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 Scott Short  Thursday, February 10th, 2011  The only good thing about interest rates going up is the “fence sitting” buyers jump in to the market.
Normally December and January are relatively slow months, but not this time. We are experiencing a high volume of borrowers wanting to buy now. Some of the buyers trying to qualify for a home loan are more challenged. Along with the lenders’ tightening standards, we in the lending industry are taking longer to figure out creative solutions to help more of your clients qualify. We are seeing more credit-challenged, budgetchallenged, employment-uncertaintychallenged and house-challenged borrowers. This is the time your mortgage professional needs to know how loans were structured back in the early 1990’s.
Almost every loan will need full documentation of the following: three months of bank statements (underwriters are scrutinizing the bank statements for overdrafts and unusual deposits), explanation letters for credit (especially all inquiries), job status (state employees need a supervisor to write a letter to address the borrowers’ furlough impact now and in the foreseeable future), motivation to buy (they are not just buying a home for a displaced family member who lost their home in foreclosure) plus other scenarios that defy the imagination some days.
At the time of this writing, HUD/FHA had not issued an extension for the “less than 90-day flip rule.” My sources inform me that HUD is working on it (not sure what “it” is going to look like when it comes out). We have seen a majority of the lenders that offer the program retract from offering the program for flips where the seller re-sells for greater than 20% over their purchase price.
Continue reading: 2011 Starts off with a Bang
Beth L. Peerce Tuesday, January 11th, 2011
 Dear C.A.R. Member,
A new year, and with it, new beginnings and new opportunities. I’m looking forward to meeting the challenges that invariably present themselves as the new year gets underway.
One of the challenges I know many of you have been dealing with is working with short sale transactions, and I promised last month to keep you informed on C.A.R.’s efforts to address your concerns.
First, just last week I, and other C.A.R. officers, met with officials at Bank of America to ask for their commitment in streamlining and improving their short sale process. The bank has agreed to meet with our Distressed Properties task force in the very near future to discuss ways to ensure a smoother short sales process. We’ll also be meeting with the other major lenders over the next several weeks and will share any outcome with you.
Additionally, C.A.R. recently sent letters to officials at the U.S. Treasury Dept., Fannie Mae, Freddie Mac, and the Federal Housing Finance Agency requesting immediate changes to the HAFA program and recommending solutions so the program can succeed. The letter attracted the attention of the banking trade American Banker, which ran an article last Thursday noting C.A.R.’s concerns about the dearth of HAFA short sale closures. The article is sure to be noticed by the lenders and servicers who greatly need to make immediate changes. Read the letter to industry regulators.
We will continue to remain vigilant in the area of short sales, so stay tuned for further updates.
Continue reading: C.A.R. Monthly Message January 2011
Caylyn Brown Monday, December 20th, 2010
On December 1, 2010, Fannie Mae announced an update to its selling guide that provides a new option to fund energy-efficient home upgrades while maintaining Fannie Mae’s principles of borrower sustainability. All Fannie Mae loan products are permitted to include the energy improvement feature excluding certain refinance loans. Eligible borrowers will be allowed to [...]
Beth L. Peerce Tuesday, December 14th, 2010
Dear C.A.R. Member,
It’s hard to believe this year is soon coming to a close. We’ve accomplished a lot over the past year, but we still have much to do in 2011.
For instance, we know we will have to defend changes to the mortgage interest deduction (MID). In late November, President Obama’s Deficit Reduction Commission released its preliminary recommendations, and one of the provisions called for dramatically limiting the MID. Since then, the commission failed to win enough votes to approve the recommendations. However, it is very likely that legislation will be introduced next year to curtail the MID. Few issues are more important to homeownership than the mortgage interest deduction, and while the housing market continues to recover, any change that reduces the ability of the market to heal is misguided and must be rejected.
I want to thank everyone who responded to NAR’s Call for Action and urged their member of Congress to preserve the MID. Last week, NAR issued a new Call for Action asking all REALTORS® to call their state senators and ask them to defend the MID. I urge you to contact Sens. Dianne Feinstein and Barbara Boxer to voice your concerns today about limiting the MID.
In my first message to you last month, I mentioned that one of my goals this year as C.A.R. President is to help you, the REALTOR®, earn a living. I know many of us have been having a very difficult time working with lenders on short sales. Please be assured that C.A.R. has been working on several fronts to help you more easily deal with short sales and distressed properties.
Continue reading: December Message from C.A.R. President Beth L. Peerce
Scott Short Thursday, December 9th, 2010
All I can say is WOW! This year has not been boring. Game changing events happened almost every month.
