FHA launches short refi opportunity for underwater homeowners

WASHINGTON – Aug. 9, 2010 – In an effort to help responsible homeowners who owe more on their mortgage than the value of their property, the U.S. Department of Housing and Urban Development (HUD) provided new details about a refinance program it announced earlier this year that helps responsible homeowners who owe more on their mortgage than the value of their property.

Starting Sept. 7, 2010, the Federal Housing Administration (FHA) will offer certain “underwater” non-FHA borrowers a new FHA-insured mortgage. To qualify, an owner must be current on his existing mortgage, and his lender must agree to write off at least 10 percent of the unpaid principal on the first mortgage.

“We’re throwing a lifeline out to those families … experiencing financial hardships because property values in their community have declined,” says FHA Commissioner David H. Stevens. “This is another tool to help overcome the negative equity problem facing many responsible homeowners who are looking to refinance into a safer, more secure mortgage product.”

Other details: A homeowner’s existing loan cannot be FHA insured, and the refinanced FHA-insured first mortgage must have a loan-to-value ratio no more than 97.75 percent. The owner must qualify for a new loan under standard FHA underwriting requirements and have a credit score equal of 500 or higher. The property must be the homeowner’s primary residence, and the new debt must bring the borrower’s combined loan-to-value ratio to no greater than 115 percent.

Interested homeowners should contact their lenders to find out if they’re eligible, and to determine whether the lender will write down a portion of the unpaid principal. If a homeowner qualifies, the U.S. Department of Treasury will provide incentives to existing second lien holders who agree to full or partial extinguishment of the liens. To be eligible, servicers must execute a Servicer Participation Agreement (SPA) with Fannie Mae, in its capacity as financial agent for the United States, on or before Oct. 3, 2010.

The FHA provided complete details in a six-page mortgagee letter that can be downloaded in PDF format. To read the letter, go to: http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/10-23ml.pdf

© 2010 Florida Realtors®

Mortgage rates hit low of 4.49%

Mortgage Rate Trend Index

Most experts (61%) polled by Bankrate.com continue to predict little change in rates even as rates continue to fall. Still, 11% foresee further drops while 28% expect a rate increase.

WASHINGTON – Aug. 6, 2010 – Mortgage rates dropped to the lowest level in decades for the sixth time in seven weeks, offering the most attractive opportunity for those who qualify to refinance or purchase a home.

Government-controlled mortgage buyer Freddie Mac said Thursday that the average rate for 30-year fixed loans this week was 4.49 percent, down from 4.54 percent last week. That’s the lowest since Freddie Mac began tracking rates in 1971.

The average rate on the 15-year fixed loan dropped to 3.95 percent, down from 4 percent last week and the lowest on record.

Rates have fallen since spring as investors seek the safety of U.S. Treasury bonds. That has lowered the yield on Treasurys. Mortgage rates tend to track those yields.

The last time home loan rates were lower was during the 1950s, when most mortgages lasted just 20 or 25 years.

Low rates have sparked some activity in the weak housing market, but not a massive boom in refinancing.

Applications to refinance loans increased 1.3 percent and those to purchase homes increased 1.5 percent, according to the Mortgage Bankers Association.

Nevertheless, high unemployment, slow job growth and tight credit have made it difficult for many to purchase homes. The housing industry received a boost this spring when the government offered homebuying tax credits, but housing activity has plummeted since they expired in April.

The number of buyers who signed contracts to purchase homes plunged in June to the lowest level on records dating back to 2001, according to the National Association of Realtors.

To calculate the national average, Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day.

Rates on five-year adjustable-rate mortgages averaged 3.63 percent, down from 3.76 percent a week earlier. Rates on one-year adjustable-rate mortgages fell to an average of 3.55 percent from 3.64 percent.

The rates do not include add-on fees known as points. One point is equal to 1 percent of the total loan amount. The nationwide fee for loans in Freddie Mac’s survey averaged 0.7 a point for all loans.
 Copyright © 2010 The Associated Press

Five reasons to buy a home now

ORLANDO, Fla. – Aug. 4, 2010 – The tax credit expired, but it’s still a great time to buy a home thanks to low mortgage rates and motivated sellers. Here are five reasons why now is a great time to buy:

1. Low mortgage rates serve as an equity shock absorber. When buyers borrow at today’s record-low rates, they start building equity as soon as they close. That means they can absorb a few ups and downs as the still-recovering housing market gains traction.

