New Making Home Affordable Plan

 Here is some information released by California Association of Realtors. Note the advice about foreclosure rescue scams.

 

Home Refinance and Loan Modification Plan
Presented by the California Association of Realtors

On March 4, 2009, the Obama Administration released detailed guidelines for homeowners to help them determine if they qualify for the Administration’s new Making Home Affordable plan.  This is a follow up to the Administration’s announcement on February 18 outlining their plan to stem the current tide of foreclosures and stabilize the nation’s housing markets.  

The plan has two primary goals:

1.To help homeowners in existing Fannie Mae or Freddie Mac loans that are current on their mortgage payments to refinance and take advantage of today’s lower interest rates.  Many of these homeowners are unable to refinance because of lost appreciation in their homes due to the continuing decline in home prices.  These homeowners still have equity in their home, just not the necessary 20% to get a refinance.  Under the Administration’s plan, Fannie and Freddie will be allowed to refinance qualified homeowners up to a 105 percent loan-to-value of the current value of the home.

2. To help homeowners who are at risk of foreclosure. The Administration is offering loan servicers and investors government assistance to help offset the cost of modifying qualified homeowners into affordable mortgages that will allow them to keep their homes. This may be done by reducing the mortgage interest rate, extending the term of the loan, principal forbearance, and/or principal cram down. This program is voluntary and the servicers must agree to contracts with the Treasury to participate.

In addition, the Government warns homeowners to beware of foreclosure rescue scams:

 - There should never be a fee charged for information or assistance regarding the Making Home Affordable Program.

 - Beware of anyone who says they can “save” your home if you sign or transfer over the deed to your home. Do not sign over the deed to your property to any organization or individual unless you are working directly with your mortgage company to forgive your debt.

 - Never make your mortgage payment to anyone other than your mortgage company without their approval.

Thanks,
CAROL PERDEW
Prudential California Realty
(209) 239-7979
www.CentralValleyHomes.com

Interests Are UP in FHA Home Loans

Mortgage apps down on higher rates

Interest in FHA purchase loans up

By Inman News, January 19th

Mortgage applications fell 38.8 percent last week as interest rates on most loans remained elevated above recent lows, the Mortgage Bankers Association said.

Applications for refinance loans fell 48 percent from the previous week during the week ending Jan. 23, while applications for purchase loans were off a more modest 2.9 percent, the MBA said.

While applications for conventional purchase loans were down 7.8 percent, applications for loans covered by government guarantee programs (largely FHA) were up 8.8 percent. The numbers were seasonally adjusted and also took into account the shortened holiday week.

Refinance loans represented a smaller share of total applications last week — 72.8 percent, compared with 83.3 percent the previous week. The share of applications for adjustable-rate mortgages rose to 2.4 percent, up from 1.5 percent the week before.

The MBA’s weekly application survey of members showed the average contract interest rate for 30-year fixed-rate mortgages decreased to 5.22 percent from 5.24 percent the week before, with points decreasing to 1.05 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 4.98 percent from 4.99 percent, with points decreasing to 1.13 from 1.2 for 80 percent LTV loans.

The average contract interest rate for one-year ARMs increased to 5.96 percent from 5.89 percent, with points decreasing to 0.06 from 0.07.

Search for Foreclosure Homes at wwwCentralValleyHomes.com 

CAROL PERDEW
Prudential California Realty
(209) 239-7979
wwwCentralValleyHomes.com

New Home Loan Disclosures to Protect Consumers

HUD: Consumers will shop for loans

Rule changes could cut into industry profits

BY MATT CARTER, INMAN NEWS

 

Consumers will be less likely to accept overpriced loans, title insurance and other services — including those offered by businesses affiliated with real estate brokerages and builders — once new loan disclosure forms and settlement procedures are fully in place at the end of next year.

That’s according to a lengthy review by the Department of Housing and Urban Development of its proposed rule changes governing enforcement of the Real Estate Settlement Procedures Act.

In publishing a final rule in Monday’s Federal Register, HUD detailed numerous “significant” changes to its proposed overhaul of RESPA in response to feedback from industry and consumer groups.

When they announced the new rule last week, HUD officials emphasized concessions they made to the real estate industry trade groups, who were highly critical of the rule changes as first proposed in March. Industry critics said HUD has overestimated the extent to which consumers will comparison shop, and underestimated the unintended consequences of the rule change, such as consolidation.

