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FHA to Cut Mortgage Insurance Premiums: White House

January 21, 2015

craftsman-style-home

 

From NY Times.com – January 7, 2015

 

WASHINGTON — The Federal Housing Administration will reduce annual mortgage insurance premiums by 0.5 percentage point to 0.85 percent from 1.35 percent, the White House said on Wednesday.

President Barack Obama will discuss the action in a speech in Phoenix on Thursday.

The premium cut is the latest in U.S. government efforts to widen mortgage access against a backdrop of tighter lending standards since the financial crisis.

The FHA, which insures about one-fifth of all new U.S. mortgages, is a major provider of mortgages to first-time homebuyers. With an FHA-backed loan, buyers can put down as little as 3.5 percent of the purchase price.

In December, U.S. mortgage firms Fannie Mae and Freddie Mac launched programs to allow down payments as low as 3 percent of a property’s value.

“If you want to call it a tennis match between Fannie and the FHA, they just returned Fannie’s serve,” said Chris Freemott, an executive at Midwest Equity Mortgage in Oak Brook, Illinois.

In a statement, the White House said the reduction was part of President Obama’s efforts “to expand responsible lending to creditworthy borrowers.”

The administration also will be taking additional steps over the coming months to “cut red tape and clarify lending standards” to make mortgages more affordable and accessible to creditworthy families, the White House said.

Homebuilder stocks were among the top performers on Wednesday, with PulteGroup Inc and Lennar Corp each ending regular trade up 4.9 percent.

The FHA was forced to draw on $1.7 billion in taxpayer funds in 2013, for the first time in its history. The FHA has since returned to the black, in part by raising the mortgage insurance premium fees it charges borrowers.

However, its mortgage insurance fund’s capital ratio remains below the legal requirement and the FHA said in its latest audit that it would not meet this minimum until 2016.

Housing finance reform has so far proved a contentious issue in Congress, with Democrats encouraging moves to widen mortgage access to first-time and lower-income homebuyers while Republicans want to reduce the U.S. government’s role in the market.

Republicans, who now control both houses of Congress, were sharply critical of the reduction.

“If President Obama follows through on today’s pledge, he will be increasing the likelihood that taxpayers will have to foot the bill for yet another bailout,” House Financial Services Committee Chairman Jeb Hensarling said in a statement.

(Additional reporting by Peter Rudegeair; Editing by Bill Trott, Matthew Lewis, Richard Chang, Meredith Mazzilli and Steve Orlofsky)

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5 New Year’s Resolutions Every Seller Should Add to Their List

January 15, 2015

checklistBy Keith Loria, RISMedia.com

You most likely have a running list of resolutions racing around your mind at any given time. However, if you plan on selling your home in the new year, here are a few things you may want to add to your list.

1. Be Kind to Your Agent. If your house isn’t selling, and your agent suggests dropping the price, hiring a stager or something else they believe will help sell the home, don’t yell or threaten to leave them and find another agent. Your agent is there to offer advice and tips to ultimately get your home sold quickly, at a price you want. Therefore, remember that they’re not your enemy. Work with them and keep the lines of communication open and clear.

2. Have Reasonable Expectations. Gone are the days when you put a house up for sale and a bidding war would ensue. If you want the best chance of selling your home, understand what’s going on in your market, and take into account that you might have to wait a while for your home to sell. Also, don’t shoot for the moon with your pricing, especially if you’re looking to get out quickly.

3. Don’t Get Discouraged. It’s always stressful when a home doesn’t sell, but don’t give up just because no one is biting. Eventually, the right buyer will come along and you’ll be able to move on to whatever new living opportunity awaits.

4. De-Clutter Every Room. It’s the most common advice you’ll get from anyone associated with real estate: if you want to sell your house, remove the clutter and store anything that’s not essential in another location. That means packing away seasonal clothes, removing kitchen tools and small appliances you never use and packing up toys or collectables.

5. Paint. It never hurts to spruce up rooms with a coat of paint. While most people are quick to paint the living room and bedrooms, it’s also a good idea to remember the smaller rooms—even the closets. When it comes to painting, keep in mind that a little paint can go a long way.

