FHA to increase mortgage insurance premiums one quarter of one point

The Federal Housing Administration is increasing its annual mortgage insurance premium one quarter of one point on all 15-year and 30-year mortgages backed by the agency.
The hike is in response to a congressional mandate that gave the FHA permission to increase premiums and keep its insurance fund liquid. The higher premiums also were outlined in President Obama's 2012 fiscal budget, which estimates the FHA will insure $218 billion in loans during the 2012 fiscal year.

The changes will effect loans issued on or after April 18.

Once the change takes place, the monthly insurance premium paid on a 30-year, fixed-rate FHA-insured loan will increase by $33.
On loans with amortization terms greater than 15 years, the FHA's annual mortgage insurance premium will increase to between 110 and 115 basis points. For loans with amortization terms of 15 years or less, the annual premium is set to rise between 25 and 50 basis points.
After the transition, a borrower holding a 30-year, fixed FHA-insured loan valued at $163,000 will be paying $151 per month in premiums, compared to $118 under the current rates.
"After careful consideration and analysis, we determined it was necessary to increase the annual mortgage insurance premium at this time in order to bolster the FHA’s capital reserves and help private capital return to the housing market,” said FHA Commissioner David Stevens in a statement. "This quarter point increase in the annual MIP is a responsible step toward meeting the congressionally mandated 2% reserve threshold, while allowing FHA to remain the most cost effective mortgage insurance option for borrowers with lower incomes and lower down payments."
The FHA also has relaxed some of its refinancing rules, declaring in a letter Monday that borrowers no longer have to be employed to get a streamlined refinancing.
In addition, the agency said on simple-rate refinancings where borrowers pay for their own closing costs with cash or higher rates, income and asset information is no longer required, which allows the refinancing to be completed with an abbreviated loan application. The changes go into effect 60 days after the official release of the FHA's letter on Feb. 14.
Meanwhile, tighter lending rules remain in place for refinancing loan holders, with the FHA stipulating that closing costs cannot be financed for a simple rate without an appraisal.
The agency also said in order for homeowners to qualify for a refinancing, the monthly cost of their new loans must save them at least 5% or more. In addition, a borrower must be current on the loan a month prior to the refinancing.

Large housing inventories to be sold at deep discounts in 2011

Foreclosure filings and completed foreclosures will reach record levels this year, after lenders exhaust alternatives such as mortgage modifications, according to DBRS.
Analysts expect increased losses to residential mortgage-backed securities, as a result, because large inventories of foreclosed homes will be sold at deep discounts. The ratings agency also expects the federal government to continue calling for large-scale loan modifications in 2011. This will now affect loans such as option adjustable-rate mortgages because most of the delinquent subprime mortgages have already been modified.
DBRS projects delinquency trends to continue climbing this year, as negative home equity persists, home prices remain down, unemployment stays high, and many borrowers have trouble refinancing due to tightened underwriting standards.
Analysts said the number of REO properties could double over the next 12 months to 4 million from 2 million, and it will take at least one to two years to sell those homes, further hindering recovery. DBRS said servicers may turn to short sales and some government programs more often this year to sell these distressed properties.
Analysts pointed to the "first look" program the Department of Housing and Urban Development rolled out in September as one option. The program gives local nonprofits or borrowers a chance to bid on a house at a 1% discount of the appraised value before investors.
More regulatory reform will come to mortgage servicers in 2011, analysts said, "as the industry tries to recover from the revelations that were brought about over the last few months including robo-signing foreclosure affidavits, wrongfully foreclosing on military families and the inability of servicers to prove in court that they owned the mortgage loans."
Servicing fees are likely to increase because lenders and servicers need to find ways to pay for additional staff and increased litigation costs, while compensating borrowers for errors, according to DBRS.

Home Buyer University! Free Online Workshops

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CA Realtors forecast slight rise in home sales for 2011

Great article in the paper today:


The California Association of Realtors expects the state's existing home sales market to end 2010 on a down note, with only modest improvement next year.

By the close of this year, sales of existing single-family homes will have declined 10 percent compared with 2009, CAR predicted Monday in its 2011 California Housing Market Forecast. Los Angeles-based CAR forecast only a 2 percent gain in 2011.

