|
|
 LeFrancis Arnold  Tuesday, December 20th, 2011  Dear Member,
I’m excited to begin my term as your 2012 President, but I first want to thank our outgoing C.A.R. President Beth L. Peerce for serving this organization so well over the past year. She helped keep you, the REALTOR®, at the center of the real estate transaction during this challenging time. Thank you Beth for your service to organized real estate!
Like Beth, I also am a second-generation REALTOR®. I followed my mother into the real estate business in 1976 and became a broker a year later. I have served as a C.A.R. director since 1994. I’m going to continue serving the organization this year by helping you get through the tough economic times and be successful in your business.
But I won’t be doing it alone. I’ll be joined by a very capable 2012 Leadership Team comprised of President-Elect Don Faught, Treasurer Chris Kutzkey, and C.A.R. Executive Vice President Joel Singer. I’m excited to serve with this incredible team.
As one of my first duties, I’m pleased to share with you the good news that the FHA loan limit was reinstated last month so that middle-class home buyers have access to affordable home financing. The higher loan limit expired on Oct. 1, 2011, when it was reduced to $625,500, but now has been restored to $729,750 for an additional two years, through Dec. 31, 2013. However, the higher loan limits for Fannie Mae and Freddie Mac loans were not reinstated. C.A.R. and NAR both have long advocated for making higher loan limits permanent.
Continue reading: C.A.R. Monthly Message from President LeFrancis Arnold
Caylyn Brown Monday, November 21st, 2011
The United States House and Senate restored FHA loan limits to the level they were at before they were allowed to expire at the end of September. As a result, the limits will rise to 125 percent of the area median home price from 115 percent, up to a maximum of $729,750, from $625,500. [...]
Beth L. Peerce Tuesday, November 8th, 2011
 Dear Member,
Last month I informed you that Congress failed to extend the Fannie Mae, Freddie Mac, and FHA conforming loan limits and allowed them to expire Sept. 30. Since then, the Senate passed an amendment to an appropriation bill that would restore the $729,750 loan limits through December 2013. The Senate and House are now working out the differences between the Senate bill and the House bill, which the House passed earlier this year, but it did not reinstate the higher loan limits. If the House and Senate agree on a final bill, we will have a two-year extension to the conforming loan limits. C.A.R. is also working with the California Congressional Delegation to ensure this provision is included in the final bill.
C.A.R. and NAR are now working to get support for the extension in the House, but we need your help also. Please look for a Call for Action email from NAR asking you to call Sen. Dianne Feinstein and possibly other members of Congress. Please act now and urge your representative to extend the higher loan limits for GSEs and FHA. Well-qualified buyers don’t need another hurdle to access affordable mortgage financing.
Big changes on the way to help millions of distressed borrowers. Late October, the Federal Housing Finance Agency (FHFA) announced important changes to the Home Affordable Refinance Program (HARP) to help millions of underwater borrowers whose mortgages are backed by Fannie Mae and Freddie Mac. The changes will allow borrowers who are current on their mortgage payments to save an average of $2,500 a year by refinancing their mortgages, regardless of what their homes are worth. The revamped HARP Program will also streamline the refinancing process, eliminating certain types of appraisals and underwriting requirements, and reducing or eliminating fees that prevented homeowners from refinancing in the past.
The FHFA is working on details of the new rules, which should be finalized by Nov. 15. Banks may be able to start issuing refinanced loans by Dec. 1. We’ll continue to keep you updated on this issue.
Continue reading: C.A.R. Monthly Message from President Beth L. Peerce – November 2011
Scott Short Thursday, October 13th, 2011
 The subject of investor overlays has been coming up a lot lately. A different angle may clear up some misunderstandings.
REALTORS® and buyers often bring up agency guidelines as if they somehow dictate lending policy.
Most people look at this backwards. They think that the agencies like FHA, VA, Fannie Mae, and Freddie Mac set underwriting guidelines and then lenders layer additional rules on top of this. In reality it’s the opposite. Understanding the reality of this dynamic will go a long way toward understanding “investor overlays”.
