Let me try to help you make sense of the Government Home Affordable Refinance program. Believe me it can be very confusing.
Under the federal government’s Home Affordable Refinance program the plan is confusing and confounding. For example, under the program, lenders are supposed to refinance loans with mortgage insurance. But they are evasive about whether they will.
Since the days of the Wild West in doing home mortgages, more and more tightening of appraising and mortgage lending is occurring. I think the changes are for the good, since you can blame the banks, wall street and some large mortgage companies who are no longer in business for the meltdown we had in the housing market.
There is so much double talk in some mortgage companies, such as advertising low teaser rates to lure you into doing business with them. Once you start working with these companies, the true cost of the loan becomes apparent. I always advise my clients to work with their local bank or mortgage company, rather then an online mortgage company. My experience with them is that they tell you the rate for your mortgage upfront and that’s what you get.
The locals know the market better, and in Nevada County and other Gold Country Counties that is very important. These counties tend to have a variety of homes, and there are few if any major subdivisions. Getting a comparable home to the one you may buy is sometimes quite difficult. Unlike a large city, where you may have a thousand homes that are similar, here you are lucky to find another home similar to yours.
Anyhow, the new rules that revise the disclosure requirements for mortgage loans under Regulation Z (Truth in Lending) went into effect July 30, 2009. The revisions implement the Mortgage Disclosure Improvement Act (MDIA), which was enacted in July 2008 as an amendment to the Truth in Lending Act (TILA). It is possible that these new requirements may cause delays in getting loans, and if you are purchasing a home, it may delay your closing date.
The MDIA requires creditors to give good faith estimates of mortgage loan costs (“early disclosures”) within three business days after receiving a consumer’s application for a mortgage loan and before any fees are collected from the consumer, other than a reasonable fee for obtaining the consumer’s credit history, according to information from the Federal Reserve. The MDIA also requires early disclosures for loans secured by dwellings other than the consumer’s principal dwelling, such as a second home.
In addition, the rules would implement the MDIA’s requirements that creditors wait seven business days after they provide the early disclosures before closing the loan; and that creditors provide new disclosures with a revised annual percentage rate (APR), and wait an additional three business days before closing the loan, if a change occurs that makes the APR in the early disclosures inaccurate beyond a specified tolerance, according to the Federal Reserve. The rules also would permit a consumer to expedite the closing to address a personal financial emergency, such as a foreclosure.
With so many foreclosures and all the negative news that you hear, it’s refreshing to hear that home inventories are decreasing. But this is making it difficult for home buyers in parts of the country where there are lots of foreclosures to buy. Investors are bidding up prices thousands above the original asking price.
Federal legislation slowing the number of foreclosures is adding to the problem by reducing the number of homes on the market. For instance, in Las Vegas, one of the areas where the bidding problem is greatest, home inventories are down 10 percent since March, according to the Las Vegas Association of REALTORS®.
When a bidding war erupts, the problem is particularly difficult for traditional buyers because investors are usually cash purchasers. They can bid up a property without concern whether the appraisal will prevent them from getting a loan.
Experts say the problem is not unlike the situation at the height of the housing bubble. “This market is about as abnormal as the hypermarket that we came out of a few years ago,” says Jay Butler, director of the Realty Studies program at Arizona State University.
Not too long ago I wrote an article about people trashing their homes during the foreclosure process. Somehow, they feel that its the mortgage company’s fault that the home they bought is now in foreclosure.
httpv://www.youtube.com/watch?v=Ms6IzSSfcoI
(Note, if you cannot see the video, download Adobe Flashplayer)
Although this video is a few months old, it’s still shows what happens to many of the homes that have been foreclosed on. The reason I’m reposting about trashed forclosed homes, is because just the other day I know someone that moved out of their condo which will soon be in foreclosure. Abandoning the condo, they decided to take the kitchen stove, built-in micro wave, the dishwasher and some of the light fixtures, none of which is personal propery and is an integral part of the condo. The condo will soon be in foreclosure, since they are not making any more mortgage payments. They decided that the place was not worth the price they paid for the condo. So much about honoring any part of your debt.
