Does this change make a lot of sense? No. Is this change the law of the land? Yes.

Let’s see what happened.

Mortgage loan limits were raised substantially in 2008. It was thought that higher limits will would help revive high-cost real estate markets in big cities and along the cost. After three years it became obvious that higher loan limits helped few but created additional risk for lenders and mortgage insurance programs, such as the FHA.

To solve the risk problem, Congress agreed to lower mortgage loan rates as of October 1, 2011. The rates were lowered and the world did not collapse. Indeed, the National Association of Realtors reported that in October existing home sales ROSE despite the lower loan limits.

With everything working well Congress naturally decided to raise FHA and conventional loan limits back to the pre-October 2011 levels. The new legislation passed with huge majorities in the Senate (60-39) and the House (298-121).

However, when the legislation got into a conference committee — representatives from both houses who are supposed to work out any conflicts in the two pieces of legislation — a strange thing happened: FHA conforming loan limits went up for two years and conventional loan limits remained stuck.

Always Smaller

It used to be FHA loans were always smaller than conventional loans for a very simple reason: FHA loans could be no larger than 87 percent of the conventional loan limit. So, if the conventional loan limit was $300,000 the largest FHA mortgage could only be $261,000 in the lower 48 states.

Now we have a situation where FHA mortgages can be bigger in high-cost areas than conventional loans. This is remarkable given how some lenders have worried that the FHA program will be over-utilized or that it allegedly will need billions of dollars in taxpayer bailout money. (See: Will The FHA Go Bankrupt?)

Also, some conservatives object to the FHA because it sells mortgage insurance, something the private sector also sells.

So, where do we stand with loan limits as of November 19, 2011? Here we go:

How Mortgage Limits Vary

There are several types of mortgage loan limits. Generally, most borrowers need to look at the limits for conventional, FHA and VA loans to see how much can be financed with the most-widely originated loans.

If you borrow at or below the conventional loan limit for non-government mortgages, you would have what is generally known as a “conforming” loan. If the amount borrowed is above the conventional loan limit, you would have a “jumbo” loan and face a higher rate because larger loans imply more risk to investors, the folks who buy mortgages.

As well, a “conventional” mortgage can be seen as loans originated from the private sector. FHA and VA mortgages are originated in the private sector but insured through government programs. For specifics, look at FHA and VA mortgage requirements.

Conventional Loans

As of October 1, 2011 the conventional loan limits depend on the county where you’re located. Instead of one national mortgage limit, loan limits depend on; one, whether the property is in a general or high cost area; two, whether the property is within the lower 48 states; and, three, whether the property located in Alaska, Hawaii, Guam and the U.S Virgin Islands.

In general terms, the October 2011 loan limits for a single-family home range from $417,000 to $625,500 in the 48 continental states. Once you know the loan limit for a single-family home in a specific area you can then see the limits for owner-occupied homes with two to four units.

VA Loans

After October 1, 2011 the Department of Veterans Affairs (VA) will use the same loan limits as before. There are no changes. As the VA explains:

“The maximum guaranty for VA guaranteed loans closed October 1, 2011 through December 31, 2011 will remain unchanged. The Veterans’ Benefits Improvement Act of 2008 provided a temporary increase in VA loan limits for loans closed January 1, 2009 through December 31, 2011. Because of this legislation, VA loan limits will remain the same for the remainder of the calendar year. Please note that VA does not have a maximum loan amount. Loan limit refers to the maximum loan a lender could make and still receive a 25% guaranty from VA, assuming the veteran has full entitlement.”

Official loan limits for specific areas range from $417,000 to as much as $1,094,625. To find the VA loan limit for a given area, please use the chart below:

2011 VA County Loan Limits for High-Cost Counties

Some important points about financing for vets, active-duty personnel, and members of the National Guard and Reserve:

• Qualified individuals can purchase homes with one to four units provided that they live in one unit. The veteran must certify as to occupancy.
• In the case of an active-duty veteran who cannot occupy because of his or her status as an active duty member of the armed forces, occupancy by the spouse can satisfy the occupancy requirement.
• Individuals on active duty have strong protections preventing foreclosure under the Servicemembers Civil Relief Act (SCRA).

FHA Loans

The FHA loan program has loan limits for owner-occupied homes under its 203(b) program, the most-common FHA option. The FHA loan limit varies according to whether you live in a typical real estate market, a “high cost” market or you reside in Alaska, Guam, Hawaii, and the Virgin Islands.

