Archive for the ‘Mortgage Articles’ Category
Bush Admin Launches ‘Hope for Homeowners’ Program to Help Struggling Families
RISMEDIA, Oct. 3, 2008-This week, the Bush Administration unveiled additional mortgage assistance for homeowners at risk of foreclosure. The HOPE for Homeowners Program will refinance mortgages for borrowers who are having difficulty making their payments, but can afford a new loan insured by HUD’s Federal Housing Administration (FHA).
“For families struggling to keep up with their mortgage payments, this program will be another resource to refinance into a loan they can afford,” said HUD Secretary Steve Preston. “FHA remains a safe and affordable alternative to the high-priced mortgage loans that threaten homeowners’ ability to retain their homes. We strongly encourage borrowers to work with their lenders to determine if HOPE for Homeowners is the right program for them.”
The HOPE for Homeowners program was authorized by the Economic and Housing Recovery Act of 2008. Since the President signed this vital legislation into law on July 30, 2008, the HOPE for Homeowners Board of Directors has worked diligently to develop and implement the program as directed by Congress. The Board was charged with establishing underwriting standards to ensure borrowers, after any write-down in principal, have a reasonable ability to repay their new FHA-insured mortgage.
The HOPE for Homeowners program ends September 30, 2011. The program is available only to owner occupants and will offer 30-year fixed rate mortgages - so the borrower’s last payment will be the same as the first payment. In many cases, to avoid what would be an even costlier foreclosure, banks will have to write down the existing mortgage to 90% of the new appraised value of the home.
Borrower Eligibility
Borrowers are encouraged to contact their lender to determine eligibility, but may be eligible if, among other factors:
- The home is their primary residence, and they have no ownership interest in any other residential property, such as second homes.
- Their existing mortgage was originated on or before January 1, 2008, and they have made at least six payments.
- They are not able to pay their existing mortgage without help.
- As of March 2008, their total monthly mortgage payments due were more than 31% of their gross monthly income.
- They certify they have not been convicted of fraud in the past 10 years, intentionally defaulted on debts, and did not knowingly or willingly provide material false information to obtain their existing mortgage(s).
How the HOPE for Homeowners program works
“HOPE for Homeowners will add to HUD’s existing efforts to make FHA refinancing available to homeowners who need it most,” said FHA Commissioner Brian D. Montgomery. “One year ago, FHA expanded refinancing into its FHASecure program. Since that time, we have helped more than 360,000 families keep their homes by refinancing with FHA, and we will assist a total of 500,000 families by the end of this year.”
The board expects that the primary way homeowners will participate in the program is by working with their current lender. HOPE for Homeowners will serve as another loss mitigation tool available to distressed borrowers.
HOPE for Homeowners also includes the following provisions:
- The loan amount may not exceed a maximum of $550,440.
- The new mortgage will be no more than 90% of the new appraised value including any financed Upfront Mortgage Insurance Premium.
- The Upfront Mortgage Insurance Premium is 3% and the Annual Mortgage Insurance Premium is 1.5%.
- The holders of existing mortgage liens must waive all prepayment penalties and late payment fees.
- The existing first mortgage must accept the proceeds of the HOPE for Homeowners loan as full settlement of all outstanding indebtedness.
- Existing subordinate lenders must release their outstanding mortgage liens.
Standard FHA policy regarding closing costs applies, and they may be:
- Financed into the new loan provided the value of the mortgage (including the Upfront Mortgage Insurance Premium) does not exceed 90% of the new appraised value of the home.
- Paid from the borrowers’ own assets.
- Paid by the servicing lender or third party (e.g., federal, state, or local program).
- Paid by the originating lender through premium pricing.
- The borrower must agree to share with FHA both the equity created at the beginning of this new mortgage and any future appreciation in the value of the home.
- The borrower cannot take out a second mortgage for the first five years of the loan, except under certain circumstances for emergency repairs.
The lender will disclose to the homeowner the benefits of the program including home retention, a new affordable mortgage based on the current appraised value, and 10% equity. The lender will also explain the prohibition against new junior liens against the property unless directly related to property maintenance, and a minimum of 50% equity and appreciation sharing with the Federal government.
The costs to the homeowner include the upfront and annual insurance premiums, as well as a share of the equity created by the write-down associated with the HOPE for Homeowners mortgage and any future appreciation in the value of the home. At settlement, subordinate lien holders will receive a certificate that evidences their interest as an obligation backed by HUD, with payment conditional on the value of HUD’s appreciation share.
If the home is sold or refinanced, the homeowner will share the equity with FHA on a sliding scale ranging from a 100% FHA share after the first year to a minimum of 50% after five years. The lien holder that previously held the highest priority will receive payment up to a proportion of its original interest, not to exceed the amount of available appreciation. This type of delayed payoff will take place until all prior lien holders are satisfied or the amount of available appreciation is exhausted. All remaining appreciation is remitted to FHA.
The HOPE for Homeowners Board of Directors includes HUD Secretary Steve Preston, Treasury Secretary Henry Paulson, Federal Reserve Board Chairman Ben Bernanke, and FDIC Chairman Sheila Bair. They have named the following people to serve on the board as their designees: FHA Commissioner and Chairman of the Board Brian Montgomery, Federal Reserve Board Governor Elizabeth Duke, Treasury Assistant Secretary for Economic Policy Phillip Swagel, and Federal Deposit Insurance Corporation Director Tom Curry.
