According to today's release from the Department of Housing and Urban Development (HUD), the waiver is limited to sales that meet the following conditions:
-- All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction. In other words, buyers and sellers are acting of their own accord and have no relationship with one another.
-- In cases in which the sales price of the property is 20 percent or more above the seller's acquisition cost, the waiver will apply only if the lender meets specific conditions, and documents the justification for the increase in value.
-- The waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for purchase program.
The extension is effective through December 31, 2012, unless otherwise extended or withdrawn by FHA.
For Immediate Release October 24, 2011
FHFA, Fannie Mae and Freddie Mac Announce HARP Changes to Reach More Borrowers
Washington, DC – The Federal Housing Finance Agency, with Fannie Mae and Freddie Mac (the Enterprises), today announced a series of changes to the Home Affordable Refinance Program (HARP) in an effort to attract more eligible borrowers who can benefit from refinancing their home mortgage. The program enhancements were developed at FHFA’s direction with input from lenders, mortgage insurers and other industry participants. “We know that there are many homeowners who are eligible to refinance under HARP and those are the borrowers we want to reach,” said FHFA Acting Director Edward J. DeMarco. “Building on the industry’s experience with HARP over the last two years, we have identified several changes that will make the program accessible to more borrowers with mortgages owned or guaranteed by the Enterprises. Our goal in pursuing these changes is to create refinancing opportunities for these borrowers, while reducing risk for Fannie Mae and Freddie Mac and bringing a measure of stability to housing markets.” Fannie Mae and Freddie Mac have helped approximately 9 million families refinance into a lower cost or more sustainable mortgage product, approximately 10 percent of those via HARP. HARP is unique in that it is the only refinance program that enables borrowers who owe more than their home is worth to take advantage of low interest rates and other refinancing benefits. This program will continue to be available to borrowers with loans sold to the Enterprises on or before May 31, 2009 with current loan-t0-value (LTV) ratios above 80 percent. The new program enhancements address several other key aspects of HARP including: ? Eliminating certain risk-based fees for borrowers who refinance into shorter-term mortgages and lowering fees for other borrowers; ? Removing the current 125 percent LTV ceiling for fixed-rate mortgages backed by Fannie Mae and Freddie Mac; ? Waiving certain representations and warranties that lenders commit to in making loans owned or guaranteed by Fannie Mae and Freddie Mac; ? Eliminating the need for a new property appraisal where there is a reliable AVM (automated valuation model) estimate provided by the Enterprises; and ? Extending the end date for HARP until Dec. 31, 2013 for loans originally sold to the Enterprises on or before May 31, 2009. An important element of these changes is the encouragement, through elimination of certain risk-based fees, for borrowers to utilize HARP to refinance into shorter-term mortgages. Borrowers who owe more on their house than the house is worth will be able to reduce the balance owed much faster if they take advantage of today’s low interest rates by shortening the term of their mortgage. The Enterprises plan to issue guidance with operational details about the HARP changes to mortgage lenders and servicers by November 15. Since industry participation in HARP is not mandatory, implementation schedules will vary as individual lenders, mortgage insurers and other market participants modify their processes. ### The Federal Housing Finance Agency regulates Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks. These government-sponsored enterprises provide more than $5.7 trillion in funding for the U.S. mortgage markets and financial institutions.
If you have any questions in regards to this program please email us at info@lendwithleverage.com or call us directly at 704-248-8742.
Effective April 18, 2011 The charts below illustrate the 25 basis points (bps) increase in the Annual Mortgage Insurance Premiums. There are no changes to the Upfront Mortgage Insurance Premium (UFMIP). It is anticipated that this increase will have minimal impact on borrowers but will significantly strengthen the capital position of the MMIF.
The increase in the Annual Mortgage Insurance Premiums for forward mortgage amortization terms is effective for case numbers assigned on or after April 18, 2011.
