Fred's Mortgage Blog

You are welcome, it truely was my honor to serve

Thu, 12 Nov 2009 13:37:15 -0600

Yesterday was Veteran’s Day and a number of people thanked me for my service and that made me feel very special. I was in the U. S. Air Force from 1966 to 1978 and spent time on Guam during operation ARC LIGHT and BULLET SHOT during my first enlistment, on temporary duty with the 4133 Bomb Wing (Provisional). The wing was flying sorties from Guam with B-52s over Vietnam. No, I wasn’t an air crew member, I flew a typewriter and a camera. I was editor of the base newspaper. I was back on Guam on permanent (well as permanent as the military gets) assignment in 1973 and helped with the processing of refugees when Saigon fell in 1975. We took in 121,000 refugees in a 10 day period as people fled from Vietnam in almost anything that would fly. The first ones came off of the commercial airliners with so much gold they could hardly walk. The last ones were stuffed so tightly into C-130s that they couldn’t sit down. Later, the boat people started arriving. It was a heart wrenching thing to watch as people fled their homes to keep from being killed. During those years, when I traveled, I didn’t do it in uniform, there was too much chance of being spit upon or derided. The military was the target for protesters and demonstrations. It wasn’t until much later that we were finally accepted for who we were and not what was being done. That is why I am so pleased that there are people today working to make sure the members of our armed forces are recognized and praised for what they are doing. The following clip was forwarded through Facebook by one of my friends. I hope you will take the time to watch the whole thing.

There are a number of very good videos out that say the same thing and I want to thank the people that have taken the time to do this for our military. There are a number of people from my era that are still suffering and maybe, just maybe, this will help them too. It is hard to come back to your home and have people turn their back on you. I don’t want that to happen to our military today. So in response to those yesterday, I just want to say: You are welcome, it really was my honor to serve.

Do you know who is writing that website you are reading?

Wed, 17 Jun 2009 16:17:44 -0500

Interestingly, while doing some web surfing trying to find out who my competition is in the blog-o-sphere, I wasn't entirely pleased with who was out there. I wanted to know who else was writing about the place I call home and who was writing about lending, mortgages and loans. It is interesting what I found. Like this site, for example. Neighborhood Expert Online is a place where you can come and find someone that is actually in your Neighborhood to help you with whatever you need. Granted, the availability is kind of limited right now, but it is a fairly new site and as such, will take some time for the various neighborhoods to be represented in the various fields. Right now, I want to focus on the Eugene/Springfield Oregon Neighborhood.

Who are these guys?

As an veteran searcher, I use Google a lot to search to see who is writing what about my area and my field. By doing that, I found the this blog called roost. It is an interesting blog and has some good information about Eugene but I have no idea who writes it or where they are or if they really know about the Eugene/Springfield Market. There is no information on the home page about who the blog is done by. On my blog sites, I am very firm about who and where I am.

Now you know who this is

A different site talks about 48 hours in Eugene. Now, Nancy D. Brown is the writer of this and she is obviously a good travel writer. She also has her name and contact information on her website. I think she is a pretty good writer too and appears to really like traveling.

Excellent Local Information

Then there is this article about planting more trees in Eugene. This is obviously by and about Eugene. Again, a nice piece that has the right local information attached. This is what I like to see when I am looking for local information. Take a look at this local information that I posted on my website. Again, plenty of acknowledgement as to who and where I am on the site.

Local Expertise

Now, how about my field of expertise? When I posted about First Time Homebuyers, you know who I am and how to get in touch with me. It isn’t a website designed to gather names so that they can be sold. That is so much different that this site, that says it is information for Oregon, but is actually another of the “contact” gather sites. Fill out the form and someone will contact you. that someone has probably purchased your name and will probably be one of several that will call, none of them necessarily knowing anything about the local area.

I believe you should chose to work with someone local to your area that knows the area. Otherwise you are taking your chances with one of the “no name” contact gather sites. Personally, I prefer to work with people that know what they are doing and know my area.

Technorati Tags: eugene,springfield,oregon,tourism,local expert,neighborhood

A very ducky banker/loan officer in Spokane

Fri, 29 May 2009 13:48:58 -0500

For those that think loan officers and bankers are just hard hearted meanies that just want your money, take a look at this video about a bank loan officer in Spokane Washington helping a whole family find safety in an unsafe world.

Via Sara Goodwin - Portland, Oregon Appraiser (Ashcroft & Associates):

It is unclear in this news story whether his title is 'Banker' or 'Loan Officer'... but really, who cares? It's just one of those nice 'breather' stories that reminds us all that life is alright.

The morale of the story ... Take a break to help others every now and again... you never know, it might even turn out to be a 'marketing moment'.

See the story here

Eugene Loan Guy Gets New Blog Heading

Tue, 19 May 2009 23:00:38 -0500

Eugene Loan Guy, my outside blog, has a new heading and I have decided to make all of my outside blogs, Eugene Loan Guy, FHA Loans Oregon and No Money Down OR/WA/CA, similar in appearance with the same heading. For those of you familiar with Oregon, you might recognize the picture in the heading below as being the Three Sisters, located between Bend and Eugene.

