Tag Archives: mortgage

Real Estate

Miss a Mortgage Payment, Your Credit Score is Drastically Affected

 

Missed mortgage payments, short sales, and foreclosures can all drastically bring down a credit score.

Lenders use credit scores to measure how well a person handles debt. Credit scores range from 300 to 850, with 650 and below considered poor credit. A mortgage makes up a big part of a person’s credit score and often is the most important part of a person’s credit profile.

And just missing a single mortgage payment by 30 days can ruin a credit score, say FICO and VantageScore, which have studied the impact mortgages can have on credit scores. For borrowers, that can be nearly as destructive as a foreclosure to a credit score, according to the companies.

On the other hand, loan modifications, which is when lenders approve new loan terms, have a “very, very minimal” impact to credit scores, possibly dropping the borrower’s score by 10 or 15 points, Sarah Davies, the senior vice president for analytics at VantageScore, told The New York Times.

A good credit score is important not just for financing home purchases, but employers increasingly check credit as well as landlords when seeking rentals. Also, poor credit scores can also mean higher costs on car loans and credit cards.

How a Credit Score Is Affected

FICO evaluated three various scenarios of mortgage holders — a borrower with a great credit score (780), a borrower with good credit (720), and a poor credit borrower (680) — in a study it conducted last month. Here’s the impact FICO found:

? 30 days late on a mortgage payment: The 780 credit score borrower has her credit score fall to 670-690. The 720 credit score borrower has his fall to 630-650. The 680 credit score borrower falls to 600-620.
? Short sale, deed in lieu of foreclosure, or settlement, assuming the balance has been wiped out: The 780 credit score borrower falls to 655-675; the 720 credit score falls to 605-625; and the 680 credit score drops to 610-630.
? Foreclosure, or short sale with a deficiency balance owed: The 780 credit score drops to 620-640; the 720 credit score falls to 570-590; and the 680 credit score decreases to 575-595.

Source: “Fallout From a Poor Credit Score,” The New York Times (April 24, 2011)

 

For all your real estate needs, call or email

John J. O’Dell
Real Estate Broker
O’Dell Realty
(530) 263-1091

Real Estate

Why Do Banks Call Them Short Sales? They Should Be Called Long Sales!

By John J. O’Dell

I wonder why banks call short sales, short sales?  Of course, what they mean by a short sale is that they are agreeing to sell a house for less than the mortgage they hold on the property. After that, short sale means you will complete a sale within a period of three months to one year, maybe.

I’ve had two short sales going since November 2010.  Last week, one of them gave the go ahead to proceed. Now remember, my buyer has been waiting about five months. So they can wait as long as they want, but they want the buyer to close the deal within 30 days.  Of course, they don’t sign the purchase contract, they just tell you go for it! They send you a one sided contract with their very own terms. You ever notice banks make their own rules?

My other “short sale”, started at the same time. Well, seems like the bank lost all the paper work. So they said they were not going to go ahead with the sale.

It’s a good thing my client has a very lady like scream. So the short sale is back on again.

The process is simple, (not) you submit tons of paper work.  Then they assign a negotiator who emails you and tells you to upload all the documents you have already uploaded for the second time. (like I said, that’s the same  documents that I uploaded in November and they lost)

So I don’t know how long I will have to wait for this second short sale, but I’ll let you know, in the meantime don’t hold your breath. I want you around to read my blogs.

 

John is a real estate broker
General Contractor and civil engineer
You may reach John at Email jodell@nevadacounty.com

Real Estate

Mortgage Aid Offered to Those Who Cashed Out Equity


The California Housing Finance Agency announced this week that people who cashed out equity on their home now are eligible for three of the four “Keep Your Home California” programs.