HUD’s response to the criticism included dropping a requirement that consumers be read a lengthy script at the closing table, and shortening the standardized good faith estimate (GFE) from four pages to three.

More crucially, perhaps, HUD toned down but did not abandon measures intended to encourage consumers to shop for the best deal and create more competition between lenders and settlement services providers. The measures still in place could have a dramatic impact on the way those products are marketed and sold to consumers.

The overall goal of the new, standardized GFE is helping consumers compare different loan packages, HUD said. The new disclosures and procedures will empower consumers to compare not only the rates and terms of different mortgage offers, but the price services required by most lenders, such as title insurance.

Slack on tolerances

HUD said one way it is helping consumers comparison shop is by imposing tolerances on how much prices and fees quoted in the GFE can change before borrowers reach the closing table. Loan origination fees can’t change at all, and fees for required services won’t be permitted to change by more than 10 percent when they are provided by a company selected by the lender.

Trade groups representing lenders and settlement service providers were generally opposed to tolerances when they were proposed by HUD in March. In order to minimize the risk of violating the tolerances, some said, big lenders would have to contract with large settlement service providers, driving small companies out of business and reducing competition.

HUD said accurate estimates are crucial to empowering consumers to shop for the best deal, protecting them from “low-ball” offers that change at the last minute. But HUD said it did not intend to punish loan originators for unforeseen changes in a borrower’s circumstances or other factors beyond their control, such as government recording charges.

HUD says the final rule provides some additional leeway for fees to change due to unforeseen circumstances. If there are changes in the tax rate or the price of the property after the good faith estimate is provided, for example, originators can provide a revised estimate.

While transfer taxes will still subject to a “zero tolerance,” HUD acknowledged that government recording charges may not be be known until closing, and will instead be categorized with other settlement services that can change by 10 percent overall.

HUD will cut lenders some additional slack by giving them up to a month after a closing to correct any failure to achieve the tolerances. The final rule would give loan originators 30 days to “cure” violations by reimbursing the borrower by the amount the tolerances were exceeded.

If that sounds like a slap on the wrist that won’t deter loan originators from engaging in bait-and-switch tactics, HUD says that until Congress grants it additional power to enforce RESPA, it can’t legally impose fines for such violations.

But lenders won’t be able to break the rules with impunity, HUD says, because federal and state banking regulators can punish the companies they license for RESPA violations. In addition, aggrieved borrowers can bring civil suits under RESPA seeking redress, and lenders who sell loans on the secondary market can also be held liable by the investors who buy them if they break rules governing mortgage originations.

In its handling of tolerances, HUD says the final RESPA rule “seeks to balance the borrower’s interest in receiving an accurate GFE early in the application process … with the lender’s interest in maintaining flexibility to address the many issues that can arise in a complex process such as loan origination.”

Presented by
CAROL PERDEW
(209) 239-7979
wwwCentralValleyHomes.com

HOPE NOW Program Is Helping Home Owners

Despite difficulties, homeowners finding relief with HOPE NOW program

By Jack Guttentag,
Inman News|  

Editor’s note: A previous version of this story erroneously stated that the HOPE NOW Alliance of loan servicers charges borrowers for consultations. The consultations are free.

Q: “I have been giving my clients an article you wrote about a year ago advising borrowers having payment problems how to request a modification in their loan contract … Could you bring it up to date?”

A: A lot has happened since that article was written. Very shortly thereafter, the HOPE NOW program promoted by Treasury Secretary Henry Paulson began as an effort by housing counseling agencies and mortgage servicers to modify loans on a strictly voluntary basis. Since then, the first recourse of borrowers in trouble has been to call them at 1-888-995-HOPE. I have sent many people to HOPE NOW, with mixed feedback.

House prices have declined further in the last year, turning more borrowers “upside down” where they owe more on their mortgage than their house is worth. This induces some borrowers to stop making payments, which increases foreclosures. But price declines also reduce the amounts that investors recover from sale of the house following a foreclosure, which should increase the attractiveness of loan modifications as an alternative.