CAR projected 2010 sales statewide to come in at 492,000, compared with 546,500 in 2009. It forecast 502,000 sales in 2011.

CAR also predicted an increase in median home sale prices. After two consecutive years of record price declines, CAR said the median home price in California will climb 11.5 percent to $306,500 for 2010, and increase another 2 percent in 2011 to $312,500.

"As the U.S. economy continues its tepid recovery, we'll see some improvement in California's economy," said CAR Chief Economist Leslie Appleton-Young. "We expect a net jobs increase of approximately 1.4 million jobs in California for the year to come and an improvement in unemployment figures."

Kris Vogt, president of the Coldwell Banker Residential Brokerage's Sacramento-Tahoe regional office, said he also was cautiously optimistic about 2011.

"I think the fact that we finally have a state budget might help with some confidence, along with low interest rates and (home) affordability at historic levels," Vogt said. "I think these are things consumers can really step into, and that will be good for 2011."

Even so, 2011 projections fall far short of pre-recession totals. In 2005, for example, statewide sales of existing homes totaled 625,000, with a median price of $522,700.

CAR President Steve Goddard believes troubled properties will play a role in helping the market climb out of the hole in 2011.

"Distressed properties will figure prominently in the market next year, but we also expect to see discretionary sellers play a larger role," he said, adding later, "The segment of the market under $500,000 has been driven by distressed sales, while higher-priced areas of the state have been constrained by restricted financing options."

"A lean supply of available homes for sale will drive prices up at the low end," Appleton-Young noted.

"But larger inventories and limited, less-attractive financing will cause continued softness at the high end. … The wild cards for 2011 include federal housing policies, actions of underwater homeowners and the strength of the economic recovery."

NAR’s HouseLogic Launches Campaign to Help Military Families Sustain Homeownership

NAR’s HouseLogic Launches Campaign to Help Military Families Sustain Homeownership
Washington, October 11, 2010
The National Association of Realtors®’ HouseLogic, a free, comprehensive consumer website about all aspects of homeownership, today launched Operation Home Relief, a new Facebook Causes campaign. The campaign aims to increase awareness, rally support and raise funding for USA Cares, a nonprofit organization that provides counseling and financial foreclosure assistance to post-9/11 active duty U.S. military service personnel, veterans and their families.
HouseLogic will donate $1 to USA Cares every time someone “likes” the Operation Home Relief Cause page on Facebook and will match individual donations made to the cause, up to $20,000.
“Owning a home is part of the American dream, where we make memories, build our futures, and feel comfortable and secure; and any family who loses that dream to foreclosure is one family too many,” said NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz. “HouseLogic’s Operation Home Relief aims to help sustain homeownership for military families who have already given so much to support our country, and we hope others will join together with us to support this worthy cause.”
When people lose homes to foreclosure, the community, the housing market and the economy all suffer. HouseLogic’s Foreclosure Guide highlights personal stories and offers information and tips to help homeowners facing foreclosure make smart, proactive decisions about what steps to take, where to find help and the alternatives to foreclosure. The guide also includes ideas for how others can get involved to combat foreclosures in their community.
“U.S. military service members bravely face danger around the world every day on behalf of all Americans. Yet, some military service members and their families also face financial dangers and hardships at home,” said William H. Nelson, executive director, USA Cares. “USA Cares’ sole mission is to help these service members and their families in their time of financial need. To that end, we’re excited to have the support of HouseLogic and the National Association of Realtors®. Their new Facebook Causes campaign highlights the work USA Cares is doing, reminding Americans of the many challenges faced by U.S. military service members and their families, and generates support via Facebook for the help that we’re offering every day.”
For more information on sustaining homeownership, and many other housing topics, visit HouseLogic at www.houselogic.com.
HouseLogic is a free source of information and tools for homeowners from the National Association of Realtors® that helps homeowners make smart decisions about all aspects of their home. HouseLogic helps homeowners plan and organize their home projects and provides timely articles and news; home improvement advice and how-to’s; and information about taxes, home finances and insurance.
USA Cares is a nonprofit 501(c)3 organization that helps post-9/11 military and their families with basic needs, assists veterans suffering from post-traumatic stress disorder (PTSD) and traumatic brain injury (TBI) and their families and works to prevent private military home foreclosures and evictions. In seven years, USA Cares has received over 24,000 requests and responded with more than $7 million in grants. Military families anywhere in America can apply for assistance through the USA Cares web site, www.usacares.org or by calling 800-773-0387. For more information on USA Cares contact John Revell, jrevell@usacares.org or call 270-352-5451.