  • Keep Your Home California is a state-run program funded with $2 billion from the U.S. Treasury’s Hardest Hit Fund.  It is designed to help low- and moderate-income people who are unemployed or owe more than their home is worth pay their mortgage.
  • There are four individual programs that fall under Keep Your Home California.  Eligible homeowners can get up to $50,000 in assistance from one or more of the four programs combined.
  • Under the new rules, people who took equity out of their homes will be eligible for the unemployment mortgage assistance, mortgage reinstatement assistance, and transition assistance programs if they meet all the other program requirements.  Homeowners who cashed out equity will continue to be ineligible for the principal reduction program.
  • When the program first started, homeowners who had tapped the equity in their homes were ineligible for the programs.  CalHFA decided to include these homeowners due to the large number of homeowners who were being turned away for assistance.
  • Under the program revisions, homeowners who originated mortgages after Jan. 1, 2009 also are eligible for the same three programs.  Originally, these borrowers were excluded because they also are excluded under the federal Home Affordable Modification Program, so CalHFA wanted to be consistent with HAMP.
  • To qualify for any of the four programs, homeowners must fall below certain income limits, must be living in the home, and cannot own a second home, among other criteria.  For additional requirements, visit www.keepyourhomecalifornia.org/eligibility.htm.

Read the full story

For all your real estate needs call or email:

John J. O’Dell
Real Estate Broker
O’Dell Realty
(530) 263-1091
Email John jodell@nevadacounty.com

DRE# 00669941

Real Estate

Regulators Propose Tighter Rules For Mortgage Backed Securities

On Tuesday, U.S. bank regulators submitted a proposal that would require lenders to originate mortgages with at least a 20 percent down payment if they want to repackage the loan to sell to other investors without keeping some of the risk on their books.  The bank regulators say this would create strong incentives for responsible lending and borrowing.

  • The Federal Deposit Insurance Corp. board and the Federal Reserve agreed to seek public comment on the proposal.  However, the rule is expected to have little near-term effect because loans sold to Fannie Mae, Freddie Mac and FHA and VA loans would be exempt.  The U.S. government currently backs nearly 90 percent of home mortgages.
  • The CALIFORNIA ASSOCIATION OF REALTORS® and the NATIONAL ASSOCIATION OF REALTORS® oppose the proposal because the 20 percent down payment requirement is too high and would make it difficult for many people to purchase homes, causing further deceleration in the housing market.  Strong evidence shows that responsible lending standards and ensuring a borrower’s ability to repay have the greatest impact on reducing lender risk.
  • “We need to strike a balance between reducing investor risk and providing affordable mortgage credit,” said NAR President Ron Phipps.  “Better underwriting and credit quality standards have greatly reduced risk. Adding unnecessarily high minimum down payment requirements will only exclude hundreds of thousands of buyers from home ownership, despite their creditworthiness and proven ability to afford the monthly payment, because of the dramatic increase in the wealth required to purchase a home.”
  • Saving the necessary down payment has always been the principal obstacle to buyers seeking to purchase their first home. Proposals requiring high down payments will only drive more borrowers to FHA, increase costs for borrowers by raising interest rates and fees, and effectively price many eligible borrowers out of the housing market,” added Phipps.

Read the full story

Real Estate

Five Signs That Say Now is the Time to “Buy”


Home buyers sitting on the fence wondering if now is the right time to buy should consider five factors when making this decision: Jobs, recent sales activity, construction, mortgage availability, and anecdotal evidence.  Each of these issues can help consumers make the best choice for their situation and financial circumstance.