Upfront Premiums:Upfront premiums will not change on April 18, 2011. FHA will continue to charge an upfront premium in an amount equal to the following percentages of the mortgage:
Annual Premiums: Annual premiums will increase by 0.25% effective April 18, 2011.For FHA traditional purchase and refinance products, the annual premium, shown in basis points below, is to be remitted on a monthly basis, and will be charged based on the initial loan-to-value ratio and length of the mortgage according to the following schedule (effective with FHA case numbers assigned on or after 4/18/2011):
How long will I have monthly FHA mortgage insurance? Years will be determined when the loan balance equals 78% of the initial sale price or appraised value, which ever is lower, provided the mortgagor has paid the annual mortgage insurance premium for at least 5 years (refer to HUD 92900)
Although there’s been tons of discussion about tax credits and the housing industry. Many feel that the tax credit last year did little to help motivate folks to purchase a new home – but there’s no disputing the fact that more houses DID sell during that little window of time last year.
North Carolina’s House and Senate passed on to the next level Legislation intended to pump up the New Construction business as they consider a bill that will provide a $10,000 tqax credit for those who purchase a new construction home in our state!
The North Carolina Home Builders Association supported this bill, which creates a NC STATE tax credit for North Carolina taxpayers who purchase a new home. The bill is currently in Committee in the NC House of Representatives, and the Senate.
House Bill 485 would allow taxpayers to take a maximum credit of $2,000 per year over the next five years against tax liability owed to the state. The Senate Bill 476 is very similar.
To achieve the maximum stimulus effect and create the maximum number of jobs, the tax credit would be available only for a new home constructed on or after July 1, 2011, or for a new home construction contract entered into on or after that date. The credit would expire June 30, 2012.
You would not be eligible for the Tax Credit if you have an ownership in the Company selling the property.
A total allocation of $100 million is being sought to provide 10,000 taxpayers with the opportunity to purchase a new home utilizing this credit. However, the state needs only to allocate $20 million per year over the next five years to fully fund this credit.
As we have seen, globalization can also have a negative impact with a domino effect in times of turmoil and unrest. This impact affects the financial markets both in the U.S. and abroad.
Flight to SafetyWhen there is political unrest, which was sparked recently in Egypt and has spread like wildfire throughout the Middle East, global investors get nervous. Often they shed their risky assets like Stocks and flee to the safe haven of the U.S. Dollar and U.S. Bond market.
This geopolitical unrest can create a buying binge, which helps Bond prices improve. And when Bond prices improve, so do home loan rates. However, there are growing concerns that trump the disturbing news coming from the Middle East, which will be the guiding force of home loan rates in the times ahead. What might that be?
Inflation, Inflation, InflationInflation is the arch enemy of Bonds and home loan rates, even if inflation is across the pond. The increase in global unrest, not just in Egypt but in other parts of the world as well, is mostly attributed to economic factors – primarily runaway inflation in commodities and food.
The People's Bank of China has raised interest rates a couple of times, most recently by 0.25% in an effort to head off a continued rise in consumer prices in China. The culprits? Soaring food prices and higher raw material costs lead the pack.
China has also tightened lending standards by requiring banks to raise their capital reserve requirements. In their latest reporting, China's inflation rose by 4.9% year over year. This was lower than their expectations, however it still marked their highest reading in a couple of years. China may have to tighten their belt some more.
Brazil is appearing on the scene with the hottest rates of inflation in six years. They are attributing this to a rise in food costs and increased bus fares. It is anticipated the Central Bank will raise the benchmark interest rate in March for a second straight time in an effort to contain the spike in inflation.
The British are grappling with inflation as well. Their year over year reading struck a hot 4%, which is twice the rate of the Central Bank's target. The UK has yet to address this with rate hikes because their economy is in such bad shape that any hike would make matters worse.
Inflation is beginning to become a problem in Europe where it has risen to 2.4%. This is super hot and well above the European Central Bank's (ECB) comfort zone of beneath 2%.
With an inflation problem in Europe, the ECB will eventually have to raise rates to fight it. When they do, the Euro will strengthen against the dollar, making European Bonds relatively more attractive than U.S. Bonds. This attraction will likely put a damper on U.S. Bond purchases, and could also cause home loan rates to rise.
