Photo courtesy of Highland Home Inspections. http://highlandhomeinspections.net/contact-us.php.
Those who lost their home due to financial hardships may get another shot at being home owners again soon. The Federal Housing Administration recently announced that they would shorten the waiting period for qualified borrowers who’ve had a bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale who want to buy a home again. Under the FHA’s Back-to-Work program, home owners must show that they have their finances back in order and they must receive counseling from a HUD-approved agency. Those who meet the requirements can apply to buy a property in as little as a year.
“The Back to Work program is a great opportunity for us to help those impacted by the recent housing crisis,” Heather Shanahan, a representative with a HUD-approved housing counseling agency called Springboard, told HousingWire. “Our goal in our counseling sessions is to enable the borrower to better understand their loan options and the obligations.”
Counselors provide borrowers with a customized action plan that reflects household budgets and shows borrowers how they can meet their financial obligations to prevent default again in the future.
The Back-to-Work program is also helping borrowers purchase their first homes, in some cases.
The government shutdown is starting to cripple the real estate business just as it was starting a comeback. You might ask how this is happening, well, here are just some of the reasons.
FHA and VA loans are being delayed because of lack of staff
USDA loans which are for low income borrowers, have ground to a complete halt.
IRS is down, so FHA and conventional loans cannot verify tax documents, delaying or killing loans.
All this means that real estate deals are being put on hold, or in some cases, just falling apart. There is a real good chance if this idiotic shutdown continues that interest rates will climb. A one percent increase in the interest rate and shutdown could mean a decline in 450,000 home sales. Welcome to another depression, thanks some die hard conservatives.
John J. O’Dell
Real Estate Broker
Civil Engineer
General Contractor
Mortgage giant Fannie Mae recently offered some predictions of what the housing market’s “normal” will look like in the next two years.
In its report, “Transition to ‘Normal’?”, Fannie says while the housing market has shown improvement, uncertainty remains over both the economy and the real estate market.
“Our forecast is that 2013 and 2014 will exhibit below-potential economic growth,” according to the white paper. “This is despite the fact that we expect the housing rebound will continue and that the economy will benefit from the gradual increased growth of U.S.-based manufacturing, as well as the expansion of domestic energy production.”
The following are some of the projections Fannie made in its report:
Mortgage rates to stay low: Fannie Mae expects mortgage rates to remain low over the next few years. The mortgage giant expects rates will increase to no more than 4.2 percent by the end of 2014.
FHA loans may get more expensive: More costs may be assigned to Federal Housing Administration loans.
Refinancing drops: The boom in refinancing may have peaked last year with slower activity projected this year. “We expect 2012 to be seen as the high watermark for refinances and 2013 as the first of several transition years as the housing finance market transitions back to a more normal balance between purchase and refinance activity.”
Foreclosures continue to fall: Fannie expects foreclosures to continue to decline from their peaks as more alternatives to foreclosure are pursued.
Housing starts to rise: Fannie Mae predicts that housing starts will increase 23 percent in 2013 — which would be 60 percent more than the record low in 2010. Fannie expects housing starts won’t reach sustainable levels until 2016.
Mortgage originations grow: “Given our expectations of continued improvement in housing starts, home sales, and home prices in 2013,” Fannie Mae writes, “we project that purchase mortgage originations will rise to $642 billion from a forecast of $518 billion in 2012.”
English: Los Angeles Times building in downtown Los Angeles, California (Photo credit: Wikipedia)
Los Angeles Times
Drop in U.S. mortgage delinquency rates led by California, Arizona
The national mortgage delinquency rate – the percentage of borrowers 60 days or more late on their payments – fell to 5.41 percent in the third quarter from 5.88 percent in the same period in 2011, said TransUnion, one of the three major credit reporting companies.
How the U.S. mortgage settlement can help military members
The national mortgage settlement between 49 states and five of the nation’s largest banks includes protections for service members. Under the settlement, participating banks have agreed to provide consumers relief, everything from granting short sales to modifying mortgages to make them more affordable for homeowners.
FHA gives those who defaulted on homes another chance
The FHA, which backs nearly 8 million loans, is helping rebound buyers recapture the American dream, boosting the housing market in the process. But that’s touched off a fierce debate about the financial and ethical wisdom of bankrolling borrowers who contributed to the last housing bubble – and the potential cost to taxpayers.
