The Good Faith Estimate In Plain English
Filed under: Conventional Loans, FHA Loans, Guideline Changes, Jumbo Mortgages | Tags: The New Good Faith Estimate, The New HUD
Leave a Comment This is the best explanation I have seen thus far. Keep in mind that the GFE doesn’t take into account suitability i.e. how long they plan to live in the home, how long they plan on having the loan, reserves, children, etc. This needs to be done by the Mortgage Professional.
To view this document click on the link below and then “Respa Plain English 12-09.”
Chinese Drywall Update
Leave a CommentThis is good news for Florida especially South Florida. HUD has directed lenders to extend temporary assistance to certain homeowners affected by Chinese drywall. “The HUD effort affects only borrowers whose mortgages are insured by the Federal Housing Administration and who may qualify for help under an existing mortgage-forbearance program intended to prevent foreclosures.”
Hopefully others will follow FHA. Unfortunately the average cost of replacing the drywall is $80,000 to $100,000 and the only help these homeowners will probably get is “suspending or reducing mortgage payments long enough to allow a borrower to catch up on missed payments.”
http://online.wsj.com/article/SB126153039559202285.html?mod=rss_asia_whats_news
More On: The New Good Faith Estimate & HUD
Filed under: Conventional Loans, FHA Loans, Guideline Changes, Jumbo Mortgages | Tags: Good Faith Estimate, The New Good Faith Estimate, The New HUD
Leave a Comment Below is the link for HUD’s new settlement guide that is for the consumer to better understand the new good faith estimate and HUD that goes into effect on January 1st, 2010. This will be used for all residential real estate transactions.
For a quick breakdown there will now be 3 different “buckets” of charges. The first bucket will be all of the origination fees that go to the lender which are lumped together as one. These fees cannot change unless the interest rate expires, zero tolerance.
The 2nd bucket is “All Other Settlement Fees” which consist of the Appraisal, Credit Report, Upfront MIP, Flood Cert, and Tax Service Fee. The Title Services and lenders title insurance ($25) lumped as one, Owners Title Insurance, Survey and Pest Inspection, Recording Fees, Intangible Tax and Doc Stamps (goes in the “Transfer Tax” spot, #8). Numbers 3 to 8 have a 10% tolerance.
The 3rd bucket is Numbers 9 to 11 which have an unlimited tolerance and consists of the escrow account, daily interest, and insurance.
The new GFE will NOT show the borrower how much cash they need for closing.
The new HUD will show the estimates from the Good Faith Estimate and have a breakdown of how much the figures varied.
It is very confusing so if you have any questions feel free to email me.
The New Good Faith Estimate
Filed under: Conventional Loans, FHA Loans, Jumbo Mortgages, Mortgage Education 101 | Tags: GFE, Good Faith Estimate
Leave a Comment I am still a little confused with it and I am in the mortgage industry. The purpose of the new 3 page good faith estimate that goes into effect on January 1st, 2010 is to improve transparency. I am not sure if it does that. I feel it is going to cause many to overestimate fees as opposed to many currently underestimating. You would think this is somewhat a good thing but if the real purpose is to help the borrower shop for a loan and the fees aren’t right, whether up or down, it does no good.
As a consumer I would go with the mortgage professional who explains everything to you. Obviously you want to make sure you get a competitive rate but in the end you get what you pay for.
I was at a training yesterday sponsored by the FAMB, Florida Association of Mortgage Brokers, from 1 pm to 4 pm designed to teach us how to fill it out. After 3 hours I still am not an expert because we ran out of time. I did some more training on it last night through www.loantoolbox.com and am now getting a better understanding of how to fill it out, pretty scary right?
“This is a mess,” said Bill Dallas, chief executive officer of Skyline Financial Corp. in Calabasas, California.
Banks Are Lending, If You Can Afford It
I have been saying this for the longest time now and I am glad someone else wrote about it. The unfortunate part for residential lending is that some can still buy even if they cannot afford it. Fannie Mae recently revised their debt to income ratios down, that’s right, I said down, to 45% and a maximum of 50% with compensating factors. A compensating factor would consist of credit score, reserves, etc. It will be to the underwriter’s discretion.
So where should you be at with a debt to income ratio? It all depends. Mortgage Professionals should be like Financial Planners and take into account other expenses, not just what is on their credit report. I am talking about insurance, children, groceries, etc. I guess if I were to use a percentage I would say to keep your total debt to income ratio around 36%.
I absolutely loved this quote because I have been telling my clients that I am not just asking for this documentation due to the housing mess. It has always been required on Conventional and government loans.
