HARP myths debunked by Freddie Mac Exec…..

BY JANN SWANSON

HARP Myths Debunked by Freddie Mac Exec

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Dec 16 2013

A Freddie Mac senior vice president is using the company's blog to debunk a few myths she says may be keepinghomeowners from refinancing through HARP, the Home Affordable Refinance Program.  Tracy Mooney's information about on nine HARP misconceptions might not only be helpful for homeowners themselves but a good resource for lenders to share with customers and the public.

1.      Myth One is that refinancing with HARP (or any other program for that matter) would reset the clock and the borrower would again be looking at 30 years of mortgage payments.  This, as Tracy points out, is not true as almost any refinancing allows the borrower to pick a term from 10 to 30 years for the new loan.  The counterpoint is that most borrowers opt for a 30yr term and this does indeed entail a new 30 years of payments.  Even then, if the interest rate is lower and the borrower simply continued paying the original mortgage payment, less interest would be paid over time and the loan would be paid off faster than the original would have been.  Bottom line: all things being equal, dropping the rate is advantageous in most cases.

2.      Some borrowers have so many offers to refinance coming their way they fear some may be scams.  Mooney says that many legitimate offers have specific information identifying the borrower's existing loan such as the account number.  Also the borrower can report any suspicious offers at 888-995-HOPE. When in doubt borrowers should check with their current lender.

3.      Another myth is that HARP can't help homeowners who are underwater on their mortgage.  That, in fact, is what HARP was designed to do and has no restrictions on loan-to-value ratios for fixed-rate mortgages.

4.      The fourth myth is that refinancing is hopeless for the unemployed.  HARP does offer options that might work such as underwriting based on assets rather than income.  Borrowers should reach out to their lender to discuss available solutions.

5.      It is possible to refinance through HARP even if the borrower's current lender doesn't participate in the program.  Freddie Mac and Fannie Mae have lists of lenders who can discuss options and eligibility with anyone.

6.      Some people believe they are ineligible if they currently have an adjustable rate mortgage (ARM).  HARP was in fact created to help such homeowners obtain mortgages that are more stable and sustainable.  With rates still so low it is the perfect time to lock into a fixed-rate mortgage

7.      Myth Seven is that condos are not eligible for HARP refinancing.  Not only are condos eligible but so are investment properties and second homes.

8.      It isn't always necessary to have sufficient cash up front to pay closing costs.  Lenders can evaluate whether a borrower qualifies to have closing costs and other necessary expenses rolled into the new loan.  

9.      Finally many homeowners think HARP is only for those who are behind in their payments and in danger of foreclosure.  In fact HARP is intended specifically for homeowners who are current on their mortgages but are underwater and unable to refinance through a traditional refinance programs

Moony said potentially millions of homeowners could save money each month by refinancing through HARP.  The program has more than 2.9 million success stories so hopefully if you now know these myths are just that, she says, reach out to your lender and get started with HARP because, "Saving money is a good thing!"

Best Regards, Capital Valley Team

 

 

Negotiating Repairs…

How to Negotiate Repairs After a Home Inspection

AUTHOR:BRENDON DESIMONE 

 

Most would-be buyers and sellers believe the real estate “deal” is negotiated at the signing of the contract. By that point, the counteroffers have been made and the back and forth has happened, so it’s easy to assume that the deal will go on auto-pilot until closing.

The reality, though, is that in many cases, the deal-making and negotiations only start at the contract signing. Even in more competitive real estate markets, negotiations still happen once in escrow.

For example, if you’re a buyer, the property inspection or sellers’ disclosures — maybe the HVAC system has some issues — may prompt you to seek a credit. But where do you go from there?

Here are three tips for negotiating repairs after a home inspection.

1. Ask for a credit for the work to be done

The sellers are on their way out. If the property is moving toward closing, they’re likely packing and dreaming of their new home. The last thing they want to do is repair work on their old home. As a result, they may not approach the work with the same conscientiousness that you, as the new owner, would. They may not even treat the work as a high priority. If you take a cash-back credit at close of escrow, you can use that money to complete the project yourself. Chances are you may do a better job than the seller, too. Finally, if you get the credit, there will be less back and forth to confirm the work has been done.