As of November 18, 2011 and through 2013 the FHA 203(b) loan limits look like this:

To qualify for the FHA loans above, at least one unit must be owner occupied.

HUD has an online database which shows the latest FHA loan limits by state and county. The system can be reached by going to the FHA Loan Limits Page

Also, HUD has a list of Areas at Ceilings and Above and Areas Between Floor and Ceiling.

FHA-Insured Reverse Mortgages

The loan limits for FHA-insured reverse mortgages (also known as home equity conversion mortgages or HECMs) will remain at $625,500. HUD, in 2010, introduced the HECM Saver program as an alternative to its standard HECM plan. The difference? The Saver program has an up-front insurance fee which is less than the cost of take-out food for four but the amount you can borrow against equity has been reduced. For specifics, speak with attorneys who specialize in elder law and fee-only financial planners.

A Brief History

Loan limits used to be set annually and the same limit applied to all states and all counties in the lower 48 states. The limits were 50 percent higher outside the countinental U.S.

The real estate marketplace began withdrawing from the highs seen in April 2007 and price reductions continued into 2008. Given lower home values, conventional loan limits were supposed to be reduced for 2009. At this point the government stepped in and changed the rules with the Economic Stimulus Act of 2008 (ESA) and the Housing and Economic Recovery Act of 2008 (HERA). These laws gave us the loan limit system we have in place today.

Until September 30, 2011, the Department of State, Foreign Operations, and Related Programs Appropriations Act extended the maximum loan limits first established in 2008.

On November 18, 2011 the President signed H.R. 2112: The Consolidated and Further Continuing Appropriations Act, 2012. This legislation increased the FHA loan limit.

A CAUTION: Because maximum loan limits can change at anytime, visitors to OurBroker.com are advised to speak with local real estate brokers and lenders BEFORE entering the real estate marketplace for the latest mortgage information.

Copyright 2011 OurBroker.com. All Rights Reserved

————————————————————————————————————–

FHA Loan Limits Rise, Conventional & VA Mortgage Limits Stick is a post from: OurBroker.com -- Refinance, Home Mortgage Loans & Rates, Home Equity Loan

Technorati Tags: 2008, 2009, 2010, 2011, 2012, conference committee, Congress, conventional, Economic Recovery Act of 2008, Economic Stimulus Act of 2008, ESA, Fannie Mae, FHA, Freddie Mac, HECM, HERA, high cost, HUD, jumbo, limit, loan, new, saver, VA

The answer as derived from the American Chopper TV show and public information is very simple: Both.

Let’s start with foreclosure. It’s plain that a foreclosure action was initiated by the lender, the GE Commercial Finance Business Property Corp.

The matter is openly discussed by Paul Sr. on the show. He raises such ideas as renting another facility, moving to another building he owns or building a new structure nearby. The local Times Herald-Record explains that loan payments of more than $100,000 had been missed as of June 1, 2010. (See: Orange County Choppers’ HQ faces foreclosure, Nov. 18, 2010)

Minutes from the Orange County Industrial Development Agency discuss the possibility of a smaller replacement building.

So if a property is foreclosed doesn’t that mean the borrower is soon tossed out?

Actually, no. Not always.

It’s in the interest of neither the lender nor the borrower to go through with a foreclosure, especially in many of today’s major foreclosure centers. The fact that a property has been “foreclosed” — that payments have been missed and foreclosure notices sent out — does not mean it will be lost.

There are a number of possible solutions to the foreclosure problem. For instance:

1. The lender and borrower can attempt to “cure” the loan. As one example, HUD reported that for fiscal 2009 the FHA had a “82.7 percent cure rate for properties 90 days or more delinquent.”
2. A cure can be created by bringing the loan current or moving unpaid money to the back of the mortgage; that is, making the loan term longer.
3. Another approach is to modify the loan by reducing the interest rate, forgiving principal, waiving penalties and fees or some combination of changes. Modifications have been used successfully by more than 720,000 residential borrowers under the government’s Making Home Affordable program.
4. If the lender will go along, the borrower can give up title — and then rent back the property. A deed-in-lieu of foreclosure with a rent-back allows the borrower to stay in place while generating income for the lender. This is the system behind Fannie Mae’s Deed for Lease progrtam. (When values are rising and foreclosure is not an issue, the better strategy is to sell the building and then rent it back — a sale and leaseback.)

