CHDAP Suspension Will Affect California RE Agents Homebuyers

Posted in Real Estate by Jake on January 28, 2013 No Comments yet

CHDAP Down Payment Assistance is temporarily suspended by CalHFA due to discrepancy by HUD.

 

“This temporary measure is a result of the Department of Housing and Urban Development’s (HUD) recent interpretive rule governing a provision of the Housing and Economic Recovery Act of 2008, that affects how all Housing Finance Agencies (HFAs) provide down payment assistance on FHA-insured loans. HUD’s interpretive rule requires HFAs to provide such assistance directly at closing. Under this interpretive rule, it is not permissible for HFAs to purchase down payment assistance loans from lenders after the loan is closed, which is the way CalHFA currently conducts business with all its approved lenders under state law. First mortgage loans combined with subordinate loans not complying with HUD’s recent interpretive rule may be uninsurable by FHA. HUD’s interpretive rule is effective for loans closed on or after November 29, 2012. Again, this only applies to CHDAP loans combined with FHA-insured first mortgages.

 

CalHFA is aggressively pursuing several solutions to again offer CHDAP loans, which we expect to release in the near future. For questions about this bulletin, contact the CalHFA Single Family Division by phone 916-326-8000; fax 916.327.8452; or email sflending@calhfa.ca.gov. In addition you can always visit CalHFA’s web site at: www.calhfa.ca.gov or Single Family Lending at www.calhfa.ca.gov/homeownership.”

 

PAY CLOSE ATTENTION TO YOUR BUYER’S PRE-APPROVAL. IF THEY ARE USING CHDAP WITH AN FHA LOAN THEY WILL NOT BE ABLE TO MOVE FORWARD AT THIS TIME.

The Real Estate Financing Rules Are About To Change Thanks To Dodd-Frank!

Posted in Real Estate by Jake on November 28, 2012 No Comments yet

With the Dodd Frank bill having no chance for repeal it looks like we will have to live with their new proposed rule changes.  Most of these new rules that will affect the lending community center around Owner Occupied residential consumer deals and will start in January 2013.  In essence,  the hard money lenders have one more month to close Owner Occupied hard money deals before this necessary piece of the lending world is turned upside down.  Some of the changes that will wildly affect the “Hard money” space are listed below.

 

-NO financing ANY lender or broker points within the loan!  Yes this means that the borrower will have to pay the points out of their savings or finance it on a credit card….no joke!

-NO Prepays protection will be allowed to the lender!  This will not allow Lenders to do loans for no points, further restricting the already limited points that you can charge all to go to the broker!

-No Balloon payments will be allowed! This will make the vast majority of lenders exit the O/O hard money space because they are use to short term commitments and forcing them into 30 year fully amortized loans is not the model that fits the niche.  All the hard money brokers that use private investor money will not be able to talk their investors in to a 30 year loan…for the same reason!

-All borrowers that do still want to get Hard Money/Alternative lending loans on their home will be FORCED to attend Consumer counseling set up by HUD.  This will just create  another entry barrier to obtaining financing on their home!

 

So… these changes that are right around the corner will wildly affect the cost of capital to the consumer in a negative way.  If you are a real estate or lending professional that has or had a borrower entertaining using Alternative lending to get them in to their home of their dreams or getting the capital they need,  you should submit your loan request immediately and plan on closing the loan in December!  If you are a home buyer trying to take advantage of the current housing either because of the loss of another home through short sale or foreclosure, or you just want to buy NOW and need hard money to do so, you need to act quickly!

 

Most lenders are committed to staying in the O/O alternative lending business after the Dodd Frank rules are implemented in January,  but closing an O/O loan this month will be easier and more profitable for you by far!  Get your O/O financing before the cost of capital goes through the roof!

Housing Shortage Being Felt…Especially In The West

Posted in Foreclosures, Real Estate by Jake on October 22, 2012 No Comments yet

“It’s hard to imagine, given that the nation’s housing market is still digging itself out of an epic foreclosure crisis, that there just are not enough homes available to buy.  But that, apparently,  is the case, according to the National Association of Realtors, who blame a drop in home sales on an ‘acute lack of supply’ in certain formerly hot markets.  ‘Recent price increases are not deterring buyer interest,’ notes Lawrence Yun, NAR’s chief economist.  ‘Rather, inventory shortages are limiting sales,  notably in parts of the West.’  A little perspective is called for here.  The housing recovery has largely been driven by investors on the low end of the market.  Cities like Phoenix,  Las Vegas and Sacramento, CA, where the foreclosure crisis hit hardest and where home prices fell the most, were swarmed by these investors, who were looking to take advantage of the situation and convert this distress into long-term rental rewards and shorter term resale profits.  Witness, sales of homes priced under $100,000 in the West are down 47 percent from a year ago, according to the NAR,  after investors drove prices notably higher.  Distressed sales made up just 24 percent of total home sales in September, while they had been making up over one third of sales for the past two years.