2. Think ‘big picture’

If you know you want to renovate a bathroom within a few years, then you likely won’t care that a little bit of its floor is damaged, that there’s a leaky faucet or that the caulking needs to be redone. These things will get fixed during your future renovation. However, the repairs are still up for negotiation. Asking the seller for a credit to fix these issues will help offset some of your closing costs.

3. Keep your cards close to your chest

A good listing agent will walk the property inspection with you, your agent and the inspector. Revealing your comfort level with the home or your intentions, in the presence of the listing agent, could come back to haunt you in further discussions or negotiations.

For example, if you mention you’re planning a gut renovation of the kitchen, the sellers will certainly hear about it. And they’re going to be less likely to offer you a credit back to repair some of the kitchen cabinets. Also, if the listing agent hears you tell the inspector that you love the home so much you don’t mind replacing the HVAC system, the agent will surely let the sellers know about that.

Eyes wide open

A word of caution: You should never complete the original contract assuming that you can negotiate more as a result of the property inspections. If it’s a competitive market and the property inspection comes back flawless, there’s nothing to negotiate. If you attempt to negotiate anyway — to recoup what you lost in the initial contract negotiations — you risk alienating the sellers and possibly giving them an incentive to move on to the next buyer.

You need to go into escrow with your eyes wide open. A real estate transaction is never a done deal until all the money has been wired in and the deed transferred. Prior to signing the real estate contract, your main concern is that you may be competing with other buyers. Once you’re in escrow and doing inspections, however, it’s just you and the sellers. Stay on your toes. Otherwise, you may risk losing out on further viable negotiation opportunities, which could lead to buyer’s remorse.

Related:

• What to Expect When Inspecting?
• Why You Should Have Your Home Inspected Before Selling
• Most Important Things to Do Before & After Closing

 

Mortgage Rates downward..,.

Mortgage rates wander downward for the first time in three weeks

• BY KATHY ORTON

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  December 12 at 10:29 am

Win McNamee/Getty Images

Fixed mortgage rates wandered downward for the first time in three weeks, according to the latest data released Thursday by Freddie Mac.

The 30-year fixed-rate average dropped to 4.42 percent with an average 0.7 point after climbing 24 basis points in the past two weeks. It was down from 4.46 percent a week ago but up from 3.32 percent a year ago. Since spiking to 4.58 percent in late August, the 30-year fixed rate has bounced around between 4.57 percent and 4.1 percent.

The 15-year fixed-rate average edged down to 3.43 percent with an average 0.7 point. It was 3.47 percent a week ago and 2.66 percent a year ago. The 15-year fixed rate has remained below 3.5 percent since late September.

Hybrid adjustable rate mortgages also fell. The five-year ARM average was 2.94 percent with an average 0.4 point. It was 2.99 percent a week ago and 2.7 percent a year ago.

The one-year ARM average was 2.51 percent with an average 0.4 point. It was 2.59 percent a week ago.

“Mortgage rates were little changed amid a light week of economic data releases,” Frank E. Nothaft, Freddie Mac vice president and chief economist, said in a statement.

“Of the few releases, total nonfarm payroll employment rose by 203,000 in November, and the unemployment rate declined to 7 percent. Also, single family mortgage debt outstanding increased for the first time since 2008. This is a positive sign, as it reflects that the pick-up in new purchase-money originations has offset loan paydowns and led to a net increase in principal outstanding.”

Meanwhile, mortgage applications showed a slight uptick last week, according to the latest data from the Mortgage Bankers Association.

The Market Composite Index, a measure of total loan application volume, edged up 1 percent. The Refinance index rose 2 percent, while the Purchase Index increased 1 percent.

The refinance share of mortgage activity accounted for 65 percent of all applications.

Best Regards, Chris Mesunas

 

Mortgage Credit Availability Tightens Up..January is Coming…

BY JANN SWANSON

Mortgage Credit Availability Tightens as Higher LTV Options Expire

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Dec 10, 2013

Mortgage credit was slightly less available in November than it was in October the Mortgage Bankers Association said today.  MBA's new Mortgage Credit Availability Index (MCAI) slipped from 111.5 to 110.2, a -1.2 percent change.  Any decrease in the index indicates that credit standards are tightening.