Lenders would like to avoid foreclosures if possible because they can produce the most expensive outcome. To avoid that high-cost outcome lenders will sometimes agree to a short sale if the loss will be less than with a foreclosure.

For borrowers, foreclosure is a lousy choice, especially if the lender can go after not only the property but also your equipment and other assets. Credit will be damaged and the ability to get another loan will be impacted.

What happened between OCC and its lender is thus far a private matter. The objective fact is that something was worked out, maybe one of our options, maybe something else. (And, as I have mentioned elsewhere online, maybe there will be a lender theme bike to settle the matter…).

Meanwhile, at Paul Jr. Designs the approach is different. The property is rented.

Was it better for Junior to rent or for Senior to own? It’s years too early to answer that question, but Paul Sr. has been smart to have a world headquarters building that could showcase his custom motorcycle business and TV show while Paul Jr. was right to start with a rental since he may need more space in the future for his bikes, trikes and designs.

American Chopper — Foreclosure Vs. No Foreclosure is a post from: OurBroker.com -- Refinance, Home Mortgage Loans & Rates, Home Equity Loan

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Note: This material is now out of date. Please go to: FHA Loan Limits Rise, Conventional & VA Mortgage Limits Stick.

Before looking at the numbers let’s make three quick points:

First, the October 1st loan limits will continue only until December 31, 2011. As of January 1, 2012 it’s possible that we could have new loan limits or they might stay the same. At this moment there’s a political fight in Washington brewing over the issue.

Second, most borrowers need far less than the mortgage loan limits for FHA, VA and conventional mortgages. For instance, in a low cost area the maximum conventional loan amount will be $417,000. According to the National Association of Realtors the typical home sold for just $174,000 in July 2011.

Third, the new is the same as the old. The limits which started October 1, 2011 are the same limits we had in place before July 1, 2007.

How Mortgage Limits Vary

There are several types of mortgage loan limits. Generally, most borrowers need to look at the limits for conventional, FHA and VA loans to see how much can be financed with the most-widely originated loans.

If you borrow at or below the conventional loan limit for non-government mortgages, you would have what is generally known as a “conforming” loan. If the amount borrowed is above the conventional loan limit, you would have a “jumbo” loan and face a higher rate because larger loans imply more risk to investors, the folks who buy mortgages.

As well, a “conventional” mortgage can be seen as loans originated from the private sector. FHA and VA mortgages are originated in the private sector but insured through government programs. For specifics, look at FHA and VA mortgage requirements.

Conventional Loans

As of October 1, 2011 the conventional loan limits depend on the county where you’re located. Instead of one national mortgage limit, loan limits depend on; one, whether the property is in a general or high cost area; two, whether the property is within the lower 48 states; and, three, whether the property located in Alaska, Hawaii, Guam and the U.S Virgin Islands.

In general terms, the October 2011 loan limits for a single-family home range from $417,000 to $625,500 in the 48 continental states. Once you know the loan limit for a single-family home in a specific area you can then see the limits for owner-occupied homes with two to four units.

VA Loans

After October 1, 2011 the Department of Veterans Affairs (VA) will use the same loan limits as before. There are no changes. As the VA explains:

“The maximum guaranty for VA guaranteed loans closed October 1, 2011 through December 31, 2011 will remain unchanged. The Veterans’ Benefits Improvement Act of 2008 provided a temporary increase in VA loan limits for loans closed January 1, 2009 through December 31, 2011. Because of this legislation, VA loan limits will remain the same for the remainder of the calendar year. Please note that VA does not have a maximum loan amount. Loan limit refers to the maximum loan a lender could make and still receive a 25% guaranty from VA, assuming the veteran has full entitlement.

Official loan limits for specific areas range from $417,000 to as much as $1,094,625. To find the VA loan limit for a given area, please use the chart below:

2011 VA County Loan Limits for High-Cost Counties

Some important points about financing for vets, active-duty personnel, and members of the National Guard and Reserve:

• Qualified individuals can purchase homes with one to four units provided that they live in one unit. The veteran must certify as to occupancy.
• In the case of an active-duty veteran who cannot occupy because of his or her status as an active duty member of the armed forces, occupancy by the spouse can satisfy the occupancy requirement.
• Individuals on active duty have strong protections preventing foreclosure under the Servicemembers Civil Relief Act (SCRA).