Copyright© 2014 RISMedia, The Leader in Real Estate Information Systems and Real Estate News. All Rights Reserved. This material may not be republished without permission.

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Fannie Mae, Freddie Mac detail plans for 3% down-payment mortgages

January 8, 2015

first-time-buyers-can-now-get-a-mortgage-with-only-3-percent-down/

By: Dina ElBoghdady, The Washington Post

Some first-time home buyers will get a break on their downpayments through programs announced Monday (Dec.8) by mortgage giants Fannie Mae and Freddie Mac as the firms try to jump-start the housing market by making it easier for more borrowers to get a mortgage.

Fannie and Freddie will soon allow for mortgages with a downpayment as low as 3 percent – instead of the 5 percent currently required — as long as one of the borrowers on the mortgage has not owned a primary residence within the past three years. The changes take effect Dec. 13 at Fannie, and March 23 at Freddie.

It’s too early to tell how many borrowers will apply for these loans, Fannie and Freddie told reporters Monday. But they also said they expect many lenders to offer them. The Federal Housing Finance Agency, which oversees both companies, said these low downpayment mortgages will probably be a small share of both firms’ overall businesses.

Since the FHFA first signaled its intent to change the downpayment policy, critics have cast the move as a return to the lax lending standards that contributed to the 2008 financial crisis. At the height of that crisis, the government took control of Fannie and Freddie and started pumping taxpayer money into the institutions to keep them solvent.

The companies and their regulator insist that they are in no way encouraging a return to the shoddy lending of the past. They say only creditworthy borrowers who take out plain-vanilla, fixed rate mortgages will qualify for the new programs, and all of them will be carefully vetted to make sure they can pay back the loans.

“These underwriting guidelines provide a responsible approach to improving access to credit while ensuring safe and sound lending practices,” Mel Watt, FHFA’s director, said in a statement.

Fannie and Freddie do not make loans. They buy them from lenders, package them into securities and sell them to investors. For a fee, they guarantee the mortgages and pay investors if the loans default.

The companies and their regulator are now trying to do their part to help open up access to credit, particularly to low and moderate income borrowers. Since the housing market unraveled, lenders have turned away many potential buyers by demanding unusually high credit scores and imposing other harsh restrictions on government-backed loans.

As many as 1.2 million additional loans would have been made annually since 2012 if normal, pre-housing bubble lending standards had been in place, according to a recent analysis by the nonpartisan Urban Institute. The industry says it doesn’t want to take any chances on people with less-than-stellar credit. After the housing bust, regulators forced lenders to buy back billions of dollars in loans, and the industry said it is merely trying to insulate itself from more financial penalties and lawsuits.

To allay the industry’s concerns, Fannie and Freddie reached an agreement with lenders that would clarify the circumstances under which the industry is required to buy back loans. Fannie and Freddie, along with several industry experts, say that agreement has made lenders more receptive to the idea of granting 3 percent down loans.

“I’m confident that the majority of the lending community is going to take part in these programs,” said David H. Stevens, chief executive of the Mortgage Bankers Association. “They’re more confident about the risks they face in extending these loans.”

These low downpayment loans will compete with the mortgages backed by the Federal Housing Administration, which requires at least 3.5 percent down. In some cases, the Fannie and Freddie loans will be cheaper because the fees on FHA loans have become very high

Both Fannie and Freddie had previously accepted 3 percent downpayment mortgages. Freddie stopped years ago, and it now insists that anyone who takes part in its new program must take borrower education classes. Freddie’s initiative is also open to current homeowners of low and moderate income, as defined by the company’s rules.Fannie stopped purchasing 3-percent down mortgages in late 2013 though it continued to buy them if they are made through state and local housing finance agencies.

Timothy Mayopoulos, Fannie’s chief executive, has said his company’s long experience with these loans shows that they perform well. The Urban Institute reached the same conclusion after analyzing low downpayment loans backed by Fannie in the recent past.

