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Eased Mortgage-Risk Rule to Be Proposed by U.S. Agencies

As a way to simplify the mortgage market, six federal agencies have proposed revised regulations that oversee how banks finance mortgages. By easing requirements on lenders under the softened qualified residential mortgage rule, banks won’t have to retain a stake in mortgages with down payments of less than 20 percent when they bundle mortgages into securities. The Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Securities and Exchange Commission, the Federal Housing Finance Agency and the Department of Housing and Urban Development are the regulators behind the proposal.

Making sense of the story

  • The first draft of the qualified residential mortgage rule faced opposition from housing industry participants and consumer groups. The rule was intended to prevent the type of risky loans that contributed to the subprime credit crisis, but opponents said it would impede home lending.
  • Under the new draft, the qualified residential mortgage rule would be aligned with the qualified mortgage, or QM, rule. The QM stems from the Consumer Financial Protection Bureau and contains no down payment requirement. Such alignment provides a clearer roadmap to banks.
  • Before regulators vote to finalize the rule, they are requesting public feedback on the full proposal by Oct. 30. Feedback is also encouraged for an alternative arrangement that would require lenders to keep a stake in any loan with a down payment of less than 30 percent.
  • Commenting on the revision, NATIONAL ASSOCIATION OF REALTORS® President Gary Thomas stated the following: “The new standards, which align with those applied to Qualified Mortgages, are stringent enough to protect consumers from unscrupulous lending practices while also creating new opportunities for private capital to reestablish itself as part of a robust and competitive mortgage market.”
  • Under the revisions, borrowers who spend less than 43 percent of their income on debts will have an easier time getting a loan.

Source: Bloomberg

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Higher home prices reduce California housing affordability in second quarter 2012

Higher home prices offset record-low interest rates and lowered housing affordability in California in the second quarter of 2012, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) recently reported.

Making sense of the story

  • The percentage of home buyers who could afford to purchase a median-priced, existing single-family home in California fell to 51 percent in the second quarter of 2012, down from 56 percent in first-quarter 2012, but matched the 51 percent recorded in second quarter 2011, according to C.A.R.’s Traditional Housing Affordability Index (HAI).
  • C.A.R.’s HAI measures the percentage of all households that can afford to purchase a median-priced, single-family home in California.  C.A.R. also reports affordability indices for regions and select counties within the state.  The Index is considered the most fundamental measure of housing well-being for home buyers in the state.
  • Home buyers needed to earn a minimum annual income of $62,390 to qualify for the purchase of a $316,230 statewide median-priced, existing single-family home in the second quarter of 2012. The monthly payment, including taxes and insurance on a 30-year fixed-rate loan, would be $1,560, assuming a 20 percent down payment and an effective composite interest rate of 3.92 percent.  The effective composite interest rate in first-quarter 2012 was 4.16 percent and 4.85 percent in the second quarter of 2011.
  • The San Francisco Bay Area experienced the largest quarterly declines in housing affordability, resulting from double-digit price increases with little movement in the interest rate.  However, when compared with the previous year, changes to the affordability index were minimal, thanks to a near-one percent drop in the effective composite interest rate.
  • At an index of 78 percent, San Bernardino County was the most affordable county of the state. At the other end, San Mateo County edged out San Francisco County (24 percent) to be the least affordable, with only 23 percent of households able to purchase the county’s median-priced home.

Read the full story

5 Things to do Before Putting Your Home on the Market

1. Have a pre-sale home inspection. Be proactive by arranging for a pre-sale home inspection. An inspector will be able to give you a good indication of the trouble areas that will stand out to potential buyers, and you ll be able to make repairs before open houses begin.

2. Organize and clean. Pare down clutter and pack up your least-used items, such as large blenders and other kitchen tools, out-of-season clothes, toys, and exercise equipment. Store items off-site or in boxes neatly arranged in the garage or basement. Clean the windows, carpets, walls, lighting fixtures, and baseboards to make the house shine.