Where’s The Beef?

So where is all this distressed supply, given that there are still 5.45 million homes with mortgages that are either delinquent or in the foreclosure process (per LPS Applied Analytics)?  Banks are doing more foreclosure alternatives, like short sales, but they are also making more aggressive loans.  Bank of America this week announced that in the past five months it has reduced principal on 30,000 troubled loans, with an average reduction of $145,000.  This as part of the mortgage servicing settlement signed early this year.  However, banks have also finally come around to the fact that loan modifications with reduced principal have a much lower re-default rate.  Yun suggests that builders need to really ramp up production in order for home sales to recover more.  Housing starts for single family homes in September were up 43 percent from a year ago and building permits were up 27%, but the real volumes are still about half the normal level.  New homes are popular with first-time home buyers, who are only making up 32 percent of the market, whereas they normally represent about 45 percent. That is due to still tight credit conditions. The biggest problem affecting inventories is that regular home sellers are not putting their homes on the market at a high enough rate to offset the drop in distressed volumes.  Why?  Part of it is still a lack of confidence in the market, but most of it is that, as of August, about 15 million homeowners still owed more on their mortgages than their homes were worth, according to Zillow.  That’s 31 percent of homes with a mortgage.  Negative equity and near negative equity is largely what is holding the market back now, even as distressed homes slowly move out of the system.  Given the huge drops in sales and inventory out West, which had been driving much of the gains in the overall market,  some analysts predict deeper sales drops in the coming months.  While sales of higher priced homes are up considerably from a year ago, they still make up a very small share of the total market.  About 65 percent of the market is made up of homes priced lower than $250,000.  These are a lot of numbers to digest, but they add up to a still bumpy recovery ahead for housing.”

Excerpts contributed by Diana Olick

California Homeowner Bill Of Rights Now Law

Posted in Real Estate by Jake on July 12, 2012 No Comments yet

All eyes in the nation now turn to California as Governor Jerry Brown signed into law the Homeowner Bill of Rights to help struggling Californians keep their homes. This law aims to avoid foreclosure where possible in order to help stabilize California’s housing market and prevent the other negative effects of foreclosures on families, communities, and the economy. The new law will generally prohibit lenders from engaging in dual tracking, require a single point of contact for borrowers seeking foreclosure prevention alternatives, provide borrowers with certain safeguards during the foreclosure process, and provide borrowers with the right to sue lenders for material violations of this law.

Applicability of the Law:

This law will generally come into effect on January 1, 2013. It only pertains to first trust deeds secured by owner-occupied properties with one-to-four residential units, unless otherwise indicated below. “Owner-occupied” means the property is the principal residence of the borrower and secured by a loan made for personal, family, or household purposes (CC 2924.15). A “borrower” under this law must generally be a natural person and potentially eligible for a foreclosure prevention alternative program offered by the mortgage servicer, but not someone who has filed bankruptcy, surrendered the secured property, or contracted with an organization primarily engaged in the business of advising people how to extend the foreclosure process and avoid their contractual obligations (CC 2920.5(c)). A “foreclosure prevention alternative” is defined as a first lien loan modification or another available loss mitigation option, including short sales (CC 2920.5(b)). Some of the requirements of this law do not apply to “smaller banks” that, during the preceding annual reporting period, foreclosed on 175 or fewer properties with one-to-four residential units (CC 2924.18(b)).

For a complete breakdown of the law and it’s specific application to the various issues of the distressed homeowner please visit:     http://www.leginfo.ca.gov/

 

Still More Legal Recourse For California Homeowners In Foreclosure?

