FHA short refinance option now available

WASHINGTON – Sept. 8, 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) now provides a new refinancing option for underwater borrowers. Originally announced in March, the enhancement of a Federal Housing Administration (FHA) refinance program offers non-FHA borrowers the opportunity to qualify for a new FHA-insured mortgage. To qualify, the homeowner must be current on his existing mortgage and lien holders must agree to write off at least 10 percent of the unpaid principal balance.

The FHA Short Refinance option is targeted to people who owe more on their mortgage than their home is worth because the local market saw large declines in home values. The Obama Administration hopes the change, as well as other programs that have been put in place, will help up to 4 million struggling homeowners through the end of 2012.

Participation in FHA’s short refinance program is voluntary and requires the consent of all lien holders. To be eligible for a new loan, the homeowner must also qualify under standard FHA underwriting requirements. The property must be the homeowner’s primary residence and the borrower’s existing first lien holder must agree to write off at least 10 percent of their unpaid principal balance. In addition, the existing loan to be refinanced must not be an FHA-insured loan, and the refinanced FHA-insured first mortgage must have a loan-to-value ratio of no more than 97.75 percent, and a combined loan-to-value ratio no greater than 115 percent.

To facilitate the refinancing of new FHA-insured loans under this program, 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 October 3, 2010.

For more information on FHA Short Refinance option, read FHA’s mortgagee letter:http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/10-23ml.pdf

© 2010 Florida Realtors®

Investment property: four considerations

NEW YORK – Sept. 7, 2010 – Real estate entrepreneur Ryan Moeller offers these four tips for anyone considering a consumer real estate investment:

1. Don’t count on appreciation. Appreciation is a bonus.

2. Watch the loan-to-value ratio. Ideally, the total cost of the purchase, fees and repairs should be no more than 70 percent of the appraised value of the property in good condition.

3. Maximize annual return. Aim for properties that can be rented for at least 1.5 percent to 3 percent of the purchase price. For example, plan to pay no more than $50,000 for a property that can be rented for $750 per month.

4. Have an exit strategy. Seek properties that are attractive enough to have value no matter what happens to the market – as rentals, for sale to other investors, or for sale to somebody who plans to live there via conventional financing or lease purchase.

Source: BiggerPockets.com

Pending home sales rise

WASHINGTON – Sept. 2, 2010 – Following a sharp drop in the months immediately after expiration of the homebuyer tax credit, pending home sales have modestly risen, according to the National Association of Realtors® (NAR).

The Pending Home Sales Index (PHSI), a forward-looking indicator, rose 5.2 percent to 79.4 based on contracts signed in July from a downwardly revised 75.5 in June; it’s 19.1 percent below July 2009 when it was 98.1. Pending sales data reflects contracts and not closings, which normally occur with a lag time of one or two months.

“Home sales will remain soft in the months ahead, but improved affordability conditions should help with a recovery,” says Lawrence Yun, NAR chief economist. “But the recovery looks to be a long process. Homebuyers over the past year got a great deal, and buyers for the balance of this year have an edge over sellers. For those who bought at or near the peak several years ago, particularly in markets experiencing big bubbles, it may take over a decade to fully recover lost equity.”

On the other hand, homes have not been this affordable in recent memory. “Affordability could reach a generational high in the second half of this year because of rock-bottom mortgage interest rates, helped partly by the Fed’s very accommodative monetary policy,” says Yun. “The loan underwriting standards are tighter, but homebuyers can improve their chances of getting a loan by staying well within their budget.”

The PHSI in the Northeast rose 6.3 percent to 62.5 in July and is 21.1 percent below a year ago.

In the Midwest the index increased 4.1 percent to 66.7 and is 25.7 percent below July 2009.

Pending home sales in the South rose 1.2 percent to an index of 86.3, and are 15.6 percent lower than a year ago.

In the West, the index jumped 11.6 percent to 95.0 and is 17.6 percent below July 2009.

The national index had fallen 29.9 percent in May and another 2.8 percent in June.

© 2010 Florida Realtors®

Home prices up 1% in June

WASHINGTON (AP) – Sept. 1, 2010 – U.S. home prices rose in June for the third straight month amid a burst of homebuying due to tax incentives that have since expired.

The Standard & Poor’s/Case-Shiller 20-city home price index posted a 1 percent increase in June from May and was up 4.2 percent from a year ago. Home prices nationally were up 4.8 percent in the second quarter compared with the first quarter, largely due to government tax credits of up to $8,000 that caused sales to surge.

Seventeen cities showed price gains on a monthly basis. Prices in Seattle and Portland (Oregon) were flat from a month ago, while prices in Las Vegas fell.

Nationally, prices have risen 6 percent from their April 2009 bottom. But they remain 28 percent below their July 2006 peak.
 Copyright © 2010 The Associated Press

5 reasons homeownership trumps renting

NEW YORK – Aug. 31, 2010 – The seemingly endless run of bad housing news is discouraging some potential homebuyers from considering a purchase. But the truth is that the advantages of homeownership have very little to do with investment gains, and a lot to do with personal comfort and satisfaction.

Here are five of them:

• Be your own landlord. The bank can only kick you out if you don’t pay; a landlord can be much less dependable – deciding to sell the property or choosing to live there themselves.