3. Get replacement estimates. Do you have big-ticket items that are worn our or will need to be replaced soon, such your roof or carpeting Get estimates on how much it would cost to replace them, even if you don t plan to do it yourself. The figures will help buyers determine if they can afford the home, and will be handy when negotiations begin.

4. Find your warranties. Gather up the warranties, guarantees, and user manuals for the furnace, washer and dryer, dishwasher, and any other items that will remain with the house.

5. Spruce up the curb appeal. Pretend you re a buyer and stand outside of your home. As you approach the front door, what is your impression of the property Do the lawn and bushes look neatly manicured Is the address clearly visible Are pretty flowers or plants framing the entrance Is the walkway free from cracks and impediments

Reprinted from REALTOR magazine (REALTOR.org/realtormag) with permission of the NATIONAL ASSOCIATION OF REALTORS .
Copyright 2008. All rights reserved.

Neighborhood Stabilization Program 2

The Neighborhood Stabilization Program2 (NSP2) was established to stabilize neighborhoods whose viability has been and continues to be damaged by the economic effects of properties that have been foreclosed upon and abandoned. NSP2, a term that references the NSP funds authorized by Title XII of Division A of the American Recovery and Reinvestment Act of 2009, (the Recovery Act) provides grants to states, local governments, nonprofits and a consortium of public and or private nonprofit entities on a competitive basis.

NSP Resource Exchange

NSP Resource Exchange is a one-stop shop for the information and resources needed by NSP grantees, subrecipients and developers to purchase, rehabilitate, and resell foreclosed properties. There are three primary components to the Resource Exchange site including:

  • Find a Resource – a database of policy guidance, practitioner support tools and training materials developed by HUD and technical assistance providers who specialize in NSP-related activities. It can be browsed by topic, audience, or type of information.
  • Ask a Question a feature that can be used to direct users to previously asked questions based on the user’s questions. It also provides users with a question form that can be submitted electronically for those questions and answers that are not listed on the website.
  • Request TA a mechanism by which users can communicate with technical assistance providers and request support in implementing NSP activities

The NSP Resource Exchange can also be used to learn about upcoming events related to NSP and coming soon the site will feature tool kits for designing programs and implementing activities. Selection of NSP2 Grantees

On January 14, 2010, HUD awarded a combined total $1.93 billion in NSP 2 grants to 56 grantees nationwide. This includes 33 consortiums at a regional level and four national consortiums carrying out activities in target areas throughout the country. These grantees were selected on the basis of foreclosure needs in their selected target areas, recent past experience, program design and compliance with NSP2 rules.

Debriefing

A request for debriefing must be made in writing or by email by the authorized official whose signature appears on the SF-424 or by his or her successor, and be submitted to the NSP Team. Information provided during a debriefing will include, at a minimum, the final score the applicant received for each rating factor, final evaluator comments for each rating factor, and the final assessment indicating the basis on which assistance was provided or denied.

Learn More about NSP2 Grantees 

The 56 NSP2 grantees selected have taken different approaches to designing their programs. Here aresummaries of each program based on the applications submitted to HUD. For more information on program design and implementation please contact the NSP2 grantees directly.