The analysis found that the default rate for loans with 3 percent to 5 percent down were very similar to the default rates on loans with 5 percent to 10 percent down. It also found that very few borrowers got the lower downpayment loans, and nearly all of those who did had top-notch credit.

Fannie and Freddie only buy loans with less than 20 percent down if they carry private mortgage insurance, so even if some of the 3 percent down loans were to default, taxpayers are not in line to take the first hit. The mortgage insurance companies are.

On Monday, Fannie also said it will allow borrowers to refinance their loans so that they cover up to 97 percent of their home’s value under a limited cash-out option. (Previously, 95 percent was the cut off.) It will permit borrowers to pull enough cash out to help pay for the closing costs, either 2 percent of the loan amount or $2,000, whichever is less.

Consider me your resource for all things real estate!  Selling, buying, upsizing, downsizing, relocating, investing, vendor referrals, shoulder to cry on during renovations and more.  Just send me an email or call me at 619-888-2117.

Happy Holidays 2014

December 23, 2014

Happy Holidays 2014

Wintry wishes from my house to yours!

May this season bring you the gifts of peace, hope and joy and a new year filled with health, happiness, and all your heart desires.  

Lisa Ashkins REALTOR®

Declutter before you move

December 19, 2014

declutter

 

The end of the year is around the corner. New Year’s resolutions are in draft form. Here’s one resolution item that everyone can manage to accomplish. Declutter.

 

Moving is the perfect time to go through your belongings and sort out the items you no longer need. After all, why haul unused items to your next place only to have them take up valuable space?

Here are tips to help you declutter your belongings before the big day.

Expired items: Go through everything that can possibly expire — spices, condiments, medications, beauty products — and toss anything past its use-by date.

Well-loved clothing: If it has a tear, a pull, a hole, a stain, or is just faded and old – get rid of it!

One-time-only clothes: This includes bridesmaid dresses and even old Halloween costumes.

Repeat offenders: Do you have 20 black tank tops? Six wine openers? You might not realize it until you line them all up, but this is the time to take stock of duplicates and narrow your supply.

Trivial keepsakes: Many people have sentimental feelings toward greeting cards and wedding invitations. But experts recommend only storing keepsakes that really have true meaning. If it doesn’t, recycle it.

Pens and pencils: Keep just a few and ditch any others that pop up in random drawers and storage bins as you pack.

Unused gadgets: Think about how many times you’ve used your small appliances and gadgets (ice-cream maker, panini press, waffle iron). Once, twice, or never? Say goodbye. If you don’t use it in your current home, you probably never will in your new one, either.

CDs: A digital music library lets you keep all the tunes you love but takes up virtually no physical space.

Old magazines and books: Donate anything you’ve already read (along with anything that’s sat unread for ages) to a local library, nursing home, or family shelter.

Borrowed goods: Designate a “returns” bin as you pack, and throw in anything (books, clothes, pots, pans) that should go back to friends and family.

Items in boxes: If it’s been in a box since your last move, chances are you don’t need it and it will remain in the box at your new home.

Things that don’t fit: Whether they don’t fit you in size, taste or style, if it no longer suits your taste, let it go.

Gifts you’ve been given but have never used: You really aren’t obligated to keep forever everything everyone has ever given you. You can appreciate the person and the sentiment of the gift without actually holding onto the gift indefinitely.

Projects you started years ago and never finished: The table you were going to refinish, the curtains you were going to sew, the bench you were going to paint and recover, and so on. If it hasn’t been high enough on your priority list to finish up before the big move it’s very unlikely to soar to the top of your list now, so scrap it now.

By parting with your unused items before the move, you’ll save time and costs.

