Today President Bush signed the housing rescue act into Law. I have mixed emotions on this as clearly its us the tax payers who will pay for this. The main parts of this are as follows:
A permanent increase in "conforming loan" limits. The law will permanently increase the cap on the size of mortgages guaranteed by Fannie and Freddie to a maximum of $625,500 from $417,000. This will really help bolster home sales and refinances and it will allow borrowers to get a better conforming rate instead of a higher jumbo loan interest rate.
The Federal housing administrations role. The FHA will be allowed to insure up to $300 billion in new 30-year fixed-rate mortgages for at-risk borrowers in owner-occupied homes if their lenders agree to write down loan balances to 90% of the homes' current appraised value. The FHA maximum loan limits for high-cost areas would also increase to a maximum of $625,500 as well. This is one part of the law that I like this will help bolster the housing market in my opinion. The law would also increase to 3.5% from 3% the down payment requirement for borrowers getting FHA loans.
A new home-buyer credit. The new law includes a tax refund for first-time home buyers worth up to 10% of a home's purchase price but no more than $7,500. The refund, however, serves more as an interest-free loan, since it would have to be paid back over 15 years in equal installments. This part is disappointing to me as it really just helps a little bit upfront but come on it has to be paid back too!
A ban on down-payment assistance from sellers. The new law eliminates a program that has allowed sellers to provide down payment assistance for FHA loans. This part is also very dissappointing as this hurts first time home buyers in my opinion.
So there is some help on the way as this starts October 1st but not without a cost for sure.
Wednesday, July 30, 2008
Sunday, July 27, 2008
Stopping Foreclosure
One of the big questions I hear all the time is how do we stop all the foreclosures from happening? Well other than the obvious I know lots of lenders are starting to become more aggressive at modifying the terms of a loan so the payment and program are more affordable.
A Loan Modification may be the best way to save your home. How do you get the lender to modify your home loan? What if you are not late will they still work with me?
To the later yes they will, don't be late just to get there attention, I never recommend being late. The best way to get a lender to listen to you is to call them and tell them you are having financial issues and need help, you must be proactive and persistent in order for them to listen. Call them and ask for their loan modification department. Then request a modification package. They will want to get a letter of hardship from you stating your situation to them and some pay information as well as a household budget of what you spend monthly. Make the information you give them is truthful as they will want to see current pay stubs to see what you make. If you don't make enough for them to work with you or make too much in rare cases then don't give up hope. I personally know of attorneys who specialize in getting borrowers loans modified and if you can't get the lender to listen to you an attorney certainly will get their attention.
For those people who want to keep their home don't give up hope, call the lender and work something out even if you are late or not. If all else fails hire a loan modification attorney and they can do a forensic audit of your loan paperwork to make sure the lenders paperwork and disclosures matched yours perfectly. Once they request this the lender will usually listen and be more likely to do a modification of your loan. If you need a referral to a loan modification attorney you may email me at dchappy7@gmail.com or call me at 661-295-4686
A Loan Modification may be the best way to save your home. How do you get the lender to modify your home loan? What if you are not late will they still work with me?
To the later yes they will, don't be late just to get there attention, I never recommend being late. The best way to get a lender to listen to you is to call them and tell them you are having financial issues and need help, you must be proactive and persistent in order for them to listen. Call them and ask for their loan modification department. Then request a modification package. They will want to get a letter of hardship from you stating your situation to them and some pay information as well as a household budget of what you spend monthly. Make the information you give them is truthful as they will want to see current pay stubs to see what you make. If you don't make enough for them to work with you or make too much in rare cases then don't give up hope. I personally know of attorneys who specialize in getting borrowers loans modified and if you can't get the lender to listen to you an attorney certainly will get their attention.
For those people who want to keep their home don't give up hope, call the lender and work something out even if you are late or not. If all else fails hire a loan modification attorney and they can do a forensic audit of your loan paperwork to make sure the lenders paperwork and disclosures matched yours perfectly. Once they request this the lender will usually listen and be more likely to do a modification of your loan. If you need a referral to a loan modification attorney you may email me at dchappy7@gmail.com or call me at 661-295-4686
Thursday, July 24, 2008
House passes Mortgage Rescue Bill
So yesterday the House passed the Mortgage Rescue Bill. This document is about 700 pages long so all the details have yet to be known but there are some good things about it and in my opinion some bad. The bill authorizes FHA to insure up to 300 billion in loans.
The good news is for first time homebuyers. The bill includes a tax credit of up to $7,500 for first time home buyers who purchase a home between April 9th, 2008-July 1st, 2009. It also allows people who don't itemize their taxes to claim a $500-$1,000 dollar decuction on their property taxes. That really benefits homeowners who have paid off their loans and can't claim a deduction. These two parts of the bill I really like as it promotes home ownership and paying off your mortgage since you can still get a larger tax break on your property taxes even though you
don't get the mortgage interest deduction since the mortgage has been paid off.