FEE-LADEN FHA MORTGAGES COST MORE THAN PRIVATELY INSURED LOANS

On April 1, fees for low-down-payment mortgages insured by the Federal Housing Administration (FHA) rose for the third time in two years. The hike in fees serves a two-fold purpose: to help shore up the FHA’s sagging mortgage insurance fund, which is dangerously low; and to reduce the government’s footprint in the mortgage market. Making sense of the story
  • The FHA has always been the first choice of low down payment-borrowers who couldn’t meet the private sector’s more rigid underwriting standards. And, as the housing market descended, the FHA picked up the slack as private insurers backed out of the market.
  • As of April 1, the FHA raised its annual premium by 0.05 percentage points to 0.1 percent, depending on the loan amount and the loan-to-value ratio. That increase is in addition to an earlier increase of 0.1 percentage points in the annual fee instituted in April 2012, as well as the hike in the upfront mortgage insurance premium, to 1.75 percent of the loan amount, up from 1 percent.
  • Lenders require insurance, either private or government-based, on mortgages in which there is a down payment of less than 20 percent. Such loans are considered more likely to default than those in which borrowers have more of their money on the line.
  • Currently, the FHA will allow borrowers to cancel PMI coverage once their loan-to-value ratio reached 78 percent of the original loan balance, and the borrower has made payments for five years. Starting June 3, the FHA will require borrowers to pay the premium as long as the loan is in force. In other words, the only way to stop paying PMI is for the borrower to refinance or otherwise pay off the loan.

TALKING POINTS …

  • In addition to a down payment, borrowers also have to set aside money for closing costs, which can run into the hundreds or sometimes thousands of dollars.
  • Lenders charge all manner of fees, some of which are negotiable, while others are not. Lenders are required to itemize all fees required to close the deal, so borrowers should review them carefully.
  • Lenders may charge borrowers to cover items such as credit reports, appraisals, documentation, and administrative costs. The total expense will vary depending on the particulars of the situation.

Wells Fargo Short Sale Guide

A Wells Fargo Short Sale is a way for troubled borrowers to avoid losing their homes in a foreclosure. In a short sale, the bank agrees to accept less than the amount owed on a borrowers mortgage, allowing him or her to sell off the home at a discount. Often, this makes more sense to Wells Fargo than foreclosing, as they tend to lose less in the process.Banks have been put on the spot for being less than efficient in helping consumers, but the Wells Fargo short sale is known to be among the fastest in the industry. In fact, one can complete a short sale with the bank in as little as two months, instead of the six or more it usually takes with other lenders. If youre considering a Wells Fargo short sale, heres a simple guide to help you get started.

Click Me! To Find Out Everything
You Need to Know About
Foreclosures and Short Sales

Prepare Your Hardship Letter – Wells Fargo short sale officials put a lot of weight on the borrowers hardshipthey want to know that your only option is a short sale and youre not just taking advantage of market conditions. Your hardship letter should explain in detail how you fell behind, and how a Wells Fargo short sale can help you. Make sure youre able to back it up with the right documentation, such as dismissal slips, medical bills, or divorce papers.

Find A Good Agent.

You need to list your home with a qualified real estate agent before applying for a Wells Fargo short sale. The listing agreement is one of the main requirements in the short sale package. Find an agent who has specific experience in short sales, particularly with Wells Fargo, as theyll be more familiar with the system and in-house policies.

Check Your Homes Value.

Wells Fargo recommends short sales for people who cannot or do not want to stay in their homes, and whose homes have depreciated. Your agent can draw up a comparative market analysis of similar homes to give you a basis of comparison, which you can use to help your Wells Fargo short sale case. The bank is more willing to work with borrowers who have underwater mortgages than those who still qualify for other alternatives.

Market Your Home.

Like other major banks, Wells Fargo has tightened its rules in closing deadlines. You have to complete your Wells Fargo short sale before the date set in the agreement; otherwise the bank will choose to foreclose. Try to get your Wells Fargo short sale home viewed by as many buyers as possible, and work with your agent to negotiate with buyers for the best possible deals.”

Article Source: http://www.articlesnatch.com

About the Author:
The author regularly writes on Short sale related issues like buying, selling, real estate short sale and loan modifications. With over 14 years experience in the real estate short sale field as a real estate broker, he provides help even first-time buyers and sellers to get the perfect deal. His suggestions and views are based on his professional experience. If you are looking for more information on author and his article on short sale, real estate short sale, Wells Fargo short sale

Q-A Series – FINDING the RIGHT LOAN for YOU

Q. HOW DO I CHOOSE THE BEST LOAN – PROGRAM FOR ME

Your personal situation will determine the best kind of loan for you. By asking yourself a few questions, you can help narrow your search among the many options available and discover which loan suits you best.
– Do you expect your finances to changeover the next few years
– Are you planning to live in this home for a long period of time
– Are you comfortable with the idea of a changing mortgage payment amount
– Do you wish to be free of mortgage debt as your children approach college age or as you prepare for retirement

Your lender can help you use your answers to questions such as these to decide which loan best fits your needs.

