Low Rate Mortgage Help

For the last 30 years, the news has been flooded regarding the record low interest rates being applied to 30-year fixed-rate mortgage loans. The rates were close to 4.5 percent just last year and are now nearly 5 percent. The major problem with this is that when a borrower calls a mortgage lender to get this amazing rate, he or she is often turned down.

This rejection is because most borrowers have credit scores that are below today’s ‘prime’. Experian puts the average score at 771 on a scale from 501 to 99. FICO, who developed the scores used to assess credit risk, says the median is 720 on a scale from 300 to 850.
Under today’s guidelines of Fannie Mae and Freddie Mac, only those borrowers with scores of 740 or more and a down payment of at least 20 percent are able avoid extra charges on a loan that could possibly raise the interest rate. These two government agencies set standards for most mortgage lending in the US.

Borrowers who have credit scores between 700 and 740 usually see additional charges, which is normally one to three-quarters of a percentage point of the total loan amount. This amount can either be paid up front or worked into a higher interest rate.
In 2008, Fannie Mae and Freddie Mac begin raising prices on higher-risk borrowers. For example, scores that fell between 680 and 700 were charged one percentage point when applying a down payment of 20 to 25 percent. A spokesman for Freddie Mac says this risk-based approach to pricing protects against losses from foreclosures.

The chief executive in Bellport, NY of the Safe Harbor Capital Group, Michel Raab-Francis, states that a score of 680 is common for people who have several credit cards with high limits. If a borrower is able to put 20 percent down on a loan, has 10 years of strong employment, a savings, a 4o1(k) and a credit score of 680 should not be penalized based on the credit score alone.
Even with these changes, there is still hope for mortgage loan borrowers. Fannie Mae and Freddie Mac are slowing down the pace at which they are applying more penalties on borrowers with lower scores. The average credit score with Fannie Mae or Freddie Mac was 758 in the last quarter of 2009, this is down from 761 in the third quarter.

 

According to federal data released on Friday, 66,000 borrowers benefited from President Obama’s administration’s $75 billion program which was aimed to protect homeowners from foreclosure.  All 66,000 of the borrowers have received permanent loan modifications and lowered interest rates, which represents a vast improvement of the number of loan modifications under Obama’s plan.

While the numbers appear to be improving and lenders appear to be more willing to refinance existing loans, the program still appears to be a failure.  The 66,000 loans refinanced accounts for a very small percentage of Obama’s goal of three to four million loans to be refinanced by 2012.  This is especially disappointing considering the cash incentives that the administration is offering to lenders who are willing to refinance their borrower’s existing mortgages.

 
The Home Affordable Modification Program needs to find new success or else the country could be looking at a new round of rampant foreclosures.  Nearly four million Americans have lost their homes to foreclosures or short sales in just the last two years.  Another fifteen million homeowners are estimated to owe more on their mortgage than their home is presently worth.

For the time being, the federal government plans to continue with the Home Affordable Modification Program, which does appear to picking up steam.  Both the Treasury Department and the Department of Housing and Urban Development (HUD) have announced that they were working to convert trial loan modifications into permanent modifications.

According the federal sources, at the end of December there were over 850,000 homeowners who were active in the loan modification program each of which were experiencing, at least temporary, payment reductions of $500 per month.  Of those 850,000 participants, 92% were on trial modifications while the other 8% had received permanent modifications.  HUD reports that an additional 46,000 borrowers are near receiving a permanent modification offer.

All of the successful loan modifications have lead to a decrease in interest rate.  43.2% of the successful loan modifications have also lead to an extended repayment period.  While reduction in principle owed is quite expensive, 26.6% of borrowers have received a reduction in loan principle.   

The government also plans to fully support Fannie Mae and Freddie Mac, which will allow the two companies to keep interest rates low, refinance mortgages, and provide tax credits for housing development.