2. Houses are in move-in condition. Homeowners continue to spend on maintenance and repair, according to the Harvard Joint Center on Housing. As these houses enter the market, they stand in marked contrast to tattered foreclosures.

3. Terrific houses are coming on the market. Foreclosures are finally starting to clear the system, and they are being replaced by some very attractive properties.

4. Appraisal regulations are finally aligned with market realities. Fannie Mae has adjusted its appraisal guidelines, giving appraisers more flexibility to set values that reflect the current market.

5. Plenty of programs. Many programs that encourage middle-class families to buy homes still exist, despite market downturns. Buyers who qualify can get a big boost by combining one of these programs with today’s low mortgage rates.

Source: ForSaleByOwner.com

6 Tips to Keeping Your Home Cooler

August 3, 2010--Wow, it's hot outside! The summer's in full swing with no signs of cooling. And while you may be tempted to crank up the A/C, remember - you won't be nearly as excited to see that electric bill next month. 

To save some money -- and, don't forget, energy! -- here are six tips that might just help. 

1. Avoid heat build-up in your home – The best way to keep your home cool is to keep the heat out. This can be done by closing the drapes on windows facing the sun (east-facing windows in the morning and west-facing windows in the afternoon). You should also try to avoid heat-generating activities, such as cooking, on hot days or during the hottest part of the day. If you are cooking, use your range fan to vent the hot air out of your house. By reducing the amount of heat in your home, you will have to use less energy to cool it.
2. Use ventilation and circulation to cool your home – Instead of automatically turning on the air conditioner on hot days, try cooling your home with window and ceiling fans. Circulating air can make your home feel cool and comfortable in a much more efficient way than air conditioning. There is also the option of a whole house fan (a large ventilating fan installed in you attic that expels hot air out of your home) which can circulate air throughout your entire home.
3. Keep air conditioning efficient and to a minimum – When you do have to use air conditioning, there are ways to make it more efficient. First of all, turn up the temperature setting on your air conditioner by a couple of degrees. Most people keep the temperature setting lower than it needs to be, hence using more energy than is needed to keep your home cool. It is recommended that you keep the temperature at about 25° C (77° F). Also, remember to turn off your air conditioner once your home has reached a comfortable temperature. By coupling minimum air conditioning with reducing the amount of heat entering your home, you can keep it cool without using excess energy. It isn’t recommended that you leave your air conditioner on when you leave your house, but if you’re going to do so, turn the temperature setting up a few more degrees while you’re gone to about 28° C (82° F). Also, remember to turn off your air conditioner if you’re going to be away from your home for more than a day. It is also important to make sure your cooling vents aren’t blocked so that the energy being used is going towards actually cooling your home and not being wasted. Furthermore, keep rooms that don't need cooling, such as closets, closed off when you're air conditioning.
4. Make sure your home isn’t losing cool air – By weather-stripping and caulking around windows, doors and electrical outlets on outer walls, you can prevent losing cool air from your home and prevent hot air from getting in. Improve your home’s insulation on outer walls, again to keep cool air in, and hot air out. You should also consider installing storm doors for the same reasons if your home doesn’t already have them. If you have a fireplace, keep the flue closed. These provide an extra barrier against the escape of cool air. All of these options will make cooling your home more efficient and will save you money on your energy bill.
5. Select energy-efficient cooling systems – If you’re in the market for a new cooling system, there are many new technologies that are much more efficient than older versions. As with other appliances, you should look for the Energy Star logo and compare the amount of electricity each uses.
6. Use the coolest parts of your home – On hot days, parts of your house will naturally stay cooler than others. For example, if you have a basement it will remain cool even during the hottest part of the day (this is because the cool air in your home will sink down to your basement). One way you can reduce the amount of energy used to cool your home is to do more in cooler areas of your home. This way, you won't have to use energy to stay cool.