FHA Loans

The FHA loan program has loan limits for owner-occupied homes under its 203(b) program, the most-common FHA option. The FHA loan limit varies according to whether you live in a typical real estate market, a “high cost” market or in Alaska, Guam, Hawaii, and the Virgin Islands.

As of October 1, 2011 the FHA 203(b) loan limits look like this:

To qualify for the FHA loans above, at least one unit must be owner occupied.

HUD has an online database which shows the latest FHA loan limits by state and county. The system can be reached by going to the FHA Loan Limits Page

Also, HUD has a list of Areas at Ceilings and Above and Areas Between Floor and Ceiling.

FHA-Insured Reverse Mortgages

The loan limits for FHA-insured reverse mortgages (also known as home equity conversion mortgages or HECMs) will remain at $625,500. HUD, in 2010, introduced the HECM Saver program as an alternative to its standard HECM plan. The difference? The Saver program has an up-front insurance fee which is less than the cost of take-out food for four but the amount you can borrow against equity has been reduced. For specifics, speak with attorneys who specialize in elder law and fee-only financial planners.

A Brief History

Loan limits used to be set annually and the same limit applied to all states and all counties in the lower 48 states. The limits were 50 percent higher outside the countinental U.S.

The real estate marketplace began withdrawing from the highs seen in April 2007 and price reductions continued into 2008. Given lower home values, conventional loan limits were supposed to be reduced for 2009. At this point the government stepped in and changed the rules with the Economic Stimulus Act of 2008 (ESA) and the Housing and Economic Recovery Act of 2008 (HERA). These laws gave us the loan limit system we have in place today.

Until September 30, 2011, the Department of State, Foreign Operations, and Related Programs Appropriations Act extended the maximum loan limits first established in 2008.

A CAUTION: Because maximum loan limits can change at anytime, visitors to OurBroker.com are advised to speak with local real estate brokers and lenders BEFORE entering the real estate marketplace for the latest mortgage information.

Copyright 2012 OurBroker.com. All Rights Reserved

————————————————————————————————————–

New FHA, VA and Conventional Mortgage Loan Limits is a post from: OurBroker.com -- Refinance, Home Mortgage Loans & Rates, Home Equity Loan

Technorati Tags: 2008, 2009, 2010, 2011, 2012, conventional, Economic Recovery Act of 2008, Economic Stimulus Act of 2008, ESA, Fannie Mae, FHA, Freddie Mac, HECM, HERA, high cost, HUD, jumbo, limit, loan, new, saver, VA

Note: This material is now out of date. Please go to: FHA Loan Limits Rise, Conventional & VA Mortgage Limits Stick.

There are several types of mortgage loan limits. Generally, most borrowers need to look at conventional, FHA and VA loan limits to see how much can be financed with the most-widely originated loans.

If you borrow at or below the conventional loan limit for non-government mortgages, you would have what is generally known as a “conforming” loan. If the amount borrowed is above the conventional loan limit, you would have a “jumbo” loan and face a higher rate because larger loans imply more risk to investors, the folks who buy mortgages.

As well, a “conventional” mortgage can be seen as loans originated from the private sector. FHA and VA mortgages are originated in the private sector but insured through government programs. For specifics, look at FHA and VA mortgage requirements.

Conventional Loans

For 2011 the conventional loan limits depend on the county where you’re located. Instead of one national mortgage limit, we now have one for each county — and there are more than 3200 counties.

In general terms, 2011 loan limits for a single-family home range from $417,000 to $729,750. Once you know the loan limit for a single-family home in a specific area you can then see the limits for owner-occupied homes with two to four units.

Example #1 — Basic Loan limit

One Unit — $417,000

Two Unit — $533,850

Three Unit — $645,300

Four Unit — $801,950

Example #2 — Loan Limit for Certain High-Cost Areas

One-Unit –$729,750

Two Unit — $934,200

Three Unit — $1,129,250

Four Unit — $1,403,400

Also, in 2011 there are loan limits for so-called “higher cost” areas. In other words, instead of looking at “counties” you can also look at “areas.” These selected areas are located in Arizona, California, Colorado, Connecticut, The District of Columbia, Delaware, Florida, Georgia, Hawaii, Idaho, Massachusetts, Maryland, North Carolina, New Hampshire, New Jersey, New Mexico, Nevada, New York, Ohio, Oregon, Pennsylvania, Rhode Island, Tennessee, Utah, Virginia and West Virginia.

