Archive for September, 2010
USDA Loans – Not as Rural As You Think!
USDA loans are 100% purchase loans offered to people living in rural areas as determined by the United States Department of Agriculture (USDA). The organization's central mission is to help lower income households obtain home loans at reasonable mortgage rates. USDA loan is serviced by direct lenders that meet federal guidelines. USDA loan gives many benefits to people living in these "rural" areas. Under the terms of the program, an individual or family may borrow up to 100% of the appraised value of the home, which eliminates the need for a down payment.Since the main problem of low income households purchasing a home is the lack of funds to make a down payment, this kind of loan guarantees from HCFP makes owning a home a reality. In order to qualify for a USDA mortgage loan you can only have an income up to 115% of the median income for the area that the home you are interested in buying is located. The guidelines also include repayment viability based on P.I.T.I (Principle, Interest, Taxes, and Insurance) divided by gross monthly income being less than 29%. Total debt divided by gross monthly income must also be equal to or less than 41%. Families applying for the loan must not currently have adequate housing. The test of adequacy is based on family size. For example of a family of five is living in a two bedroom apartment then that is not adequate and they would be eligible for the loan. The home must also be reasonable in size based on the size of the family. So if you are living in a place considered as rural area and wish to own a home, don't hesitate to apply for a USDA loan. For more information email me at lindsey_huntington@yahoo.com
Bank of America urges funding for investors
Analysts from Bank of America have a unique proposal: Instead of further funding TARP to help distressed homeowners hold onto their properties, give the money to property management companies that would then buy property and turn it into rentals. In a recent research paper, Bank of America analysts suggested that the government spend as much as $400 billion to encourage property management companies to buy properties and rent them out. That, according to research, would bring the homeownership level to “a more natural level of 62 percent to 64 percent” from its current 67 percent. Under Bank of America’s recommendation, investors would be prevented from reselling the properties quickly. Source: The Wall Street Journal, Emily Peck
Mortgage Purchase Apps About to Crash? FHA Commissioner Weighs In
Government purchase applications have been driving the market for the past year, accounting for, at times, nearly half of all new loans. That may be about to change.
Mortgage Purchase Apps About to Crash? FHA Commissioner Weighs In
Government purchase applications have been driving the market for the past year, accounting for, at times, nearly half of all new loans. That may be about to change.
GSEs eye standards shift for appraisals
Recently enacted Wall St. reforms require the Federal Housing Finance Agency, the regulator of Fannie Mae and Freddie Mac, to come up with appraisal standards to replace the Home Valuation Code of Conduct (HVCC) by Oct. 21. The law retains the basic intent of HVCC, which is for lenders to keep an arm’s length distance between them and the appraiser, and it continues to allow appraisal decisions to be left in the hands of appraisal management companies, if lenders so choose. But it attempts to prevent abuses by, among other things, blocking AMCs from negotiating fees with appraisers. Lenders and AMCs must pay appraisers at the market rate. Source: American Banker, Brian Collins
Fannie Mae offers new closing incentive
Fannie Mae today announced a new seller-assistance incentive for Fannie Mae-owned properties that are listed on the company’s REO website, http://www.homepath.com/ – and it offers an incentive to real estate agents and brokers. Agents representing owner-occupants will receive a $1,500 bonus, while homebuyers who will live in the house can receive up to 3.5 percent of the final sales price that can be used toward closing costs, including a home warranty. Eligible offers must be submitted on or after Sept. 23, 2010, and must close by Dec. 31, 2010. The sale must also close within 60 days of offer acceptance. “More than 87,000 families purchased HomePath properties in the first half of 2010 – nearly double the number of Fannie Mae foreclosed properties sold in the first half of 2009,” says Terry Edwards, executive vice president of Fannie Mae’s Credit Portfolio Management. “We continue to look for ways to stabilize neighborhoods and offer incentives to qualified buyers.”
