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Category Archive: ‘Mortgage News’

Teacher Loan

teachers

Changes this month by the California Housing Finance Authority will help more K-12 public school employees land their first home.

The Extra Credit Teacher Home Purchase Program — once restricted to teachers — is now available to all administrators and support staff such as aides, bus drivers and custodians in public schools, charter schools and district offices.

Education professionals can now receive down-payment assistance of up to $15,000 in “high-cost” counties such as Riverside and San Bernardino. The loan, at 2.5 percent interest, does not require payments until the home is sold, refinanced or the principal loan has been paid, explained finance authority spokesman Eric Johnson.

“People always think government programs are for low income people, but we’re really for low and moderate income residents,” Johnson said. “It’s the missing middle – people with good jobs who have sometimes been priced out of the housing market.”

Applicants must have a minimum credit score of 640. Those making more than $91,000 per year are excluded from the program. The home sales price cannot exceed $400,000.

Read full article here:

http://www.pe.com/articles/home-817823-riverside-teachers.html

CalHFA has several assistance programs:

http://www.calhfa.ca.gov/homebuyer/programs/

Posted by on Nov 8, 2016 in Jim's Take on the Market, Mortgage News, Mortgage Qualifying | 2 comments

Condo Owner-Occ Ratio Lowered

condo

Dropping the required owner-occupied ratio from 50% to 35% should open up more opportunities for condo buyers and sellers, but yes, the mortgage guidelines are getting easier and easier.

Owner occupied units are defined as principal residences, secondary residences, or units that have been sold to purchasers who intend to occupy them as a primary or secondary residence. A principal residence refers to a dwelling where the owner maintains or will maintain their permanent place of abode, and which the owner typically occupies or will occupy for the majority of the calendar year. A secondary residence refers to a dwelling that an owner occupies in addition to their principal residence, but less than a majority of the calendar year. A secondary residence does not include a vacation home.

Conditions to Lower Owner Occupancy Percentage to as low as 35 percent

Existing projects (greater than 12 months old) with an owner occupancy percentage of at least 35 percent and less than 50 percent are eligible for approval under the following circumstances and subject to the following conditions:

  1. Applications must be submitted for processing and review under the HUD Review and Approval Process (HRAP) option.
  2. Financial documents (see Section 2.1.6) must provide for funding of replacement reserves for capital expenditures and deferred maintenance in an account representing at least 20 percent of the budget; and
  3. No more than 10 percent of the total units can be in arrears (more than 60 days past due) on their condominium association fee payments (as defined in Section 2.1.5 of the Guide; and
  4. Three years of acceptable financial documents (see Section 2.1.6) must be provided.

http://portal.hud.gov/hudportal/documents/huddoc?id=16-15ml.pdf

Posted by on Nov 3, 2016 in Jim's Take on the Market, Mortgage News, Mortgage Qualifying | 2 comments

Fannie to Pay Off Student Loans

pig

What could go wrong?

http://www.housingwire.com/articles/38430-sofi-and-fannie-mae-announce-cash-out-refinance-student-loan-offering

Capitalizing off of its start as a student lender, SoFi and government-sponsored enterprise Fannie Mae announced a new loan option on Wednesday that allows homeowners to refinance their mortgage at a lower rate and pay down the balance of an existing student loan.

Under the new loan option, which is titled the Student Loan Payoff ReFi, SoFi stated that it will pay down the student loan by disbursing payment directly to the servicer of the student debt.

“People can pay off student loan debt and are left with one loan at the low rates that mortgage borrowers are enjoying in today’s market,” said Michael Tannenbaum, senior vice president of mortgage at SoFi.

Tannenbaum explained in an interview with HousingWire that there’s a big opportunity for borrowers to take out additional mortgage debt on their home thanks to the current low interest rate environment.

Typically, he said, student loans have a much higher rate than mortgages, making it better for borrowers to have more mortgage debt and pay off their student loans.

Posted by on Nov 2, 2016 in Jim's Take on the Market, Mortgage News | 7 comments

$880,000,000 in Slush Funds

doj

We’ve seen how bankers have been able to finagle fines instead of jail time for the harm done during the mortgage crisis.  Where did that money go?

Thanks to Art for sending:

https://judiciary.house.gov/press-release/majority-leader-announces-vote-goodlatte-bill-stop-obamas-settlement-slush-funds/

Washington, D.C. — House Majority Leader Kevin McCarthy (R-Calif.) announced that House Judiciary Committee Chairman Bob Goodlatte’s (R-Va.) bipartisan “Stop Settlement Slush Funds Act of 2016” (H.R. 5063) will receive a vote by the full House of Representatives next week.

Introduced by Chairman Goodlatte, this bill bars the Department of Justice (DOJ), and all other government agencies, from requiring defendants to donate money to outside groups as part of their settlement agreements with the federal government.