The chart for specific high-cost areas and loan limits can be found at:

Loan Limits for 2009 Mortgage Originations — High-Cost Areas (Remember, the limits for 2011 are the same as 2009)

VA Loans

For 2011 the Department of Veterans Affairs (VA) will use a locality-based approach to establish VA loan limits. Official loan limits for specific areas range from $417,000 to as much as $1,094,625. To find the VA loan limit for a given area, please use the chart below:

2009 VA County Loan Limits for High-Cost Counties

Some important points about financing for vets made by the VA:

• Vets can purchase homes with one to four units provided that they live in one unit. The veteran must certify as to occupancy.
• In the case of an active-duty veteran who cannot occupy because of his or her status as an active duty member of the armed forces, occupancy by the spouse can satisfy the occupancy requirement.

FHA Loans

The FHA loan program has loan limits for owner-occupied homes under its 203(b) program, the most-common FHA option. The FHA loan limit varies according to whether you live in a typical real estate market, a “high cost” market or in Alaska, Guam, Hawaii, and the Virgin Islands.

For 2011 the FHA loan floor for owner-occupied properties look like this:

One-Unit — $271,050

Two-Unit — $347,000

Three-Unit — $419,400

Four-Unit — $521,250

For 2011 FHA loan limits in higher-cost areas are as follows:

One-Unit — $729,750

Two-Unit — $934,200

Three-Unit — $1,129,250

Four-Unit — $1,403,400

The FHA has special, higher potential loan limits outside the continental U.S. for Alaska, Hawaii, Guam and the Virgin Islands.

One-Unit — $1,094,625

Two-Unit — $1,401,300

Three Unit — $1,693,875

Four-Unit — $2,105,100

To qualify for the FHA loans above, at least one unit must be owner occupied.

HUD has an online database which shows the latest FHA loan limits by state and county. The system can be reached by going to the

FHA Loan Limits Page

FHA-Insured Reverse Mortgages

The loan limits for FHA-insured reverse mortgages (also known as home equity conversion mortgages or HECMs) has been set at $625,500. HUD, in 2010, introduced the HECM Saver program as alternative to its standard HECM plan. The difference? The Saver program has an up-front insurance fee which is less than the cost of take-out food for four but the amount you can borrow against equity has been reduced. For specifics, speak with attorneys who specialize in elder law and fee-only financial planners.

A Brief History

Loan limits used to be set annually and the same limit applied to all states and all counties in the lower 48 states. The limits were 50 percent higher outside the countinental U.S.

The real estate marketplace began withdrawing from the highs seen in April 2007 and price reductions continued into 2008. Given lower home values, conventional loan limits were supposed to be reduced for 2009. At this point the government stepped in and changed the rules with the Economic Stimulus Act of 2008 (ESA) and the Housing and Economic Recovery Act of 2008 (HERA). These laws gave us the loan limit system we have in place today.

For 2011, the Department of State, Foreign Operations, and Related Programs Appropriations Act extends the maximum loan limits first established in 2008.

A CAUTION: Because maximum loan limits can change at anytime, visitors to OurBroker.com are advised to speak with local real estate brokers and lenders BEFORE entering the real estate marketplace for the latest mortgage information.

Mortgage Loan Limits — Conventional, FHA, VA is a post from: OurBroker.com -- Refinance, Home Mortgage Loans & Rates, Home Equity Loan

Technorati Tags: 2008, 2009, 2010, 2011, conventional, Economic Recovery Act of 2008, Economic Stimulus Act of 2008, ESA, Fannie Mae, FHA, Freddie Mac, HECM, HERA, HUD, jumbo, limit, loan, new, saver, VA

Fannie Mae and some of the country’s top mortgage lenders have agreed to establish special forbearance procedures for Armed Forces members. Service members injured on active duty can have their mortgage payments reduced or eliminated for up to six months. The same measure will be in place for the families of service members who are killed in action.

The goal will be to help service members and their families find a long-term solution.

“There are a lot of people in this company who have a real passion to do something for soldiers,– Jeff Hayward, senior vice president of Fannie Mae’s National Servicing Organization. “No family impacted by a death or injury in the line of duty should have to face the additional burden of foreclosure as a result of the hardship. We want to do all that we can to provide support to these families at a time of need as we honor their sacrifices and service to our country.”