Crist won’t delay septic inspections
Gov. Charlie Crist will not delay implementing a bill passed earlier this year that will require septic tank inspections every five years, despite calls from two more lawmakers to postpone the plan for now. Sen. Durrell Peaden, R-Crestview, and Rep. Greg Evers, R-Baker, wrote Crist Thursday to say the septic tank inspection requirement is too expensive in a tight economy and should be pushed back from Jan. 1, 2011, to July 2011 so lawmakers can revisit the issue during the 2011 session of the Florida Legislature. Earlier this summer, outgoing Senate Democratic Leader Al Lawson, D-Tallahassee, suggested that the bill should be repealed altogether, and he’s promised to keep hammering the state on the issue. But Crist, who signed the measure in June, will not postpone inspections, a spokesman told the News Service of Florida. “The governor is not delaying implementation,” Crist spokesman Sterling Ivey said. “It was a Senate bill that passed both houses and he signed into law. He didn’t have any reservation about the bill when it reached his desk or he would have vetoed it.” Backers of the springs protection bill say the requirements will cost much less than possible federal water regulations from the U.S. Environmental Protection Agency (EPA). The EPA is currently considering limits on the amount of chemical pollution allowed in state bodies of water, but backers of inspection repeal says that the EPA may back off and allow Florida officials to police state septic tanks – providing the state showed it was serious about protecting its water resources. But Peaden and Evers said Thursday that “less expensive” is not good enough in a rocky economic time. “In recent months … many individuals have contacted our offices regarding the adverse impacts to them both financially and physically as a result of the new septic system evaluation requirements,” they wrote to Crist. “Concerns have continued to grow as estimates from various counties on the cost of implementing the septic tank evaluation provisions have varied widely from a low of $180 to a high of $800. Since the law itself makes no mention of the actual cost of an evaluation, Floridians can be left to deal with unscrupulous individuals that can charge any fee they choose under the authority of the state.” The springs bill, SB 550, was backed by environmentalists, but heralded by sponsor Sen. Lee Constantine as a product of negotiations with various competing interests groups. “When you get the home builders and the Sierra Club to agree,” Constantine told the News Service last month, that’s consensus. “This was landmark legislation.” But Peaden and Evers said that a cost review by the Florida Department of Health as it considers implementation rules suggests that lawmakers should take another look at the requirement. “This raises serious concerns that in a rush to pass legislation to protect Florida’s water resources, insufficient time was spent on how this law was going to financially affect Floridians,” they said. “Therefore, we request that you use executive authority granted to you under the Florida Constitution to direct the Department of Health to postpone the implementation of this legislation … allowing the Florida Legislature to more thoroughly investigate the financial impact to Floridians.” The two lawmakers also asked Crist to direct the Department of Health to conduct a fiscal analysis on the “full and actual costs of the implementation of such an evaluation program” before the new requirements go into effect Jan. 1. Source: News Service of Florida
Higher conforming loan limits due to expire
Unless Congress intervenes, the maximum loan amount the Federal Housing Administration will back, as well as loans backed by Fannie Mae and Freddie Mac, will return to $417,000 in most areas and $625,500 in high-cost areas. The higher loan limits are due to expire Dec. 31, 2010. Over the last two years, the government raised the limits in some high-cost areas to $729,750. If Congress doesn’t extend higher limits, home prices would “drop precipitously” because it would be “impossible to finance homes in most parts of Los Angeles and certain other major cities,” said Rep. Brad Sherman, a California Democrat and member of the House Financial Services Committee. But many economists support the end to higher limits. “We need to think how we are going to exit from a Fannie-and-Freddie world, and this is a very small step toward that exit,” said Richard K. Green, director of the University of Southern California’s Lusk Center for Real Estate. “Dialing it back to $625,500 is a perfectly reasonable thing to do.” Source: The Wall Street Journal
Mistakes widespread on foreclosures, lawyers say