None of the agencies listed above dictate lending policy to mortgage lenders. Mortgage lenders develop whatever policies they feel offer the greatest return, while best managing the risk of the loans they make. If a lender wants to do a 100% LTV mortgage for a homebuyer who is being foreclosed on right now and just completed their bankruptcy, they are allowed to do that even if that buyer doesn’t have a job and has federal tax liens. On the other end of the spectrum.If a lender decided that they are only going to do loans with a maximum loan to value of 50% to borrowers with 800 credit scores, they could also choose to do this. Lenders are free to set whatever standards and policies they choose to set, provided that they do not violate any other laws pertaining to things like discrimination.
So let’s look at the actual roles of the agencies. While lenders set their own policies regarding the level of risk in relation to the return they are looking for, they must ensure that they are meeting FHA’s minimum standards if they intend to have the loan insured by FHA. In other words, FHA does not set the underwriting guidelines, but only the minimum standards under which they’re willing to insure those loans. Lenders are free to choose to set a standard that exceeds the FHA minimum.
Continue reading: Maybe This Will Help
Beth L. Peerce Monday, October 10th, 2011
October 10, 2011
Dear REALTORS®,
Important news on the housing policy front. Despite efforts by C.A.R. and NAR to fight for an extension of Fannie Mae, Freddie Mac, and FHA conforming loan limits, Congress failed to extend the $729,750 loan limits and allowed them to expire Sept. 30. This means the maximum loan amount that Fannie, Freddie, and FHA will buy or guarantee is $625,500, and anything above that amount will be non-conforming and will require a jumbo loan. These loans typically carry a higher mortgage interest rate and require a higher down payment, increasing the monthly payment, which will particularly be hard on middle-class buyers and sellers.
However, I’d like to applaud Rep. Gary Miller (R-Calif.) and Brad Sherman (D-Calif.) for jointly introducing a bill that would have made the current loan limits permanent, and Congressman John Campbell (R-Calif.), who introduced a bill that would have extended the current loan limits. And of course, California Senator Dianne Feinstein, who introduced a bill in the Senate that would have extended the conforming loan limits.
C.A.R. and NAR will continue to work with Congress to attempt to restore the higher limits as quickly as possible.
View the new loan limits.
Continue reading: C.A.R. Monthly Message from President Beth L. Peerce
Doug Covill Tuesday, June 14th, 2011
 We came back from the NAR Mid-Year meeting feeling a bit tossed around.
The housing market will not recover, and therefore the economy will not recover, until all creditworthy homebuyers can get a mortgage. For example, we don’t need to get rid of Fannie Mae and Freddie Mac. We need to go to this time back before they got so loose. The pendulum has swung too far. Making it too hard to get loans won’t help the economy.
Lawrence Yun, chief economist at NAR, said sales would rise 15-20 percent if FHA and Fannie and Freddie would return to normal lending standards.
We heard a lot of talk about requiring all buyers to put 20 percent down to buy a home. We all understand the value of buyers making a down payment. But that is no way to encourage home ownership. The crowd burst into applause when one speaker called that idea “lunacy.” Mr. Yun referred to such proposals as an attack on the middle class. He also calculated that, using average prices and salaries, it would take a buyer 14 years to save for a 20 percent down payment.
We all know that not everyone should be a homeowner. We also know that homeownership creates lots of benefits, including more education, less crime and better health. We also know lots of people who could and should be able to buy a home right now but are finding it very hard.
Continue reading: President’s Perspective for June 2011
Scott Short Wednesday, May 25th, 2011
Automated Underwriting Systems (AUS–when the computer underwrites the loan based on specific lender overlays) are unable to determine the existence of extenuating circumstances that resulted in a bankruptcy, foreclosure, deed-in-lieu, pre-foreclosure or short sale (ie: the computer cannot read written extenuating circumstances). If a client has appropriate documentation that these events occurred, the minimum time period has elapsed, and the program does not require an AUS decision, then the loan may be manually underwritten. (If your client is applying for a conventional loan; good luck finding a lender who will take on the risk of manually underwriting a loan). The loan must meet all manual underwriting requirements, including documentation, minimum credit scores and maximum loan-to-value.