In addition, a full-fledged financial crisis has erupted, forcing the Federal Reserve to act as the lender of last resort to a series of weakened financial firms unable to meet their cash needs. The coverage of deposit insurance has been broadened and money market funds are now insured. In the works, furthermore, are plans to purchase mortgage assets from investors, to make direct equity investments in banks, and even to insure payment of principal and interest on mortgages and other assets.

An excellent study by Alan M. White provides some indications of what has happened to modifications during this tumultuous period. In a sample of subprime loans he examined, the mortgage payment was reduced in only about half the modifications, and the balance was reduced in very few cases. In many cases, the modification consisted of adding the amounts past due (“arrearages”) to the balance, which raises the payment. It is no wonder that during the annual period he examined, the number of foreclosures swamped the number of modifications.

Borrowers having payment trouble have choices. The rational choices are either to seek help immediately, or to take immediate action themselves. Those who put their heads in the sand will lose their home in a foreclosure.

I suggest that those who elect to seek help go to HOPE NOW first, and if that does not work out, to try a HUD-approved counselor. Before seeing a counselor, prepare yourself by pulling together all the data that the counselor will need; the form at Genworth Financial can be used for this purpose.

Responding to a solicitation from one of the many modification consultants who have emerged over the last year is extremely risky. They charge $1,000 and up, usually payable in advance. Some may do a good job, but many are hustlers looking to garner upfront fees.

If you elect to handle the matter yourself, you must get to the servicer’s loss mitigation department, which may take some persistence. The burden of proof is on you to demonstrate and document that, for the reasons you lay out, you can no longer make the required payment. You must also demonstrate and document that you can make a smaller payment that you specify.

Under the new FHA program called H4H (“Hope for Homeowners”), FHA will refinance loans of borrowers having payment problems if the existing investor will write down the loan balance to 90 percent of current market value. HUD publishes a list of lenders participating in this program. I am not sure whether there is any benefit to a borrower contacting one of them before the firm servicing their existing loan has agreed to pay down the balance. But it can’t hurt to get that lender on your side.

Aside from the possible increased risk exposure under FHA, the federal government has not channeled any crisis money directly to borrowers. The new programs referred to earlier will direct $700 billion or more to financial institutions, but none to households. A strong case can be made that this is unbalanced.

The root cause of the crisis is the decline in home prices, which will continue so long as the foreclosure problem isn’t solved. Arguably, dealing directly with this problem is more effective than dealing with it indirectly. The Treasury recently put out a request for proposals on a mortgage payment insurance plan, which could be the perfect vehicle for providing direct assistance to borrowers. Stay tuned.

The writer is professor of finance emeritus at the Wharton School of the University of Pennsylvania. Comments and questions can be left at www.mtgprofessor.com.

Presented by
CAROL PERDEW
Prudential California Realty
(209) 239-7979
wwwCentralValleyHomes.com

 

Credit Crisis Taking a Toll on the Housing Market

Experts: No quick housing fix

Credit crunch stalls buyer activity

By Glenn Roberts Jr.
Presented By Inman News
 

U.S. economic troubles, including the compounding credit crisis, are taking a toll on the housing market, said real estate industry experts during a conference call Thursday hosted by real estate search company Trulia.

“Bad news is always the worst thing to hit the market, more than fact or reality,” said Barbara Corcoran, a real estate veteran and author who founded Manhattan’s Corcoran Group and is a contributor to CNBC and NBC’s “Today Show.” It takes a “brave soul” to be in the market these days, she said.

The heavy focus on the proposed federal mortgage bailout plan, which could cost hundreds of billions of dollars, has definitely hurt the housing market, said Corcoran, causing some would-be buyers to “run for the hills” and to “position themselves on fences and wait this out.” She likened the “battered market” to “a sail fluttering in the wind.”

“I feel like I’m watching the American Dream disseminate … disappear in air,” she said. “People these days are more willing to drop their house than to drop their credit card.”

Jonathan Miller, co-founder of Miller Samuel Inc., a Manhattan real estate appraisal and consulting company, said the nation must fix the credit crisis before the housing market can mend, adding that he expects the recovery curve to look more like an “L” with a long leveling period after the sharp downturn than a “V” with a sharp upward trend following the downturn.

There are too many unknowns to predict a bottom in the market, Miller said. “There are a lot of problems on the table right now and frankly, there isn’t much in the way of tangible solutions. I really don’t know what the plan is going to be by the government yet, in its final form.”