Mortgage Foreclosure Hault Widens as BofA extends freeze to 50 states

Bank of America has now widened it’s mortgage foreclosure halt from 23 to all 50 states. This follows as a growing number of mortgage lenders, such as GMAC Mortgage and JPMorgan Chase, have put a stop to foreclosures. Reports of problems involving paperwork and a lack of review of cases may have led to homeowners being evicted illegally. Some 40 state attorney generals are now investigating. The foreclosure halt by Bank of America in all 50 states is just the latest result of the subprime fiasco which now includes bank employees robo-signing and foreclosures being processed without proper documentation. The number of home foreclosures third quarter 2010 could be far worse than those in 2009.

One of the principle issues involved is whether or not the banks initiating the foreclosures are the actual mortgage holder? During the ‘hey-day’ of the housing boom, subprime mortgages were handed out like candy on Halloween to just about anybody. To cover these loans, banks would often sell the paper to another institution. Many ultimately were acquired by either Fannie Mae or Freddie Mac, who control a vast majority of all home mortgages.

Bank of America is the largest lender in the United States. They, along with JP Morgan Chase and Ally Bank, as well as others, first halted foreclosures in 23 states due to these problems with documentation and possible ‘robo-signing’ by employees without actually reading and reviewing the paperwork. With record numbers of home foreclosures being processed by banks through the courts, the potential for errors, false data and other issues increases.

Bank of America has now widened it’s mortgage foreclosure halt from 23 to all 50 states. There is no word yet if other lenders, such as GMAC Mortgage and JPMorgan Chase, will also extend their moratoriums on foreclosures. Some 40 state attorney generals are now investigating the legality of procedures used. The foreclosure halt by Bank of America in all 50 states is just the latest result of the subprime fiasco which now includes bank employees robo-signing and foreclosures being processed without proper documentation. The number of home foreclosures third quarter 2010 could be far worse than those in 2009.

State Tax Payment Plans Available

SACRAMENTO – The Franchise Tax Board (FTB) advised taxpayers dealing with income tax liabilities to contact
FTB for assistance if they are unable to pay on time.
For people experiencing a financial hardship and cannot pay what they owe, FTB specialists can establish payment
plans, grant temporary relief from state tax liens, or, in some cases, delay collection actions. FTB generally approves
installment payment requests if the balance owed is less than $25,000 and can be paid within 60 months.
FTB can generally grant relief from state tax liens within two weeks for financially distressed homeowners trying to sell
or refinance their homes. When a home sells for less than the loan balance, FTB can sometimes remove its tax lien
from the property to allow the homeowner to complete the sale. Tax liens typically must be paid before a real estate
escrow can close. The tax lien remains in effect on any other property the taxpayer currently holds or later acquires.
FTB can help people refinancing or modifying an existing home loan. Homeowners can request that FTB allow the
new or modified loan to have priority over the tax lien. This allows prior home loans to be refinanced or modified
without first having to pay the lien.
More information is available at FTB’s website, ftb.ca.gov, including ways to help taxpayers resolve their accounts
through installment agreement requests. For lien information, look under the "Bills and Notices" tab and then under
the Earnings Withholding and Collections Action section, select: Individuals - Liens.
Taxpayers who cannot resolve their accounts online should call the phone number listed on their billing notices. Those
without Internet service may request an installment agreement payment plan by calling FTB at 800.689.4776, Monday
through Friday, between 8 a.m. and 5 p.m.
Partial Release & Subordination of State Tax Liens
Partial Release
A partial release of lien releases a state tax lien from a specific piece of property. However, the lien remains in effect
and will encumber the transfer of title of any other properties owned or subsequently acquired by the taxpayer.
Reasons to request a partial release of lien include a need to transfer the rights to the property when there are
insufficient funds to fully satisfy the state tax lien or the party with the lien has no rights to title of the property.
Subordination
A subordination of a lien is not the same as a release of lien . The lien remains in effect; however, a subordination of
lien lowers the priority in favor of some other lien against the property. The lien remains in effect and will encumber
the sale of the specified property and any other property owned or acquired by the taxpayer. Typical situations are the
refinance of a loan and there are insufficient funds to fully satisfy the state tax lien or the existing loan is being
modified.
Requesting Partial Release or Subordination
Individual or business entity, call 916.845.4350. If determined that a partial release of lien or subordination
of a lien is warranted, you will be asked to submit the following:
1. Letter of explanation detailing your request.
2. Estimated closing statement.
3. Current preliminary title report that includes the legal description of the property.
4. Current appraisal.
5. Copies of all other liens and encumbrances.
6. Documentation to substantiate all lien payoffs through this escrow.
7. Copy of the new deed of trust (for subordination requests only).
Additional documentation may be needed to complete your request.
Send your request by overnight mail to:
LIEN RESOLUTION UNIT MS A317
FRANCHISE TAX BOARD
SACRAMENTO CA 95827
Phone Numbers:
For Individuals:
800.689.4776 or 916.845.4470
Fax Number: 916.845.4389
For Business Entities:
Entity Type Phone Number
• Corporations 888.635.0494 or 916.845.7033
• Partnerships 888.635.0494 or 916.845.7166
• Limited Liability Companies 888.635.0494 or 916.845.7166

