WEST PALM BEACH, Fla. (Cox Newspapers http://www.statesman.com/business/content/business/stories/other/2009/09/30/0930subprime.html ) – As of yesterday, borrowers with bad credit or no verifiable income will not be eligible for a home loan.  The new rule, approved as part of the Housing and Economic Recovery Act of 2008, requires lenders to prove a person’s ability to repay a loan before awarding one.  This guideline mostly concerns subprime or high-interest loans for people with weak credit.

"Lending Standards Tighten" was originally posted as a blog post at Shannon Register Real Estate Team on October 12, 2009.

Shannon Register Real Estate Team named "Best Real Estate Blog in Texas by the Mays Business School Real Estate Research Center at Texas A&M University.

© 2008-2009 | Shannon Register Real Estate Team

by Ralph Roberts

Read the entire article.

The Treasury Department recently released its Home Affordable Modification Program Guidelines (part of its Making Home Affordable initiative), which include eligibility requirements to determine which homeowners qualify for relief under the plan. Following are the eligibility requirements as specified in the guidelines:

 

 

• Mortgage must have originated on or before January 1, 2009. 
• Home must be an owner-occupied primary residence (verified with tax return, credit report, and other documentation such as a utility bill) – this program is not designed for investor-owned properties. 
• Home must be a single family 1-4 unit property (including condominium, cooperative, and manufactured home affixed to a foundation and treated as real property under state law). 
• Home may not be vacant or condemned. 
• Borrowers in bankruptcy are not automatically excluded from consideration. 
• Borrowers in active litigation regarding the mortgage loan can qualify for a modification without waiving their legal rights. 
• First lien loans must have an unpaid principal balance (prior to capitalization of arrearages) equal to or less than:

 
1. 1 Unit: $729,750 
2. 2 Units: $934,200 
3. 3 Units: $1,129,250 
4. 4 Units: $1,403,400

 
• Foreclosure actions are suspended (not cancelled) during the trial period or while borrowers are considered for alternative foreclosure prevention options. If homeowners fail to qualify, foreclosure proceedings may resume. 
• No minimum or maximum LTV ratio for eligibility purposes. 
• Loans are eligible for only one loan modification under the program. 
• Subordinate liens (such as second mortgages or home equity loans or lines of credit) are not included in the Front-End DTI calculation, but they are included in the Back-End DTI calculation. Back-End DTI is used to determine whether the borrower will be required to undergo credit counseling as a condition to modification. 
• Servicers should follow any existing express contractual restrictions with respect to solicitation of borrowers for modifications. Applicants will be accepted into the program only until December 31, 2012 (the program expiration date), but incentive payments will continue up to five years after the date of entry into the Home Affordable Modification Program. Monitoring will continue through the life of the program.

When discussing this program with homeowners in your area, it’s a good idea to point out the following:

 
• Eligibility requirements are simply government guidelines. Guidelines may change, and lenders make exceptions, if it is in their best interest to do so. In other words, homeowners should not count themselves out. If they are having trouble making their house payment, they should explore the loan modification option. Sometimes, the only way to determine whether you qualify is to apply. 
• Not all servicers, lenders, or investors are required to participate in the program at this time. The program is designed for Fannie Mae and Freddie Mac mortgages, but the plan’s incentives may encourage servicers, lenders, and investors to modify other types of mortgages, as well. 
• The individual servicers that agree to participate in the program are required to sign a contract agreeing to abide by the program guidelines. If the servicer does not contract under the program, they are not eligible for incentive payments. 
• Homeowners should consult a specialist who works with lenders on a daily basis to review their situation and determine whether the homeowners are likely to qualify for whatever workout options are available through the lender. Sometimes the only way to determine whether a homeowner qualifies is to submit an application.

During this unprecedented crisis in the housing industry, you can play a valuable role in keeping homeowners in your area well-informed of the programs available to help them keep their homes. I encourage you to do your part to preserve the American Dream of Homeownership and stabilize your corner of the housing market.

"Who’s Eligible for a Loan Modification under Obama’s Plan" was originally posted as a blog post at Shannon Register Real Estate Team on June 19, 2009.

