Category Archives: LOAN SPECIALIST
In a move designed to bring more first-time homebuyers into the housing market, President Barack Obama said Wednesday the Federal Housing Administration (FHA), the government insurer of home loans, will lower its annual insurance premiums from 1.35 percent to 0.85 percent.
In a statement, the White House said the move was part of the president’s efforts `”to expand responsible lending to creditworthy borrowers.” The president is scheduled to talk about improvements in the housing market at a speech on Thursday in Phoenix, one of the hardest-hit markets of the housing crash.
Stocks of the nation’s home builders rose on the news Wednesday, while those of mortgage insurers fell.
“This action will make home ownership more affordable for over two million Americans in the next three years,” said Julián Castro, U.S. Department of Housing and Urban Development Secretary. “Since 2009, the Obama administration has taken bold steps to reduce risks in the mortgage market and to protect consumers. These efforts have made it possible to take this prudent measure while also ensuring FHA remains on a positive financial trajectory. By bringing our premiums down, we’re helping folks lift themselves up so they can open new doors of opportunity and strengthen their financial futures.”
Mortgage bankers praised the decision. “It couldn’t come at a better time,” said David Stevens, CEO of the Mortgage Bankers Association. “February is the beginning of the spring market. I think it will have a definitive impact particularly in the first-time homebuyer market.”
For the typical FHA applicant, the reduction in premiums means a savings of about $80 on their monthly payment, according to CoreLogic’s chief economist, Sam Khater.
“So it’s positive news from a consumer welfare perspective, especially for first-time homebuyers, which account for the majority of FHA’s business,” he said, adding, “However, I think the marginal impact on sales will be small because potential buyers make the decision to purchase based on trigger events, such as a new job, marriage, kids, etc. Changes in affordability only impact how much home they can buy.”
The FHA had been the only low down payment product available, with a minimum 3.5 percent down, but recently Fannie Mae and Freddie Mac announced a new 3 percent down payment product that would require private mortgage insurance. The product would compete directly with the FHA and could have offered some borrowers a cheaper option if they had a good credit score.
“We believe the cut is strategic. Our view is that FHA was at risk of losing enough market share—especially of higher-quality borrowers—to the GSE 97 percent down mortgage that it could have put at risk the ability of the FHA fund to reach its 200 basis point reserve requirement this year as it had forecast. By cutting the premium, FHA would increase its share of the market and should be back on track to meeting the reserve requirement despite the cut in revenue,” wrote Jaret Seiberg, an analyst at Guggenheim Partners.
The reduction will likely come under scrutiny by some on Capitol Hill, as the FHA is still building its capital reserves and is not yet above the mandatory 2 percent minimum. It is back in the black, after having bled cash for two years.
The FHA’s volume had soared at the beginning of the housing crash, making up for the lack of credit in the private market, but that came at a price. In order to rebuild its fund, it more than doubled its annual insurance premium and raised average credit scores. That made it harder for borrowers today to afford an FHA loan.
Lowering the premium will bring volume back to the FHA, but it will also bring back risk.
“That is clearly the tension with any lending program that encourages low down payment,” said Stevens. “But we are in a different position. We are clearly in an environment where home prices are very stable with steady growth. You don’t have the dynamics to create any type of housing bubble.”
Mortgage volume has been lagging, even with interest rates falling to near record lows. The Obama administration is clearly looking for new ways to boost homeownership, as investor activity wanes and the market is left to mortgage-dependent buyers.
“Now that we’ve made it harder for reckless buyers to buy homes that they can’t afford, let’s make it a little bit easier for qualified buyers to buy the homes that they can afford,” said Obama in an August 2013 speech, also in Phoenix. At the time he did not make mention of the FHA, which was still in the red, but instead touted refinance programs and less red tape for lenders.
Obama is also expected to address the issue of putbacks at the FHA, which is when lenders are forced to buy back bad loans. The regulator of Fannie Mae and Freddie Mac, the Federal Housing Finance Agency, has already sought to clarify these rules, which have created huge costs for lenders and consequently higher costs for borrowers. Source: cnbc.com
Your Loan in the Valley
Pre-qualify Prospects and Referring Partners so you get more Real Estate Business
1) Cooperate: When speaking with them, are they amiable and willing to cooperate? Although they may be facing challenges because of today’s market or because of credit issues, that is fine, but if they get belligerent or angry with you, you do not have to work with them.
2) Plea for Help: Do they want to be helped? Find out their “hurt” and show them how your product or service is the “cure”
3) Realistic: Do they have realistic expectations? Does the prospect realize that the current value of their home may not be the same as it was few years ago? If financing is involved, do buyer prospects realize that loan programs are not the same today as they were 2 years ago.