MBA said the index drop was occasioned by discontinuance of a significant number of loan programs that had allowed for loan-to-value ratios exceeding 95 percent and low-to-mid range credit score minimums.  There was also a continued investor pull-back from programs offering longer than 30-year terms and interest only loans. Some of these changes were the result of preparations for new regulations coming into effect in January.  The above changes were offset a bit by an increase in cash-out refinancing programs offered to well-qualified borrowers by some investors.

MBA unveiled the MCAI earlier this year in conjunction with AllRegs and using their Market Clarity product.  The index is benchmarked to 100 in March 2012.  It takes into account several factors related to borrower eligibility and the underwriting criteria from over 85 lenders and investors.   By way of context, MBA says that had the market been tracked by the index in 2007 it would have been at a level of roughly 800 because of the easy availability of credit at that time.

The MCAI rose for four straight months after MBA first went public with in late spring.  It has now retreated for a fourth consecutive month.

Regards, Chris Mesunas

 

 

Fannie Mae Mortgage Fees Increase…

Fannie Mae Mortgage-Guarantee Fees Increased by

U.S. Overseer

By Clea Benson  Dec 9, 2013 

Fannie Mae (FNMA) and Freddie Mac, the U.S.-owned mortgage-finance companies, will raise the fees they charge lenders to guarantee loans as part of an effort to shrink their presence in the mortgage market, the Federal Housing Finance Agency said.

For the first time, the companies also will start charging higher fees in New York, New Jersey, Connecticut and Florida, where long foreclosure timelines make it more expensive for Fannie Mae and Freddie Mac to dispose of properties they take over after borrowers default, the FHFA said yesterday. The agency is also shifting its fee structure so borrowers with poor credit will pay more.

The fee increases, typically passed on to borrowers in the form of higher interest rates, will go into effect in March and April, the agency said in a statement. Fees will rise an average of 14 basis points on typical 30-year fixed-rate mortgages, the FHFA said.

“Today’s price changes improve the relationship between g-fees and risk,” FHFA Acting Director Edward J. DeMarco said in a statement, referring to fees for the guarantees. “The new pricing continues the gradual progression toward more market-based prices, closer to the pricing one might expect to see if mortgage credit risk was borne solely by private capital.”

Fannie Mae and Freddie Mac (FMCC) purchase loans and package them into securities, guaranteeing payments of principal and interest. They currently back about 60 percent of U.S. home mortgages.

Shrinking Footprint

The move to shrink the companies’ footprint by raising prices comes as DeMarco is in his last days heading the agency after spending four years pursuing a program of gradually reducing the companies’ operations and maximizing their returns to taxpayers.

The U.S. Senate plans to vote tomorrow to confirm DeMarco’s successor, Mel Watt, a Democratic congressman from North Carolina. Watt, who has declined to discuss his views on housing policy while his nomination is pending, would have the power to reverse the increases if he disagrees with them.

The FHFA is eliminating a 25 basis-point up-front fee Fannie Mae and Freddie Mac began charging in 2008 to deal with the costs of the adverse housing market, recognizing that the market has improved. The fee will remain in the four high-cost states.

FHFA’s last guarantee-fee increase, of 10 basis points, came in November of 2012. An increase of 10 basis points would cost a borrower with a $200,000 mortgage about $4,000 over a 30-year loan term. The average guarantee fee charged by the two companies rose to 38 basis points in 2012 from 28 basis points in 2011, according to a report FHFA also released yesterday.

Washington-based Fannie Mae and McLean, Virginia-based Freddie Mac have taken almost $187.5 billion in U.S. aid since they were placed under conservatorship in September 2008 after losses on investments in risky loans pushed them to the brink of insolvency. With the rebound in the housing market, the companies have become profitable and will have returned $185.2 billion to taxpayers by the end of 2013.

Best Regards, Chris Mesunas