I think that having this new heading that is so specific to my area is a great addition to my web presence. I have to thank my webmaster(s), Danny Thornton and Rich Dansereau of RandDArt, took this wonderful picture and transformed it into the heading. I will continue to use the fantastic heading that Marti designed for me here on A/R, but I wanted to make sure that my branding was consistent.

I will eventually use the same blog heading for my posting on Positive Real Estate Professionals. That will give me brand recognition wherever I am posting. I have to also comment on the great things that Danny did with my blogs as far as blog rating. The changes and adjustments for SEO and blog rating has really made a huge difference in the number of visits and business coming from my websites.

It is amazing what can happen when you know the details that bring more searches to you blogsite. Since Eugene Loan Guy has only be in existence for about six months and the other two for just over 3 months, Alexa ratings of under a million are unheard of and mine was just over 200,000 last month for Eugene Loan Guy. Admittedly, it is worse this month (345,969), but that has to do with not making my consistent postings. Please note, Alexa ratings are better low than high.

$8000 Tax Credit Used as Down Payment for FTHB

Tue, 12 May 2009 17:13:54 -0500

The biggest problem that most first time home buyers have is coming up with the down payment. I have posted several times in the past various ways to get the down payment together, but it has still been out of the reach of some people. Now, that could change. The First Time Home Buyer Tax Credit is going to be available for the down payment on FHA loans in the near future, according the the Secretary of HUD.

Shaun Donovan, Secretary of the U.S. Department of Housing and Urban Development, said that the Federal Housing Administration is going to permit its lenders to allow homeowners to use the $8,000 tax credit as a down payment. According to Secretary Donovan, the FHA's approved lenders will be permitted to “monetize” the tax credit through short-term bridge loans. For the first time, eligible home buyers will be able to access the funds immediately at the closing table.

Needless to say, there are no procedures in place at this moment to take care of the “bridge” loan, but this should be done in a fairly short fashion since HUD wants this to be the new way of doing things. My suggestion is that those that qualify for the First Time Home Buyer Tax Credit on an FHA loan start looking for a home now. The procedures should be in effect by the time the purchase is ready to close…..at least I hope that is the case. This should be a boon to the Real Estate purchase market and start using up some of the excess inventory. That may also mean rising home prices in a short period of time.

HUD Announces New FHA Loan Limits for 2009

Fri, 07 Nov 2008 20:01:29 -0600

HUD has announced the new FHA loan limits for 2009 and they are lower than I expected for Lane County. The new loan limit is $271,050 versus the current "temporary" loan limit of $343,750, a reduction of over $70k.

There are a few Oregon counties that have higher loan limits, but the majority of the counties are limited to this same number. $271,050 is the magic number nationwide.

To take advantage of the current loan limit, a property must have an accepted offer and an FHA case number assigned prior to the end of the year. Like what happened with the phase out of DPAs, individual lenders may have their own rules.

If you, or a client, has been fence sitting about buying in this price range, it is time to get off of the fence and onto the bull. Real Estate is selling well below where it was. Interest rates are extremely attractive. We have money to lend. Down payments with FHA is only 3% until Jan. 1 when it goes up to 3.5%.

Why wait?

Let me know if I can give you any information on other counties or cities.

Authored by Fred Chamberlin, a mortgage loan consultant, Eugene/Springfield Oregon

NEDCO - Assistance for the Home Owner and prospective Home Owner, or how to save your house!

Sun, 03 Aug 2008 16:23:05 -0500

NEDCO, Neighborhood Economic Development Corporation, in Eugene and Salem is a non-profit Community Development Corporation that helps neighborhoods and families. NEDCO is a HUD Approved Housing Counseling Agency and has help hundreds of people prepare for home ownership.

The Springfield Home Ownership Program and the Eugene Homeowner Assistance Program both require counseling and training prior to receiving one of their no interest loans. I have had my clients attend the course and come away much more prepared for the huge step of purchasing a home. The program they offer is called the "ABC's of Homebuying." It is a one day class designed to help understand the entire home buying process.

They also offer the Threshold Homeownership Education & Counseling Program (http://www.nedcocdc.org/threshold.htm), which is an in-depth education and individualized consultation program. This is the most comprehensive program, and it has successfully prepared hundreds of families for homeownership.

In today's market, one of their program that is coming more and more into demand is: Default and Foreclosure Prevention Counseling- A Homeownership Counselor is available to review your situation and help with identifying options, developing a strategic plan, contacting lenders, and providing information about available resources. In addition, they offer an Information and Referral Service for current homeowners. They offer assistance with getting better mortgage terms, budgeting, dealing with payment problems, or answering your questions about financing is available. We also provide information about home repairs, weatherization, and selling your home.

NEDCO is available at their Mid-Willamette Valley office: 945 Columbia Street NE, Salem, OR 97301, Phone: 503-485-8974; or the Lane County office: 783 Grant Street, Eugene, OR 97402, Phone: 541-345-7106.