4) Conversation: Are they willing to have a conversation with you? Do they even answer the phone or have they been avoiding you for weeks? Are they short with you and give clipped, one word answers or do they at least provide a little dialogue? Follow the rule of three, once you have left them 3 messages if they do not respond throw them away and move on.
5) Action: Do they want to move forward anytime within the next 2-14 days? Are they motivated and ready to move forward now?
Qualifying your prospective clients quickly and effectively is a skill that is sure to bring you massive success in any industry. Source: propertysolutions123.com
CalHFA has launched three new programs, and each may be combined with CalHFA’s various down payment assistance programs for first time homebuyers in the housing market.
Two of the CalHFA’s new programs are first mortgage loans, the CalPLUS Conventional and the CalHFA Conventional, offering a maximum LTV of 97%. The third new program is CalHFA’s Energy Efficient Mortgage combined with an additional Energy Efficient Mortgage Grant to allow for energy efficient improvements. All three of the programs are available to first time homebuyers, with exceptions if the borrower is purchasing a home located in a Federally Designated Targeted Area*.
Each of the programs can be combined with CalHFA down payment assistance programs and other assistance programs including the California Homebuyer’s Down Payment Assistance Program (CHDAP), the Extra Credit Teacher Program (ECTP), and the Mortgage Certificate Credit (MCC) program.
The CalPLUS Conventional Loan Program is already combined with the Zero Intererst Program (ZIP), which is a deferred second loan with zero interest. The maximum amount of the ZIP loan is 3% of the CalPLUS first mortgage.
The CalHFA EEM Grant may be a maximum of 4% the first mortgage total loan amount and includes the Up Front Mortgage Premium (UFMIP).
All three of the programs require a minimum credit score of 640, and debt-to-income (DTI) not to exceed 45%. With the assistance of other down payment assistance programs or grants, all programs may have a maximum combined loan-to-value (CLTV) of 103%. Source: prweb.com photo by photostock
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Your Loan in the Valley
CALIFORNIA HOMEBUYER’S DOWNPAYMENT ASSISTANCE PROGRAM
• Owner Occupied Purchase, 1 unit dwelling only (5 acre maximum & property cannot be income producing)
• Up to 3% of Sales Price or value whichever is less @3.25% simple interest with deferred payments
Note: repayment of the principal and interest on subordinate loan shall be due and payable at the earliest of the following:
1) transfer of title,
2) Sale of the property,
3) Payoff or refinance of 1st TD,
4) Recording of a Notice of Default.
• Borrower must be a first-time homebuyer (cannot have owned a property in the last 3 years)
•Homebuyer education must be completed by all borrowers.
• Max $250 processing fee allowed for 2nd TD (2nd loan package must be submitted & disclosed)
• Sales Price limit applies per County
• Household income limit applies per County
• Please check limits at http://calhfa.ca.gov/ or CHDAP manual.
(may be subject to change annually)
(Note: Household income is defined as the annualized gross income of a mortgagor and any other person who is expected to liable on the mortgage, be vested on title and live in the residence)
• DU Approved/Eligible required – Manual UW is NOT allowed
• Max. 43% DTI (based on qualifying income not household income)
• Non-occupant co-borrowers are not allowed
• FHA/VA/USDA – min. 640 qualifying credit score required
• Conventional @95% LTV or below – min. 640 credit score required
• $1,000 min. required investment for 680 qualifying credit score or higher (Gift allowed DU approval)
• $1,500 min. required investment for 640 – 679 qualifying credit score (Gift allowed with DU approval)
• 3 years 1040’s or IRS 1040’s Transcripts required (signed 4506-T required in file)
• 2 Year Home Warranty required (except new construction)- If paid by borrower cost can be used toward the min. required investment
• All documents must be dated within 60 days of submission to CALHFA (includes credit report, VOE’s/VOD’s, paystubs & bank statements)
(Note: Community property law may imply an interest in a property if when the non-purchasing spouse owns an O/O property)
• Homebuyer Education Certificate (all borrowers)
• Tax Return Affidavit
• Military Service Questionnaire
• Borrower Affidavit of Household Size
• Borrower’s Certification & Authorization to release information
1. A purchase contract must be fully executed prior to reservation
2. Lender to reserve CHDAP funds prior to submission of 2nd TD package to CALHFA (90 day expiration or 180 day expiration required for new construction)
3. Loan can be locked with CALFHA when all PTD conditions are signed off by CHDAP U/W (60 day expiration required for locks)
4. All loans must be approved, closed, delivered & purchased prior to reservation expiration date.
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Your Loan in the Valley
818 810 4646