By Stephanie Andre

BP to give $7M initial payout for Fla. ads

TALLAHASSEE, Fla. – Aug. 2, 2010 – As Northwest Florida businesses continue to struggle with the fears of oil along the Panhandle that is keeping travelers away, Gov. Charlie Crist announced BP will make a $7 million initial payment on money it promised to help advertise that the beaches are OK.

Crist announced Friday the money would go to the Northwest Florida Travel Council, even as he pressed the company for the rest of the $50 million he requested in June.

“While we are grateful the well has been capped – and pray that a complete seal of the well is achieved as soon as possible – there still remains a very real and constant threat to Florida’s $60-billion-a-year tourism industry,” Crist wrote to BP Chief Operating Officer Doug Shuttles.

The governor continued: “Unfortunately, images of damage from spill continue to appear in the media, thereby perpetuating the perception that Florida’s pristine beaches are contaminated by oil. For that reason, I must continue to urge BP to recognize that the impact of the oil spill extends far beyond the coastal counties of Northwest Florida.

“While the $7 million you have committed to the Northwest Florida Travel Council is certainly appreciated, we continue to believe these funds fall drastically short of the need throughout the Sunshine State.”

Source: News Service of Florida

Mortgage rates hit low of 4.54 percent

Mortgage Rate Trend Index

Over the next week, 74% of the industry experts surveyed by Bankrate.com believe mortgage rates will remain relatively unchanged; 21% think rates will rise; and 5% think they’ll fall.

NEW YORK – July 30, 2010 – Mortgage rates are the most affordable in decades for those who can qualify for a loan.

For many, the opportunity to buy a home or refinance at this time is lost because of the tough economy and tight credit standards. But those who have secure jobs, superior credit and strong finances could do even better than the 4.54 average rate that Freddie Mac reported Thursday, according to experts.

The latest rate is the lowest for a 30-year fixed loan since Freddie began tracking rates in 1971. It also marks the fifth time in six weeks that the mortgage company has reported hitting a new average low.

Still, it’s possible to get an even lower rate if a borrower contributes more than 20 percent to the downpayment or has impeccable credit.

“Scores matter,” said Ritch Workman, co-owner of Workman Mortgage in Melbourne, Fla. He can offer a rate of 3.375 percent on a $200,000 Freddie Mac loan. The caveat: The borrower must put down 20 percent, have a credit score of 800 and pay $1,400 in add-on fees.

Susquehanna Bank, which has branches in Pennsylvania, New Jersey, Maryland and West Virginia, is advertising a similar loan. But the credit score requirement is 720 and the add-on fees total $750.

Sometimes the best rates are offered by community banks or credit unions. They keep mortgages on their books instead of selling them to investors, said Greg McBride, a senior financial analyst at Bankrate.com. Other times, bigger banks or smaller mortgage bankers have the best deals.

Keep in mind that rates fluctuate significantly, even within a day, like airfares on a travel site. And the key to finding the best rate is to shop around online and in person.

Either way, borrowers are getting good deals. The last time home loan rates were lower was during the 1950s, when most mortgages lasted just 20 or 25 years.

The rate on 15-year fixed loans, a popular choice for refinancing, also are the lowest on records dating back to 1991. That rate fell to 4 percent from 4.03 percent last week.

Mortgage rates have been falling since spring. Yields on U.S. Treasury bonds have dropped as jittery investors seek safer investments. Rates tend to track the yields on Treasurys.

Low rates helped spark a little activity in the weak housing market. Applications to purchase homes rose 2 percent last week from the previous week, the Mortgage Bankers Association said Wednesday. Still, the housing market has been struggling and overall applications for loans were down last week as fewer people applied to refinance.

High unemployment, slow job growth and tight credit have made it difficult for many to purchase homes. Home sales got a boost this spring when the government offered homebuying tax credits, but activity has fizzled since those expired in April.

Sales of previously occupied homes fell 5.1 percent in June. New home sales jumped last month, but it was the second-weakest month on record and it came after sales tumbled in May.

Refinance activity has increased over the last month as homeowners seek more affordable monthly payments. But many don’t qualify for a loan or don’t have the cash to pay for closing costs. And rates have been low for so long that many have already refinanced.

To calculate the national average, Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country.