There are other programs for low and moderate income clients, including Individual Development account and individual consultations. Find out more about NEDCO at their website, http://www.nedcocdc.org.

FHA 203k Streamline

Mon, 30 Jun 2008 12:59:47 -0500

FHA offers a Streamline 203k program that allows a homebuyer/owner to finance up to $35,000 of home repairs in the purchase or refinance of a home. This is an excellent program because it doesn't have the same review requirements of a complete rehab loan. I would be surprised if you could make the necessary repairs to this home with $35,000. Would probably take a few hundred more.
Following is the "Mortgagee Letter" from HUD.

Call me for explanations.

MORTGAGEE LETTER 2005-50
December 29, 2005

TO: ALL APPROVED MORTGAGEES
ALL APPROVED APPRAISERS

SUBJECT: Enhancements to "Streamlined (k)" Limited Repair Program

Mortgagee Letter 2005-19 (ML 05-19) announced the Streamlined (k) Limited Repair Program to augment FHA's existing Section 203(k) rehabilitation program for less extensive repairs and improvement. This Mortgagee Letter replaces in its entirety ML 05-19 and is designed to make the program more reflective of the desire of many homebuyers and existing homeowners to improve their homes including making them more energy efficient.

This Mortgagee Letter contains important changes to the Streamlined (k) program described in Mortgagee Letter 2005-19, including:

· Additional eligible work items, including lead-based paint stabilization.
· Increased maximum mortgage amount for repair or rehabilitation costs from $15,000 to $35,000.
· Elimination of minimum repair cost threshold.

Like the regular Section 203(k) rehabilitation loan program, Streamlined (k) is available for use in conjunction with other Departmental programs and activities. This Mortgagee Letter introduces some procedural requirements applicable only to Streamlined (k) - including:

· The availability of Streamlined (k) to pay for lead-based paint stabilization costs above and beyond that paid for by HUD when it sells real estate owned (REO).
· The option (rather than a requirement) for the mortgagee to establish a contingency reserve of rehabilitation loan proceeds.

In addition, like the regular Section 203(k) program, Streamlined (k) is available:

· To augment an FHA Energy Efficient Mortgage (EEM),
· To insure the mortgage on a single-family housing unit sold from the HUD's REO inventory
· To insure a mortgage that covers both repairs costs and the refinance of an existing mortgage.

What improvements are eligible under the new Streamlined (k) program?

The Streamlined (k) program is intended to facilitate uncomplicated rehabilitation and/or improvements to a home for which plans, consultants, engineers and/or architects are not required. The Streamlined (k) program includes the discretionary improvements and/or repairs shown below:

· Repair/Replacement of roofs, gutters and downspouts
· Repair/Replacement/upgrade of existing HVAC systems
· Repair/Replacement/upgrade of plumbing and electrical systems
· Repair/Replacement of flooring
· Minor remodeling, such as kitchens, which does not involve structural repairs
· Painting, both exterior and interior
· Weatherization, including storm windows and doors, insulation, weather stripping, etc.
· Purchase and installation of appliances, including free-standing ranges, refrigerators, washers/dryers, dishwashers and microwave ovens
· Accessibility improvements for persons with disabilities
· Lead-based paint stabilization or abatement of lead-based paint hazards
· Repair/replace/add exterior decks, patios, porches
· Basement finishing and remodeling, which does not involve structural repairs
· Basement waterproofing
· Window and door replacements and exterior wall re-siding
· Septic system and/or well repair or replacement

What are the minimum and maximum amounts for repair costs under this program?

Given the need for homeowners to make minor repairs without exhausting personal savings, and in consideration of the increasing cost of materials, the minimum repair cost of $5,000 is eliminated and the ceiling is now raised to $35,000. This revised maximum repair/rehabilitation amount recognizes the cost of making older homes more energy efficient. Note that as described below, when the repairs exceed $15,000, the mortgagee must perform or obtain an inspection to determine that all listed repairs were completed.

Can this program be used for repairs and improvements on purchases of HUD Homes?

Like the regular Section 203(k) program, Streamlined (k) may be used for single-family housing sold by HUD. REO properties that have been designated by FHA's Management and Marketing contractor (M&M) as "insurable" with repair escrow ($5,000 or less in required repairs) or "uninsurable" (with more than $5,000 but no more than $35,000 in required repairs) are eligible for the Streamlined (k) program provided that the repairs qualify as eligible work items outlined in this Mortgagee Letter.

In addition, mortgagees are reminded that nonprofit purchasers of multiple HUD Homes using the Streamlined (k) program must comply with the approval and financing requirements described in Mortgagee Letter 00-8.

What if the REO property requires lead-based paint stabilization?