Fannie Mae Extends Alternative Modification Program

The latest in a string of government extensions is an extension to Fannie Mae’s Alternative Modification (Alt Mod) to the Home Affordable Modification Program (HAMP).

The extension is being provided so servicers will have enough time to complete the processing of modifications for borrowers who meet the eligibility requirements for the Alt Mod program, which remain the same.
In Lender Letter LL-2010-04, Fannie Mae introduced the Alt Mod program for borrowers who were eligible for and
accepted into a HAMP trial period, and made all trial payments, but were not offered a permanent modification because of eligibility restrictions.
Fannie Mae requires that servicers consider the Alt Mod program for any eligible borrower before proceeding with foreclosure.
In addition to HAMP evaluation and fulfillment of trial payments, borrowers must meet one of the following requirements to be considered eligible:
• The monthly average mortgage payment ratio based on verified income was less than 31 percent.
• The target monthly mortgage payment ratio of 31 percent based on verified income could not be reached using the standard HAMP modification waterfall.
• The borrower failed to provide all income documentation required for a HAMP modification but meets the streamlined income documentation requirements outlined by Fannie.
The extension was announced September 30 and will allow servicers until November 30, 2010 to submit their Alt Mod cases.

B of A out of Wholesale Lending - see today's news

BofA unexpectedly exits wholesale mortgage market
Local mortgage brokers caught totally unawares; departure of second such huge lender leaves big gap.

--------------------------------------------------------------------------------

By Amanda Fung

Published: October 5, 2010 - 5:15 pm

Bank of America Corp. has exited the wholesale residential lending market, cutting off its business with mortgage brokers, the bank announced Tuesday.

The move came as a surprise to local mortgage providers who did business with the Charlotte, N.C.-based bank. It means that mortgage brokers and their clients will have one less option when they are looking for a loan to buy a condo or co-op in the city.

“We used them a lot for condo sales,” said Ross Weinstein, managing partner at Exclusive Capital Consultants. “Now we will have to move that business to other lenders.”

A BofA spokesperson said, given the opportunity in retail business, the bank preferred “to reallocate its resources to its retail channel and correspondent lending channel.” Less than 5% of the mortgages that the bank annually made came from its wholesale channel. In just the first six months of the year, BofA originated $145 billion in mortgages, according to trade publication Inside Mortgage Finance.

Loan applications via the wholesale lending channel were accepted through the end of the business day on Tuesday and must close by Dec. 1.

“This was not expected,” said Melissa Cohn, president of Manhattan Mortgage, adding that the bank had scheduled a conference for top mortgage brokers in the New York area and had abruptly cancelled it. “We were caught flat-footed.”

BofA's exit follows a similar move by J.P. Morgan Chase & Co., which got out of the wholesale lending business last year.

"It's another way for banks to cut back," Mr. Weinstein said.