Short sale advice: the long an short of it

With foreclosures at their highest level in many years, homeowners trying to escape mortgage default are opting for alternatives to losing both their home and credit score. As a means of avoiding foreclosure, home owners do have options, some more attractive than others:

Reinstatement is one option which the lender allows the mortgagee to make the arrears and any attorney’s fees and costs to bring the loan current; thereafter, the mortgagee must stay current.
PMI (Private Mortgage Insurance) or Lenders Mortgage Insurance (LMI), is insurance payable to a mortgage lender that is usually required when a mortgagee takes out a loan. Should the borrower be unable to meet their obligation and pay back the loan, PMI or LMI insurance will make up for the shortfall if the mortgagor is can not recuperate its costs after a filing a foreclosure action and subsequently sell the property.
As a last resort, borrowers may be able to voluntarily "give back" their property to the lender (known as a deed-in-lieu). While this option will not allow them to keep their house, it is not as damaging to their credit rating as a foreclosure.
If your home is worth less than the amount you owe, you might be a candidate for a short sale. A short sale affects credit but it’s not as bad as a foreclosure. You or your real estate agent will need to negotiate with your lender to find out if the lender will cooperate on a short sale. This is called a pre-foreclosure redeemed and allows mortgagees to avoid foreclosure by selling their property for an amount less than the amount necessary to pay off their mortgage loan.
Mortgagees may qualify for a short sale if:
1. The loan is at least 2 months delinquent;
2. You are able to sell your house within 3 to 5 months; and
3. A new appraisal (that your lender will obtain) shows that the value of your home meets HUD program guidelines.
Contact the lender for their short sale guidelines; once they agree to a short sale, add up all of the costs associated in selling your property – this includes real estate commission, closing costs and any other loans or liens against the property. You can determine closing costs through your real estate agent, or if you are selling the property directly as the owner, phone a local title company for an estimate.
Take the total owed on the property with the selling costs and subtract that amount from the estimated sale price (in a short sale, this will show as a negative amount) but keep in mind, the IRS will regard the sale of your home as income and tax you accordingly. Mortgagees that can afford the taxable income should note that a short sale or deed-in-lieu will be recorded on their credit. Moreover, there is no guarantee the lender will not pursue legal action against the borrower for the difference – bankruptcy can clear the slate at least if no workout is possible

2010 Mortgage Reduction Programs

Prior to discussing with the bank your options for mortgage reduction know your credit score to increase your chances of getting a better rate. See your Credit Score for $0 at CreditReport.com. It’s Free and available in seconds.After finding out what it is you may find few things you may be able to do to increase your credit score, it would pay off for you both in money and worry.

The real estate industry has been hit rather hard with foreclosures and we have seen, or heard of some one who have been affected with this problem. However, President Obama has outlined what is termed the Homeowner Affordability and Stability Plan(HASP)-and from the new administration’s strategy for curbing foreclosures. Since, President’s Obama’s mortgage modification strategy, one of the (HASP) its’ sub component,is the Home Affordable Modification Program( HAMP) which is a loss mitigation tool upon which to measure how effective economists’ and lawgivers’ can assess the real estate industry’s efforts to keep borrower in their homes while curing the ranks of foreclosures affecting the economies of scale globally.

The 2010 Mortgage Reduction Programs, these are government programs which offer the borrowers some relief. Even Fannie Mae has bought out of its retirement its HomeSaver Forbearance(HSF)Program and replaced it with its newly introduced Payment Reduction Plan(PRP). The goal of Fannie Mae’e and its (PRP)Payment Reduction Plan is to maintain the borrowers payment streams who have encountered long term financial hardships and who are exploring permanent alternatives fo foreclosure. (Agency Updates).

NEWS:

Click here for New Government Mortgage Help Plan to Aid Americans

Although, the PRP program might not pay or offer the borrowers out-right cash to make towards their mortgage payments,however,Fannie Mae’s PRP program can reduce the borrower’s monthly principal and interest.The (HSF)Homesaver Forbearance Program is limited to only owner-occupied properties. On the other hand, the PRP allows for reduced payments on non-owner occupied properties.
Under the HSF,the mortgage servicers receive incentive payments under this new program.However, unlike the HSF, the PRP payments are issued upon successful completion of a permanent foreclosure prevention alternative.
In addition, few  governmental HAMP mortgage servicers who have initiated in trial modification are:

Falling Behind On Payments? Modify your loan, eliminate your back payments and save your home.
• Saxon Mortgage Services,
• Citi Mortgage
• GMAC
• Auroa Loan Services
• JP Morgan Chase, and
• Nationstar Mortgage

These participatory agencies have performed trial mortgage modification and offer trial-periods plans. The homeowner benefits include reduced monthly mortgage payments with the continued opportunity of the borrower staying in their homes. While the 2010 mortgage reduction programs does not offer cash to the borrowers,the mortgage reduction programs has impacted those borrowers hard- hit by the housing crisis. But there is more work to be done!