  • Jobs: Although many areas of the country were deeply impacted by the recession, some areas were less affected by job loss.  If employment stability is a concern, prospective buyers should review job-growth data from the U.S. Bureau of Labor Statistics at www.bls.gov.  The data provided by the Bureau is approximately one month old and shows the direction of the local economy.
  • Recent Sales Activity: Housing inventory and sales volume should be taken into consideration while house hunting.  A large inventory of homes with few actual transactions can be a negative indicator.  On the other hand, if inventory is falling and transactions are rising, that is a good sign.  In January, the CALIFORNIA ASSOCIATION OF REALTORS®’ Unsold Inventory Index stood at 6.7 months, up from 5 months in December 2010, but down from 5.7 months in January 2010.  The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.
  • Construction: Staying up-to-date on the number of building permits issued for local builders is useful for gauging builder sentiment and the future of housing activity.  The California Building Industry Association recently announced that California home builders pulled 2,920 total housing permits in January, registering a 5-percent decline compared with a year ago and a 56-percent decline compared with December.  However, the Construction Industry Research Board is projecting 62,000 total permits will be pulled in 2011, an increase of 38 percent compared with 2010’s total of 44,893 permits.
  • Mortgage Availability: Home buyers hoping to be approved for a mortgage should monitor local lending patterns.  Following the financial crisis, most national banks tightened lending standards; however, some local banks haven’t been impacted as much as large lenders and are more willing to lend, even for higher-priced homes.
  • Anecdotal Evidence: Although buyers can access home listings online, one of the best ways to monitor the local housing market is to work with a REALTOR® and gather intelligence using their expertise and guidance.

Read the full story

For all your real estate needs write or call:

John J. O’Dell
Real Estate Broker
(530) 263-1091
Email John at jodell@nevadacounty.com

Visit my other website www.johnodellrealty.com

DRE# 00669941

Real Estate

Fees For Home Mortgages Increase

Grouse Ridge, Nevada County, CA
Grouse Ridge, Nevada County, CA

For the first time since 2009, Fannie Mae and Freddie Mac are raising risk fees charged to lenders on loans they buy for resale to investors.  Fannie and Freddie also are adding risk fees to more loans offered to borrowers with exemplary credit.  Although lenders could absorb the cost, most are expected to add the fees to loan costs.

MAKING SENSE OF THE STORY

  • To avoid a fee or to receive a discount, most borrowers will need FICO scores of 740 or better and down payments of at least 25 percent.
  • The fee increases likely will affect most loans with terms longer than 15 years that are sent to Freddie beginning March 1, and to Fannie beginning April 1.
  • The most notable aspect of the fee increase is that the fees are being added to more loans to borrowers with higher credit scores.  With few exceptions, risk fees previously hadn’t applied to borrowers with FICO scores of 740 or higher.

Read the full story

For all your real estate needs Call

John J. O’Dell
Real Estate Broker
(530) 263-1091

DRE#  00669941

Grouse Ridge Location


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Real Estate

New Online Help From Fannie Mae


Since the start of the housing downturn, the number of Web sites and foreclosure-prevention companies claiming to offer help to struggling borrowers has greatly increased.  While some of the businesses are legitimate, others are fraudulent and offer services that consumers may be eligible to receive free of charge.

  • This month, Fannie Mae – the government-sponsored entity that helps set lending standards for most mortgages—started a Web site, KnowYourOptions.com. The site contains elements distinguishing it from those aiming to prevent foreclosure.  All of the information on the site is available in Spanish or English.
  • KnowYourOptions.com provides video explanations of what users might accomplish in each of the tabbed section of the site.  In the “Take Action” section, for example,” struggling homeowners are advised that the first step to take in seeking help with their mortgage is to contact their mortgage company.
  • Other features of the site include contact information for mortgage companies and loan counselors, calculators to determine if the borrower is eligible for assistance, and information on commencing short sales or deeds-in-lieu of foreclosure.
  • Another helpful Web site for consumers is Hope LoanPort, which allows struggling homeowners and housing counselors to submit financial documents to mortgage companies and track the status of their efforts to avoid foreclosure. Hope LoanPort was created by Hope Now, a consortium of 12 mortgage companies and 250 counseling agencies.

To read the full story, please click here.

Real Estate

Making Sense of The Reform Bill as it Relates to Real Estate

The Senate passed the financial regulation bill today, which will impact home buyers and lending guidelines.  Chief among the changes impacting consumers is the creation a consumer bureau at the Federal Reserve and the requirement that lenders ensure a borrower is able to repay a home loan by verifying income, employment, and credit history.