Rates on five-year adjustable-rate mortgages averaged 3.76 percent, down from 3.79 percent a week earlier. Rates on one-year adjustable-rate mortgages fell to an average of 3.64 percent from 3.70 percent.

The rates do not include add-on fees known as points. One point is equal to 1 percent of the total loan amount. The nationwide fee for loans in Freddie Mac’s survey averaged 0.7 a point for all loans.
 Copyright © 2010 The Associated Press

Foreclosure vs. short sale: pros and cons

PALM BEACH, Fla. – July 28, 2010 – With today’s reduced property values and increased unemployment, it’s tempting for some homeowners to just throw their hands up in defeat, allow the bank to take their home in foreclosure and rid themselves of the monthly mortgage burden.

Even suffering through the paperwork and stress of a short sale may seem too much for an overwhelmed borrower to handle.

But Florida homeowners should be aware of unique rules in the state that make the benefits of a short sale typically outweigh the ease of walking away in a foreclosure.

“I want to be very clear on this, short sales are a better solution than a foreclosure, even when all the options in a situation where you lose your house are not great,” said Mark Greene, owner and president of Short Sale Operations LLC in North Palm Beach.

The biggest difference between Florida and many other states when it comes to losing a home is the deficiency judgment.

While some states ban lenders from collecting the remainder owed on a loan after a foreclosure or short sale is completed, Florida law allows banks to go after borrowers for up to 20 years. That can lead to a garnishment of wages long after the home is gone.

In a short sale, where the bank agrees to take a lesser amount for the home than what is owed on a loan, lenders sometimes are willing to write off the deficiency on the front end.

Greene said in 90 percent of the cases he handles, the bank has waived its right to seek a deficiency.

That was the case with Jupiter resident Kathryn Lorello, who in 2008 found herself in a home she couldn’t afford.

Following a divorce, and with three children, Lorello bought a $408,000 home that she lived in comfortably for a year. But then she lost her job as a manager of a real estate company.

She remembers the day the bank served the notice of foreclosure.

“I cried my eyes out,” Lorello said. “That’s when I panicked because I really didn’t want it to happen.”

Lorello got advice from Greene on doing a short sale.

Her bank, Wells Fargo, waived its right to seek a deficiency even though it ended up taking $200,000 less than what was owed on the loan.

Also, if a bank refuses to waive the deficiency in a short sale, it still would have to go back to court to seek a judgment.

In a foreclosure, at the end of the proceeding, a deficiency judgment is automatically awarded by the courts and the bank is free to seek a claim.

“In the past, people just wanted to move from the property and get on with their lives and didn’t understand what the lenders’ rights were in terms of pursuing a deficiency claim,” said Paul Baltrun, director of loss mitigation at the LaBovick & La-Bovick law firm.

“I think people are more aware now about what can happen after the fact and that their nightmare can continue.”

Another consideration is the effect of a foreclosure or short sale on credit.

According to the Fair Isaac Corp., which developed the widely used measurement of credit risk called a FICO score, the negative effect of a foreclosure is only marginally worse than a short sale.

But in Florida, a deficiency judgment from a foreclosure is likely to have a much larger impact that will prohibit your ability to buy another home for many years.

Daniel Poulos, a mortgage broker with Elite Lending in North Palm Beach who has studied the effect of foreclosures and short sales on credit, said unless a borrower pays off the deficiency, it may be 20 years before someone is eligible for another mortgage.

“That’s the kind of information that’s not getting out in Florida,” Poulos said.

There are a few situations where some experts believe it is better for someone to go to foreclosure rather than do a short sale.

To do a short sale, a borrower must give all of his or her financial information to the bank before it will decide whether to allow the short sale. The idea is that if a person can afford to pay the mortgage, the short sale may be denied.

“Now the lender knows everything about your finances and they can better decide whether they will go after you or not,” said Jon Maddux, CEO of YouWalkAway.com, a company that advises people on strategic defaults.

If a lender doesn’t know your finances, Maddux argues, it reduces the chances it will go after you following a foreclosure.

“You might fly under the radar,” he said. “With the millions of people going through this, they are probably going to go after the low-hanging fruit.”

Copyright © 2010, The Palm Beach Post