Q. WHAT IS THE BEST WAY TO COMPARE LOAN TERMS BETWEEN LENDERS

First, devise a checklist for the information from each lending institution. You should include the company’s name and basic information, the type of mortgage, minimum down payment required, interest rate and points, closing costs, loan processing time, and whether prepayment is allowed.

Speak with companies by phone or in person. Be sure to call every lender on the list the same day, as interest rates can fluctuate daily. In addition to doing your own research, your real estate agent may have access to a database of lender and mortgage options. Though your agent may primarily be affiliated with a particular lending institution, he or she may also be able to suggest a variety of different lender options to you.

Q. ARE THERE ANY COSTS OR FEES ASSOCIATED WITH THE LOAN ORIGINATION PROCESS

Yes. When you turn in your application, you’ll be required to pay a loan application fee to cover the costs of underwriting the loan. This fee pays for the home appraisal, a copy of your credit report, and any additional charges that may be necessary. The application fee is generally non-refundable.

Q. WHAT IS RESPA

RESPA stands for Real Estate Settlement Procedures Act. It requires lenders to disclose information to potential customers throughout the mortgage process, By doing so, it protects borrowers from abuses by lending institutions. RESPA mandates that lenders fully inform borrowers about all closing costs, lender servicing and escrow account practices, and business relationships between closing service providers and other parties to the transaction.

For more information on RESPA, or call 1-800-569-4287 for a local counseling referral.

Q. WHAT IS A GOOD FAITH ESTIMATE, AND HOW DOES IT HELP ME

It’s an estimate that lists all fees paid before closing, all closing costs, and any escrow costs you will encounter when purchasing a home. The lender must supply it within three days of your application so that you can make accurate judgments when shopping for a loan.

Q. BESIDES RESPA, DOES THE LENDER HAVE ANY ADDITIONAL RESPONSIBILITIES

Lenders are not allowed to discriminate in any way against potential borrowers. If you believe a lender is refusing to provide his or her services to you on the basis of race, color, nationality, religion, sex, familial status, or disability, contact HUD’s Office of Fair Housing at 1-800-669-9777 (or 1-800-927-9275 for the hearing impaired).

Q. WHAT RESPONSIBILITIES DO I HAVE DURING THE LENDING PROCESS

To ensure you won’t fall victim to loan fraud, be sure to follow all of these steps as you apply for a loan:
– Be sure to read and understand everything before you sign.
– Refuse to sign any blank documents.
– Do not buy property for someone else.
– Do not overstate your income.
– Do not overstate how long you have been employed.
– Do not overstate your assets.
– Accurately report your debts.
– Do not change your income tax returns for any reason. Tell the whole truth about gifts. Do not list fake co-borrowers on your loan application.
– Be truthful about your credit problems, past and present.
– Be honest about your intention to occupy the house
– Do not provide false supporting documents.

Short Sale, Foreclosure

Many a times, for some people questions comes to mind: What is a short sale – It is when the property owner will accept less sale price than the amount which is due as per the loan amount when the property is sold. Lenders sometimes accepts low amount to avoid the expense and time of a foreclosure. A short sale generally persists when the loans amount on the property is greater than what the property can be sold for. The short sale is the best alternative for owners who no longer can afford make their mortgage payment and want to avoid foreclosure which is more embarrassing.