Posted in Foreclosures, Real Estate by Jake on July 2, 2012 No Comments yet

The Foreclosure Reduction Act and the Due Process Rights Act were approved by the Joint Conference Committee in a 4-1 vote, sending them up to an expected vote in both the Assembly and Senate next week. The Foreclosure Reduction Act restricts the process of “dual-tracked foreclosures,” in which lenders work with homeowners on trial loan modifications while at the same time continuing the foreclosure process.  Over 900,000 foreclosures occurred in California between 2007 and 2011 and last year, 38 of the top 100 ZIP codes hit hardest by foreclosures were in California.  California’s foreclosure crisis has hurt property values throughout the state and resulted in less revenue for schools, public safety, and other vital public services.  The Due Process Rights Act guarantees a reliable contact for struggling homeowners to discuss their loans with and imposes civil penalties on robosigning.   The legislation also includes enforcement for borrowers whose rights are violated.  The committee responsible for the bill, the Joint Conference Committee, has passed historic legislation that codifies the protections eligible homeowners deserve while helping to stabilize the foreclosure crisis that has thwarted California’s economic recovery.  The Homeowner Bill of Rights was introduced in February and has been the subject of much debate from various state groups ever since.

Meanwhile in a galaxy not far away…

Economists continued to predict home prices will decline only slightly in 2012, falling 0.4 percent for the entire year, and will increase thereafter, according to the June 2012 Zillow Home Price Expectations Survey, compiled from 114 responses by a diverse group of economists, real estate experts, and investment and market strategists. 
For the first time, the individual economists surveyed were largely in agreement on the trajectory of home prices nationally, signaling that a true bottom may be imminent.

However, a majority (56 percent) of respondents also believe that, in five years, the U.S. homeownership rate will be below 65.4 percent, the rate recorded in the first quarter of 2012. One in five believe the homeownership rate will be at or below 63 percent, testing or breaking the 62.9 percent rate established in 1965, the lowest on record.
While the stronger signals of an imminent market bottom and turn are encouraging, the expected pace of housing recovery over the coming three years is significantly weaker now than it was two years ago.

Up and Down: Seesawing Mortgages

It’s not hard to see the effects of a distressed economy. Jobless claims, mortgage loans, rates and delinquencies, foreclosures and short sales rise and fall. Just this November, headlines under mortgages in inman.com prove that the country’s real estate industry is ever changing and ever inconsistent. Obviously, thanks to the big help coming from the White House, many Americans are still unemployed, homeless, and in debt.

Let’s trace the headlines back to the first week of the month.

November 3, 2011 — Mortgage rates stay in the basement

“Mortgage rates sagged this week as ongoing concerns about the European debt crisis had investors fleeing to the relative safety of mortgage-backed securities that fund most U.S. home loans.”

November 9, 2011 – New settlement disclosure form to replace HUD-1

A prototype for a new unified settlement disclosure form may replace the separate HUD-1 Settlement Statement and Truth in Lending disclosure form which is currently used. Should the new forms’ designs are finalized, consumers will receive a unified loan disclosure form when they apply for a mortgage, and a unified settlement disclosure form if they want to purchase a home.

November 10, 2011 – Low rates sparking demand for mortgages

Low rates of mortgage loans increased demand to purchase mortgages and refinancings.

November 11, 2011 – 10 guilty pleas in scheme to take control of Las Vegas HOAs

“Federal prosecutors have negotiated guilty pleas with 10 defendants for their alleged involvement in a scheme to take control of as many as a dozen homeowners associations in Las Vegas in order to file construction defect lawsuits against builders and then win contracts to do remediation work.”

November 17, 2011 – Mortgage rates near historic lows for third straight week

Mortgage rates remain low for the third consecutive week averaging 4% and still nearing the all-time low of 3.94 percent in the week ending October6.

November 17, 2011 – Congress votes to restore FHA loan limits

The Congress and Senate vote  with 298-121 and 70-30, respectively, to restore FHA’s ability to insure loans of up to $729,750 in high cost markets through 2013.

November 23, 2011 – Economic worries keep lid on mortgages rates

Mortgage rates reach record lows for the fourth consecutive week in November for the week ending November 23, which is down by percent last week and 4.4 percent a year ago, according to Freddie Mac’s Primary Mortgage Market Survey.

 

Source: www.inman.com/news/category/Mortgages

What Happens if FHA Continues to Lose Money?

Posted in Real Estate, Wholesale And Rehabs by mrdublin on November 18, 2011 No Comments yet

Congress raises FHA loan limits amidst the latter continuously running out of cash.

The Federal Housing Administration is the governing body that insures mortgage loans thus as an insurance, it needs to maintain a certain amount of money called cash reserves, that will keep it operating. The cash reserve also guarantees that if ever an unfortunate even happens to FHA (it got closed down or something) it can still pay off all insured. The government’s mandated FHA reserve must at least be 2% of its total insurance in force.