 

2010 Mortgage Assistance Outlook
During this financial crisis America’s housing market has been able to be used to predict what the general market will do. In 2009 the market went up some due to the home buyer’s tax credit. This credit gave first time home buyers up to eight thousand dollars tax credit if they bought at home before the end of 2009. The housing market rose due to this stimulus that congress passed but gave the market false hope. Clinging on to hope senate voted 98-0 to extend this tax credit for first time home buyers until April 30, 2010. This tax credit also extended a tax credit to existing home buyers for $6500 to encourage them to buy another home.
What do existing homeowner’s have to look forward to?

The housing market does not look good for existing home owner’s houses during 2010. Even with the home buyer’s tax credit and low mortgage rates fueling sales home prices flattened in October 2009. This was due to the 3.2 million new and existing unsold homes in America which has created a seven month supply of homes for buyers.

Predictions for 2010 Housing Market
Many predict that the financial crisis will not improve until the government stops stimulating the economy and allow the economy to take its natural course. These stimuli are slowing down the economies full recovery because of the false rises in the market they are creating. After April, 30 2009 there will most likely be another dive in the market due to the false rises. This year there is an estimated 2.4 million homes that will be foreclosed on and added to the dive which will drive down prices another 10 percent. Only then will the market start to improve on its own without any help from the government.

Another Decline in the Future
The next decline in the market could mean worse times for an estimated 16 million homeowners. Many homeowners owe more on their homes than they are worth. If this happens than many homeowners are likely to allow their homes to go into foreclosure and seek cheaper rent at another residence. Lender’s could prevent this by lowering the principal balance of these mortgages which would give the buyers lower monthly payments. This will prevent the lender from having unnumbered houses sitting empty on the market and allow homeowners to stay in their current home paying less, but many lenders refuse to take this immediate loss on the loans they have extended. Congress has attempted to change the law so that bankruptcy will force lenders to reduce the mortgage balances for borrowers, but lenders have been able to avoid this law and stop from being forced into this resolution.

Is there A Hopeful Future?
Although the economy is hard pressed the future will start to look brighter. There are many different approaches the government could use to help improve the financial crisis. The government should focus on job creation to combat the rising unemployment rate which in turn will allow the housing market to improve as more and more American’s earn a steady pay check.

New York Government Mortgage Foreclosure protection Help

Now in New York, prime borrowers will get New York Government foreclosure help through a new bill that just passed in the State Legislature. Similar to the 2007 legislation that helped subprime mortgage borrowers, prime mortgage borrowers will also have protection against foreclosure. The law should be effective within 2 months after Gov. David A. Paterson signs it.

90 Day Notice
Borrower’s will receive a 90 notice before the foreclosure proceedings begin. They also are to be included in the settlement conference negotiations before the bank decides to take a foreclosure action. Out of the 20 measures, being able to mediate with the banks, would finally let borrowers get a chance to ask for a loan modification. This offers tremendous help, since many borrowers have reported that their bank has not been willing to discuss any change in their loan.
Bill Passed Quickly
There are definite signs that the New York Government foreclosure help bill will get passed quickly. According to the New York State Banking Department superintendent, Richard H. Neiman, that compared to the recent stalled legislation, he was pleasantly surprised by how fast the bill passed.
Foreclosure Mediation
Homeowners pay nothing for the mediation. At a particular place and date, lenders are required to have a representative that brings financial documents and all the information required by the mediators.
Mediation administrators have said that these have had poor results for subprime borrowers because the borrowers don’t attend. Now, with the lender required to bring all requested financial documents, borrowers have more incentive to come.
Borrowers Get Housing Counseling
In addition, when banks tell the state their will soon act on foreclosures, the new legislation forces the state to give the borrower’s name to housing counseling organizations. Then, these organizations provide information for the borrower on how to avoid foreclosure, like mediation.
Protection For Multifamily Housing Tenants
This legislation provides co-op residents 90 days prior to losing their ownership shares. Since co-op units are not legally defined as real property, they do not meet the qualifications for typical foreclosure procedures. Tenants are responsible for monthly maintenance payments that cover the building’s expenses and its mortgage.
This new law has shined a light on the trials that tenants endure when they cannot meet the monthly maintenance payments. Often, their owners have been told to leave their residence within 2 months right after the building’s board decides to take official action against a resident that has not paid. After this law takes affect, tenants will have more time to get help and be protected against harassment.
Large Part Of New York Housing
Moreover, the new protection for the tenants is especially significant, since the housing market in New York includes a large amount of multifamily units, according to Jane Azia, director for the State Banking Department. Jane Azia added, that it also helps multifamily units already undergoing foreclosure. Even though foreclosure takes almost 15 months in the state of New York, only after the foreclosure judgment, can lenders evict the tenants.