The Streamlined (k) program may be used for the financing of REO purchases where a pre-1978 property has been determined to contain lead-based paint and the M&M Contractor has completed a stabilization plan and cost estimate to stabilize (mitigate) the deteriorated paint. The purchaser must sign a 203(k) rehabilitation financing lead agreement requiring that a clearance examination and report be included in the work write-up and conducted before release of the final construction disbursement and before occupancy. The credit from HUD, received at sales closing by the purchaser, associated with the lead-based paint stabilization plan is not included in the $35,000 Streamlined (k) limit. The Streamlined (k) program may be used for all eligible repair items as shown above, including the cost of lead-based paint stabilization not paid for by HUD when it sells a property requiring lead-based paint stabilization. A state- or Environmental Protection Agency (EPA) certified lead-based paint inspector, certified risk assessor or sampling technician, must perform the clearance examination.

When the Department sells a single-family REO property, the M&M Contractor determines whether repairs are necessary to stabilize any lead-based paint. HUD's regulations for pre-1978 housing require the stabilization of paint except for paint determined not to be lead-based paint. HUD may reduce the sales price by the amount of a credit equal to the Department's contribution toward the cost of lead-based paint stabilization. Any lead-based paint stabilization costs in excess of this credit become the responsibility of the purchaser.

Can the Streamlined (k) program be used for refinancing the mortgage?

The Streamlined (k) program is also available for mortgage refinance transactions including those where the property is owned free-and clear. Only credit-qualifying "no cash out" refinance transactions with an appraisal are eligible for the Streamlined (k) program. The form HUD-92700 provides instructions for calculating the maximum mortgage permitted for Streamlined (k) loans for purchase and refinance transactions.

If the borrower has owned the property for less than a year, the acquisition cost must be used to determine the maximum mortgage amount. The requirement to use the lowest sales price within the last year does not apply to the Streamlined (k) program.

What are the appraisal requirements under the Streamlined (k) program?

The Streamlined (k) program may be used for discretionary repairs and/or improvements that may not have been identified in the course of a pre-purchase inspection or appraisal. The mortgagee must provide the appraiser with information regarding the proposed rehabilitation or improvements and all cost estimates so that an after-improved value can be estimated. A

description of the proposed repairs and/or improvement must be included in the appraisal report as well as the contractor's cost estimate. The appraiser is to indicate in the reconciliation section of the appraisal report an after-improved value subject to completion of the proposed repairs and/or improvements.

What are the mortgagee's requirements for examining the contractor bids? For paying the contractor prior to beginning construction? For inspections of the work?

· Contractor bids: While mortgagees are not contractors, participation in this program requires that they examine the contractor's bid(s) and determine that they fall within the usual and customary range for similar work. Mortgagees must also ensure that the selected contractor(s) meet all jurisdictional licensing and bonding requirements.
· Payments in advance of construction: The mortgagee-at its discretion-may provide the contractor with up to 50 percent of the estimated cost of any work item prior to beginning construction. Such payments should only be made where the mortgagee is satisfied with the reputation of the contractor(s) and the contractor is not willing or able to defer receipt of payment until completion of the work or the payment represents the cost of materials incurred prior to construction.
· Payments for Inspections:
o For repair costs not exceeding $15,000, the mortgagee is not required to perform, or have others perform, inspections of the completed work. However, the mortgagee may choose to obtain or perform inspections if it believes such actions are necessary for program compliance and/or risk mitigation. Mortgagees may also ensure that the repairs and/or improvements have been completed by obtaining contractor's receipts or by a signed Mortgagor's Letter of Completion. If the mortgagee determines that an inspection(s) by a third party is necessary to ensure proper completion of the proposed repair or improvement item, the mortgagee may charge the borrower for the costs of no more than two inspections per each contractor.
o For repairs in excess of $15,000, the mortgagee must perform or obtain an inspection of the completed work by a third party.

What are the mortgagor's requirements for selecting the contractor? And what are the mortgagee's requirements for review of the contractor and the rehabilitation proposal?

The mortgagor must use one or more contractors to complete the repairs. "Self-help" arrangements, in which the mortgagor performs the work, are not to be approved unless the mortgagor can sufficiently demonstrate that he or she has the necessary expertise and experience to perform the work competently (e.g., mortgagor is an electrician and will perform electrical repairs/upgrades to the property).

The mortgagor will select the contractor(s) who will provide estimates for work to be done. The mortgagee reviews the mortgagor's proposed work plan and cost estimates to ensure the planned work meets all program and repair recommendations as noted on the appraisal report. The mortgagor must provide the mortgagee with a written cost estimate(s) and references from a duly licensed and bonded contractor(s) for each specialized repair or improvement. If "self-help" arrangements are utilized, the mortgagor must provide written estimates from the suppliers of the materials. Those repairs and improvements must meet any local codes and ordinances and the mortgagor and/or contractor must obtain all required permits prior to the commencement of work.