Faulty Foreclosures May Prolong the Slump

Faulty Foreclosures May Prolong the Slump
Probes of whether lenders followed the rules could halt seizures, and that could keep the real estate market from finding its bottom

Howard Cohen hasn't paid the loan on his Tukwila (Wash.) home in a year, and when he heard in mid-September that Ally Financial's (GJM) GMAC Mortgage unit was suspending foreclosure evictions in 23 states, it gave him hope. "Maybe I'll stay in my house, too," says Cohen, a 57-year-old commercial-loan broker whose business fell off after the financial crisis. Cohen was encouraged even though his mortgage servicer, Bank of America (BAC), hasn't reported any irregularities.
Attorneys general in Iowa, Illinois, and Texas started investigating Ally's GMAC unit after it disclosed that one of its employees said in a December 2009 deposition that he had signed thousands of foreclosure documents without verifying their accuracy. The company also faces inquiries from officials in Ohio, Colorado, and North Carolina. A JPMorgan Chase (JPM) executive has said she signed thousands of documents without checking loan records, according to a deposition she made in a court case in Palm Beach, Fla., in May. JPMorgan spokesman Thomas Kelly declined to comment. On Sept. 29 the bank asked judges to postpone rulings in pending foreclosure cases while it reviews and possibly resubmits statements.
"Regrettably, a procedural error was found to have occurred in certain affidavits required in certain states," GMAC said in a Sept. 24 statement, adding that the problem "is not related to the accuracy of the underlying transaction." The "error" was the employee's failure to sign the documents in the presence of a notary public or signing them without "direct personal knowledge of all the information," GMAC said. The U.S. government, which has been pressing lenders to reduce foreclosures as evictions hit record levels, owns 56 percent of Detroit-based Ally. The company, formerly known as GMAC, has benefited from more than $17 billion in bailouts.
No one can say how widespread the problems are. "The suspicion is that there might have been shortcuts taken by every mortgage servicer who had extraordinary numbers of foreclosure documents to go through," says Rick Sharga, senior vice-president at RealtyTrac, a housing data provider in Irvine, Calif. In August, lenders took possession of a record 95,364 homes and issued foreclosure notices to 338,836 homeowners, according to RealtyTrac.
If uncovering deficiencies halts thousands of pending foreclosures or voids ones that have already taken place, the courts could be tied up with cases for years, says Stuart Saft, a partner at New York-based Dewey & LeBoeuf. That could further postpone a recovery. "You can't get the economy moving until this whole situation gets straightened out," Saft says. "Dragging out foreclosures doesn't help."
"Shadow Inventory" Problem
The foreclosure foul-ups highlight the "shadow inventory" problem—the vast number of homes now in default or foreclosure that may flood the market, further depressing prices. "Buyers know [prices haven't] hit bottom," says Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez, a New York forecasting firm. "So they're sitting on the sidelines."
In the 23 states where judges must approve foreclosures, the average time between borrowers falling behind and sales of their properties has climbed to almost 25 months from fewer than 18 at the start of 2007, according to data compiled by Austin (Tex.)-based Amherst Securities. The increasing time between default and foreclosure may encourage more homeowners to stop paying, says Cameron Findlay, chief economist at LendingTree.com (TREE) in Irvine, Calif. Overwhelmed lenders are likely to address the worst cases first, leaving many delinquent borrowers in their homes for longer periods, he says.
Other paperwork problems could also keep homeowners in limbo. Cohen, who is 12 months behind on his mortgage payments, says he's been trying to negotiate a loan modification. He anticipates difficulties down the road, he says, because "nobody can tell me who owns my mortgage."
The bottom line: Problems with the paperwork surrounding foreclosures threaten to delay the housing recovery and prolong the economic slump.

FHA Up Front and Monthly MIP Changes happening on 10-04-2010

Time is running out to secure the lower monthly FHA premiums!

FHA is increasing their monthly premium starting October 4th!

Click on the title above for the actual FHA Mortgagee Newsletter!

Article from DS NEWS that offers some hope

New Bill Calls for Refinancing of 30 Million GSE Mortgages
By: Carrie Bay 09/28/2010

Legislation to stabilize the foreclosure crisis through the federal government’s conservatorship of Fannie Mae and Freddie Mac was introduced in the U.S. House of Representatives Tuesday by Congressman Dennis Cardoza (D-California).