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Customer Satisfaction is Key

December 10, 2014

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CustomerSatisfactionisKey

More owners tapping home equity lines of credit

December 5, 2014
Homeowners’ equity holdings nationwide are up sharply and interest rates are near historical lows, leading to more home equity borrowing. Above, homes in Mission Viejo. (Mark Boster / Los Angeles Times)

Homeowners’ equity holdings nationwide are up sharply and interest rates are near historical lows, leading to more home equity borrowing. Above, homes in Mission Viejo. (Mark Boster / Los Angeles Times)

 

By KENNETH R. HARNEY – LA Times.com /Distributed by Washington Post Writers Group / Copyright © 2014, Los Angeles Times

If you’re thinking about taking out a home equity line, you’re hardly alone. Credit lines tied to home equity — popularly known as HELOCs — are one of the fastest-growing segments in the mortgage market. Volume during the first half of 2014 is up by an extraordinary 21% compared with the same period last year, according to data collected by credit bureau Equifax.

The main reasons: Owners’ equity holdings nationwide are up sharply — the Federal Reserve estimates gains at nearly $4.5 trillion since 2011 — and interest rates are near historical lows. Owners borrowed $66 billion against those fattened equity stakes during the first half of this year, a six-year high. Banks and other lenders extended 670,000 new HELOCs during the same period, also a six-year high, according to Equifax.

What are these people doing with their sudden access to ready cash, and how much are they pulling out? A new national survey, based on a representative sample of 1,364 homeowners with HELOCs, offers some important answers. The study was conducted last month by research firm Vision Critical for TD Bank.

The No. 1 finding: Most people aren’t spending their home equity line money on dumb stuff. There’s no evidence of a repeat of the wacky days of the last decade when houses morphed into ATMs and credit lines paid for groceries and nights out on the town.

Slightly more than half of current borrowers say they are using or have used their draw-downs for projects that are likely to increase the market value of their properties — updating kitchens, adding bathrooms, putting on a new roof and similar remodelings.

An additional 29% have used their HELOC money to take advantage of today’s wide gaps in interest rates among financial products. They are consolidating debts — paying off credit card balances with interest rates in the double digits using equity line funds borrowed at rates in the low single digits.

Nearly a quarter of borrowers say they’ve used some of the equity line dollars as a form of insurance against unforeseen “emergency” expenses — paying off bills for events that popped up without warning and might have been otherwise unaffordable.

Other major uses, according to the survey: Buying new autos (27% of borrowers); paying medical bills (18%); spending on kids’ and adults’ education costs (15%): travel (15%); and small-business investments (13%). Relatively few owners (13%) say they use their equity line dollars for day-to-day expenses.

Michael Kinane, TD Bank’s head of consumer and mortgage lending, says that he interprets the strong recent surges in home equity borrowing as a delayed reaction by owners who have put off home improvements and other expenditures for years because they were unsure about the economy, their jobs and where real estate values were headed.

“Now they’re stepping back in,” he told me. “They’ve got more confidence” in the economy and they’ve seen their property values increase to the point where they can responsibly pull out some cash secured by their equity.

Home equity lines as a financial product “are much safer” in 2014 — for borrowers and lenders alike — than they were a decade ago, Kinane believes. Most banks now limit the combined loan-to-value ratio — the total of the primary mortgage balance plus the maximum draw amount on the new credit line compared with the home value — to 80%. And full documentation of income, employment, credit and property values is the rule, not the exception.

In 2005 and 2006, by contrast, 100% ratios were readily available with minimal underwriting and documentation. Some lenders, including TD Bank, now allow select customers to borrow more (TD’s ceiling is 89%) but only those applicants with pristine credit reports, high FICO scores, lots of income and plentiful financial reserves.

Today’s rates and fees on HELOCs generally are as good as or better than they were at the height of the boom. A quick search of deals offered on Bankrate.com last week turned up rates from the low 3% range to 4% and up, depending on the dollar limit on the line and applicants’ credit scores. Some credit unions and banks offer special rates — below 3% — for existing customers or members with solid credit.

Bottom line: HELOCs are hot. If you’ve got the need, the equity and the capacity to handle one, now might be a good time to check them out.



Consider me your resource for all things real estate!  Selling, buying, upsizing, downsizing, relocating, investing, vendor referrals, shoulder to cry on during renovations and more.  Just send me an email or call me at 619-888-2117.

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