The cost estimate(s) must clearly state the nature and type of repair and the cost for completion of the work item and must be made even if the mortgagor is performing some or all of the work under a self-help arrangement. The mortgagee must review the contractor's credentials, work experience and client references and may require the mortgagor to provide additional cost estimates if necessary. After review, the selected contractor(s) must agree in writing to complete the work for the amount of the cost estimate and within the allotted time frame. A copy of the contractor's cost estimate(s) and the Homeowner/Contractor Agreement(s) must be placed in the insuring binder. The contractor must finish the work in accordance with the written estimate and Homeowner/Contractor Agreement and any approved change order. As in the regular 203(k) program, the Rehabilitation Construction Period begins when the mortgage loan is closed.

What are the mortgagee's requirements for paying contractors?

No more than two payments may be made to each contractor, or to the mortgagor if the mortgagor is performing the work under a self-help arrangement. The first payment is intended to defray material costs and shall not be more than 50% of the estimated costs of all repairs/improvements. When permits are required, those fees may be reimbursed to the contractor at closing. The final payment to the contractor will be made following completion of all work and release of any and all liens arising out of the contract or submission of receipts or other evidence of payment covering all subcontractors or suppliers who could file a legal claim. When necessary, the mortgagee may arrange a payment schedule, not to exceed two (2) releases, per specialized contractor (an initial release plus a final release.) Mortgagees are to issue payments solely to the contractor, except if the mortgagor is performing the work under a self-help arrangement, in which case the mortgagor may be reimbursed for materials purchased in accordance with the previously obtained estimates; the mortgagor may not be compensated for his or her labor.

To eliminate the need and cost for an inspection of the completed repair(s) or improvement(s) when not exceeding $15,000, the mortgagee may accept receipts or proof of completion of the work to the homeowner's satisfaction from the contractor. Before a final release is made, the mortgagor must sign a statement acknowledging that the work has been completed in a professional and satisfactory manner.

May the mortgagee establish a Contingency Reserve?

The Streamlined (k) program does not mandate a contingency reserve be established. However, at the mortgagee's discretion a contingency reserve account may be set up for administering the loan. Funds held back in contingency reserve must be used solely to pay for the proposed repairs or improvements and any unforeseen items related to these repair items. Any unspent funds remaining after the final work item payment(s) is made, must be applied to the mortgage principal.

Is there a maximum mortgage amount worksheet that must be used?

Form HUD-92700, 203(k) Maximum Mortgage Worksheet must be used to calculate the mortgage amount. Also, the appraiser must provide an after-improved value since 110% of that amount is used in calculating the maximum mortgage. Architectural and consultant fees, line items 6 and 7 of Section B of the worksheet are not applicable to the Streamlined (k) program. For Item 3 of Section D, please refer to handbook HUD-4155.1 REV-5, paragraph 1-7 which provides the various maximum loan-to-value ratios.

Expenses that may be included in the total amount of the improvements, not to exceed the $35,000 limit, are inspection fees, building and other permits, the supplemental origination fee, title update costs and the amount of any contingency reserve required by the mortgagee.

Can we combine the Streamlined (k) with an Energy Efficient Mortgage (EEM)?

The EEM program, as described in ML 05-21, may be used in conjunction with the Streamlined (k) program. The amounts permissible under the EEM program-as well as the qualifying requirements-are in addition to those available under the Streamlined (k) program and, thus, combined may exceed the $35,000 Streamlined (k) repair cost limit. Both the cost of EEM improvements as well as weatherization items (not to exceed $2,000) may be added to the total FHA loan amount.

What are the "closeout requirements" under the Streamlined (k) program?

The mortgagee electronically certifies the closeout via the FHA Connection and is not required to forward the closeout documents to FHA. As with all FHA case binders, the originator must retain the file, either in hard copy or electronic format, for two years following endorsement of the mortgage. Proper close-out means that the mortgagee has certified that it has reviewed and verified for accuracy of the following without limitations: mortgagor's acknowledgement of satisfactory completion, evidence of release of lien(s), mortgagee's inspection report(s), change orders, mortgagee accounting of the escrow funds, and record of disbursements.

Are there specific data entry requirements under the Streamlined (k) program?

The mortgagee must enter "203KS" in the 203(k) Consultant ID field in the
Case Number Assignment Screen (and the Insurance Application Screen) to identify the Streamlined (k) product and enter the amount of the repairs in the Repair Escrow Amount field in the Insurance Application Screen. In the event that the mortgagee had originally begun processing the case as a purchase mortgage without repairs, the mortgagee should update the existing case data in the Case Number Assignment screen, changing the ADP Code to a valid 203(k) ADP Code and the Construction Code to Substantial Rehabilitation.

If the Streamlined (k) mortgage is for a refinance transaction, please enter "substantial rehabilitation" in the drop down screen labeled "Construction Code" and "Not Streamlined" (the
refinance type) in the drop down screen labeled "All Refinances" in the Case Number Assignment Screen in FHA Connection.

What items remain ineligible for the Streamlined (k) program?

Properties that require the following work items are not eligible for financing under the Streamlined (k):
· Major rehabilitation or major remodeling, such as the relocation of a load-bearing wall;
· New construction (including room additions);
· Repair of structural damage;
· Repairs requiring detailed drawings or architectural exhibits;
· Landscaping or similar site amenity improvements;
· Any repair or improvement requiring a work schedule longer than six (6) months; or
· Rehabilitation activities that require more than two (2) payments per specialized contractor.