He also said he doesn’t expect much to change in the next six months, and he does expect it could take two to three years to sort out the nation’s credit problems. The nation is in about the second or third inning of a game, he said, so there is still some ways to go. “At least (there is) some progress.”

The Manhattan market — one of the last U.S. real estate markets to feel the effects of the housing downturn — will be hurt by the Wall Street layoffs and dramatic drop in bonus pay but is still in “a fairly good position” heading into the weaker economic times, as there was not widespread speculation as seen in some other hard-hit markets and the for-sale inventory level is “rather modest.”

Corcoran said she is not optimistic that the federal government’s very active involvement in resolving the credit crunch will find quick solutions. “Just figuring out the rules, regulations and handling the new printed paperwork takes six months alone,” she said.

A major housing bill passed by Congress on July 30, HR 3221, doesn’t do enough to solve housing market problems, Corcoran also said, adding that she hopes for more substantial help for homeowners in the latest congressional effort.

“We really need a leader to come up to the plate to make a big, sweeping change,” she said.

David Michonski, chairman and CEO for Coldwell Banker Hunt Kennedy, a Manhattan-based brokerage company, said that the median price has been a bit unpredictable lately — “it’s what we call a ’sloppy bottom’ here that the market is trying to find,” he said.

Foreign buyers have helped to prop up sales, he said, and the company’s agents report that about 40 percent of transactions each month are with international buyers.

Miller said that some foreign countries are starting to feel the weight of economic problems too, so the foreign market may not be as dependable moving forward.

Michonski also said he is hopeful that the tightly wound spring of buyer demand — fueled by the simple demographics of a growing U.S. population — will help the housing market to rebound.

Pete Flint, CEO and co-founder of Trulia, noted that the company has commissioned a study which found that the so-called American Dream of homeownership is definitely not a dream shared by all. Less than half of the respondents said that homeownership is a great long-term investment, for example, Flint said, and about 56 percent said that homeownership is “part of achieving the American Dream.”

“So the question we have: Is this a knee-jerk reaction or is this a part of a fundamental change in the U.S. economy?” Flint said. “What does homeownership mean to buyers and sellers today?” He said the company plans to release the full results of the survey soon.

 

CAROL PERDEW
Prudential California Realty
(209) 239-7979
www.CentralValleyHomes.com

Bank Representatives Help Homeowners Save Their Homes

You could save your home Friday
Banks in Manteca in bid to see if they can modify loans on foreclosures

Dennis Wyatt
Manteca Bulletin
Managing Editor

There is a chance that a number of homeowners on the verge of losing their homes to foreclosure could walk away from the Manteca Senior Center on Friday cutting deals with lenders that makes it possible to stay put.

Five lenders – Countrywide, Indy Mac, Wells Fargo, Chase, and Washington Mutual – will have representatives on hand with many authorized to make loan modifications on the spot if they have all of the appropriate information from borrowers. For those who don’t have a loan through one of those five lenders, representatives of five different housing counseling firms that have HUD approval will serve as advocates.

“It means a lot to a lender when they get a call from someone that’s HUD approved,” said Ana Rocha, a Manteca Redevelopment Agency representative.

It’s all part of the grassroots non-profit No Homeowner Left Behind effort that has conducted nine similar efforts in the Northern San Joaquin Valley during the past year that have helped hundreds of families save their homes some times the same day of the workshop.

The Manteca gathering is this Friday from 2 to 8 p.m. at the Manteca Senior Center, 295 Cherry Lane. If you can’t make it Friday, there is also one Saturday from 9 a.m. to 3 p.m. at the Stanislaus Agricultural Center at 3800 Capricornia.

Edward Parcaut – a certified mortgage planner with SourceOne Financial in Modesto who is among the moving forces behind the effort to give homeowners in distress free help that arms them with knowledge and connections necessary to have a solid chance at saving their homes – noted that the chances of getting a resolution has improved significantly in recent months.

“A lot more banks are willing to take steps and modify loans upfront,” Parcaut said. “It saves them a lot more money.”

It’s based on the new reality of home loan math. For example, if a loan is outstanding for $477,000 a bank now realizes if it foreclosures on a home it can only get $277,000. It costs as much as $57,000 in additional costs to foreclosure. The bank looks at that, considers loan modification and is able to reduce their losses upfront.