Fannie Mae also plans to suspend negative reporting to credit bureaus during the forbearance period, a move that would help service members avoid taking a potentially major hit to their credit scores.

Forbearance opportunities are not limited to borrowers with VA loans.

Among the mortgage lenders joining Fannie Mae are Citi-Mortgage, USAA, Wells Fargo, Bank of America, JP Morgan/Chase, Luxury Mortgage Corp. and First Citizens Bank. A government-sponsored enterprise based in Washington, D.C., Fannie Mae is the largest purchaser and backer of mortgages in the nation.

The company has also created a special hotline for military families struggling to make their mortgage payments. Service members and their families can call the Fannie Mae Military Support Hotline at 1-877-MIL-4566. They can also visit KnowYourOptions.com for more information.

“We who serve alongside our military recognize the great sacrifice they and their families make each day,– Katherine Hammack, assistant secretary of the Army (Installations and Environment). “The initiative between Fannie Mae and the lending community recognizes their sacrifice and demonstrates our gratitude for those who face economic hardships as a result of their service. We are profoundly grateful for this heartwarming response from the lending community as they become partners in designing and implementing this initiative.”

____________________________________

About the author: Chris Birk writes about real estate and the mortgage industry for a host of sites and publications, including Bigger Pockets, Mortgages Unzipped and Scotsman Guide. A former newspaper and magazine writer, he is also content director for a leading VA lender.

Military Families To Get Mortgage Relief is a post from: OurBroker.com -- Refinance, Home Mortgage Loans & Rates, Home Equity Loan

Technorati Tags: Fannie Mae, loan, mortgage, relief, VA, veterans

The Fannie Mae findings are good news in the sense that real estate cannot be sold short, no one benefits from lower home prices. A belief that home values are rising is one sure way to encourage real estate purchases and thus — in circular fashion — increasing real estate prices.

Fannie Mae’a National Housing Survey found that respondents believe home prices will hold steady (47 percent) or increase (31 percent) over the next year, and that rental prices will stay the same (46 percent) or go up (39 percent). Across the general population, the average expected rise in rental prices is four times that of home prices (3.6 percent versus 0.9 percent).

Fannie Mae also found that 70 percent of Americans think it’s a good time to buy a house, compared with 64 percent in a similar survey conducted in January 2010. But 33 percent — up from 30 percent — of all respondents said they would be more likely to rent their next home if they were to move.

The big caveat with the survey, of course, is that real estate is a localized commodity. What people think nationally is less important than what people think about that house down the street. One suspects that the survey questions would draw vastly different responses from individuals in Phoenix when compared with residents of Nebraska.

Key Findings

• A large majority of Americans (78 percent) believe that home prices either will remain flat or go up over the next year, up five points from the beginning of the year. Forty-seven percent believe prices will hold steady, while 31 percent think they will go up. This is a notable shift from January 2010, when these numbers were 36 percent and 37 percent, respectively.
• Thirty-nine percent think rental prices will increase over the next 12 months, while 46 percent said they will stay the same.
• Consumers continue to believe it is a buyers’ market; 70 percent said it is a good time to buy a house, up six points from January. However, 83 percent believe it is a bad time to sell a house.
• A majority of Americans (67 percent) continue to believe that buying a home is a safe investment, although this is down three points since January and 16 points since 2003. Housing ranked second behind putting money into a savings or money market account (76 percent).
• Fifty-four percent think it would be very difficult or somewhat difficult to get a home loan today, down six points since January. However, 71 percent of Americans think buying a home will be harder for the next generation, up three points since January.
• The number of respondents who said they would be more likely to rent rather than buy their next home if they were going to move increased from 30 percent in January to 33 percent in July.
• A majority of renters said they would be more likely to rent their next home if they were to move, increasing significantly from 54 percent in January to 60 percent in July, even though 69 percent of renters think it makes more sense to buy a home.
• Twenty-two percent of mortgage borrowers said they have reduced their mortgage debt significantly in the last year, and 27 percent of the mortgage borrowers say they have reduced their non-mortgage debt significantly.

Confidence Rising: 78% Say Home Prices Have Bottomed Out is a post from: OurBroker.com -- Refinance, Home Mortgage Loans & Rates, Home Equity Loan

Technorati Tags: confidence, Fannie Mae, real estate, survey

Is allowing buyers to purchase with no money down a good idea or a bad one?