Mortgagors may not use the Streamlined (k) program to finance any required repairs arising from the appraisal that do not appear on the list of Streamlined (k) Eligible Work Items or that would:
· Necessitate a "consultant" to develop a "Specification of Repairs/Work Write-Up";
· Require plans or architectural exhibits;
· Require a plan reviewer;
· Require more than six months to complete;
· Result in work not starting within 30 days after loan closing; or
· Cause the mortgagor to be displaced from the property for more than 30 days during the time the rehabilitation work is being conducted. (FHA anticipates that, in a typical case, the mortgagor would be able to occupy the property after mortgage loan closing).

If you have any questions regarding this Mortgagee Letter, please contact your local Homeownership Center (HOC) in Atlanta (888) 696-4687, Denver (800) 543-9378, Philadelphia (800) 440-8647, or Santa Ana (888) 827-5605.

Sincerely,
Brian D. Montgomery
Assistant Secretary for Housing-

Obama Plan ............... New Refinancing Program.

Wed, 11 Mar 2009 19:47:47 -0500

This is a second in a two part series by George. I think it is a very good read and something that covers a lot of details about the new refinance plan for those that are underwater on their current mortgage.

Via George Souto (McCue Mortgage Co.) FHA, CHFA, VA Mortgages:

Yesterday I wrote the first of two parts on the Homeowner Affordability & Stability plan that was released by the Obama administration on Wed March 4th. Which contained two major parts they hoped would have an impact on assisting homeowners with troubled mortgage. The first part of the plan which I blogged about yesterday is a modification program that Servicers will offer to borrowers with high debt-to-income ratios or who are at risk of foreclosure. The second part of the plan which I am blogging about today, a refinance program for existing Fannie Mae or Freddie Mac loans.

As I stated yesterday our Executive Vice President at McCue Mortgage, Kim Neilson and others are still assessing the details of the Homeowner Affordability & Stability plan to determine our next steps, but in the mean time we are trying to provide a summary of its major points so that it might help other to better understandable it. So here we go:

The second part of the plan is a refinance program for existing Fannie Mae or Freddie Mac loans. Fannie Mae is offering two different programs:

The Refi Plus Program that requires the servicer of the loan to be the originating lender.

The DU Refi Plus Program (DU is the Automated Underwriting System for Fannie Mae) that allows any lender using DU to originate the loan as long as the existing loan is a Fannie Mae loan.

Freddie Mac requires the servicer of the loan to be the originating lender. Some specifics of the program are:

Existing mortgage must currently be a Fannie or Freddie loan.

Existing loan may not be considered ineligible (must get an Approved/Eligible from DU). Ineligible loans include existing mortgage loans that received a DU Expanded approval (EA).

Maximum LTV for 1-2 unit properties is 105% and require an appraisal.

Maximum LTV for 3-4 unit properties is 80% and also require an appraisal.

No maximum CLTV.

Existing mortgage must be current and have acceptable mortgage payment history. No minimum FICO score is required although borrower must meet bankruptcy and foreclosure requirements. In addition, borrower must demonstrate credit worthiness.

Rate and term refinance only (No Cash Out) - purchase money seconds MAY Not be included.

Loan level price adjustments (points) will apply (determined by credit score on credit report)

MI required (same coverage factor of existing loan) for mortgage loans that had original LTV’s greater than 80%.

DU Refi Plus must receive Approve/Eligible and will not be available until April 4. Income and employment verification is required.

Refi Plus is a manual underwrite and requires verbal verification of employment. Lender must determine that the borrower has a reasonable ability to repay the mortgage based on current information provided by borrower.

There it is in a nut shell. I actually have higher expectations for this part of the plan then I do for the Loan Modification part. This part of the plan stands a chance to actually help those who have good credit and have little to no equity in their property. But I do not see it doing anything for those who are in areas that property values have taken a noticeable hit, and 105% LTV is not going to do anything for them. Also this does offer a second option to FHA which will allow a borrower to go to a 96.5% LTV on a No Cash Out Refi.

While I think that this plan might actually help a few people, but it will be a source of false hope for many more. As I ended my last post, the purpose for providing this information is so that those who read it may have a better understanding of the "Homeowner Affordability & Stability Plan", and help them come to their own conclusion.

******************************************************************************************************************

Info about the author:

George Souto is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com

Obama Plan ............... New Loan Modification Program

Wed, 11 Mar 2009 19:43:39 -0500

I think the George may have hit this program right on the nose. I hope that it helps people but the chances are not as good as the government may lead many to believe. The big thing is, and always has been, participation of the servicers.

Via George Souto (McCue Mortgage Co.) FHA, CHFA, VA Mortgages:

The Homeowner Affordability & Stability plan was released by the Obama administration on Wed March 4th. There were two major parts of this plan that affect the Mortgage Industry. The first part of the plan is a modification program that Servicers will offer to borrowers with high debt-to-income ratios or who are at risk of foreclosure. The second part of the plan is a refinance program for existing Fannie Mae or Freddie Mac loans.