Robert C. Weaver Federal Building HUD Headquarters
The FBI and the U.S. Department of Housing and Urban Development Office of Inspector General (HUD-OIG) urge consumers, especially senior citizens, to be vigilant when seeking reverse mortgage products. Reverse mortgages, also known as Home Equity Conversion Mortgages (HECM), have increased more than 1,300 percent between 1999 and 2008, creating significant opportunities for fraud perpetrators.
Reverse mortgage scams are engineered by unscrupulous professionals in a multitude of real estate, financial services, and related entities to steal the equity from the property of unsuspecting senior citizens aged 62 or older or to use these seniors to unwittingly aid the fraudsters in stealing equity from a flipped property.
In many of the reported scams, victim seniors are offered free homes, investment opportunities, and foreclosure or refinance assistance; they are also used as straw buyers in property flipping scams.
Seniors are frequently targeted for this fraud through local churches, investment seminars, and television, radio, billboard, and mailer advertisements.
A legitimate HECM loan product is insured by the Federal Housing Authority (FHA). It enables eligible homeowners to access the equity in their homes by providing funds without incurring a monthly payment. Eligible borrowers must be 62 years or older who occupy their property as their primary residence and who own their property or have a small mortgage balance. See the FBI/HUD Intelligence Bulletin for specific details on HECMs as well as other foreclosure rescue and investment schemes.
Seniors should consider the following:
* Do not respond to unsolicited advertisements.
* Be suspicious of anyone claiming that you can own a home with no down payment.
* Do not sign anything that you do not fully understand.
* Do not accept payment from individuals for a home you did not purchase.
* Seek out your own reverse mortgage counselor.
If you are a victim of this type of fraud and want to file a complaint, please submit information through our electronic tip line or through your local FBI office. You may also file a complaint with HUD-OIG at HUD Complaints or by calling HUD’s Hotline at 1-800-347-3735.
Fannie Mae (FNM/NYSE) announced today that the company is providing information to servicers regarding changes to the Home Affordable Refinance Program (HARP) that permits refinancing of existing Fannie Mae loans with loan-to-value (LTV) ratios up to 125 percent. The loans will be eligible for delivery on or after September 1, 2009.
“This step aims to reach even more borrowers who would benefit from a lower payment,” said Michael J. Williams, President and Chief Executive Officer. “Many borrowers in good standing have been shut out from the benefits of refinancing due to significant declines in property values across the country. By broadening the scope of the initiative, more borrowers will experience savings on their monthly mortgage payments and have a better chance of sustaining homeownership over the long term.”
Previously, HARP allowed for refinancing of Fannie Mae loans with LTVs up to 105 percent. With the expansion, loans with LTVs above 105 percent and up to 125 percent will be eligible for refinancing through the company’s Refi Plus™ manual underwriting option. For loans with LTVs above 105 percent, borrowers must refinance through their existing servicer and the new loans must be fully amortizing fixed-rate mortgages with terms greater than 15 years up to 30 years.
In conjunction with the LTV eligibility expansion, Fannie Mae will offer a special .50 percent reduction in the loan-level price adjustment charged for loans with LTVs above 105 percent and loan terms of 20 and 25 years. The reduction is intended to incent borrowers to select shorter terms and build positive equity in their homes sooner than with a typical 30-year mortgage.
HARP is part of the Administration’s Making Home Affordable plan aimed at stabilizing the housing market, helping Americans reduce their mortgage payments to more affordable levels, and preventing avoidable foreclosures. For more information, visit Making Home Affordable.gov
A study of the Massachusetts housing market by researchers from Northwestern University and the University of Chicago concludes that a home owner’s propensity to default increases the further their loan goes under water.
The study found that home owners begin to walk away after declines of 15 percent or more. More than 17 percent of households would default, even if they can afford to pay their mortgage, when the equity shortfall reaches 50 percent of the value of the house.
The researchers found:
• People under the age of 35 and over the age of 65 are less likely to say it is morally wrong to default compared to middle-aged respondents.