We started out the year with total confusion in the mortgage industry due to the new Good Faith Estimate (aka: GFE 2010). It took most mortgage professionals at least a month or two to understand the new form and the impact it would have on the consumers and themselves.
Consumers received overinflated GFEs to protect the loan officer from underdisclosing everyone’s fees in the transaction. If certain fees were underdisclosed, the loan officer would have to pay for it out of his/her pocket. One of the mysteries with the new GFE 2010 is that there is no place on the GFE 2010 to sign. There is a separate form for signatures. Now where is the consumer benefit from this change?
While struggling with the new GFE 2010, HUD/FHA released a waiver that they will allow “less than 90-day flips” to be financed with FHA loans (another program with a ton of misinterpretation).
Oh, did I forget to mention that HUD/FHA decided January 1, 2010 to adopt HVCC (Home Value Code of Conduct) practices for all their FHA loans. The industry thought HUD would have seen the “train wreck” Fannie and Freddie created with HVCC and steered away. But in the spirit of follow the leader, HUD jumped in with both feet. Can you say complexity, when you have HUD’s version of HVCC and the new appraisal requirements for the “less than 90-day flips?” This is just another reason the industry slowed down even more at the beginning of the year.
Continue reading: Real Estate Finance Forum – The Year in Review
Janelle Fallan Thursday, December 2nd, 2010
Mortgage banker Rob Chrisman, San Rafael, spoke to the Real Estate Finance Forum on Dec. 2 on the current state of capital markets.
Mr. Chrisman writes a daily on-line column on the mortgage business at robchrisman.com.
He discussed the current uncertainty in how mortgage originators are compensated. New federal regulations (Dodd-Frank act) will take effect April 1, 2011. In the meantime, many of the larger banks are also issuing their own rules. He expects “lots of rumors and innuendo” until all the rules are in place.
He credits mortgage brokers as “intelligent and nimble.” “You’ll figure out a way to do a loan” because the mortgage brokers who are still in the business are there because they like helping people.
“People with other motives,” such as those who came to mortgage origination just because it was a job, are gone.
Relationships have become much more important in mortgage origination, Mr. Chrisman said. “Your clients like using you. (Lending) is much more of a team effort.”
Continue reading: Mortgage Banker Rob Chrisman Speaks at the SAR Real Estate Finance Forum
Scott Short Monday, October 11th, 2010
CalHFA just brought back their FHA program as of September 7, 2010
It is a 96.5% of the sales price, 30-year fixed FHA loan not to exceed $417,000 loan amount. The borrower will need a 620 minimum (middle score of the three bureaus) credit score. Purchase money only loan. Requires homebuyer’s education for each borrower. The borrower must be a first-time home buyer (FTHB) or a qualified veteran pursuant to Heroes Earning Assistance & Relief Act of 2008, or located in a federally designated target area. Income and sale price restrictions do apply. Only single family residence, one unit including condo/PUD. Non-owner occupants not allowed. Manufactured homes and non-permitted additions are not allowed on the program. FHA less than 90 day flips where the seller is reselling for greater than 20% of their purchase price also not allowed on the program.
This new CalHFA FHA loan will allow the buyer to utilize the CHDAP (CalHFA Down Payment Assistance) program in conjunction. The buyer can borrow up to 3% of the sales price or appraised value, whichever is less. If you add 96.5% (FHA 1st mortgage) + 3% (CHDAP) = 99.5% loan, the buyer’s down payment would be ½%.
The program requires a minimum investment into the purchase of 1% of the buyer’s own funds. For more in depth details contact your authorized CalHFA mortgage professional. CRHMFA Homebuyers Fund (aka: National Homebuyers Fund) also announced a new loan program called the “CHF Platinum program”. The new CHF Platinum loan program provides downpayment for low-to-moderate income individuals and families purchasing a home in California as their primary residence. The downpayment assistance is currently in the form of a grant, sized at 3% of the first loan amount and can be used for downpayment and/or closing costs. This is not a bond program and not limited to first time home buyers. Eligible first mortgages include 30-year fixed term FHA, VA and USDA.
Continue reading: Change is Still in the Air
Scott Short Friday, September 10th, 2010
FHA announced as of October 4, 2010 that they will change their mortgage insurance costs to the borrower. Before the change, the up front mortgage insurance (the mortgage insurance that is financed into the loan) was 2.25% on or after October 4. It will drop to 1.00%. The monthly mortgage insurance which is added to the borrower’s monthly payment will increase from .55% to .90% (annually on amortized loans over 15 years). Your clients will qualify for less now that the MMI has nearly doubled. It would have benefited the buyer/ borrower if the upfront mortgage insurance went up and the monthly mortgage insurance went down since the upfront mortgage insurance is financed over 30 years (or whatever the amortization might be).