No one objects to the VA loan program, a program which for decades has permitted qualified veterans to purchase with no cash up front. Everyone understands that such financing is a benefit, a reward for military service.

As well, no one objects when Mom and Pop give junior enough money to buy with nothing down while they also co-sign the note. Such arrangements are just dandy for families that can afford big cash advances, even if Junior has lousy credit and no savings.

Investment seminars, of course, have long touted deals with no money down and the use of other people’s money (OPM) to buy real estate. The pitch is that with no cash upfront novice investors — the folks who attend seminars and buy books — can make big money, even in down markets and in communities with lots of vacancies.

In too many cases, the real objection is the thought of giving “poor people” a head start, “poor people” sometimes being a code word for those of a different race or individuals whose relatives did not immigrate here before 1920.

Decades ago I bought investment property with no money down by borrowing from private parties. There were strict terms, lawyers and lots of paperwork; I’m pleased to say that all such loans were repaid in full and with interest.

Given this background, it’s hard to say that I don’t like or somehow do not approve of financing with no cash up front.

After all, it worked out pretty well for me.

Mortgages With No Money Down is a post from: OurBroker.com -- Refinance, Home Mortgage Loans & Rates, Home Equity Loan

Technorati Tags: Affordable Advantage, Fannie Mae, no money down, OPM, other people's money

The site, Know Your Options.com, has the usual bells and whistles for a modern site and includes sections devoted to refinancing, repayment plans, forebearance, modification, short sales, deed in lieu of foreclosure and a deed-and-lease back plan.

The site also has some useful and nicely-laid out forms such as a financial checklist and a contact log. There is, of course, lots of advice against walking away from your home, a so-called strategic default.

“Through foreclosure prevention programs, borrower outreach, underwriting guidelines and servicer engagement, Fannie Mae is taking a comprehensive approach to helping struggling borrowers,” says Jeff Hayward, a Fannie Mae senior vice president. “Identifying accurate resources and finding the right answers can be a difficult challenge for borrowers facing hardship and a flurry of disparate, incomplete and sometimes fraudulent information. Know Your Options is the company’s newest effort to reach distressed homeowners and is designed to bring the best information and guidance together in one place so that struggling borrowers can focus on finding solutions that work for their particular circumstances.”

What’s Missing

The new Fannie Mae site has some valuable information and the site itself is certainly well-designed. That said, where is the parallel site for would-be borrowers who have yet to have an encounter with lenders? Why wait until someone faces foreclosure before providing valued consumer information? Why not have warnings and red flags in place to help borrowers at the beginning of the mortgage process?

The new Wall Street Reform Act provides a perfect platform for Fannie Mae and other major players in the mortgage arena to openly tell the public that we now have such a thing as a qualified residential mortgage. In basic terms that’s a conventional, FHA or VA mortgage underwritten with a fully-documented loan application, a mortgage where prepayment penalties are limited to the first three years of a fixed-rate mortgage and banned for ARMs. A qualified residential mortgage is also a loan with fewer than 3 points and where the lender has an obligation to assure that the borrower is receiving a net tangible benefit.

Why Foreclosure Prevention Is Not Enough is a post from: OurBroker.com -- Refinance, Home Mortgage Loans & Rates, Home Equity Loan

Technorati Tags: deed in lieu of foreclosure, deed-and-lease back, Fannie Mae, forebearance, foreclosure, modification, qualified residential mortgage, refinancing, repayment plans, short sale, strategic default, walkaway, Wall Street Reform Act

Borrowers don’t have to walk away, says the company. “Troubled borrowers who work with their servicers, and provide information to help the servicer assess their situation, can be considered for foreclosure alternatives, such as a loan modification, a short sale, or a deed-in-lieu of foreclosure. A borrower with extenuating circumstances who works out one of these options with their servicer could be eligible for a new mortgage loan in three years and in as little as two years depending on the circumstances.”

The announcement is the latest in a series from various lenders and loan buyers that concern so-called strategic walk-aways, individuals who refuse to pay their mortgage even though they have the financial capacity to do so.

Problems

There are several problems with the get-tough policy:

First, and obviously, why should residential borrowers be unable to walk away from mortgage loans when walking away is a common commercial practice? Just consider that in Manhattan the Stuyvesant Town-Peter Cooper Village complex was bought for $5.6 billion in 2006. The property is now in bankruptcy, with a first-lien debt of some $3.66 billion according to Bloomberg News.

