate because it could eventually set the stage for a slow revival of new home building.

Another target: Defaulted equity lines of credit and second mortgages made to home buyers during the boom years. You probably remember the wildly popular "piggyback" plans that allowed people to purchase homes with no downpayment.

Many of those second liens are gushing red ink in bank portfolios right now. By getting them off the books, the program should eventually allow local and regional banks to begin offering credit lines and seconds to homeowners who need them and qualify for them.

Though TARP will also be buying up billions of dollars of complex mortgage securities from giant banks -- and that's extremely important -- its help to small and medium-sized lending institutions on ADC loans and home equity lines may well have more immediate, tangible impacts on local real estate markets around the country.

Still another key priority: Reworking the repayment terms of tens of thousands of "underwater" and delinquent mortgages to allow home owners to remain in their houses and avoid foreclosure.

That, in turn, should gradually begin to have positive impacts on local real estate market conditions.

But don't expect miracles overnight. This is going to take months and years to fully work its way through the system.

In the meantime, Realty Times will keep a close eye on TARP -- and keep you posted on important developments.
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Copyright © 2008 Realty Times. All Rights Reserved.


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Market Conditions & Total Mortgages in U.S.

Market Conditions by Realty Times Staff October 7, 2008

It appears that with the recent final woes in the nation and on Wall Street, the Dow fell below 10,000 for the first time since 2004 in the first hour on Monday, many consumers are holding back on their spending.

Even before the latest ailing markets, reports indicated that August had been the weakest for consumer spending in six months. The Commerce Department reported that consumer spending was unchanged in August -- not a positive sign in an economy that needs jumpstarted.

The New York times reports that cutbacks seem to be across the board, from the automobile industry to fashion to restaurants. "Less than a month ago, Nigel Gault, chief domestic economist at Global Insight, a forecasting service, predicted that domestic economic output would rise 1.2 percent in the third quarter." This number is currently closer to zero percent.

Copyright © 2008 Realty Times. All Rights Reserved.

Some numbers heard on the radio. 95% of all mortgages are current and being paid every month. There are $14 Trillion total mortgages in the U.S. Thus 5% or $700 Billion are of concern. Interesting number, $700 Billion. Hmmmmm.


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THE BAILOUT - SURPRISE, SURPRISE!!

The bailout bill has failed in the U.S. House !!!!

What next, nobody knows at this stage. Probably Thursday before they can restart negotiations.

Brief Overview of Bailout Plan

From Realty Times on September 29, 2008

Washington Report: Overview of Bailout Plan by Kenneth R. Harney


There's no question what's been dominating debate in Washington -- the Treasury's and Congress's plans to buy hundreds of billions of dollars of distressed mortgages from lenders and investors.

The fine print rules and regulations for the bailout plan won't be known for weeks, but here's a quick overview from a real estate perspective on how it's supposed to work:

At its core, the plan is all about taking home loans off lenders' and investors' books that are currently illiquid -- they can't be sold, or are extremely difficult to sell -- because no one is sure what they're really worth.

Consider this hypothetical example: Say you own a mortgage-backed bond that has 100 subprime home mortgages in it. At the moment, 24 of those loans are delinquent; but 76 are paying on time. That proportion is pretty close to reality, according to the latest delinquency numbers from the Mortgage Bankers Association.

Now, because there are serious defaults in the pool, there's a stigma attached to your subprime bond. The best offer you've heard is maybe 20 cents on the dollar - which is ridiculous because over three quarters of your loans are paying on time, and the monthly cash flows should be worth a lot more.

You need an organization or program to intervene, buy your mortgage pool for a fairer price. That, in turn, will allow you to take in some cash and make some new mortgages.

The buyer of your loans can now work to see whether the interest rates, monthly payments, and other features of the 24 “bad” mortgages can be modified to be more affordable for the home owners involved.

Let's say that over a period of three years, those modifications end up saving 15 of the 24 delinquent mortgages from going into foreclosure. The new owner of the pool now has 90 loans paying on time, making it a lot more valuable than it paid.

Although the example is simplified, it's pretty much what the bailout plan is all about: Taking undervalued assets, holding them for awhile and turning them into better assets -- lemons into lemonade -- and reselling them, maybe even at a profit.

It's not clear at the moment how successful this will be long-term. But by buying up incorrectly valued mortgages at a “fair” price, the government has a chance to pump new money into the market -- money for new home mortgages -- and even lower interest rates in the process.

Exactly how to do that -- with what rules and guidelines -- has been what all the noise in Washington has been about.

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Copyright © 2008 Realty Times. All Rights Reserved.