New competition for Short Sales
FHA has turbo charged one of their existing programs, the Short Refinance for Borrowers with Negative Equity Positions. This is a program designed to help borrowers (non FHA currently) to refinance down to 97.75% of their current appraised value, requiring their current first mortgage lender to reduce their principle by at least 10% or more. Remember, all these programs are voluntary for the servicing lender. If a second mortgage exists they will have to re-subordinate back into second position after the new first mortgage. (Max CLTV or Combined Loan to Value is 115%)
Fannie created a website on August 3, 2010: “Know Your Options”
This site was developed to assist consumers in financial distress. This link https://www.efanniemae.com/sf/kyo/index.jsp enables you, the Real Estate professional, to learn more about Fannie Mae’s new website and what it offers your clients.
Additional Resources
Obama Administration Announces Additional Support for Targeted Foreclosure-prevention Programs to Help Homeowners Struggling with Unemployment (http://portal.hud.gov/portal/page/portal/HUD/press/press_releases_media_advisories/2010/HUDNo.10-176)
Continue reading: FHA is Busy Making Changes…
Scott Short Friday, May 21st, 2010
It appears the black cloud over California is being lifted by the PMI (Private Mortgage Insurance) companies. When the housing market started to decline, the PMI companies retreated from the “sand” states (California, Florida, Arizona, and Nevada), or at least pulled back on the maximum loan-tovalue (LTV) they would guarantee. They still have a lot of areas they are avoiding (flips, non-owner occupied and condos – just to name a few).
April was the first month mortgage rates were not artificially stimulated by the Fed. (The Federal government bought $1.25 trillion of mortgagebacked securities (MBS) over the past 15 months.) Rates initially jumped up mainly due to the long Easter weekend after a shortened trading day on Good Friday.
Rates settled down the following week mainly attributed to the safer mortgages being produced now than were before. (Meaning that the quality is better and the risk of default is less.) Hopefully the appetite will continue. The Mortgage Bankers Association believes the 30 year mortgage rate will increase to 5.5% by mid-to-late summer and then possibly 6% by year end.
Kudos to the SAR Housing Opportunities Committee for hosting the “Show Me the Money” seminar held on April 29. There is an amazing amount of money being allotted to energy upgrades in the form of rebates, tax breaks and incentives. The REALTOR® community needs to stay current with this information in order to effectively educate clients on how to utilize the available programs.
On April 15, Congress reauthorized and the President signed into law an act that includes reauthorization of the National Flood Insurance Program (NFIP) through May 31, 2010. This temporary measure is retroactive to March 28, 2010, the date the NFIP’s authority expired, and provides the NFIP the ability to issue new and renewal flood insurance policies and increased coverage on existing policies.
Continue reading: More Changes, It’s the Name of the Game
Jim Hanson Monday, December 7th, 2009
 Jim Hanson - 2009 Real Estate Finance Forum Chair This is my 24th and final article as the Chair of the Real Estate Finance Forum. What a blessing it has been to serve this Association and you, its Members. I wanted to take this opportunity to say thank you to all my faithful readers. It has been a blast. I have learned so much and this position has helped me grow as a person and as a mortgage originator. Serving on the Board has taught me many valuable lessons as well. I will miss embarrassing myself every month at the Main Meeting giving the financial update. I have done my very best to bring value in every aspect of this position.
I would like to leave you with one important reminder. I wrote about this back in 2008 and believe it to be the single most important topic I covered. Education. You have to stay informed. The massive changes in the mortgage industry are a great example. I noted many changes in our industry over the last two years, some good and some not so good. SAR and the Housing Opportunities Committee have done an outstanding job offering forums that are designed to educate us on the changes taking place in front of our eyes. We must be proactive in staying ahead of the curve. Use change to grow. Use change to make change. Use change to fight changes you do not agree with.
Economically speaking, we are in good shape for the moment. Rates are still low. Last time I looked, inflation was in check. Employment is a huge factor in our economic recovery and is very complicated. Government intervention in many areas of our economy is at an all time high. I am not sure how to respond to the decisions that are being made in Washington at this time. We can only hope our economy gets fired up and pulls us out of the struggles we are having.
Continue reading: About the Market – December 2009
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