Need for this legislation arose after a 20-month House Judiciary Committee investigation found that DOJ had engaged in a “pattern or practice” of systematically subverting Congress’s Spending Power by using settlements from financial institutions to funnel money to left-wing activist groups. This bill would end this practice and restore accountability to the appropriations process.

Read the full story here:

https://judiciary.house.gov/press-release/majority-leader-announces-vote-goodlatte-bill-stop-obamas-settlement-slush-funds/

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Posted by on Sep 27, 2016 in Jim's Take on the Market, Mortgage News | 3 comments

Selling Equity

selleq

What could go wrong? From realtor.com:

A Silicon Valley startup is hoping that homeowners seeking fast cash will forgo begging for loans from banks (and dear old Mom and Dad), skip refinancing their abodes, avoid traditional home equity loans and credit loans—and sell off some of the equity in their residences instead.

Point, the Palo Alto–based company, has a simple but novel proposition: Homeowners can sell small fractions of their equity to investors for a lump sum, with no interest rates or monthly payments.

This gives folks who can’t afford the monthly bills on a second mortgage, home equity loan, or credit line the chance to get cash on their residences while providing wealthy individuals, companies, and hedge funds (accredited investors only) something new to sink their money into.

“It’s a really good option for homeowners who are looking for alternatives,” says Point co-founder and Chief Business Officer Eoin Matthews. “The homeowner gets to tap into their home equity, and they don’t have a monthly payment. There’s no interest rates associated with the product.”

But new investments are inherently risky as they have no track record. And folks could be losing money over the long run by signing away much of their future home appreciation.

So should homeowners sign up?

Here’s how it works: The homeowner applies online for a pre-approval. If all goes well, an appraiser comes to assess the property. If it’s approved, official documents detailing the partial ownership arrangement are signed and filed in the homeowner’s county recorder’s office. Once everything is finalized, a check is deposited into the homeowner’s bank account.

Typically, the maximum amount an owner can receive from Point for any one property is the lesser of:

a) $100,000

b) 15% of the property’s value

c) 30% of the equity

Homeowners’ remaining equity can’t dip below 20%.

The deals are typically good for about 10 years, with the expectation that Point will turn a profit when the property is sold. Alternatively, homeowners can buy back their equity at any time during the term.

If the home value increases, everyone wins. Point gets back what it invested, plus a percentage of the appreciation—12.5% to 45%, depending on the investment. If the home value falls, Point also loses money, getting back only the value of its fraction of equity.

Homeowners are responsible for maintaining their properties, keeping insurance, and staying current on all property taxes. But they can make whatever changes, renovations, or modifications they’d like to their residences without any interference from Point or its investors.

Most folks use the money to pay off credit card debt and other loans, make home renovations, and invest in their small businesses, Matthews says.

“There are lots of homeowners in the U.S. right now who are not able to access the equity in their home,” Matthews says. “There’s a whole segment of homeowners who don’t want to take on significant debt … or don’t qualify.”

(Point, which formally launched last year, announced this month that it had raised $15.4 million in funding.)

Currently, the service is available only in California and Washington. The company plans to expand into Massachusetts, Virginia, and Oregon by the end of the year, and its founders hope to eventually go nationwide.

And although homeowners do not have monthly payments, there are still fees involved. Applicants are charged for the appraiser’s visit, which Point estimates is usually about $400 to $800. That’s on top of a 3% processing fee on the investment amount and the escrow costs, typically an additional $450.

Most folks won’t make it that far. Only 1% of the roughly 4,000 to 5,000 applications the company has received has been approved, resulting in only about 60 investments so far. But Matthews was quick to point out that many of those homeowners choose to opt out of the process.

“For some homeowners, this might be more expensive than debt,” Matthews says.

It’s also not for everyone, says certified financial planner Jenna Rogers of Mission Wealth in Santa Barbara, CA.

“It could end up being a lot more expensive than you think,” she says, particularly for those in very pricey areas like San Francisco, “where real estate appreciates very quickly.”

She recommends those considering selling their home equity use a calculator and run the numbers first. With interest rates low, it may make more financial sense for folks to secure a home equity loan or line of credit instead—instead of forking over a percentage of the hoped-for future appreciation of their abodes.

But it could be a lifesaver for some, particularly those trying to pay off high-interest credit cards.

“It sort of is a last-resort option when all your money is tied up in your home and you can’t afford a monthly payment on a second mortgage or a home equity line,” Rogers says. “It could make sense for someone who needs the cash and will use the money in a smart way.”

http://www.realtor.com/news/trends/sell-shares-home-equity/

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Posted by on Sep 22, 2016 in Jim's Take on the Market, Mortgage News | 5 comments

PACE and FHA

hero

We covered the PACE financing of energy-efficient upgrades – LINK HERE.