2010 Conforming Loan Ceiling for jumbo Loans to Stay Fixed

The Federal Government has announced that it will not lower the limit on conforming loans for 2010 in high priced markets, as it was previously thought they would do. Conforming loans are defined as loans which meet the criteria to be eligible for purchase by Fannie Mae and Freddie Mac. Residential loans that don’t conform to these standards because of size are called jumbo loans. Conforming loans are less risky to lenders than jumbo loans. Currently in high-priced areas, conforming loans are limited to $729,500. That is the limit for a one unit dwelling. A four unit dwelling is eligible for a limit of $1,403,400. If the limits had been lowered, new conforming loans for one unit dwellings, the most important indicator, would have needed to be under $625,500 to be eligible for purchase by Fannie Mae and Freddie Mac. This could have held values flat or even pushed them down in high cost areas.

At the height of the housing market, new jumbo loans had totaled $500 billion dollars per year. Last year, that figure was only a $100 billion, according to Inside MBS & ABS. Investor and lender appetite for jumbo loans has clearly diminished, along with borrower willingness to pay the higher interest rates and fees associated with such loans.

Not everyone can take advantage of the high end conforming loan limit. The area must be designated a high cost area. Most of the New York metropolitan area is designated high cost. Kentucky, for example, doesn’t have any areas that are eligible for the highest conforming loan limits.

Keeping the limit higher allows borrowers with mortgages between $625,500 and $729,500 to generally obtain a lower rate, as less risk to lenders means lower interest rates to consumers. It makes a big difference to home buyers. A borrower might get a conforming loan rate right now under five percent interest rate, but a jumbo loan might cost as much as a half percent or more than a conforming loan. On a $650,000 mortgage, that’s a difference of $3,250 per year or more. This savings in turn stimulates the residential housing market in these areas as borrowers are able to afford more property for their dollar.

https://www.efanniemae.com/sf/refmaterials/loanlimits/index.jsp

Hope Now Can Take The Stress and Confusion Out Of Refinancing

For the at risk home owner who wants to take advantage of the new mortgage modifications but is drowning in paper work, there is now hope with Hope Now. Hope Now, with the help of free counselors, will be able to send in their digital versions of their documents online.

In the past there has been many issues with mortgage companies saying the proper documents where not sent in, while the homeowner state that they have. This has lead too much confusion and results in slow or no action on the mortgage refinancing. With Hope Now, you will be able to send in digital copies of your documents while keeping the originals for future need.

Hope Now can verify that the proper documents were sent in. Hope Now is also able to track the status of the their loan modification application. This will help the home owner understand what is happening with their loan modification application and avoid any problems due to lost or missing documentation.

Even though loan modification have been in the news since the time the program started, many still do not know if they are eligible or not. There are many misconceptions about who is eligible for loan modification.

Many home owners are afraid that they will not qualify for a loan modification because their home has lost some of its value due to the drop in property values. This causes them to owe more than what the home is worth now. In many cases it is still possible for them to get a loan modification as long as they do not owe more than 125% of the homes value.
Some home owners are afraid that getting a loan modification will not lower their payments and will have a negative impact on their credit rating. For homeowners that are paying a higher interest rate then the current rate, restructuring the loan will give them smaller payments due to the lower interest rates. Other people will find the piece of mind knowing that their payments will stay at the present rate and not get higher. This can show them a savings by preventing future increases in the payments.

Many home owners when researching the loan modifications, do so under the misunderstanding the when they refinance the loan they will end up owing less on their home. This is wrong, the amount that the house is mortgaged for stays the same. The difference comes from having to pay less in interest.

If you are not behind on your payments. If you can show that you will be able to maintain the payments at the new rate. The new loan helps prevent the loan from defaulting, you may be eligible for a loan restructuring.