To document the existence of extenuating circumstances, the loan file must include all of the following:
- A signed, written statement from the borrower’s third-party and documentation confirming that this was an isolated occurrence that significantly reduced the borrower’s income and/or increased their expenses
- No evidence that the borrowers had unacceptable credit prior to the problems
- Evidence that the borrowers have reestablished acceptable credit with at least four references for at least two years, including one traditional credit reference (an account that would appear on a credit report), and one housing related reference (e.g. a PG&E, SMUD or Comcast bill).
Note: If the derogatory information involved tradeline credit (an account that appears on your credit report), the reestablished credit must also be for tradeline credit. If the derogatory information involved non-credit payment references, either tradelines or non-credit payment references can be used.
- Evidence on the credit report and other credit documentation that the borrower’s present credit is current
- Evidence that no new public records, no 60-day late payments, no more than two 30-day late payments and no housing lates exist for the most recent 24 months
- If the client is unable to obtain thirdparty documentation confirming the extenuating circumstances or reestablishment of credit, the derogatory or adverse credit information cannot be offset.
For a new FHA loan:
Foreclosure:
A borrower whose previous residence or other real property was foreclosed on, sold through a short sale, or was given a deed-in-lieu of foreclosure within the previous three years is generally not eligible.
If the foreclosure was greater than three years prior to the date of the application, and the risk decision (AUS) received is an accept, the loan does not need manual downgrading (manual underwrite in the eyes of FHA means that your ratios are 31% housing /43% debt-to-income) and foreclosure documentation is not required.
Remember, FHA counts from the day the mortgage insurance claim was paid to the lender, not the trustee sale date – sometimes it can take months before the claim is paid. Have your mortgage professional check with FHA to confirm the date the claim was paid.
Scott Short Friday, March 11th, 2011
On Friday, January 28th, HUD/FHA extended the “Less Than 90-Day” flip rule. Now trying to find a lender who will allow the seller to resell for 20%+ over what they bought it for is becoming more difficult.
Last October HUD/FHA increased the Monthly Mortgage Insurance (MMI) cost from .55% to .90% for a 30-year fixed with a minimum down payment loan. During that time, HUD/FHA also lowered the Up Front Mortgage Insurance Premium (UFMIP) they finance into the loan from 2.25% to 1%.
In a move to increase their capital reserves and encourage private money back into mortgages, HUD/FHA will once again raise the MMI cost. On April 18 MMI goes from .90% to 1.15% for 30- and 15-year fixed loans with minimum down payment. (Since April 18 is a Monday, your loan professional needs to pull the case number on Friday April 15 to avoid this increase.)
One positive outcome for homebuyers from this new change is that the HUD/FHA system will automatically cancel any uninsured case number where there has been no activity for six months since the last action except for:
- Loans where an appraisal update has been entered, and/or
- Loans where the Upfront Mortgage Insurance Premium (UFMIP) has been received
Last action includes:
- Case number assigned
- Appraisal information entered
- Firm commitment issued by FHA
- Insurance application received and subsequent updates and
- Notice of Return and Resubmissions
Continue reading: The Cost of Working with FHA is Going Up Again
Leon Williams Friday, February 11th, 2011
 Did you hear? The Obama Administration just delivered a report to congress where it is outlining major reform to our housing market. What does this mean? According to Treasury Secretary Tim Geithner, they are laying out a plan for fundamental reform on a responsible timeline. The goal is to: 1. wind down the GSEs, 2. strengthen consumer protection, and 3. preserve access to affordable housing for people who need it.
In the long run I think the plan calls for some much needed reform in our markets, however those of you wanting to make moves in the housing market better do it now, as this is a sure sign of rising interest rates, Albeit probably for the better.
The Ideal is to fix the fundamental flaws in the mortgage market by shrinking the governments footprint while better targeting the government’s support for affordable homeownership and rental housing, but all in a responsible manner.
As I have said previously in my “War on Wealth” postings, less reliance on a “Big Government” will hopefully decrease the need for the government to unreasonably attack us where it hurts the most, our Pocket Books.
Sounds like a great goal. I wonder if the Special Interests can actually get behind this and help instead of constantly trying to throw a monkey wrench in the works. If we can learn to stop thinking bipartisan and actually chip in and help no matter who is in office, we just might be able to take back our lead and standing as the place to be.
The plan call for:
Continue reading: Obama To Provide Path To Major Reform Of America’s Housing Market
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
|
Register | Login
|
Recent Comments