Paperwork mistakes that led one of the nation’s largest mortgage servicers to halt foreclosure evictions in 23 states last week have happened elsewhere and affect tens of thousands of foreclosures, say lawyers for homeowners. Ally Financial’s GMAC Mortgage acted after manager Jeffrey Stephan gave a statement to opposing lawyers that he had signed off on legal documents for 10,000 foreclosure papers a month without following verification procedures. Those lawyers say they’ve obtained similar statements from employees at JPMorgan Chase and OneWest Bank – formerly IndyMac Federal Bank – that court papers weren’t properly verified before being filed. “We’ve taken depositions at other servicing companies that take these documents without reviewing them,” says Christopher Immel, a lawyer at Ice Legal in West Palm Beach, Fla. “They were filing fraudulently. It’s rarely done correctly.” In one case, Erica Johnson-Seck, a vice president at OneWest, said she signed 750 foreclosure documents a week and didn’t read each document before signing it, according to a 2009 deposition obtained by Ice Legal. She also said they were signed without a notary present. In a May 17 deposition, also taken by Ice Legal, Beth Cottrell, a supervisor at Chase Home Finance, a division of JPMorgan Chase, said she was among eight managers who signed off on about 18,000 foreclosure papers a month. Cottrell said she only reviewed the entire foreclosure document if another employee raised a question about it. JPMorgan Chase declined to comment. “How can a judge rely on something when the person who is signing it doesn’t even know what they’re signing?” says Ice Legal lawyer Dustin Zacks. “I find it very hard to believe it’s limited to the few depositions we’ve taken.” In many states, servicers must file a motion in court to take possession of a home in a foreclosure. To support their motion, a representative has to verify they’ve reviewed the supporting documents, checked who owns the mortgage note and had a notary public witness their signature. Ally Financial said Friday that delays in completing foreclosures should be resolved before year’s end. It also said it’s confident that processing errors did not result in any inappropriate foreclosures. Fannie Mae and Freddie Mac are reviewing foreclosures on GMAC-serviced mortgages they own and have halted evictions on them until the review is done. Fannie Mae says it is also reminding servicers to follow proper procedures. Copyright © 2010 USA TODAY
Lawmakers question Fannie on ‘foreclosure mills’
A trio of congressional Democrats is demanding to know why government-backed mortgage giant Fannie Mae has entrusted many of its foreclosure cases to Florida law firms that stand accused of fabricating or backdating numerous court documents. These so-called “foreclosure mills,” essentially law firms that specialize in representing lenders while churning out foreclosure suits quickly and efficiently, are under investigation by the Florida attorney general and are running into legal challenges in other parts of the country. According to the letter from three House Democrats – Financial Services Committee Chairman Barney Frank of Massachusetts and Corrine Brown and Alan Grayson of Florida – several firms facing scrutiny represent Fannie Mae both in foreclosure suits and in the company’s pre-filing mediation program, which is designed to help borrowers and lenders talk through possible alternatives to foreclosure. “In other words, Fannie Mae seems to specifically delegate its foreclosure avoidance obligations out to lawyers who specialize in kicking people out of their homes,” the group wrote Friday in a letter to the company’s chief executive.” The legal pressure to foreclose at all costs is leading to a situation where servicers are foreclosing on properties on which they do not even own the note,” they added. “This practice is blessed by a legal system overwhelmed with foreclosure cases and unable to sort out murky legal details, and a set of law firms who mass produce filings to move foreclosures as quickly as possible.” The lawmakers urged Fannie Mae to remove any “foreclosure mills” under investigation for document fraud from its attorney network. In addition, they argued that the mortgage giant should put in place guidelines that allow foreclosures to proceed only when the legal right to do so is clearly documented. “Why is Fannie Mae using lawyers that are accused of regularly engaging in fraud to kick people out of their homes?” the group wrote. “Given that Fannie Mae is at this point a government entity, and it is the policy of the government that foreclosures are a costly situation best avoided if there are any lower cost alternatives, what steps is Fannie Mae taking to avoid the use of foreclosure mills?” In addition to the investigation in Florida, other states such as Iowa and Texas have begun their own inquiries. Those actions come as Ally Financial this week temporarily halted evictions on foreclosed homes in 23 states amid questions about whether a prolific document signer had verified the accuracy of court documents. Asked about the congressional letter, a spokeswoman for Fannie Mae said Friday that “we have received the letter and will respond to the questions raised.” Copyright © 2010 washingtonpost.com
