Mar 24, 2009
Fed action sends mortgage rates below 5%
Less than a day after the Federal Reserve said it would double its purchases of mortgage debt, fixed rates on conforming 30-year mortgages fell well below 5 percent, and there's thought rates may stay there for a while. The last time mortgage lenders offered rates this low was 1965!
Mar 5, 2009
Obama's Housing Rescue Plan Simplified
Obviously there is a lot of information coming out of the Obama camp and getting the answers can be frustrating. After all, knowing that there is help out there means nothing if you don't know what that help is. I will try to simplify it as best I can:
The first part of the program, called Home Affordable Refinance, is aimed at homeowners whose property has lost value as housing prices have plummeted. It is only open to borrowers with conforming loans backed by Fannie Mae and Freddie Mac (no FHA, VA, or subprime). The program does not reduce principal, but rather allows the borrower to refinance up to 105% of the current value. Usual fees would apply, though for many borrowers the procedures would be streamlined. Unfortunately, since most values have doped over 40%, this program will help only a small amount of people in my opinion. Interested borrowers should contact their loan servicers to determine whether their mortgages are held or guaranteed by Fannie Mae or Freddie Mac. You can also contact me to determine what your home is worth if you are unsure.
The second program, called Home Affordable Modification, is more complex (and more interesting) and is aimed at borrowers whose mortgage payments have become unaffordable either because of a hardship such as job loss or illness or because the interest rate has been reset higher on an adjustable-rate mortgage.
For those borrowers, the government would provide cash payments and financial subsidies to help the lender lower the monthly payment to no more than 31% of the borrower's gross monthly income. In most cases the lender would reduce the interest rate on the loan to as low as 2% for five years. If that was inadequate to bring down the payment, the lender also could extend the term of the loan to 40 years or temporarily reduce the loan principal. In those cases, the set-aside portion of the loan principal would be repaid to the lender in a balloon payment when the house was sold or refinanced.
The 31% target income level would apply only to the borrower's primary mortgage payment; second mortgages, home equity loans and other consumer debt would not be included in that calculation.
However, administration officials said they would offer additional financial incentives to servicers to reach agreements with second-lien holders to accept partial repayment of those debts. Details of that policy are still being worked out.
To address the problem of borrowers who default again on mortgages, the government would provide additional payments to lenders and servicers the longer the borrower stays current on the loan. And borrowers would also see a benefit: For each of the first five years that they continue to pay the mortgage, the government would reduce the loan principal by $1,000.
And those whose interest rates are reduced below market value would see rates float back gradually after the initial five-year loan period -- at 1% a year, up to the market rate on the day the loan modification was signed. Interested borrowers should contact their servicers directly, administration officials said, and should pay no fees to access the program.
Finally, if neither one of these programs work for you, or perhaps you have an investment property, you still have the option to Short Sale it and spare your credit the stigma of Foreclosure...
The first part of the program, called Home Affordable Refinance, is aimed at homeowners whose property has lost value as housing prices have plummeted. It is only open to borrowers with conforming loans backed by Fannie Mae and Freddie Mac (no FHA, VA, or subprime). The program does not reduce principal, but rather allows the borrower to refinance up to 105% of the current value. Usual fees would apply, though for many borrowers the procedures would be streamlined. Unfortunately, since most values have doped over 40%, this program will help only a small amount of people in my opinion. Interested borrowers should contact their loan servicers to determine whether their mortgages are held or guaranteed by Fannie Mae or Freddie Mac. You can also contact me to determine what your home is worth if you are unsure.
The second program, called Home Affordable Modification, is more complex (and more interesting) and is aimed at borrowers whose mortgage payments have become unaffordable either because of a hardship such as job loss or illness or because the interest rate has been reset higher on an adjustable-rate mortgage.
For those borrowers, the government would provide cash payments and financial subsidies to help the lender lower the monthly payment to no more than 31% of the borrower's gross monthly income. In most cases the lender would reduce the interest rate on the loan to as low as 2% for five years. If that was inadequate to bring down the payment, the lender also could extend the term of the loan to 40 years or temporarily reduce the loan principal. In those cases, the set-aside portion of the loan principal would be repaid to the lender in a balloon payment when the house was sold or refinanced.
The 31% target income level would apply only to the borrower's primary mortgage payment; second mortgages, home equity loans and other consumer debt would not be included in that calculation.
However, administration officials said they would offer additional financial incentives to servicers to reach agreements with second-lien holders to accept partial repayment of those debts. Details of that policy are still being worked out.
To address the problem of borrowers who default again on mortgages, the government would provide additional payments to lenders and servicers the longer the borrower stays current on the loan. And borrowers would also see a benefit: For each of the first five years that they continue to pay the mortgage, the government would reduce the loan principal by $1,000.