• Paying the principal is forced savings. Yes, it’s possible that home prices will fall further. It is also possible that your 401(k) will lose value. But over the long haul, both are likely to enjoy modest gains in value.

• Fixed-rate mortgages never rise – and eventually you pay them off. With mortgage rates at record lows, people who buy now are locking in real bargains.

• Good schools. Family-sized rentals are harder to come by in areas with excellent public schools.

• Spacious properties in pleasant neighborhoods. Sizable homes in attractive communities are almost always owned – not rented.

Source: The New York Times

5 things to know about Facebook Places and your privacy

DETROIT – Aug. 30, 2010 – Facebook has brought the geo-tracking phenomenon to the masses. But there are pitfalls.

And, even if you’re not on Facebook, there are some things you need to know about the new check-in service Places to protect your privacy.

Location services like Foursquare and Gowalla – which allow users to “check in” to places, sharing their precise current location with a group of friends using GPS technology on smart phones – have grown considerably this year, but have nowhere near Facebook’s market-leading 500 million-plus active users.

For some, Facebook has been a safe way to stay in touch with friends in a mostly closed environment. The dawning of Places, though, calls some of that into question.

The unveiling of Places last week set off some hand-wringing over the increasing intrusions the social Web is making into our everyday lives.

All Facebook users are now, by default, part of the Places ecosystem. And, even if you’re not a Facebook member, someone in your home could create a listing on your behalf – whether you want him to or not.

Here’s what you need to know to be safe and informed.

1. Friends can share your location
Facebook lets your friends check you in to locations without your consent.

This means that when you’re out for a night on the town, a friend can check in and tell Facebook everyone he or she is with. Then, all your Facebook connections know where you are, even if you didn’t want to share your location with the whole World Wide Web.

To turn off this feature, head deep into your privacy settings and disable the entry called “Friends can check me in Places.”

2. Strangers can see you nearby
Even if you choose to be seen only by your friends, you could still be showing up to strangers when they check into the same location under a section called “People Here Now.” This is intended to show Facebook users who else is at the coffee shop, movie theater, restaurant, etc.

You can disable this under “Things I share” in Facebook’s privacy settings.

3. Place listings are public
It’s important to know that Facebook Place listings – the pages created when you check into a new place – are public. So, if you create a listing to check into your house when you get home from work, that page – say, “Mark W. Smith’s house” – is searchable on the Web even for those who aren’t connected with you on Facebook or even have a Facebook account.

Each page also automatically includes a handy interactive map – powered by Microsoft’s Bing – to locate the exact location. So don’t check into your house if you don’t want the entire Internet knowing exactly where you live.

If you’re curious if a listing has been created for your home or other private place, launch touch.facebook.com on a GPS-enabled smart phone. Under Places, you’ll be able to see a listing of nearby Facebook locations.

4. Opportunities for businesses
Facebook allows business owners to manage the page that pools the check-ins of its patrons. Page owners can then use that page to keep customers updated on new services, merchandise, menu items, etc.

First you have to prove to Facebook that you own the business you’re trying to manage online. To do so, click the link that says, “Is this your business?” and follow the instructions to take ownership. You’ll need to supply proof by attaching a digital copy of a business license or certificate of incorporation.

5. Integration should be coming
Facebook says it is partnering with the previous location leaders Foursquare and Gowalla so that users of those services can send their location to Facebook Places automatically. These connections have not yet been enabled, though, and it’s unclear how willing other location services will be to play nice with Facebook, which will almost undoubtedly render their services obsolete.

© 2010 Detroit Free Press

Mortgage rates hit low of 4.36%

Mortgage Rate Trend Index

Rates keep dropping but most mortgage experts polled by Bankrate.com continue to think they couldn’t drop more. Fully half (50%) predict no change over the short term; 30% foresee a decline; and the remaining 20% expect an increase.

 NEW YORK – Aug. 27, 2010 – Mortgage rates fell to the lowest level in decades for the ninth time in 10 weeks as concerns grow that the economy is weakening.

Mortgage buyer Freddie Mac said Thursday that the average rate for a 30-year fixed loan was 4.36 percent this week, down from 4.42 percent last week. That’s the lowest since Freddie Mac began tracking rates in 1971.

The average rate on a 15-year fixed loan dropped to 3.86 percent from 3.90 percent the previous week. That’s the lowest on records starting in 1991.

Rates have fallen since spring as investors shifted money into the safety of Treasury bonds, lowering their yield. Mortgage rates tend to track those yields.

The low rates have fueled borrowers to refinance their home loans. Refinancing is at its highest level since May 2009 and made up 82.4 percent of all new loan activity.

However, low rates haven’t budged home sales, Those have been stymied by high unemployment, slow job growth and strict credit standards, and have dropped sharply since the expiration of homebuying tax credits in April.

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.

Average rates on five-year adjustable-rate mortgages were unchanged at 3.56 percent. Rates on one-year adjustable-rate mortgages fell to an average rate of 3.52 from 3.53 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 30-year and 1-year mortgages. They averaged 0.6 of a point for 15-year and 5-year mortgages.

Copyright © 2010 The Associated Press