Snag for FHA Hope

From Realty Times of September 22, 2008

Washington Report: Snag for FHA Hope
by Kenneth R. Harney

Although Wall Street's woes got a lot of attention on Capitol Hill last week, so did the continuing crisis in home foreclosures.

Starting October 1, home owners who owe more on their mortgage than their property is worth may be able to qualify for new FHA "Hope" refinancings that cut their debt, lower their interest rates and help them start rebuilding equity.

Sounds like a great opportunity for hundreds of thousands of hard-pressed owners, but there's a huge potential snag: Their lenders and loan servicers have to agree to participate, and they may not.

Why? Because among other requirements, lenders and bond market owners of mortgages will have to agree to write down the balances due on the loans below current market values for the house -- in other words, they'd need to take immediate and sizable losses on those mortgages.

At a House financial services hearing last Wednesday, a top Bank of America executive, Michael Gross, said Congress may have unrealistic assumptions about how many lenders and investors will agree to participate in Hope refinancings.

"My biggest concern," said Gross, "is that expectations for (this) program might be too high."

Rather than booking instant losses many banks and bond investors might prefer to work out customized loan modifications with borrowers instead -- renegotiating loan balances, reducing monthly payments and even interest rates - without having to deal with FHA.

But Congressional critics like House financial services committee chairman Barney Frank say the banks have already been doing that -- and foreclosure rates are still rising in many markets.

Frank is threatening to make massive -- though as yet unspecified -- changes in the federal rules governing home mortgage servicing that would force lenders to be more responsive to borrowers stuck with underwater properties.

In the meantime, borrowers who believe they might benefit from a Hope refinancing, should start talking with their servicers to see whether there's a chance. The law expressly makes the decision voluntary for all financial institutions -- borrowers cannot compel them or take them to court to force their hands.

But Barney Frank's ominous warning to lenders just might get some banks' attention and soften their stances on taking part in the Hope program. At the very least, home owners who talk to their lenders about Hope refinancings could open the door to customized loan modifications that help them out of their jams.

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Copyright © 2008 Realty Times. All Rights Reserved.

THE STATE OF US FINANCES AND FORECLOSURES

The following statement recently appeared in a News Article:

"Lenders have repossessed a record 656,545 properties nationwide – or 8.6 of every 1,000 households in the US" - the data was attributed to ForeclosureS.com.

It concerns me that it is stated in terms of 1,000 households - in reality it is 0.86% of households, less than 1%, but sounds more ominous when they say it as they do. I do agree it is a very painful experience for those affected, and do not mean to minimize the impact to those folks, but let's at least keep it in a reasonable perspective.

In a similar fashion, August Foreclosures were a new record! However, have any of you heard that the percentage of foreclosures in August reflected a reduced rate of foreclosures over July? Stated differently, the rate of foreclosures dropped! Hmmm, don't guess you heard that.

How about the Bank Foreclosure Crisis. Some large banks have fallen, and no doubt others will follow. I can't prove the numbers I heard but this is what I heard. "The Feds are still looking at 117 banks that are potential Lehman Brothers or Bear Stearns". The speaker then went on to say that there are 8500 banks in the U.S.
Hmmmm, if that's accurate, then the 0.0138% largest of the 8500 banks may be in trouble.

What is the old expression, liars figure, figures lie? Well, it does sell papers. Maybe this makes me guilty of being a liar?

Again, not trying to minimize the concerns we face but let's at least try to offer the whole story after we sell the paper.


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MARKET CONDITIONS

From Realty Times:

Market Conditions
by Realty Times Staff

When the government decided to place Fannie Mae and Freddie Mac into its conservatorship, it opened up many different possible avenues the heal the ailing giants.

The New York Times reports that there haven't been any specific proposals made by lawmakers to date on what to do -- but in one option, some lawmaker "favors restoring the companies to health and then returning them to the way they were before they went into conservatorship, but with safeguards to prevent another crisis."

This seems a much milder approach than free-market theorists who favor a liquidation of the companies.

National Association of Realtors President, Richard Gaylord, issued the statement: "I commend Treasury Secretary Paulson and Federal Housing Finance Agency Director Lockhart for their bold actions to bring stability and continued liquidity to the nation’s mortgage market. Fannie Mae and Freddie Mac have always played a vital role in the U.S. economy by making fair and affordable mortgage loans available for home buyers and owners. Their critical mission must not be interrupted, and Sunday’s announcement goes a long way in making sure that does not happen."

Many experts hope that with this takeover will come restored confidence and more movement in the mortgage markets -- and maybe more affordable housing.



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Copyright © 2008 Realty Times. All Rights Reserved.