Does anyone seriously think that the 2006 buyers, Tishman Speyer Properties LP and BlackRock Inc., entities with huge assets, will no longer be able to get a mortgage? How come the same standard doesn’t apply to a borrower who qualified for FHA or VA financing in 2006 but was sold a toxic loan?

Second, in about a third of the states neither Fannie Mae nor anyone else can get a deficiency judgment when a residential mortgage fails. The Fannie Mae policy implicitly punishes borrowers in some states but not in others, a hint that other states should dump pro-bank deficiency judgment laws.

Third, Fannie Mae says “a borrower with extenuating circumstances who works out one of these options with their servicer could be eligible for a new mortgage loan in three years and in as little as two years depending on the circumstances.” And just who is going to determine which circumstances of “extenuating” and which are not? Will a borrower with an option ARM be treated the same as a borrower who cannot make payments on a conventional mortgage? That hardly seems reasonable.

Here’s the question: What will Fannie Mae do about the mortgage lemons sold to borrowers? Will such loans be recalled?

Fannie Mae Gets Tough With Mortgage Loan Walk-Aways is a post from: OurBroker.com -- Refinance, Home Mortgage Loans & Rates, Home Equity Loan

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Relief

In the usual case, disaster relief from mortgage investors falls into six possible categories:

1. Suspend mortgage payments for several months.
2. Reduce the payments for several months.
3. Waive penalties and late fees against borrowers with disaster-damaged homes.
4. Quickly releasing insurance money to help borrowers repair homes.
5. Create longer loan modification plans in severe situations.
6. Temporarily discontinue reporting delinquencies caused by the storm to credit reporting agencies.

While these are the forms of relief which Fannie Mae and Freddie Mac will be offering, relief is not automatic. You must apply to your loan servicer — the company that collects the monthly mortgage payment — for assistance. Also, generally, you must live in or near the spill zone, which generally means homeowners in Louisiana, Mississippi, Texas, Florida and Alabama.

Freddie Mac

Under the Freddie Mac forbearance program, mortgage servicers can suspend mortgage payments for up to three months or reduce payments for up to six months. Servicers may recommend to Freddie Mac forbearance for up to twelve months in situations which are especially difficult and drawn out..

In addition, Freddie Mac says servicers “must not accrue or collect late charges from the borrower during a short-term forbearance or any subsequent repayment plan period if the borrower is paying according to the forbearance agreement.”

Fannie Mae

Fannie Mae says “servicers may immediately suspend or reduce mortgage payments for borrowers whose properties or income are negatively impacted by the Gulf oil spill.” Notice the term “may” — there is no “must” in the policy.

Under its “Special Relief Measures” policy, Fannie Mae servicers “may suspend or reduce a borrower’s payments for up to 90 days while the servicer determines the nature and extent of the impact the disaster is having on the condition of the property or on the borrower’s financial condition. At the conclusion of that assessment, servicers have additional flexibilities to evaluate the appropriate loss mitigation alternative based on a case-by-case determination, including an additional three months of forbearance, a loan modification or other customized solution.”

As with Freddie Mac, relief is not automatic. You must contact your servicer if you have been impacted by the BP oil spill.

Other Lenders

Most borrowers do not know who owns their loan, in part because loans are frequently bought and sold. If your loan is not owned by Fannie Mae or Freddie, or if you do not know who owns your loan, contact your servicer anyway. Other loan owners may also have forbearance programs in place.

As an example, CitiMortgage has “announced a foreclosure suspension program for CitiMortgage-owned mortgages in coastal areas hard-hit by the oil spill in the Gulf of Mexico. The aim of this program is to allow distressed homeowners to remain in their homes during these uncertain times as the Gulf communities respond to the oil spill and its economic repercussions. During the three-month suspension, effective June 17 through September 17, 2010, borrowers with first mortgage loans owned by CitiMortgage and who meet certain other criteria will not be subject to foreclosure sales or foreclosure notifications. While CitiMortgage does not own all of the loans it services, the company hopes to help as many borrowers as possible with this initiative.”

“CitiMortgage

Mortgage Loan Relief For BP Spill Victims is a post from: OurBroker.com -- Refinance, Home Mortgage Loans & Rates, Home Equity Loan

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