According to CNBC.Com’s Diana Olick, But the FHA is right inside the danger zone now. An actual independent actuarial report found that FHA’s loan loss reserves is already 0.24% of its $1.1 trillion dollars insured mortgages.

From 5% in the market share, FHA has gone up to 30% now – obviously an indication that there are much more mortgage loans now (spell: debts) that FHA is insuring. This will continue to grow big, according to the auditor, as home prices fall and mortgage delinquencies grow high.

FHA’s reserves is at $2.6 billion as of end of September which means it is down by a whopping 45% from last year’s $4.7 billion. This is hardly 2% of the required reserves (which the Congress has set) yet now that the loan mortgages are raised, there could be more loaners running after FHA.

Well in that case, the government must prepare itself for a bailout program, unless it wants FHA to continue going down the drain, which seem to be the case when the Congress approved for higher loan limits.

Bob Nielsen, chairman of the National Association of Home Builders (NAHB) was caught saying, “The FHA program is fully self-supporting, and a great example of a public-private partnership with lending institutions. Restoring the loan limits will provide millions of potential consumers in markets throughout the nation access to safe, affordable mortgage financing.”

Good intentions, wrong execution. It’s still a fail for the government.

Senate Restores Mortgage Loan Limits

Posted in Politics, Real Estate by mrdublin on November 1, 2011 No Comments yet

The Senate makes a move to restore mortgage loan limits just before Halloween. But…Will it save the real estate market? Will it increase home sales? Will it attract more homeowners to sell home? Will it push home buyers to buy home? Or will it be just another scheme to make the government look like it is doing something to save the home sales market?

Calling all real estate agents, home buyers and home sellers, an important amendment was passed by the senate last Thursday, October 30, which will restore the mortgage loan limits back to $729,750. This is still in connection with the request of National Association of Realtor (NAR) to restore the mortgage loan limits and give more chances for home buyers to purchase the house of their dreams.

The amendment to a spending bill would restore the $729,750 maximum loan limit on government backed mortgages for two more years. The increase in ceiling is joined by another Senate amendment that would bring back the formula for determining the upper loan limit in high-cost housing markets from now until 2013.

With a 60-38 vote, the new amendment was approved by the Senate, and now moves to the House, which is now responsible for approving or disapproving the said bill.

NAR lobbied real hard for the amendment despite continuously failing to have related bills reach the House or even the Senate and despite the Obama Administration not wanting to extend its role in mortgage lending by opposing the higher limits taking place.

To rationalize with those against the higher limits, the new amendment will impose a new loan fee of 15 basis points a year on unpaid principal balance for the entire time of the mortgage. A basis point is equal to a hundredth of a percent thus, 15 basis point fee means $750 on a loan with a $500,000 balance. This would raise the revenue to $300 million according to backers of the bill.

Meanwhile, according to Fannie Mae, Freddie Mac and FHA, lower loan limits would affect approximately 83,000 mortgages in areas with higher living costs.

Courtesy: Real Estate Insider News

HARP Revealed: Thoughts for the Home Buyers and Home Sellers

Posted in Real Estate by mrdublin on October 28, 2011 No Comments yet

Thousands of Americans will find mortgage relief in what the Obama Administration claims is an attempt to prevent economic and political fallout in housing crisis. This move is in direct correlation to Obama’s new rules on federally guaranteed loans, as part of his efforts to address economic troubles and various challenges faced by homeowners and investors.

The Obama’s Administration made the efforts despite the Republicans’  block on a majority of his proposals. But critics said it’s finally time that the President make a move to improve (or technically, save) housing in the country. In fact, his lack of action with respect to the home foreclosures and other housing crisis has resulted in demands from his own allies to do something!

These new bailout plans known as the Home Affordable Refinance Program (HARP 2.0), however, are questionable in terms of scope of benefits. Under this proposal, homeowners who are still current on their mortgages are still able to refinance even if the value of their home has dropped lower than what they still owe. But what percent of the population can benefit from it? Will it really be that beneficial to majority of people suffering from mortgage debt?

An explanation of the things one should consider before thinking they could benefit from the mortgage bailout plan was revealed in an interesting feature article:

Will you qualify for the revised HARP (HARP 2.0) program…will this program really work to ‘save housing’?