While our Executive Vice President at McCue Mortgage, Kim Neilson and others are still assessing the details of the Fannie Mae/Freddie Mac plan to determine our next steps, they have summarized it to a point that would make it more understandable to rest of us, and I will sharing this in two blogs.

The first part of the plan that as I stated above is the modification program that Servicers will offer to borrowers with high debt-to-income ratios or who are at risk of foreclosure, which states that:

Existing mortgage must currently be a Fannie Mae or Freddie Mac loan.

The mortgage loan is delinquent, or is expected to go into default soon.

Borrowers must occupy property as primary residence

Borrowers must provide hardship documentation.

Borrowers must provide income documentation and evidence the monthly mortgage payment (housing ratio) is greater than 31%

If the housing ratio is more than 31%, the Servicer will modify the terms of the loan, to reduce the housing ratio to 31% by:

Lowering the interest rate, but the minimum rate (floor) is 2%. The adjusted rate will be in effect for the first 5 years following modification, and then will increase by a 1% annually until it reaches the original rate.

Extending the term up to 40 years.

Provide principal forbearance which will later be paid back in the form of a balloon payment that will be due upon the earliest of the following:

Sale of property

Payoff of the loan

Maturity of the loan.

Servicers will receive compensation of $1000 or $500 for each completed modification.

A borrower whose monthly payment is reduced by six percent or more and make on time payments will receive $1000 principal reduction for up to five years.

I will end this post by stating that while I am sharing this information about the provisions that are contained in the Homeowner Affordability & Stability plan that became effective March 4th., that it does not mean that I am in favor of this, or believe that it will help us get out of this mess that we are in, because I don't believe that. I think that this plan just like all the others before it will help very few if any, and is more smoke and mirrors then anything else. But I have provided this information so that those of you reading this can have a better understanding of it, and help you come to your own conclusion.

I will cover the second part of the plan that I stated above "refinance program for existing Fannie Mae or Freddie Mac loans" in my next post.

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Info about the author:

George Souto is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com

Get your cameras out

Tue, 03 Mar 2009 21:41:52 -0600

Come by the site and see my latest pictures. I think you will enjoy what Danny and Rich have done.

Via Danny Thornton (Taylor, Bean, & Whitaker):

Ok, for all of you picture buffs that love the Wordless Wednesdays and Speechless Sundays, we have a treat for you. Some of you might have read the post from Rich Dansereau or maybe the one from me about our newest multi-user platform to date, but if you have not, then let me tell you the news.

You See

Has Now Become

And We Are Just Dying

For YOU To Join US Today.

For those who are unfamilar, this is the latest of our multi-user platforms. It is designed for an outlet for those that love to post pictures for fun and show off your camera skills. Swing by and see if it might be a site for you.

First Time Home Buyer $7,500 Tax Credit and How To Use It for Down Payment

Wed, 03 Sep 2008 17:48:39 -0500

First of all, it needs to be stressed that there are limitations and qualification for this program. The most stringent is that it is availalbe from homes purchased between April 9 of this year and July 1 of next year. If you miss that window, you miss the tax credit.

Next, the credit is only available to single taxpayers with an Adjusted Gross Income (AGI) of $75,000 or less or married taxpayers with a AGI or $150,000 or less to get the full credit. Lesser credits are available for those making more than the limits listed here.

Additionally, this is not a gift from the government. It is a tax credit that has to be paid back. It is in essence a interest-free loan. You are required to pay it back (with your taxes) at $500 per year starting with the tax return of the year after you receive the credit. So, if you take the credit for 2008, it starts being payable with your 2010 taxes. It is paid over a 15 year period. Also, if you sold the home in this time period and netted less than what was still owing, that amount would be forgiven.

Remember, politicians wrote this. That means it takes a lot to understand what they did. When working on the tax ramification, please seek advise from a tax professional on your personal situation. I am not a tax professional and do not intend to give any tax advice. I do believe you will find that your tax obligation as a home owner should more than generate deductions to pay for the $500. Again, this is my belief, not tax advice.

You also must not have had ownership in a primary residence for the past three years to qualify as a first time home buyer.

But, how do you use it for down payment? Good question.

Borrow from your 401k. I know that most people have an aversion to taking money from their 401k since that is their retirement nest egg. But, by using the 401k for the down payment, the money (again check with a tax professional) can be borrowed or even withdrawn and then paid back with no penalties.
Borrow the money from a commercial lending institution. You may belong to a credit union that would be more than happy to lend you the money in this instance. Use your car or boat or the like for security if necessary.
Get a gift from a relative. The money must be a gift with no expectation of being repaid. The giftor must sign a letter stating that it is a gift with no repayment. That being said, what you do with your $7,500 is your business.
Sell a kidney....no, I don't think that would be a really good idea. I don't think you can get that back. But, maybe you have a collection of baseball cards, or silver dollars you can use for security to get the down payment.