Many of these countries within Europe have a high number of union workers. They could very well demand pay increases to offset the higher cost of living resulting from inflation. This would exacerbate matters.
As we see signs of inflation around the world, the U.S. isn't immune. With the second round of Quantitative Easing, known as QE2, the Federal Reserve's stated goal is to boost Stock prices, create inflation, and lower the unemployment rate. These are all unfriendly to Bonds and could also cause home loan rates to move higher. As the old trading saying goes, "Don't Fight the Fed." It's a bit like the Golden Rule, "He with the gold, rules." If the Fed wants to accomplish these goals at the expense of Bonds, they probably will.
Some Good NewsDespite inflation rising around the world, the global economy will continue to recover and growth will continue to expand. Consumer confidence has picked up, hitting the highest level since February 2008. With continued confidence as the economy picks up speed, housing may begin to show signs of improvement as well.
These are very interesting times. Historically speaking, rates are still extremely attractive and remain close to the historic lows…but for how long? Overall, as a percentage of total income, the cost of owning a home is less expensive that it's been at any time since 1963. So if you or someone you know has been thinking about purchasing or refinancing a home, now is the time to get started! Contact the person who supplied you with this month's issue of YOU Magazine and spend time reviewing your situation today.
If your home is in a designated rural area, and you meet income requirements, you may qualify for a loan with no down payment.
The zero-down mortgage is still alive through the Agriculture Department's rural-development housing program.
People buy houses without down payments or mortgage insurance with USDA loans. The catch? The property must be in a designated rural area. The surprise? Some eligible properties are in places that most people would not consider rural.
"The terms of eligibility for a USDA loan are twofold, because not only does the borrower need to qualify, but so does the property," "It's a small box that borrowers have to fit into, but it's a great program if they do."
Do you qualify?First, to be eligible, the property must be in a designated rural area. The USDA website lists counties designated as rural. But some properties are eligible for USDA loans in counties that are not designated rural, There are eligible homes on the outskirts of Charlotte,NC for example."The best way to find out about property eligibility is to enter an exact address (on the USDA site),"
After the home's location is deemed eligible, the borrower must meet income and credit standards.
Call us today to see if your prospective home purchase is eligible.
704-248-8742.
Tax Deadline Extended!
Consumers are often misled when it comes to the subject of the Federal Reserve and how it affects mortgage interest rates. Often the media is the culprit causing the confusion. In the last few years, the Fed has taken action that caused mortgage interest rates to move in a direction other than what consumers expected, because the media provided weak reporting on the subject.The Federal Reserve affects short-term interest rate maturities, the Fed Funds rate, and the Overnight Lending rate. These factors have a direct impact on the Prime rate. If you took only this into consideration, you may mistakenly conclude that changes made by the Fed will cause a similar movement in mortgage interest rates. However, mortgage interest rates are dictated by the trading of mortgage-backed securities, which trade on a daily basis. The real dynamic at the heart of interest rate movement is the relationship between stocks and bonds.Stocks and bonds compete for the same investment dollar on a daily basis. There is literally only so much money to be invested. When the Federal Reserve feels that interest rates need to be decreased in an effort to stimulate the economy, this reduction in rates can often cause a stock market rally. When the market becomes bullish, the money to invest in stocks comes from the selling of mortgage-backed securities.Unfortunately, selling mortgage-backed securities to fuel stock market rallies causes interest rates to go up, not down.Historically, there have been many times when the Federal Reserve has increased interest rates. Stocks then sell off in fear that the increase will affect corporate profit margins, and the liquidated stock assets need a place to park until the next rally comes along. The safe haven is found in mortgage-backed securities which cause mortgage rates to drop.The daily ebb and flow of money is what matters most when it comes to the movement of mortgage interest rates. A good lender will make it a point to continuously monitor interest rates for their clients, and advise them of opportunities to manage their mortgage debt at a better rate.
Call us today for a free interest rate quote. 704-631-9276 x 301.
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