The biggest source of funding for low-down-payment condo mortgages, the Federal Housing Administration, has revamped controversial rules that caused thousands of building across the country to lose their eligibility for FHA financing.
The revised guidelines, which were issued Sept. 13 and took effect immediately, should make it easier for a large number of homeowner associations to seek certification by the FHA. Without approval of an entire development, no individual unit can be financed or refinanced with an FHA mortgage.
The previous rules prohibited FHA insurance of units in buildings where more than 25 percent of the total floor space was used for commercial or nonresidential purposes. Yet many condominiums in urban areas have lower floors devoted to retail stores and offices that generate revenues that help support the entire project. The revised rules allow exceptions of up to 35 percent commercial use, and provide for additional case-by-case exceptions to 50 percent or higher.
The Community Associations Institute, the condo industry’s largest trade group, is predicting that the relaxed FHA rules will spark home sales and helps tens of thousands of condominium communities begin to recover from the housing slump.
The new rules also offer greater flexibility on investor ownership. In existing developments, one or more investors are now allowed to own up to 50 percent of the total units provided that at least half of the units are owner-occupied. The previous rule required that no more than 10 percent of units could be owned by a single investor.
The Federal Housing Administration (FHA) plans to impose significant restrictions on the amount of money that sellers can contribute at closing in the near future. The FHA also will be raising its mortgage insurance premiums during the coming weeks, increasing charges for new purchases across the board.
Making sense of the story
One reason for the increase in fees is that over the last six years, the number of FHA loans used by buyers has increased significantly. The housing program is financing 40 percent or more of all new-home purchases in some areas and is a crucial resource for first-time buyers and moderate-income families. This is especially because of the low 3.5 percent down payment required for most FHA loans.
During this span of rapid growth, the FHA’s insurance fund capital reserves have steadily deteriorated – far below congressionally mandated levels. And delinquencies have been increasing. As a result, the FHA is under the gun to get its own house in order, cut insurance claims, and rebuild its reserves.
Under the changes, the FHA will lower its seller concession cap to 3 percent of the home price or $6,000, whichever is greater. Currently, the FHA allows up to 6 percent of the price of the house to go toward buyers’ closing costs.
Beyond that change, the FHA also plans significant increases in insurance premiums – upfront premiums will rise to 1.75 percent from 1 percent, effective April 1, and annual premiums will increase by 0.1 percent on all loans under $625,000 and 0.35 percent on mortgage amounts above that, effective June 1.
For all your real estate needs:
Call or email today
John J. O’Dell Realtor® GRI
Real Estate Broker
Civil Engineer
General Contractor
(530) 263-1091
Email jodell@nevadacounty.com
Largest False Claims Act Settlement Relating to Mortgage Fraud
As part of the global resolution between the United States of America and the five largest mortgage servicing banks in the country, which will bring much needed relief to financially distressed homeowners nationwide, Loretta E. Lynch, United States Attorney for the Eastern District of New York, today announced that the government will also resolve its claims against the Bank of America, Countrywide Financial Corporation and certain Countrywide subsidiaries and affiliates (Countrywide) for underwriting and origination mortgage fraud.
As part of the global settlement, Bank of America will pay $1 billion to resolve the wrongdoing uncovered during the office’s investigation. The settlement will entail an immediate payment of $500 million to provide a recovery for the harm done to the FHA by Countrywide’s conduct. Payment of the second $500 million will be deferred to fund a loan modification program for Countrywide borrowers across the nation with underwater mortgages. Under the terms of the program, Bank of America will solicit all potentially eligible borrowers and provide a loan modification to anyone with an eligible mortgage who accepts the offer. If, after the expiration of three years, the bank has not met its obligation to apply the full $500 million to provide such relief, any remainder will be paid directly to the United States.
“We announce today the largest ever False Claims Act settlement relating to mortgage fraud. Through their underwriting and origination of tens of thousands of government-insured loans to unqualified borrowers, Countrywide Financial subsidiaries systematically abused the Federal Housing Administration and became some of the main players in this country’s financial crisis. We are committed to protecting the FHA’s ability to provide assistance to qualified low-income and first-time home-buyers, and this settlement goes a long way toward that end. It also puts lenders on notice that they will face serious financial consequences for violating their obligations under the FHA’s programs,” stated United States Attorney Lynch.
