IMPORTANT: New FTC rule creates new requirements for Realtors®.
IMPORTANT: New FTC rule creates new requirements for Realtors®
August 22, 2011
Leave a Comment » | 
Mortgage Loans | 
Permalink
Posted by Jim Evans
HAFA has finally arrived
April 5, 2010Announced last November, today officially marks the date when servicers had to have in place the Home Af0rdability Foreclosure Alternatives Program (HAFA). The Treasury has set the required guidelines for eligibility, underwriting and servicing. Having a standard practice for short sales should go along ways towards making real estate agents sane again.
This new directive is aimed at loans that are not owned by or guaranteed by Fannie Mae or Freddie Mac. Recently Wells Fargo, Bank of America, and Citibank have all said they would implement these procedures on loans that they fully own. Fannie and Freddie are considering similar procedures.
To qualify certain criteria must be met:
- It must be a principal residence
- The loan was taken prior to January 1, 2009
- The mortgage is delinquent or default is reasonably foreseeable
- The unpaid principal balance is less than $729,750
- The borrower’s total monthly mortgage payment exceeds 31% of the borrower’s gross income
Every potentially eligible borrower must be considered for HAFA before the loan is referred to foreclosure. They will automatically refer you to this program within 30 days from the date the borrower:
- Does not qualify for a trial period modification
- Does not successfully complete a trial modification
- Is delinquent on a modification by missing 2 consecutive payments
- Request a short sale or deed in lieu
If the lender offers it up, the borrower has 14 days to accept this action. There are additional time lines and an initial appraisal up from that is required. The Realtor will have a bottom line number to work with that will encompass all fees for the sale and will be able to properly market to potential purchasers with assurance of acceptance.
Currently we have watched these short sales take months and months. This appears to cut the time line to about 45 days from the time we receive an offer. Additionally there are incentives for the seller who may qualify for up to $1500 in relocation assistance. I know in the beginning the process will be a bit rocky. I just hope that it quickly catches on to All of the lenders and investors out there.
1 Comment | Housing market, Mortgage Loans, Short Sales | Tagged: Banks, HAFA, Loan Modification, No Foreclosure, Selling Homes, Short Sales | Permalink
Posted by Jim Evans
Bank of America steps up foreclosure prevention efforts
January 27, 2010
NEW YORK (CNNMoney.com) — One roadblock slowing President Obama’s foreclosure prevention program seems to be clearing away. Bank of America, the nation’s largest mortgage lender, said Tuesday that it was the first lender to agree to lower or eliminate payments on second mortgages.
This federal initiative, called the Second Lien Modification Program, pays incentives to second mortgage holders to work closely with first mortgage holders under the Home Affordable Modification Program.
First mortgage holders have been reluctant to lower payments when there was a second lien involved because they did not want to take on losses while leaving payments on the second mortgages intact.
The lack of an agreement with second lien holders “has been a major impediment to getting successful modifications done,” said John Taylor, CEO of the National Community Reinvestment Coalition, a group whose members include foreclosure prevention counselors.
Without alteration to the terms of second mortgages, first mortgage holders often have to lower their payments even more to hit the HAMP target requiring that borrowers’ total mortgage payments represent no more than 31% of their pre-tax income.
“For many homeowners facing severe financial difficulty, decreasing the payment on the first mortgage without a reduction in the payment on the second lien may not produce an affordable combined mortgage payment,” said Barbara Desoer, president of Bank of America (BAC, Fortune 500) Home Loans.
The second lien plan has been in the works since last spring, shortly after HAMP was initiated, but implementing it proved difficult.
HAMP itself has been a disappointment. Originally designed to help as many as 4 million borrowers obtain mortgage workouts, it had produced fewer than 70,000 permanent modifications as of Dec. 31. Another 800,000 or so homeowners were in a trial-modification phase.
The Treasury Department hopes the second lien program will make a big difference. It’s estimated that as many as half of at-risk mortgages are burdened with second liens.
Signing on Bank of America was an important first step because it is the nation’s top mortgage lender with 14 million loans outstanding, including 3 million second loans.
The lender said it has all systems in place to begin implementing the program as soon as the final program policies and guidelines are released by federal regulatory agencies. That is expected to happen soon.
More banks are expected to sign on to the program very quickly, according to a Treasury spokeswoman.
“They need a lot more of the major banks to sign up,” Taylor said. 
Leave a Comment » | Housing market, Mortgage Loans, Short Sales | Tagged: Banks, foreclosures, Loan Modification, Short Sales | Permalink
Posted by Jim Evans
FHA Announces Policy Changes to Address Risk and Strengthen Finances
January 21, 2010The costs of government backed loans are going up, but downpayment requirement is remaining low for most! Here is the latest anouncement from HUD:
WASHINGTON – Federal Housing Administration (FHA) Commissioner David Stevens today announced a set of policy changes to strengthen the FHA’s capital reserves, while enabling the agency to continue to fulfill its mission to provide access to homeownership for underserved communities. The changes announced today are the latest in a series of changes Stevens has enacted in order to better position the FHA to manage its risk while continuing to support the nation’s housing market recovery.