For more information, visit http://www.hud.gov/hopeforhomeowners/index.cfm.
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Originally by Paige from RISMedia » Real Estate on October 2, 2008, 1:14pm
The Long Wait to Sell
By Brian Everstine
RISMEDIA, Sept. 30, 2008-(MCT)-When Noel and Lorie Martin show their house, they usually display the blueprints on the kitchen table. But their house has been on the market for so long, and there hasn’t been much traffic-so the Martins moved the blueprints and started putting together jigsaw puzzles. One is finished, and they are starting another one.
Their custom-built South Hill home has been on the market for almost two years. In that time, they have come close to an offer but nothing stuck. They went through conventional agents and the house was listed on the Multiple Listing Service. The Martins have even dropped $120,000 off the original price.
Finally, the couple has decided to take the three-bedroom off the market and wait for a bit.
“We’re going to let it sit for six months and just wait for the market to catch up,” Noel said last week. “We’ve tried literally everything we can think of.”
The couple seems to be living through the worst of the market. They put their house up for sale and bought another in Wenatchee as Noel waits to retire.
The couple met with The News Tribune to talk about their situation and what sellers face.
When did you put the house on the market?
Noel: We listed it October ‘06, so we’re just coming up on two years. I’m sure there are probably other people out there with long listings. But it’s kind of frustrating. … Now it’s almost the norm to have these year-plus listings.
What is the price?
Noel: It’s at $475,000. We started at $595,000. I got a couple of market appraisals from a couple of real estate agents back in September of ‘06 and that was the ballpark number. If it would have been priced where we are at today, I guarantee we would have sold it two years ago. But here we sit.
Lorie: I think we’re setting the prices for these other houses around us for sale. People start looking and comparing, and they’ve dropped their prices. Our neighbors are probably not very happy with us.
Where are you moving?
Noel: We actually purchased a house in Wenatchee. It’s just a tiny little house. Our goal is as soon as we sell the house, I’m going to retire from my job. We’re just going to sell the house and downsize a whole bunch.
What do people like about the house?
Noel: They really like the house, they love the layout, they love the openness and the space and the view and the location. There are things that have caused trouble, it is a custom house. It is a large house, and it has three bedrooms.
What do people look for in today’s market?
Noel: I don’t know what people are looking for. I don’t think people are buying houses.
We listed in October of ‘06, anticipating selling it by spring of ‘07. We had a whole vacation planned to Europe and we had to cancel the whole thing. They even had a retirement party planned for me. There are a lot of people I work with who have houses they are trying to sell. There are a lot of people stuck in the same boat. There are just a lot of people waiting to sell houses so they can retire.
What advice do you have for someone looking to sell?
Noel: Probably wait. I think you’re seeing inventory drop because people are deciding to wait. Because this is going to change, right? I mean, with the new administration that’s coming in the office in November. I mean the economy can’t get much worse. Maybe it can.
Lorie: Yeah, maybe it can. That’s the scary part.
Copyright © 2008, The News Tribune, Tacoma, Wash.
Distributed by McClatchy-Tribune Information Services.
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Originally by Paige from RISMedia » Real Estate on September 29, 2008, 2:11pm
NAR, FHA Work Together to Help More Buyers Become Homeowners
RISMEDIA, Sept. 30, 2008-Late last week, the National Association of Realtors® was joined by Department of Housing and Urban Development Secretary Steve Preston as NAR launched its new Federal Housing Administration Toolkit. According to the Association, Realtors can use the toolkit to help buyers obtain safe and affordable FHA-backed mortgages.
“As the leading advocate for homeownership, NAR is pleased to have a long-established working relationship with HUD and FHA,” said Pat V. Combs, NAR immediate past president. “The new toolkit will help Realtors educate consumers about FHA updates and changes and the great benefits of using these programs.”
FHA loans offer low down payments, competitive interest rates, and greater flexibility than most conventional mortgages. In addition, the Housing and Economic Recovery Act of 2008 made increased FHA loan limits permanent, allowing more buyers in high-cost areas to obtain FHA-backed mortgages.
“FHA offers a safe alternative to many of the subprime and exotic loans that caused much of today’s market turmoil, and the program is easier to use than ever before,” Combs said. “Recent revisions to the FHA program will enable more families to achieve their dreams of homeownership, and will allow others to refinance their mortgage at terms that will allow them to keep their home.”
The FHA Toolkit includes a video of frequently asked questions, a flash media presentation of FHA programs, brochures and other reference guides and links to other useful resources.
Also in attendance at the presentation were Illinois Association of Realtors® President Pat Callan and NAR Region 7 Vice President John Veneris.
For more information about recent changes to FHA programs, visit the FHA Resources section of http://www.REALTOR.org.
RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.
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Originally by Paige from RISMedia » Real Estate on September 29, 2008, 2:20pm
FHA Raises Premiums for Home Loans
The Federal Housing Administration raised the premiums it charges for insuring that mortgages will be repaid to 1.75% of the loan amount.
Originally from WSJ.com: Real Estate on August 27, 2008, 6:00am