“This agreement is demonstrative, and should serve as a model, of what results can be achieved when agencies of the United States Government join forces in a united effort to combat fraud in the FHA insured mortgage program,” said Inspector General Montoya. “OIG staff served IG subpoenas, conducted multiple interviews, reviewed loan files, and worked closely with the U.S. Attorney’s office in developing this case.” He further added, “I am appreciative of the tenacity with which the Assistant United States Attorneys approached this matter, the expertise and effort of my OIG auditors, investigators and legal team, and the assistance of the HUD Office of General Counsel and its Office of Program Enforcement and Philadelphia Home Ownership Center throughout this endeavor.”
In anticipation of the expiration of current loan limits on Sept. 30, 2011, Bank of America has decided to stop accepting conventional and government applications for loan amounts that will exceed the permanent loan amounts. The deadline to submit loan applications was July 1.
According to an email from Bank of America, conventional loans that exceed the permanent loan limits will now be required to use non-conforming programs.
Barring Congressional action, the maximum FHA, Fannie Mae, and Freddie Mac conforming loan limit will decline to $625,500 beginning Oct. 1, 2011, from the current $729,750 limit, though the majority of counties will fall far below the $625,500 maximum. The conforming loan limit determines the maximum size of a mortgage that FHA, Fannie Mae, and Freddie Mac government-sponsored enterprises (GSEs) can buy or guarantee. Non-conforming or jumbo loans typically carry a higher mortgage interest rate than a conforming loan and require a higher down payment, increasing the monthly payment and negatively impacting housing affordability for California home buyers.
Thinking of buying or selling?
For all your real estate needs, call or email:
John J. O’Dell Realtor®
Real Estate Broker
O’Dell Realty
9530) 263-1091 jodell@nevadacounty.com
Beginning Aug. 1, the Federal Housing Administration will extend the period for unemployed homeowners to miss mortgage payments from four months to a full year, providing qualified homeowners with more time to find employment before the foreclosure process begins.
Making sense of the story
The new Special Forbearance program falls under the FHA’s Loss Mitigation program, which FHA-approved servicers must participate in.
The extended grace period only applies to FHA-backed loans and homeowners in the government’s foreclosure prevention program, the Making Home Affordable Program (MHA).
In addition to extending the forbearance period and removing the up-front hurdles for borrowers, the FHA also reemphasized its requirement that participating servicers conduct a review at the end of the forbearance period to evaluate the borrower for all additional, applicable foreclosure assistance programs and notify the borrower in writing whether or not he/she qualifies for any other available option.
If the borrower does not qualify for any foreclosure assistance option, the servicer must provide the borrower with the reason for denial and allow the borrower at least seven calendar days to submit additional information that may impact the servicer’s evaluation.
Housing and Urban Development, which oversees FHA, hopes private lenders and government-controlled Fannie Mae and Freddie Mac will adopt a similar policy.
For additional information on the program, including eligibility and requirements, please visit Read the full storyThinking of buying or selling?
For all your real estate needs, call or email:
John J. O’Dell Realtor®
Real Estate Broker
O’Dell Realty
9530) 263-1091 jodell@nevadacounty.com
Foreclosure properties, especially those with the water and power turned off, may not qualify for standard financing, but would-be owner-occupants may qualify for a federally insured 203(k) loan.
Would-be owner-occupants who do not have enough money to purchase a foreclosure home using cash, may qualify for the federally insured 203(k) loan, which allows borrowers to roll projected rehab costs into the loan.
According to one real estate expert, most foreclosure properties are sold as is, and, oftentimes, heat, plumbing, and electric are turned off, making it unlikely a lender will lend money on the home.
To qualify for a 203(k) loan, buyers generally hire an independent consultant hired by the Federal Housing Administration to review contractor cost estimates and architectural plans for things like whether the work will bring the property up to minimum standards, while not going overboard on improvements.
Buyers should be aware that not all foreclosure properties are eligible. For instance, a partially built house that has never had a certificate of occupancy requires a construction loan of the kind that a commercial developer would use.
The interest rate on a 203(k) loan is approximately a quarter of a percentage point higher than on a standard FHA-insured loan, and a buyer also can expect to pay 1 or 2 points.
Also, as with other FHA-backed loans, down payments may be as low as 3.5 percent, and loan limits apply. Currently, most FHA loans are capped at $729,750.
