The Los Angeles Times
The Federal Housing Administration (FHA) plans to impose significant restrictions on the amount of money that sellers can contribute at closing in the near future. The FHA also will be raising its mortgage insurance premiums during the coming weeks, increasing charges for new purchases across the board.
Making sense of the story
- One reason for the increase in fees is that over the last six years, the number of FHA loans used by buyers has increased significantly. The housing program is financing 40 percent or more of all new-home purchases in some areas and is a crucial resource for first-time buyers and moderate-income families. This is especially because of the low 3.5 percent down payment required for most FHA loans.
- During this span of rapid growth, the FHA’s insurance fund capital reserves have steadily deteriorated – far below congressionally mandated levels. And delinquencies have been increasing. As a result, the FHA is under the gun to get its own house in order, cut insurance claims, and rebuild its reserves.
- Under the changes, the FHA will lower its seller concession cap to 3 percent of the home price or $6,000, whichever is greater. Currently, the FHA allows up to 6 percent of the price of the house to go toward buyers’ closing costs.
- Beyond that change, the FHA also plans significant increases in insurance premiums – upfront premiums will rise to 1.75 percent from 1 percent, effective April 1, and annual premiums will increase by 0.1 percent on all loans under $625,000 and 0.35 percent on mortgage amounts above that, effective June 1.
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http://www.latimes.com/business/realestate/la-fi-harney-20120311,0,6866408.story
- Some borrowers who have sold their homes through short sales may be eager to buy another home while interest rates are still low. However, these borrowers should be aware of the downside of trying to purchase a home right away.
- While banks are starting to lend again to those who have worked to polish their tarnished credit, and once-wary investors are starting to show renewed interest in sub-prime mortgage bonds, buyers who simply can’t wait will have to pay high interest rates and likely a down payment of at least 30 percent.
- Working with a private lender is one option, but borrowers should first check to make sure that the lender is licensed to provide mortgages by searching the Nationwide Mortgage Licensing System & Registry.
Borrowers who kept their mortgage payments current until the closing of the short sale also may be able to get a Federal Housing Administration loan. If the mortgage was in default though, an FHA loan is not possible for three years.
Corelogic has released a new default servicing platform to the mortgage industry that will streamline the way mortgage servicers manage loans through all stages of the default lifecycle. The new platform, DefaultView, opens pathways between previously disconnected servicing functions, allowing an exchange of information across multiple departments. The platform offers nine modules that interconnect within its architecture to help provide a more efficient and transparent default servicing operation.
DefaultView uses a master-loan architecture that offers a singular view of a loan. This design enables end users across a default enterprise to easily see a complete transaction history including workflow steps, resulting data, outcomes and all related documents and messages. By enabling top-down transparency across all relevant default departments and functions, the platform simplifies reporting and strengthens management oversight.
http://www.corelogic.com/about-us/news/new-corelogic-technology-platform-to-help-mortgage-servicers-adapt-to-loan-default-process-changes.aspx
The Mercury News
The housing crisis has caught up with people whose wealth helped them hang onto their houses longer.
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http://www.mercurynews.com/business/ci_19899224
The New York Times
Fannie Mae and Freddie Mac recently extended their foreclosure forbearance programs to give short-term aid to unemployed homeowners, but housing counselors warn that these borrowers will need to look at longer-term solutions.
Making sense of the story
- In a forbearance program, a lender agrees not to foreclose on a property and gives the borrower several months’ grace from or reduction in monthly mortgage payments. The programs work best for temporary setbacks, like job loss, health problems, or natural disasters.
- There are drawbacks to the forbearances though. The most-significant drawback is a larger total debt from the smaller payments. The unpaid balance continues to increase during this time.
- The new temporary mortgage payment is often set to 31 percent of the household income; in some cases lenders agree to accept no payments. Fannie Mae’s extended unemployment program, first offered in the fall of 2010, limits any nonpayment or other forbearance plans to one year, with the second six months requiring approval by both Fannie Mae and the lender.
- However, even with the program in place, the lender could still report a mortgage as delinquent, which could adversely affect the borrower’s credit score.
- Because some agreements add onerous term and conditions, homeowners should also consult with a housing counselor certified by the Dept. of Housing and Urban Development.
Read the full story
http://www.nytimes.com/2012/01/22/realestate/mortgages-a-reprieve-for-unemployed-borrowers.html?_r=1&ref=realestate