The plan also includes a new cap of up to $625,000 on loans that Fannie Mae and Freddie Mac buy and loans that the FHA may insure. It would permanently increase the conforming and FHA loan limits up to $625,000 from $417,000. This would allow borrowers who are in a higher interest jumbo loan to refinance into a lower conforming rate loan.
The bill also would allow FHA to insure loans where borrowers are upside down in equity if the current lender is willing to forgive some of the mortgage debt. So in order to avoid foreclosure or a possible short sale the lender would have to agree to write off the debt and FHA would insure the remaining amount based off the current appraised value. While this is good for a home owner in distress it is not good for the lender for sure nor is it good for the government as someone has to pay for this loss. Who do you think is going to pay for this? Correct you and me the American tax payer who pays their mortgage and bills on time! If Obama is elected taxes are for sure going to have a dramatic increase but even if McCain gets elected I don't see how taxes cannot go up some to help pay for this mess we have gotten ourselves into. We are in unprecedented times the U.S. economy has not seen as poor a housing market as this in decades. Couple that with the increasingly weak U.S. Dollar and the high cost of oil and gas and we are in for a tough ride before we get out of this mess. Feel free to email me your thoughts at dchappy7@gmail.com
The good news is for first time homebuyers. The bill includes a tax credit of up to $7,500 for first time home buyers who purchase a home between April 9th, 2008-July 1st, 2009. It also allows people who don't itemize their taxes to claim a $500-$1,000 dollar decuction on their property taxes. That really benefits homeowners who have paid off their loans and can't claim a deduction. These two parts of the bill I really like as it promotes home ownership and paying off your mortgage since you can still get a larger tax break on your property taxes even though you
don't get the mortgage interest deduction since the mortgage has been paid off.
The plan also includes a new cap of up to $625,000 on loans that Fannie Mae and Freddie Mac buy and loans that the FHA may insure. It would permanently increase the conforming and FHA loan limits up to $625,000 from $417,000. This would allow borrowers who are in a higher interest jumbo loan to refinance into a lower conforming rate loan.
The bill also would allow FHA to insure loans where borrowers are upside down in equity if the current lender is willing to forgive some of the mortgage debt. So in order to avoid foreclosure or a possible short sale the lender would have to agree to write off the debt and FHA would insure the remaining amount based off the current appraised value. While this is good for a home owner in distress it is not good for the lender for sure nor is it good for the government as someone has to pay for this loss. Who do you think is going to pay for this? Correct you and me the American tax payer who pays their mortgage and bills on time! If Obama is elected taxes are for sure going to have a dramatic increase but even if McCain gets elected I don't see how taxes cannot go up some to help pay for this mess we have gotten ourselves into. We are in unprecedented times the U.S. economy has not seen as poor a housing market as this in decades. Couple that with the increasingly weak U.S. Dollar and the high cost of oil and gas and we are in for a tough ride before we get out of this mess. Feel free to email me your thoughts at dchappy7@gmail.com
Tuesday, July 1, 2008
Mortgage Market update
Interest rates on first mortgages continue to go up and then back down a bit, so the rollercoaster ride continues. It is likely the Fed will raise the Fed funds rate late this year. Officials want to insure inflation is kept in check, despite an abundance of economic figures suggesting that growth will continue. They are concerned about increasing inflation, which is being driven by the price of oil and other commodities. If the fed raises the funds rate from it's current rate of 2% then this could actually help keep fixed rates low for the time being as inflation is the enemy of mortgage bonds and interest rates.
Existing home sales rose slightly higher than expected in May as home buyers responded to a buyers market. A modest gain of 2% but a gain none the less. Home buyers are starting to get off the fence to grab a great price on a home and secure a good fixed rate while they are still low. But depending on where you live some prices still have not fallen much if any such as NYC, others like Las Vegas, Phoenix and certain areas of California have dropped dramatically.
In the areas where prices have dropped dramatically there are great deals to be had but you have to do your homework. Some of the lower price ranges are seeing multiple offers because the demand for these homes are greater because of first time home buyers and real estate investors, don't get caught up in a price war it is a buyers market and there are plenty of homes out there that can be bought for a big discount.
Existing home sales rose slightly higher than expected in May as home buyers responded to a buyers market. A modest gain of 2% but a gain none the less. Home buyers are starting to get off the fence to grab a great price on a home and secure a good fixed rate while they are still low. But depending on where you live some prices still have not fallen much if any such as NYC, others like Las Vegas, Phoenix and certain areas of California have dropped dramatically.
In the areas where prices have dropped dramatically there are great deals to be had but you have to do your homework. Some of the lower price ranges are seeing multiple offers because the demand for these homes are greater because of first time home buyers and real estate investors, don't get caught up in a price war it is a buyers market and there are plenty of homes out there that can be bought for a big discount.
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