It makes sense the buyers should assume the cost of the benefits – they are the ones who will enjoy the lower costs.  But it depends on the purchase price – if you are paying a premium for those energy-efficient upgrades, it makes sense that the sellers should pay off the lien, which HERO will do.

From the people in the video, Renovate America:

FHA announced new guidance on PACE endorsing it, recognizing it as a tax assessment and its senior lien status to a mortgage.  It is a major development in the market and an indicator of trends around energy efficiency programs and incentives.

They will now purchase mortgages with PACE liens which means any remaining balance will easily transfer to a new owner without the owner having to get approved.  Solar leases transfer only after the buyer qualifies.

This accounts for about 25% of the mortgage market.  Pressure is now on the FHFA who oversee Freddie and Fannie to follow suit.  Obviously, this is a big issue with the Mortgage Banker’s Association and CAR among other industry groups who have been pushing the other way.

So, PACE financing is alive and well – and we may see some considerable market expansion from this announcement.  There are other regulatory hurdles but this shift is a big one for an emerging industry and new financial asset class.

The HUD press release:

http://portal.hud.gov/hudportal/HUD?src=/press/press_releases_media_advisories/2016/HUDNo_16-110

The HERO program is PACE financing provided by Renovate America, a private company.

Posted by on Aug 4, 2016 in Jim's Take on the Market, Mortgage News | 0 comments

Mortgage Rates Drop

todays rate

Home sellers – if you aren’t getting offers this week, you are missing out on what will be the closest thing we will see to frenzy conditions the rest of the year!  Lower your price a little to get in the game!

California 30-year fixed mortgage rates go down to 3.22%

Saturday, July 30, 2016

The current average 30-year fixed mortgage rate in California decreased 1 basis point from 3.23% to 3.22%. State mortgage rates today ranged from the lowest rate of 3.20% (VT) to the highest rate of 3.34% (AK, NE). California mortgage rates today are 3 basis points lower than the national average rate of 3.25%.

The California mortgage interest rate on July 30, 2016 is down 11 basis points from last week’s average California rate of 3.33%.

The current average 15-year fixed mortgage rate in California remained stable at 2.54% and the current average 5/1 ARM rate is equal to 2.62%.

https://www.zillow.com/mortgage-rates/ca/

Posted by on Jul 30, 2016 in Jim's Take on the Market, Mortgage News, Mortgage Qualifying | 0 comments

Republican Platform – Housing

trump

If the Republicans sweep in November, Fannie/Freddie will be under siege – but it’s very unlikely that they would go away.  If they did, it would cause the big banks to dominate mortgage lending, leading to that Too Big To Fail thingy.

From HW:

Lost amid the uproar over Melania Trump’s supposed plagiarism of Michelle Obama on Monday night, the Republican Party actually conducted some official party business during the first night of its convention, when it approved its 2016 party platform.

And if the Republican Party sweeps November’s elections, the world of housing finance could be in for some significant changes, as the 2016 Republican Party platform calls for seriously cutting the government’s role in housing, potentially abolishing the Consumer Financial Protection Bureau and ending the use of disparate impact to enforce fair lending laws.

According to the Republican Party platform, which can be read in full here, one of the GOP’s goals for 2016 and beyond is to “advance responsible homeownership while guarding against the abuses that led to the housing collapse.”

The GOP platform states that the party believes in the importance of homeownership and wants to do more to help more people achieve it.

“Homeownership expands personal liberty, builds communities, and helps Americans create wealth. ‘The American Dream’ is not a stale slogan. It is the lived reality that expresses the aspirations of all our people,” the Republican Party platform states. “It means a decent place to live, a safe place to raise kids, a welcoming place to retire. It bespeaks the quiet pride of those who work hard to shelter their family and, in the process, create caring neighborhoods.”

And to return to healthier levels of homeownership, instead of the current near-record lows, more needs to be done, but not by the government, the Republican Party argues.

According to the Republicans, the government has already done more than enough.

“The Great Recession devastated the housing market. U.S. taxpayers paid billions to rescue Freddie Mac and Fannie Mae, the latter managed and controlled by senior officials from the Carter and Clinton Administrations, and to cover the losses of the poorly-managed Federal Housing Administration,” the Republican platform states. “Millions lost their homes, millions more lost value in their homes.”

To remedy this problem, the Republican Party believes the government should play far less of a role in housing than it does currently.

“We must scale back the federal role in the housing market, promote responsibility on the part of borrowers and lenders and avoid future taxpayer bailouts,” the Republican platform states.

“Reforms should provide clear and prudent underwriting standards and guidelines on predatory lending and acceptable lending practices,” the platform continues. “Compliance with regulatory standards should constitute a legal safe harbor to guard against opportunistic litigation by trial lawyers.”

The Republicans also call for a “comprehensive” review of federal regulations, “especially those dealing with the environment,” that make it “harder and more costly for Americans to rent, buy, or sell homes.”