Real Estate Outlook: Recession Fears Put to Rest

From the September 9, 2008 REALTY TIMES:


Real Estate Outlook: Recession Fears Put to Rest
by Kenneth R. Harney


The latest national economic growth numbers should finally put to rest fears of a recession that could choke the real estate recovery now getting underway.

Second quarter Gross Domestic Product (or GDP) came in at an upwardly-revised 3.3 percent -- far above the 1.9 percent the federal government had previously estimated.

Key reasons for the robust economic performance: Exports, which have been riding the weak dollar to record levels, and lower imports because the prices of foreign-made goods have been priced higher.

Why should anyone interested in real estate care about GDP? Well, number one, when the economic growth rate accelerates, consumer confidence in the economy rises. That, in turn, pulls potential buyers off the sidelines and opens the door to higher housing sales.

And sure enough, the consumer confidence numbers for August, released last week by the Conference Board, are up by 5 points.

We're already seeing some impressive jumps in home sales in places that haven't seen positive news in two to three years -- central Florida and even some of the hardest-hit parts of California. According to a new report from the real estate tracking firm, DataQuick, sales in southern California jumped 16.7 percent in July over June, and were 14 percent above the pace of July the year before.

Another encouraging sign: Last week's mortgage rates dropped to 6.39 percent for 30-year fixed rate loans, according to the Mortgage Bankers Association of America. Fifteen year rates are still just under 6 percent. Applications for loans to buy homes jumped by 6 percent for conventional loans and an impressive 19.9 percent for FHA mortgages.

The federal government's latest quarterly survey on home prices reveals that the best price appreciation performances are now coming from areas that barely got noticed during the hottest years of the housing boom -- markets like Charleston, West Virginia ( up 6 percent for the year), Greenville, South Carolina (up 5.8 percent), Tulsa, Oklahoma (up by nearly 5 percent) and Scranton, Pennsylvania, where values were up by 4.7 percent..

All these markets -- and there are dozens more spread through Texas, the Midwest and the South -- never experienced the wild days of double digit appreciation.

They offer affordable housing prices and moderate - but steady and slow - price growth. They're not flashy -- never have been, probably never will be -- but that's why they're still producing positive appreciation numbers, while the boom to bust markets are not.

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Copyright © 2008 Realty Times. All Rights Reserved.

There are some who feel that the numbers on which this article is based are not really correct - that the Feds are leaving out some things that would negatively effect the GDP. October may give us a better indicator and hopefully still support the premise that the Recession is no longer a concern.

FHA Increasing Premiums

From Realty Times:

Washington Report: FHA Increasing Premiums
by Kenneth R. Harney


The politicians may have fled Washington for conventions and vacations, but there's been lots of action at the Federal Housing Administration that could affect home buyers and borrowers across the country.

Tops on the list: Forced by Congress to raise prices, FHA is increasing the mortgage premiums it charges applicants in its booming programs. Starting October 1st, upfront premiums will jump by one quarter of a percentage point -- from the current one and half percent of the loan amount to one and three quarters.

Annual premiums will remain in the half-point range. Home owners seeking refinancing under the expanded "FHASecure" program will be charged 3 points in premiums up front.

FHA had no choice but to raise premiums across the board following Congress's imposition of a one year moratorium on the agency's planned move to "risk based pricing" for all applicants, using credit scores and downpayment amounts.

Under those plans, people with high credit scores and downpayments would be charged lower insurance premiums. Borrowers with low scores and downpayments would be charged more - precisely as they are in the private mortgage insurance industry.

But Congress decided to keep the traditional "one-size-fits-all" cross-subsidization approach that FHA has used for decades, at least for another year.

Seller-paid downpayment gift assistance through third-party organizations such as Nehemiah and Ameridream -- which the agency says have contributed heavily to insurance claims -- will no longer be accepted by FHA as of October 1.

The net effect of the premium increase for most buyers: An extra $500 more in fees up front on a typical $200,000 mortgage.

At the same time, FHA announced a series consumer-friendly changes to the ways it handles loan modifications for borrowers in financial trouble. The bottom line is that when home owners fall behind and need to have their payment terms changed to enable them to stay in the house, fees will be tacked onto their principal debts and any rate hikes will be limited.

Finally, FHA's parent department -- HUD -- made good on its promise and sent its final version of real estate settlement and mortgage disclosure rules -- the so-called "RESPA reform" regulations - for final White House clearance. Though mortgage and real estate industry groups - along with 243 members of the House -- have criticized the rules as unwieldy and potentially costly to implement, HUD said consumers need better disclosures now, not later. The RESPA changes appear likely to be adopted before the next administration arrives in January -- tossing a political hot potato to either John McCain or Barack Obama.