I keep saying it is $7,500, but in actuality, it is only 10% of the sales price of the home. So, if you found a home with a sale price less than $75,000, your credit would be less. Let me know if you find one of these, OK?

I hope this information helps you understand this particular portion of the Housing Act of 2008. There is so much more in the Act that will have effect on us down the road. This one is a good thing, I think.

Now, just one more thing. There are rumors and speculation that this money can be used for down payment and/or closing costs. That is not true. This is not money in hand. That means you cannot use it "CAUSE YOU AIN'T GOT IT YET!" Anytime you are working on a loan, one of the primary thing we do is verify and track the money. Where did it come from and how long has it been there?

Call me and let's discuss your options on purchasing a home before this incentive is gone. Rates are great. Prices are excellent. What are you waiting for?

Fannie Mae HomePath, help for home owners and home buyers

Tue, 23 Sep 2008 14:49:14 -0500

Are you aware of Fannie Mae's HomePath website? They answer the following two questions for home owners:

I Am Current on My Mortgage. I Want To Stay That Way

I Am Worried About Losing My Home

Both questions are covered in a very upfront and business like manner. I am impressed with the information available here. There are also links to the Home Loan Learning Center, Home Preservation Foundation and HopeNOW.

For home buyers, the basics of home buying are covered, along with a link to Fannie Mae owned homes. According to my search, there is only one in Eugene and two in Springfield. Apparently, there are 157 in Oregon. The REO search is an interesting tool.

The link to the HUD Tips for Avoiding Foreclosure is also an excellent reference. The number one tip is: "Don't ignore the problem." How many times have we in this business found this to be true. Realistically, no lender wants to foreclose on a home. Almost everytime, they are looking at a loss, they would much rather work something out. And that is why the 2nd tip, "Contact your lender as soon as you realize that you have a problem," is an excellent follow up.

Overall, there are great resources available. We, as real estate professionals, need to be promoting these resources.

Homeownership is still the American Dream. We need to help with keeping the dream alive. Call me if you have any questions, I am available to help set up counseling if necessary. The FHA Secure is still an excellent way to help many in difficulty.

Licensed Oregon Mortgage Brokers

Tue, 08 Jul 2008 12:11:23 -0500

In January of 2007, there were more than 13,000 licensed mortgage loan originators in Oregon. As of the Independence Day holiday, that number was down to 6,985 with less than half of them living in Oregon. It appears that the wheat is being separated from the chaff.

I have been working in the mortgage industry before there was a license requirement. I supported the licensing requirement for mortgage originators, expecting it to make our industry more responsive and responsible. In some ways it has, but nothing the way a downturn in the market has.

If you have lost your loan officer, I would like to offer my services. I am located in Eugene, but am able to handle your business in Oregon, California (soon Washington) and Alaska. Call me at 866-916-7596 or on my cell at 541-221-3455, anytime.

I am in this business for the long run. I can do almost any type of loan, but am a specialist in government loans. I teach classes in FHA lending practices and programs. I am a vereran and have always been a champion for my comrades-in-arms. Considering I flew a typewriter in the Vietnam War, arms may be an exaggeration. LOL

Could Mortgage Interest Rates Drop to 4.5% with Treasury Intervention?

Thu, 04 Dec 2008 20:09:12 -0600

The latest rumor (anonymous comment) coming from our "tight lipped" bureaucrats in Washington is that Treasury Secretary Henry Paulson is considering a new plan to reduce mortgage rates in another bid to revive the U.S. housing market. The Treasury could, under this new plan, step up purchases of mortgage backed securities (MBS) to drive down interest rates on some loans to 4.5 percent, the official said on condition of anonymity. The possibility that this plan could change is enormous.

Mortgage applications surged by a record last week and the average rate on a 30-year fixed-rate loan dropped to 5.47 percent, the lowest level since June 2005, according to the Mortgage Bankers Association. So, what will this latest "news" do to the clients that have started application and (probably) locked their interest rate when they hear rates could drop another full percent?

Lowering mortgage rates to 4.5 percent might allow a lot of homeowners to refinance into a cheaper loan but some financial experts expect far fewer people will actually qualify for the lower rates. There are already a number of additions to rates due to credit score, loan to value and purpose of loan. With substantially lower rates, lender will probably tighten these requirements, even more.

I am not certain of what this announcement means to future business opportunities. One "expert" stated that he thought the lowering of the fixed rates to 4.5% could mean that 90% of the mortgages in existence could benefit from refinancing to the new, lower rate. If true, business could get quite brisk.

What are your feelings about having interest rates drop like this? Is it sustainable?

authored by Fred Chamberlin, senior mortgage consultant, Eugene/Springfield Oregon, 541-342-7576

Feb. 16, 2009: Just an update. I am getting some recent comments as to if this is possible or not. If you read my comments below, you will find that it has already happened once and may again. Also, I have deleted some long winded comments that I didn't believe gave any good information to the post. Thanks for reading and come back again to see what people are still saying.