But much of the Republican animus towards the government’s (and the Democrats’) role in housing is centered on the ongoing conservatorship of Fannie Mae and Freddie Mac.

And the Republicans’ message on Fannie and Freddie’s ownership structure should give pause to the Fannie and Freddie shareholders fighting for the recapitalization and release of Fannie and Freddie.

“For nine years, Fannie Mae and Freddie Mac have been in conservatorship and the current Administration and Democrats have prevented any effort to reform them,” the platform states.

“Their corrupt business model lets shareholders and executives reap huge profits while the taxpayers cover all losses,” the Republicans continue. “The utility of both agencies should be reconsidered as a Republican administration clears away the jumble of subsidies and controls that complicate and distort home buying.”

The Republicans also call for the FHA to end its “support” of “high-income individuals,” and state that the public “should not be financially exposed by risks taken by FHA officials.”

The Republicans also state that they will “end the government mandates that required Fannie Mae, Freddie Mac, and federally insured banks to satisfy lending quotas to specific groups,” adding that “discrimination should have no place in the mortgage industry.”

The Republicans also state their opposition to the Obama Administration’s Affirmatively Furthering Fair Housing program, which the administration heavily touted last year as a way to ensure that all children are given a “fair shot.”

The Republicans argue that the Affirmatively Furthering Fair Housing program is an attempt by the government to “seize control” of the zoning process away from local governments.

(“The Affirmatively Furthering Fair Housing program) threatens to undermine zoning laws in order to socially engineer every community in the country,” the Republicans state. “While the federal government has a legitimate role in enforcing non-discrimination laws, this regulation has nothing to do with proven or alleged discrimination and everything to do with hostility to the self-government of citizens.”

The Republican platform also echoes several points of the recently released Republican-crafted plan to repeal and replace the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Part of that plan involves changing the structure of the Consumer Financial Protection Bureau to replace the agency’s director, a position currently filled by Richard Cordray, with a bipartisan commission and changing the CFPB’s funding mechanism to bring the agency’s budget under Congressional oversight.

Posted by on Jul 20, 2016 in Jim's Take on the Market, Mortgage News | 5 comments

Refinancing Your Mortgage

cash out

Mortgage rates dropped some more today, now around 3.25%:

http://www.mortgagenewsdaily.com/consumer_rates/633676.aspx

Over the weekend, I spoke with a client who purchased his home five years ago, and has a 4.0% mortgage rate now on a loan amount of $315,000.  If he were to refinance, his savings would be roughly $200 per month.

Is it worth it?

It might be worth it if he took out some extra money to buy another house!

Is it worth it to refinance just to lower your payment?  If you found a $200 bill on the ground, you’d pick it up, right?  If the extra $200 per month would change your lifestyle, then do it.

But I pointed out that he only has 25 years left on his existing loan, and that getting a new 30-year mortgage would add five years of payments if you kept the home for the duration.

The $200 per month savings times 25 years = $60,000 savings.  But adding the extra five years means an extra $120,000 in payments (the new payment is about $2,000 per month).

What if you take the new loan and save the $200 per month for 25 years, and then pay off the balance? We looked it up on an amortization schedule, and the balance on the new loan after 25 years was $77,000.

Bankers always win – you may save the $200 per month, but if you kept the home for the duration, it will cost you more in the end.

You need to do a cash-out refinance and spend the money on something worthwhile (like another house!!!), or have the savings be enough to improve your lifestyle.  The last survey showed that the average ownership is now 20 years, so don’t take for granted that you will ever sell this house – no matter how much I try to convince you! 😆

Posted by on Jul 5, 2016 in Jim's Take on the Market, Mortgage News | 14 comments

Mortgages 2016

Those in the business who know the mortgage underwriting guidelines might enjoy this video – here are my takeaways from today’s Caliber Home Loans talk:

  1. ‘Investors’ are banks, mutual funds, insurance cos., hedge funds, etc. who invest in steady streams of income. But they get more than the note rate – discount points and admin fees will bump up the annual returns to 5% – 8%.  They are motivated to find ways to fund mortgages!
  2. Income-qualifying the self-employed buyers according to their 24 months of bank statements is an idea that should have been implemented by now – it is a fantastic way to qualify the actual income.
  3.  Trended credit is a smart and gives benefit to those who pay off credit cards every month.
  4.  Alternative credit is here to stay, and anyone who can verify they are paying on 3 lines of credit on time every month – one being rent – can get a mortgage.
  5.  We accept that the government will want to subsidize the mortgage industry.  The FHA allows for sub-580 FICO scores on FHA loans (which already accept gift money for down payments and multiple co-borrowers).

Posted by on Jun 9, 2016 in Bubbleinfo TV, Jim's Take on the Market, Mortgage News, Mortgage Qualifying | 2 comments