There is no guarantee that a home can be saved on the spot, but the organizers say it happens every time – or within weeks of the workshop.

As for those that can’t save their homes as a bank may decide against loan modification based on financials and income, organizer Dori Beck noted, “we can work to make sure they leave their homes with the same dignity they had when they moved in.”

Those attending need to bring their loan information and documents, pay stubs for the past month, and current mortgage payment.

“There’s a huge chance it (a loan modification) can happen,” Parcaut said of those who attend the workshop.

The Federal Reserve is helping publicize the Manteca workshop by sending notices all the way back to June 1 who got foreclosure notices in San Joaquin County.

Rocha said the City of Manteca is participating in the effort under the direction of the City Council that wants to do everything it can to help people keep their homes in Manteca.

It is also open to those who have bought homes as an investment.

Parcaut said banks have worked with those people as well adding that many of those homes have renters in them who will lose a place to stay if the bank forecloses.

At such gatherings in the past, some homeowners have been successful with negotiating with bank representatives on the spot to secure 30-year fixed rate loans that have kept them in their homes,

Organizers have cautioned that not all banks are working to that degree. They also warned that some people might simply not be in a position to be helped based on the determination of the bank to get a streamlined loan at a reduced rate. The climate today has vastly improved compared to six months ago when banks were struggling to figure out what to do.

There are over 1,200 homes in Manteca property in various stages of foreclosure. Either the bank have repossessed them, they are in escrow to be transferred to another buyer, are in the final stages of having their home reposed or have just missed their first payment.

There is a serious concern about whether the market can continue to absorb foreclosures.

That is why some banks – but not all – are now working with those caught up in the foreclosure process.

For more information contact the Manteca Redevelopment Agency at 239-8427.

 

CAROL PERDEW
Prudential California Realty
(209) 239-7979
www.CentralValleyHome.com

Low Down Payment CalHFA Home Loans

CalHFA Homeownership Programs

FIRST MORTGAGE LOAN PROGRAMS CalHFA Conventional Loans interest only PLUSSM This conventional mortgage loan offers up to 95% financing and allows borrowers to pay only the interest for the first five years of a 35-year term. After that, borrowers pay principal and interest at the same low, fixed interest rate for the remaining 30 years. 40-Year Fixed Mortgage This conventional mortgage loan offers up to 95% financing with a 40-year term and a low, fixed interest rate. 30-Year Fixed Mortgage This conventional mortgage loan offers up to 95% financing with a 30-year term and a low, fixed interest rate. Government Insured/Guaranteed Loans 30-Year Fixed Government Insured/Guaranteed Mortgage This program is for mortgage loans that are insured or guaranteed by FHA, VA or USDA and features a 30-year term with a low, fixed interest rate. Real Estate Owned (REO) Loan Programs CalHFA Community Stabilization Home Loan Program This program helps first-time homebuyers purchase vacant homes that are owned by participating financial institutions in certain areas of California.   DOWN PAYMENT ASSISTANCE LOAN PROGRAMS Affordable Housing Partnership Program (AHPP) A joint effort by CalHFA and cities, counties, redevelopment agencies and housing authorities whereby a deferred payment subordinate loan from a locality is utilized by the first-time homebuyer to assist them with down payment and/or closing costs. CalHFA Housing Assistance Program (CHAP) Offers a deferred-payment second loan of an amount up to the lesser of two percent (2%) of the purchase price or appraised value. California Homebuyer’s Downpayment Assistance Program (CHDAP) Offers a deferred-payment junior loan of an amount up to the lesser of three percent (3%) of the purchase price or appraised value. Extra Credit Teacher Home Purchase Program (ECTP) A low interest rate CalHFA first loan, together with a forgivable interest CalHFA junior loan to assist eligible teachers, administrators, staff members and classified employees to purchase their first home. High Cost Area Home Purchase Assistance Program (HiCAP) Designed to assist first-time homebuyers in the highest housing cost areas of the state. School Facility Fee Down Payment Assistance Program (SFF) A conditional grant program that provides assistance to buyers of newly constructed homes throughout California.

Search for homes at wwwCentralValleyHomes.com

CAROL PERDEW
Prudential California Realty
(209) 239-7979
www.CentralValleyHomes.com