“We really haven’t changed our lending criteria in the last five years,” Wilmoth says. “The only thing that has changed is the number of qualified borrowers.”
http://www.msnbc.msn.com/id/34514657/ns/business-us_business/
Modifications For The Jobless?
Filed under: Foreclosure, Loan Modification | Tags: Jobless, Loan Modifications, Unemployed Homeowners
Leave a Comment That is what they are saying but I have heard these talks before. I am not a pessimist but just telling you the facts. I hope they do take the existing $75 million to help modify mortgages for the jobless because if anyone “deserves” it, it is them.
Unfortunately it could take awhile before it is approved and many of the jobless could be facing foreclosures before that time. Hopefully they pick up the pace because I like this idea.
“Dodds’ proposal would give homeowners who have been unemployed during the recession a loan fixed at 31% of the family’s income for two or three years or until the primary wage earner finds employment again.”
Mortgage Re-Default Rate Improves
Filed under: Foreclosure, Loan Modification | Tags: Loan Modifications
Leave a Comment That’s what happens when you start to modify mortgage payments down instead of up. I have been saying this all along. We will have to see how these loans perform over the long run but maybe Lewis Ranieri, who I wrote about in another post, is onto something and will make a lot of money especially since he is going to reduce principle. I think that is the real key if you are going to do modifications.
This could bode well for Fort Lauderdale and South Florida since we have been hit so hard by the housing mess. I guess we will just have to wait and see.
“Some 18.7% of loans modified in the second quarter of 2009 were at least 60 days past due three months later, according to the report, by the Office of Comptroller of the Currency and the Office of Thrift Supervision. That compares with a redefault rate of 30% or more after three months for loans modified in the previous four quarters.”
http://online.wsj.com/article/SB126144913572001111.html?mod=rss_whats_news_us
Mortgage Insurance Companies & Lenders Ease Down Payment Standards
This is a positive sign for some parts of the US because now you will be able to get a Conventional loan with only 5% down versus the 10%. Not for Fort Lauderdale and the rest of South Florida though.
In South Florida to be able to put 10% you have to be buying a single family detached home, have a minimum of a 720 middle credit score, and a maximum debt to income ratio of 41%. The article below states that in New Orleans you only need a 680 credit score.
“We’ve seen some stabilization in the housing market,” said Kevin Schneider, president of Genworth. While “additional home price declines” are likely, he added, tighter credit standards, including the requirement of full documentation and higher credit scores, should limit delinquencies.”
http://online.wsj.com/article/SB126118008009797749.html#mod=todays_us_page_one
Refinance Now, Even Bernanke Did
Filed under: Interest Rates, Refinance | Tags: Interest Rates, Refinance, Refinancing
Leave a Comment Even our Fed Chairman has refinanced and he had an adjustable at 4.125% that was going to adjust down. With the Fed’s buying of mortgage-backed securities ending at the end of the 1st quarter of 2010 interest rates will go up. No one knows how much and how fast but they will go up.
Always make sure that it makes sense for you by dividing the costs of the refinance by the monthly savings to figure out how many months it will take to recover your money. If you are unsure of how long you will be in the home my opinion is that you are better safe than sorry.
“Locking into a fixed rate mortgage looks like a sensible thing for any homeowner to do with long rates at historic lows now. Of course, Mr. Bernanke isn’t any homeowner. One has to wonder what the decision to refinance implies about his beliefs about where rates are going in the future. Refinancing suggests he sees them going up eventually. But that shouldn’t be too big a surprise to people given that short-rates, at zero, can’t go any lower and given that Mr. Bernanke has been talking about the Fed’s exit strategy and a recovery for months. Does it say anything about the timing of eventual rate hikes or the magnitude? Very doubtful.”
Renovations Aren’t Paying Off
Filed under: Appraised Values | Tags: Remodeling, Renovations
Leave a Comment Like they used to according to the article below from CNNMoney. I would have to agree based on what I see with appraisals. Appraisers just aren’t able to give the adjustments that a property should receive for upgrades and renovations. But then again I am in the Fort Lauderdale and South Florida market where your comparable sales are foreclosures and short sales.
I am not a real estate agent but I am sure it helps you to sell your home faster so depending on how much faster it enables you, you might just recoup the costs. For example, if a renovated home sells 2 months faster the seller saves 2 months worth of taxes and insurance.
“The most financially successful jobs are smaller-scale, lower-cost renovations that improve the exterior appearance of homes. In this down real estate market, curb appeal is king.”