The Housing Opportunity and Mortgage Equity (HOME) Act would require Fannie and Freddie to allow borrowers to refinance their mortgages by locking in today’s record-low interest rates for longer fixed-term loans. The legislation would affect up to 30 million mortgages held or backed by the two GSEs.

To fund the program, Fannie and Freddie would issue new mortgage-backed securities (MBS) to fund the refinanced mortgages and use the proceeds to pay off the existing mortgages.

Fannie and Freddie would receive the same cash flow to cover default risk that they do now, passing along the reductions in financing costs to borrowers. Borrowers that qualify for the program would be able to refinance without facing penalty fees.

According to Rep. Cardoza, the measure would help stabilize the housing market by decreasing the inventory of foreclosed homes and reducing declines in property values from issues surrounding blight and abandonment.

At the same time, he argues that those with mortgages backed by Fannie and Freddie would have additional disposable income, providing a direct economic stimulus.

“No solution to date has addressed both foreclosure prevention and the decline of home equity, Cardoza said in a statement. “The reality is the housing crisis has spread far beyond the subprime market, hindering our economic recovery.”

Cardoza criticized the administration’s current housing programs for not being strong enough to make a dent in the worst foreclosure crisis in U.S. history.

“Until we see a program that cuts to the heart of the recession, we will continue to see little growth in our economy, families losing their homes, and lifetime investments with lost equity,” Cardoza said.

The legislation was initially introduced in January 2009. It has been modified based on new input Cardoza received from the House Financial Services Committee and several well-reputed economists, including Christopher Mayer, senior vice dean of Columbia Business School, and Mark Zandi, chief economist for Moody’s Analytics.

Cardoza says the proposal has gained increased interest as more economists realize that measures aimed at addressing the foreclosure meltdown have not been sufficient.

“If we allow housing to go into a free fall, everyone loses: taxpayers will have more bailouts, homeowners will watch their homes continue to decline in value, local communities will struggle to fund their schools. Everyone loses,” Mayer said. “Housing is an important part of what is holding back the economy. The government has a chance to help housing without harming the deficit. We should take it.”

Zandi added, “With mortgage rates near record lows, the quickest and most effective way policymakers can help the economy is to facilitate more mortgage refinancing. The HOME Act does this at little or no cost to taxpayers.”

©2010 DS News. All Rights Reserved.

The Pre-Approval Process

In our last 3 Insider Mortgage Tips we discussed the
3 components lenders look at in order to make a determination
of your ability to obtain a mortgage.

In this Insider Mortgage Secrets Tip, we will discuss the
process of getting approved for a loan BEFORE you start
shopping for your new home.

Do You Have A Thousand Dollars To Simply Throw Away?

I know this may sound like a very silly question but that
is exactly what happens every day to unsuspecting buyers
who do not get pre-approved for a loan BEFORE they go
house hunting.

Let me explain with a typical scenario...

You decide it is time to move so you find a realtor and
start looking for a home. After some house hunting you
find the perfect home and make an offer which is accepted.

Now you must meet with a lender to obtain a mortgage for
this home. When you apply for your loan the lender will
request a check for the appraisal and credit report. It is
also a very good idea to have your home inspected. This is
another fee that you will be required to pay for when the
service is rendered.

So, approximately 7 to 10 days after your contract was
accepted by the seller you will be required to spend this
$1000.00 or more.

Whether Your Loan Is Approved Or Denied These Funds Are
Not Refunded!

THE RIGHT WAY...

The proper procedure is to meet with a lender and get your
loan pre-approved BEFORE you go house hunting. Aside from
avoiding the unpleasant situation just described above there are
other benefits to having your loan in place as your first
step in the process.

In this pre-approval meeting we can establish what your
comfort level is for monthly payments as well as the
amount of funds you can comfortably use for the
transaction and we can then use these figures to recommend the
appropriate program.

In a seller's market where there are many more buyers in
the market than there are homes for sale this can give you
a much needed edge. When the seller knows your loan is
already pre-approved your contract has a better chance of
being accepted than the one from the buyer who has not yet
met with the lender and may or may not be able to get a
loan.

If you would like to get pre-approved and have your money
waiting for you BEFORE you go house hunting please call me
at 916-960-5900 for a No-Obligation Consultation.

In our next issue we will cover the appraisal and what your
home is worth.