And those whose interest rates are reduced below market value would see rates float back gradually after the initial five-year loan period -- at 1% a year, up to the market rate on the day the loan modification was signed. Interested borrowers should contact their servicers directly, administration officials said, and should pay no fees to access the program.
Finally, if neither one of these programs work for you, or perhaps you have an investment property, you still have the option to Short Sale it and spare your credit the stigma of Foreclosure...
Feb 19, 2009
Protecting Your Family
The single most important document in your estate conservation strategy might not be your will or any of the other instruments that you probably paid an attorney to create such as Revocable Living Trusts. In fact, what is likely to be your single most valuable asset will convey directly to your heirs without going through probate or any of the typical estate distribution channels.
In this case, the asset is your retirement savings, and the document is the retirement account beneficiary form. Because your beneficiary designations will override any instructions in your will regarding who will inherit your IRA or employer-sponsored retirement plan, ensuring that the correct beneficiary is named on the account form might be the easiest, most inexpensive step you can take toward a sound estate conservation strategy.
Yet experts say it is fairly common for beneficiary designation forms to be outdated. This can be an especially serious problem when a beneficiary was named years ago and the designation was never reviewed. Then, because of life events — marriage, divorce, birth, or death — the named beneficiary is no longer the person whom the account owner wishes to inherit the money. If this information doesn't come to light until the account owner’s death, it’s too late to do anything about it. The custodian of the plan has no choice but to follow the instructions on the form, even if it means the decedent’s children are deprived of their inheritance because a former spouse or now-estranged family member was the designated beneficiary.
Fortunately, there’s an easy fix to avoid this scenario. Regularly reviewing and updating your beneficiary designations can help ensure that your loved ones inherit your retirement savings.
In this case, the asset is your retirement savings, and the document is the retirement account beneficiary form. Because your beneficiary designations will override any instructions in your will regarding who will inherit your IRA or employer-sponsored retirement plan, ensuring that the correct beneficiary is named on the account form might be the easiest, most inexpensive step you can take toward a sound estate conservation strategy.
Yet experts say it is fairly common for beneficiary designation forms to be outdated. This can be an especially serious problem when a beneficiary was named years ago and the designation was never reviewed. Then, because of life events — marriage, divorce, birth, or death — the named beneficiary is no longer the person whom the account owner wishes to inherit the money. If this information doesn't come to light until the account owner’s death, it’s too late to do anything about it. The custodian of the plan has no choice but to follow the instructions on the form, even if it means the decedent’s children are deprived of their inheritance because a former spouse or now-estranged family member was the designated beneficiary.
Fortunately, there’s an easy fix to avoid this scenario. Regularly reviewing and updating your beneficiary designations can help ensure that your loved ones inherit your retirement savings.
Feb 16, 2009
Foreclosures Stoppage Awaiting Obama's Plan
Citigroup, Chase, Bank of America, Wells Fargo, Morgan Stanley, Bank of New York, and greed to suspend foreclosures to give time to the Obama administration as it continues to craft a housing plan to modify mortgages for troubled borrowers.
Citigroup will halt foreclosures through March 12, or until a plan is completed, the company said Friday. Wells Fargo said its moratorium is in place until a plan is announced. The other lenders said foreclosures will be stopped on owner-occupied homes until March 6.
Fannie Mae and Freddie Mac said they will suspend foreclosure sales involving occupied single-family and two- to four-unit residential properties through March 6.
Citigroup will halt foreclosures through March 12, or until a plan is completed, the company said Friday. Wells Fargo said its moratorium is in place until a plan is announced. The other lenders said foreclosures will be stopped on owner-occupied homes until March 6.
Fannie Mae and Freddie Mac said they will suspend foreclosure sales involving occupied single-family and two- to four-unit residential properties through March 6.
Jan 29, 2009
New Condo Guidelines for Fannie Mae loans
Fannie Mae has issued new guidelines that Florida condos and condo conversions, and, in some cases, old condos, must meet before it will fund loans:
• At least 70 percent of the units in new condos must be pre-sold.
• No more than 10 percent of units can be owned by a single entity.
• No more than 15 percent of units in all condos can be more than 30 days past due on association fees.
• No more than 20 percent of a condo can be devoted to commercial use.
• All condos, new and old, must have fidelity insurance, which protects association funds from fraud.
• The seller is not allowed to help with down payments or offer other perks, like deductions of association fees, unless they are disclosed.
• Condos must have hazard insurance.
• When investors buy in established projects, at least 51 percent of units must be owner-occupied.
**If the condo you wish to purchase or refinance has any of these issue, it may still be possible to go FHA. Contact me with the address and I can check whether or not the project is approved by them...
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