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Copyright © 2008 Realty Times. All Rights Reserved.

Fannie Mae Removes High Downpayment Provisions

From NewsGeni.us an article from CNNMoney.com:


Fannie Mae Removes High Downpayment Provisions

This will improve the sale of mortgages by many lenders, thus loosening up the money available to lend on new mortgages.

In parallel, Congress is still kicking around a credit relief program to stimulate the lending process with the aim of resolving the Housing Crisis sooner. Bush is prepared to veto since it's the taxpayers that will pay the price ultimately.

Here is a chance to read the process and progress of such a bill through our congress:


House Bill H.R.3221

Why should I worry, the Government will fix it - if I live long enough.

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ARE YOU READY FOR THE FEB 2009 TV CHANGE?

By now you have hopefully heard that some TV sets will stop working on February 17, 2009. We leave the world of Analog TV and enter the era of Digital TV.

If you are not aware, here's the scoop on what will happen and how to be ready for it.

All about the coming change in Television

You will now be prepared to continue as today with your everyday TV watching!

And by the way, as predicted in this blog, Blu-Ray is the winner in the chase toward the preferred format for High Definition DVDs. It does appear that there will be some sources for the HD DVD format for some time, but don't rush out and buy one of these units at this stage. That goes for Beta VCRs and 8 Track tape players as well!

ALWAYS SOME GOOD NEWS

The following provided courtesy of Craig Bohall at www.submort.com:

1) The Senate approved legislation that would cut in half the down-payment requirement for loans obtained from the Federal Housing Administration. The bill also raises the maximum loan size to $417,000. - change your paradigms! This isn’t your parents FHA loan!

417K limit with 1.5% down!!
There are millions of your renters out there with 1.5% for a down payment!

2) First time home buyers - add this tool to your browser:

http://www.pmi-us.com/media/pdf/em/pmi_successhomeownerbk.pdf

to preview and/or download the Becoming a Successful Homeowner book. Available in English or Spanish.

3) Fannie Mae revised yet another guideline on 12-05-07 (announcement 07-23) regarding sales concessions VS financing concessions. Financing concessions like origination, discount, are acceptable as far as concessions paid by the seller or Realtor because they are normal and customary.

SALES concessions however are NOT normal and customary to the financing transaction and are treated as follows and I quote… “Sales concessions that take the form of non-realty items such as cash, furniture, automobiles, decorator allowances (paint and carpet), moving costs, or other giveaways, pre paid HOA dues are considered sales concessions and the value of such concessions MUST BE DEDUCTED FORM THE SALES PRICE WHEN CALCULATING THE LTV RATIOS”

In plain English = carpet allowances or any such NON typical item needed for the financing of the home will be valued and deducted from the sales price to determine the new loan amount….

Translation =

OLD RULE = 100K home, 5% down = 95K loan

NEW RULE = With a 5K “sales” concession, you deduct 5K from sales price = 100K – 5K = 95K

Buyer gets a 95% loan from 95,000 which means the loan amount now is 90,250.
HOWEVER, you are buying a 100K home so that means more money down.

Payment abatements are no longer eligible to be delivered to Fannie Mae effective immediately! (seller pays for first few months of payments for buyer)


Craig Bohall

"Striving to be...your lender for life!"

480-619-4411 - office
1910 S Stapley Dr #107
NW corner of Stapley & Baseline
480-540-3596 - cell
480-344-7968 - e-fax
cbohall@submort.com
www.submort.com/

MORTGAGE RATE UPDATE?

In case you wondered how investors influence mortgage rates, here is a clue from Realty Times:

Hot Debates on Subprimes and Foreclosures

I guess if you're going to buy a home any time soon, you would hope the stock market doesn't perform well!

CONGRESS WRESTLES WITH MORTGAGE HELP

Latest word from Washinton via Realty Times:

Hot Debates on Subprimes and Foreclosures

Meanwhile, folks under the gun are wondering where they will be spending Christmas, with the greatest emphasis on "spending" - Congress has not been known to act too quickly, particulary in the Holiday Season. Come on guys, get with it!

MORTGAGE BAILOUT - DO YOU QUALIFY?

An excellent article from Business Week. The big question, does the plan go far enough?

New mortgage bailout plan: Do you qualify?

There are several subarticles on the bailout, including investor reaction.

If you are in an "ARM" mortgage, this is must reading!

A NEW CONCEPT FOR UPLIFTING THE USA

The gathering of inputs from 363 highly connected integrated metropolitan areas to bring new life to a stodgy federal structure.


Blueprint For American Prosperity


Let's all pray and hope it will begin to bring us into the New 21st century.