…few things to consider:

  1. There are 11,000,000 underwater owners in the US. (and growing). Estimates are that HARP 2.0 can only ‘help’ 10% of those underwater owners…big reason, the owner must be current on their mortgage. If you are late, don’t apply. Of the estimated 11 million underwater owners nearly half are already behind on their payments, in default.
  2. HARP 2.0 has nothing to do with homes already foreclosed. There are millions of homes readying to become REO listings over the next 12-24 months. Millions of homes that will be put for sale and discount prices. What effect will this have on property values?
  3. 3) Did HARP 1.0 work? The HARP program in its current form has fallen well short of its intended target of 4-5 million homeowners, helping just 894,000 of which only 70,000 were significantly underwater.
    4) THE BANKS have to agree to participate in HARP 2.0. Its estimated that the banks will ‘lose’ 15,000,000,000 (15 BILLION) if they participate with this new program. Do you think banks will be eager to participate in 2.0?
    5) AND THE BIG QUESTION….how many owners does the Obama Administration think HARP 2.0 will help? Their answer…’Time will tell’. In other words, they have no idea.

So, I ask you….does the new HARP 2.0 offering any real substance and hope or will this program follow the same path as HAMP and all the other failed efforts?”

Courtesy: Real Estate Insider News

Two Billion In Aid Open To Struggling Homeowners

Posted in Real Estate by Jake on February 18, 2011 No Comments yet

More financial help is on its way to those fighting to remain in their homes throughout the state, including the San Diego region.

More financial help is on its way to those fighting to remain in their homes throughout the state, including the San Diego region.

Eligibility requirements

Applicants must:

  • Own and occupy their homes as their primary residence.
  • Not exceed $729,750 in current unpaid principal balances on first mortgages.
  • Meet low- and moderate- income limits
  • Complete and sign a hardship affidavit to document reasons for hardships.
  • Have mortgage loans that are delinquent or “in imminent default.”
  • Have enough income to pay modified mortgage payments according to guidelines from servicers participating in the programs.

Source: keepyourhomecalifornia.com

To apply

To apply, call 888-954-KEEP (5337) or your mortgage servicer – the company to which you send your monthly mortgage payments.

Each program requires the participation of the company or agency that holds the mortgage.

For more, visit KeepYourHomeCalifornia.org.

Four new mortgage-aid programs costing $2 billion might help 100,000 households avoid foreclosure, California Housing Finance Agency officials say.

The state program, “Keep Your Home California,” is available to eligible homeowners throughout the state, including in San Diego County.

The four components would:

  • Offer up to $3,000 a month for unemployed homeowners, up to six months of benefits.
  • Help those who have fallen behind on payments due to temporary change in housing circumstance with payments of up to $15,000 per household.
  • Give relocation assistance to homeowners are have finished short sales or deed-in-lieu of foreclosure transactions.
  • Provide capital to cut the outstanding principal balances of struggling borrowers who owe significantly more than their homes are worth.

Each program requires the participation of the company or agency servicing the mortgage. As of last week, GMAC, Guild Mortgage, the California Housing Finance Agency and California Department of Veterans Affairs are all taking part in all four programs.

Others, including Bank of America, JPMorgan Chase, CitiMortgage and Wells Fargo, are currently in some of the programs. Housing agency officials are expecting that list to grow in the coming weeks. (See a chart of servicers and their programs.)

“We’re excited to offer this program,” said Housing Finance Agency spokeswoman Evan Gerberding. “It’s not only going to help individual families, it’s also going to help to stabilize entire communities.”

Funding comes from the U.S. Treasury Department’s Hardest Hit fund, money intended to help homeowners stave off foreclosures.

After receiving the $2 billion, officials from the California Housing Finance Agency – which has helped renters and first-time homebuyers with financing and programs for 35 years – spoke to community stakeholders throughout the state to create the four new programs.

“No one program will solve the foreclosure crisis affecting our state, but together we hope to make a difference for as many families as possible,” said Assemblymember Norma Torres, Chair of Assembly Committee on Housing and Community Development, in a media statement. Torres is Democrat representing part of San Bernardino County.

The programs are intended for Californians who own and occupy their homes as primary residences. They must meet certain income and financial-hardship requirements.

News of the efforts comes about a week after the state Attorney General’s Office announced a new statewide foreclosure fund fueled by a $6.5 million settlement of a case against two former Countrywide executives accused of predatory-lending practices. (Read “$6.5M Countrywide settlement could help homebuyers”.)

By Lily Leung