• People with a higher education (8 percentage points) and African-Americans (14 percentage points) are less likely to think it is morally wrong to default, whereas respondents with a higher income are more likely to think it is morally wrong.
• Default is considered less morally wrong in the Northeast (6 percentage points) and West (8 1/2 percentage points).
• There was little difference in the moral view of strategic default among Republicans and Democrats, but independents are less likely to say defaulting is immoral.
• Respondents who supported government intervention to help homeowners were 12 percentage points less likely to say strategic default is immoral.
So what do you think, is it OK to walk away if you are still able to make your monthly payments on your mortgage?
The bank has started foreclosure proceedings on Victoria Gotti, daughter of the infamous John Gottie, palatial estate on Long Island — the same used in the TV reality show “Growing Up Gotti” — saying she owes a whopping $650,000 in mortgage payments, according to court papers filed recently.
Gotti’s lender, JP Morgan Chase, claims the daughter of the late Gambino crime family boss John “Dapper Don” Gotti — owes them that staggering amount after she failed to make payments starting in September 2006, court records reveal.
The bank said in court records that the mafia princess owed them $25,000 a month in mortgage payments.
The home, which Gotti once tried to sell at $4.8 million but lowered once she put it on the market this past January for $3.2 million, became known to TV viewers across the country after A&E filmed the reality show, “Growing Up Gotti” there in 2004 and 2005.
From August 2004 until December 2005, she was the star of Growing Up Gotti, an American reality television on the A&E Network. The show, which was short lived, also featured her three sons. The Smoking Gun launched a parody of sorts entitled Blowing Up Gotti, which consisted of family visits to John Gotti while he was in prison that prison officials routinely taped.
A&E faced exceptional criticism for the show. Some viewers complained that A&E was showcasing a family living in luxury that was purchased by blood money made by her father, John Gotti. They felt the network was glorifying organized crime. Many have also complained about the foul language used on the show, as well as the dysfunctional relationship between Victoria Gotti and her sons. Film.com said about the show: “Victoria Gotti has the warmth of an ice pick and her sons the charm of, well, thugs.”
Robert Dietz, tax economist, of the National Association of Home Builders gives detailed answers to questions home buyers might have about the Federal tax credit. (The $10,000 California tax credit for home buyers has been used up)
Some of the questions answered are:
• Who’s eligible to claim the credit?
• How does it help you?
• What kind of homes qualify?
• How is the amount of credit determined?
• What is a partial credit?
• When can you claim the refund?
• How is the 2009 credit different from the 2008 tax credit?
Thomas Hastert
It’s hard for me to imagine a man like Thomas Hastert a man who worked so hard to get ahead in this world becoming a felon. Hastert worked for the Nevada County Sheriff’s office, studied to become an attorney, then got his real estate broker’s license.
Once he got his broker’s license he proceed to engage in hard money lending in direct conflict with the law, making construction loans without fully funding them, a felony.
In addition, Hastert pleaded no contest to 62 counts of embezzlement, offering and selling unregistered and unqualified securities by false and incomplete communications. According to the Attorney General of California amounting to $20 million lost by his clients. That’s a lot of money to handle and lose. A standard fee for the mortgage broker Hastert is to charge is about 3 percent of the loan amount which means Hastert would have pocketed about $600,000.
Hastert’s attorneys and the California Deputy Attorney General Keith Lyon had reached a plea bargain that would have given Hastert five years in state prison. Normally that type of sentence means two and one-half years and he’s out of prison.
However, at the sentencing Judge Sean Dowling rejected the plea agreement and came back with his own sentencing of eight years and four months. Hastert’s attorney refused the new sentencing and demanded a jury trial.
I met Thomas Hastert some time ago, while he was an attorney. I did some investigations (as a civil engineer) for Hastert regarding building code violations for some of the real estate cases that he had. My impression of him at that time was that he was a nice person and I had no idea that he would resort to what he did. What does a person like that think? We have the Bernard Madoff, the Sir Walter Stanford’s who look you in the eye with a smile and steal your pocket book at the same time.