Shannon Register Real Estate Team named "Best Real Estate Blog in Texas by the Mays Business School Real Estate Research Center at Texas A&M University.

© 2008-2009 | Shannon Register Real Estate Team

Coldwell Banker Mortgage Update October 2008 Volume 3/Issue 43

We’ve all seen the headlines credit squeeze, credit freeze, credit-system seizures. Mortgage companies are folding left and right and banks seem to be collapsing daily. We are all painfully aware on how severe the global financial breakdown has been, with banks unwilling to lend even to other banks.

But what about mortgages and real estate? Can you still get a home loan with less than a 20 or 30 percent down payment? Or with a credit score below 720?

Absolutely. It would be a big stretch to label housing the sunny side of the market at the moment, but there’s a lot more light here than in most other financial sectors. Consider these facts:

There is no shortage of money for home mortgages, no freezing of credit to purchase or refinance a house. Why? Because the mortgage market effectively has been federalized — at least for the time being. Most of our mortgages are being funded through the (FHA) insurance program, plus Fannie and Freddie. FHA is owned by the federal government, and Fannie and Freddie are operating under federal conservatorship giving all three virtually unlimited funds because their borrowings are fully guaranteed by the Treasury. When we sell loans to these entities we are going to market with pools of loans in the BILLIONS of dollars. Think of it like buying in bulk at a discount club. Our cost per loan is significantly reduced because we work with such large quantities.

Loan terms and credit underwriting standards have been toughened up, but you can still put down 3 percent (3.5 percent after Jan. 1) on an FHA-insured mortgage and 5 percent on most of our conventional loan programs with private mortgage insurance.

FHA’s credit standards are generous and forgiving; the agency exists to help people with less-than-spotless credit histories. Fannie Mae and Freddie Mac have raised their credit-score requirements over the past year, but buyers and refinances with scores in the upper 600s can still qualify for loans having reasonable rates and fees.

Home prices have been pushed back by foreclosures and short sales have rolled back to 2003 levels or lower in many former boom markets. As a result, buyers are coming off the sidelines, making offers and writing contracts. The pending home-sales index jumped by 7.4 percent last month according to the National Association of Realtors.

So the way I see it…The prices of houses have dropped making it affordable for more buyers.

Coldwell Banker Mortgage Company has a huge supply of money and are currently closing loans in 2-3 weeks. Call your Realtor today and you can be in your new home before Thanksgiving!

"Did Someone Say Good News?" was originally posted as a blog post at Shannon Register Real Estate Team on October 28, 2008.

Shannon Register Real Estate Team named "Best Real Estate Blog in Texas by the Mays Business School Real Estate Research Center at Texas A&M University.

© 2008-2008 | Shannon Register Real Estate Team

NEW YORK (New York Times) – Countrywide Financial, in an effort to resolve lawsuits against it, has launched the largest program ever to help struggling homeowners in Texas and ten other states.

The lender, recently acquired by Bank of America, will provide a total of $8.7 billion to borrowers, $8.4 billion of which will be through direct loan relief that will affect about 400,000 people. Countrywide will also waive $79 million in late fees and $56 million in prepayment penalties, and suspend foreclosures on delinquent borrowers with the riskiest loans.

A foreclosure relief fund will be created with $150 million from Countrywide to help borrowers who are four or more months behind on their payments or whose homes have already been foreclosed on. The company will also provide $70 million to help troubled borrowers relocate to rental housing.

Additionally, Countrywide will reduce principal balances in some cases and cut interest rates in others.

To qualify, the borrower’s first payment must have been due between Jan. 1, 2004, and Dec. 31, 2007. The loan balance must be at least 75 percent of the current value of the home, and the borrower must be able to afford the adjusted monthly payments.

"Big Break for Texas Borrowers" was originally posted as a blog post at Shannon Register Real Estate Team on October 15, 2008.

Shannon Register Real Estate Team named "Best Real Estate Blog in Texas by the Mays Business School Real Estate Research Center at Texas A&M University.

© 2008-2008 | Shannon Register Real Estate Team