You should gather the documentation before calling to see if you qualify for refinancing. You will need proof gross of income for everyone listed as a borrower on the loan papers. The most recent income tax return. Information on a credit card bills you owe. Information on any other bills you owe, car loans or student loans, for example.
Hope Now will help with any other questions you may have.

Fannie Mae Changing Lending Practices

Fannie Mae which is a very large financial institution has announced that the company is changing its lending practices. This comes after many financial institutions have come under fire for their lending practices due to the number of foreclosures caused by predatory lending practices.

The financial institution is now going to make it harder for people to get loans and lines of credit. They are going to increase the minimum credit scores that are required by consumers to qualify for a loan.
Many consumers who easily qualified for loans with low credit scores have become overwhelmed with their payments due to the economy. Many people are now unemployed and cannot keep up with their monthly loan payments.

Fannie Mae will implement its new automated lending system on December 12, 2009. The system will now automatically reject borrowers who wish to take out loans who have a credit score that is lower than 620. The company had a previous system that only rejected borrowers with a credit score of 580 and below.
The credit score of 620 was chosen because borrowers who had a lower score than this one were nine times more likely to default on making their monthly loan payments.

There are also income restrictions for borrowers who are making a down payment of at least twenty percent towards their loan balance. Borrowers now cannot spend more than forty five percent of their income to pay their monthly payments and other expenses.
This news is actually very beneficial to borrowers and the financial industry as a whole. Many financial institutions who loan money to consumers often lose money because the borrowers default on their loans. This can hurt their bottom line which in turn causes the bank’s profit margin to decrease substantially.
Too many borrowers get in over their heads because they want to live above their own means. Many people think that taking on a lot of debt is not a big concern because they will pay the balance off over time.

The problem is that the economy and job growth in the United States has slowed down a lot. This means that employers are laying off employees and are not increasing their employees’ wages.
Consumers also need to help the financial industry recover by making sure that the budget before taking on a large monthly loan payment. By having a healthy amount of money in a savings account, consumers can prepare for the worst. Having a few months worth of expenses can ensure that financial obligations are met.
Other financial institutions can learn from Fannie Mae’s new stricter lending practices. Everyone needs to take responsibility for their own actions so that money can be lent in a way that is good for consumers, the financial institutions, and the financial market as a whole.

Government Help refinancing jumbo Mortgages

Is there any government help available for refinancing a Jumbo Mortgage?

What is a Jumbo Mortgage?
A Jumbo Mortgage, previously, was a mortgage that was more than $417,000. A loan of less than that could previously be refinanced through Fannie Mae and Freddie Mac. A loan of more than that could not.
Under President Obama’s 2009 Stimulus Package, however, the limit has been extended to $650,000. Thus, a loan between $417,000 and $650,000 would previously have been considered a Jumbo Loan, and no government help would have been available for refinancing. Now, such a loan would not be considered a Jumbo Loan, and it can be refinanced through Fannie Mae and Freddie Mac.

Before this action by President Obama, refinancing a loan of between $417,000 and $650,000 was difficult because of the credit crunch. It is now easier. You can now save one percent per year by refinancing your loan of that amount.
There are a variety of banks and finance companies that will refinance a jumbo loan. Some programs offer no requirement of private mortgage insurance, no lenders’ fees, no points, and interest only new home loans.
Under President Obama’s Stimulus Package, it is no longer necessary to hold a 20% equity share of a home before refinancing a Jumbo Mortgage. Even if a mortgage exceeds 105% of the current value of the home, you are eligible to apply to refinance your Jumbo Mortgage, or the loan that previously would have been considered a Jumbo Mortgage. The interest rate on refinancing such a loan has been reduced from 6.5% to 5.16%.
Banks that will refinance under the government program can be found at any number of popular lending sites, and the official sites of many banks have information.Traditionally, many who did refinance Jumbo Loans obtained interest rates of 7%, which was high enough that many abandoned their plans of refinancing. On the other hand, those with traditional mortgages often paid rates of 5% or below. Traditionally, those who obtained Jumbo Loan refinances have had to accept variable interest rates, rather than fixed.
Fannie Mae and Freddie Mac have traditionally not purchased Jumbo Loans, so it is significant if you want to refinance that the government has changed the definition of what a Jumbo Loan is. You now can get government help for refinancing a loan that would have been considered a Jumbo Loan before, because it is not considered such a loan now. That is true, even if you cannot get help on what the government now considers a Jumbo Loan.

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