  • Under the financial regulation bill, at least two categories of mortgages likely will see a dramatic decrease in their availability: interest-only loans and stated-income loans.  Both loan types likely would fall short of the government’s definition of “qualified” mortgages and therefore be avoided by many in the lending community.
  • Many real estate analysts credit interest-only loans and stated-income loans as contributing factors to the decline of the housing market.  With interest-only loans, borrowers pay none of the loan principal for a fixed period, typically 10 years, after which time they must make higher payments for the remaining 20 years of the loan.  Unlike other loan products, stated-income loans do not require borrowers to verify their actual income.  Only a few lenders continue to offer these loans, and typically only to borrowers with deep cash reserves and large down payments.
  • The bill also severely limits the industry practice known as “yield spread premiums,” which in many cases incentivized mortgage brokers and loan officers to sell higher-interest loans to borrowers.  The reform bill will no longer allow commissions earned by mortgage brokers and loan officers to be linked to the interest rate, but rather the loan amount. (a great change )  Once the bill takes effect, the total commission and additional fees charged by lenders and others in the mortgage process will be limited to a maximum of 3 percent of the loan amount, not including the real estate commission.  My comments on this change is good. Some mortgage brokers received a greater commission by playing the consumer against the interest rate.

Read the full story New York Times

Real Estate

Five Steps to Take Before Buying a Home

As the housing downturn has shown, homeownership is about more than buying a home – you have to make sure you can keep the home over the long term. If you’re thinking about buying a home, these five steps can help ensure you get the right house for you and the affordable financing that helps make homeownership a long-term success:

1.  Get Educated. A little mortgage know-how goes a long way toward ensuring you get an affordable mortgage

Before you hire an agent or find a lender, get educated on the loan process and key factors that make a loan affordable.  You’ll  want to know about loan types – fixed-rate mortgages, adjustable-rate mortgages, FHA and VA loans – and the full range of line items that contribute to the total cost of securing the loan, including discount points, appraisals, and real estate agent commissions.

If you would like more in-depth information, the Department of Housing and Urban Development (HUD) can put you in touch with the nearest housing counseling professional in your area. Visit www.HUD.gov for more information. You can also check with local government, neighborhood associations and neighborhood bank branch offices for information sessions on home buying as well as homebuyer-education programs.
Continue reading Five Steps to Take Before Buying a Home →

Real Estate

Nabbing a Bargain-Basement Mortgage Before Rates Rise

The Federal Reserve has been purchasing mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac since early last year.  The purchase program has helped maintain low interest rates for borrowers.  As planned, the Fed this week announced it will stop purchasing these securities at the end of this month.  Many analysts anticipate this will result in a slight rise in rates by year’s end.

Making sense of the story for consumers

  • Interest rates have hovered at or near historic lows for much of the past 18 months, resulting in lower payments for many borrowers.  With the Fed discontinuing its purchase program, some analysts believe a rise in interest rates could range from 0.25 percent to as much as 1 percent by the end of 2010.
  • The federal tax credit for home buyers also is scheduled to end April 30.  The tax credit combined with the expectation interest rates will increase has created a sense of urgency for many home buyers.  In fact, 23 percent of California home buyers purchased a home in 2009 due to the perception that interest rates will rise and they would be priced out of the market, according to C.A.R.’s 2009 Survey of California Home Buyers.
  • Rising interest rates will have an effect on home buyers.  For example, a qualified couple with a combined pretax income of $100,000 per year and debt obligations (excluding mortgage) of $500 who receive a mortgage rate of 5 percent could qualify for a loan of up to $590,000, assuming a 20 percent down payment.  If the interest rate were to rise to 6 percent, as analysts at Barclays Capital predict, the same couple could only qualify for a mortgage of $540,000.

So in short, now is the time to buy real estate while home prices and interest rates are low.

John J. O’Dell
Real Estate Broker

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