The FHA will propose to take the following steps: increase the mortgage insurance premium (MIP); update the combination of FICO scores and down payments for new borrowers; reduce seller concessions to three percent, from six percent; and implement a series of significant measures aimed at increasing lender enforcement. U.S. Housing and Urban Development Secretary Shaun Donovan previewed the changes in December of last year, noting that the FHA would announce additional details before the end of January.
“Striking the right balance between managing the FHA’s risk, continuing to provide access to underserved communities, and supporting the nation’s economic recovery is critically important,” said Commissioner Stevens. “When combined with the risk management measures announced in September of last year, these changes are among the most significant steps to address risk in the agency’s history. Additionally, by continuing to provide affordable, responsible mortgage products, FHA will support the housing market’s recovery. Importantly, FHA will remain the largest source of home purchase financing for underserved communities.”
Announced FHA Policy Changes:
- Mortgage insurance premium (MIP) will be increased to build up capital reserves and bring back private lending
- The first step will be to raise the up-front MIP by 50 bps to 2.25% and request legislative authority to increase the maximum annual MIP that the FHA can charge.
- If this authority is granted, then the second step will be to shift some of the premium increase from the up-front MIP to the annual MIP.
- This shift will allow for the capital reserves to increase with less impact to the consumer, because the annual MIP is paid over the life of the loan instead of at the time of closing
- The initial up-front increase is included in a Mortgagee Letter to be released tomorrow, January 21st, and will go into effect in the spring.
- Update the combination of FICO scores and down payments for new borrowers.
- New borrowers will now be required to have a minimum FICO score of 580 to qualify for FHA’s 3.5% down payment program. New borrowers with less than a 580 FICO score will be required to put down at least 10%.
- This allows the FHA to better balance its risk and continue to provide access for those borrowers who have historically performed well.
- This change will be posted in the Federal Register in February and, after a notice and comment period, would go into effect in the early summer.
- Reduce allowable seller concessions from 6% to 3%
- The current level exposes the FHA to excess risk by creating incentives to inflate appraised value. This change will bring FHA into conformity with industry standards on seller concessions.
- This change will be posted in the Federal Register in February, and after a notice and comment period, would go into effect in the early summer.
- Increase enforcement on FHA lenders
- Publicly report lender performance rankings to complement currently available Neighborhood Watch data – Will be available on the HUD website on February 1.
- This is an operational change to make information more user-friendly and hold lenders more accountable; it does not require new regulatory action as Neighborhood Watch data is currently publicly available.
- Enhance monitoring of lender performance and compliance with FHA guidelines and standards.
- Implement Credit Watch termination through lender underwriting ID in addition to originating ID.
- This change is included in a Mortgagee Letter to be released tomorrow, January 21st, and is effective immediately.
- Implement statutory authority through regulation of section 256 of the National Housing Act to enforce indemnification provisions for lenders using delegated insuring process
- Specifications of this change will be posted in March, and after a notice and comment period, would go into effect in early summer.
- HUD is pursuing legislative authority to increase enforcement on FHA lenders. Specific authority includes:
- Amendment of section 256 of the National Housing Act to apply indemnification provisions to all Direct Endorsement lenders. This would require all approved mortgagees to assume liability for all of the loans that they originate and underwrite
- Legislative authority permitting HUD maximum flexibility to establish separate “areas” for purposes of review and termination under the Credit Watch initiative. This would provide authority to withdraw originating and underwriting approval for a lender nationwide on the basis of the performance of its regional branches
- Publicly report lender performance rankings to complement currently available Neighborhood Watch data – Will be available on the HUD website on February 1.
In addition to the changes proposed today, the FHA is continuing to review its overall response to housing market conditions, and continuing to evaluate its mortgage insurance underwriting standards and its measures to help distressed and underwater borrowers through FHA/HAMP and other FHA initiatives going forward.
###
HUD is the nation’s housing agency committed to sustaining homeownership; creating affordable housing opportunities for low-income Americans; and supporting the homeless, elderly, people with disabilities and people living with AIDS. The Department also promotes economic and community development ad enforces the nation’s fair housing laws. More information about HUD and its programs is available on the Internet at www.hud.gov and espanol.hud.gov.
New Measures Will Help FHA Better Manage Risk, While Maintaining Support for the Housing Market and Access for Underserved Communities
Leave a Comment » | Mortgage Loans | Tagged: Banks, downpayment, FHA, interest rates, lender enforcement, loans | Permalink
Posted by Jim Evans