Though a short sale seems to be the only solution to the problem avoiding foreclosure, the fact is there are other solutions which a short sale realtor can guide you through that will benefit the home owner as well as the lender. You need to be very careful when transacting with a third party company regarding the short sale. A lot of people understand they can make profit in short sale which might be true in some circumstances with the help of a short sale realtor.

Some of the best options to go for advice from short sale realtor to avoid foreclosure:

1. The value of your home is more than what you owe, you can get a good price to pay off the mortgages and avoid foreclosure. An advice from Short Sale Scholars can guide you the right way.

2. Advice from Foreclosure Realtor comes handy to show your lender that foreclosure is more costly & they are not likely to do any better foreclosure & remarketing.

3. Foreclosure affects your credit rating and to avoid all these painful time expert advice from Foreclosure Realtor and Short Sale Realtor come handy.

Any short sale investor knows that one of the biggest challenges they might face is dealing with the lender. The short sale process is lengthy, importantly when short sale investor has to deal with more than one lender to come up with best price for the property. If the foreclosure property is auctioned it is a more of a possibility that it is sold in lesser market value leaving you with no money in hand to go for another property to lease. Due to lack of funds after selling their foreclosure property owner will be left in cold with no money to buy another property with some down-payment. There are many reasons why we should avoid a foreclosure taking the help of Foreclosure Realtor. Foreclosure is a public preceding that property owner risks your own social status. If your mortgage sum is more than the current value of your property, you may finally to consider Short Sale with the help of Short Sale Realtor.

You need to hire an experienced Shore Sale Realtor as they are the specialist and will look after all your issues. Once you have a Short Sale Realtor whom you can trust, he will be authorized by you talk on your behalf to negotiate with lenders and short sale buyers. Expert advice from Short Sale Scholars comes effective in these situations for short sale investors and property owners as well to avoid foreclosure.
http://www.ShortSaleScholars.com

Article Source: http://www.articlesnatch.com

About the Author:
This is Euriq Gates as a story writer about short sale foreclosure

Read more: http://www.articlesnatch.com/Article/Short-Sale–Foreclosure/939443#ixzz1NNUepSyG
Under Creative Commons License: Attribution No Derivatives

California Short Sale Laws Needed To End Foreclosures

California Short Sale Laws are changing a lot of people’s perceptions on foreclosures. California was known as the state with the largest number of foreclosures due to the economic recession. The recession was taking everything it could from its residents.

The worse thing to ever have ripped from your hands is your home. Your home is what you utilize as a means to raise your family; it is your private getaway from the world and all its corrupt ways. However, for many people that is the first thing that has been going in these financially difficult times.

People are getting thrown out of their homes because of unemployment, or lay offs at their jobs. Many people are being forced to take jobs that pay them substantially less, just so they can put food on their family’s tables. Well, California’s great Governor Arnold Schwarzenegger, has heard the cries of his people, and sees people’s lives as well as the states livelihood turning upside down, because of the current recession.

For this matter alone, the Governor was more then obliged to sign the Short Sale Law Bill. This bill gives people who are facing hard times due to the economy to be able to negotiate prices with their mortgage carriers to get some of the amount that they may owe on their homes knocked off completely.

This means their overall mortgage payment every month will be substantially lower, and this will stop a big majority of foreclosures from occurring. Something had to be done to help the great people of California and this relief could not come soon enough with over 833, 000 homes being foreclosed on, the economy of California was suffering a winding streak downhill.

During a foreclosure banks and or mortgage companies normally take over the homes. This leaves some of the homes empty for an elongated period of time. Which leaves the doors open for drug activity and violence to go on around those homes that are empty.

Short sales, allow the right people to keep their homes. We definitely needed something to stop the all powerful banks from taking money from us. The Stimulus package that the banks received should be enough for them to suffice, they don’t need to collect more money from the less fortunate as a means to feed their hungry mouths.

The short sale laws, gives everyone the right that is going through financial hardship the ability to speak with their mortgage institute and work out an arrangement that will suit them during these times. One big downfall to the short sale is the fact that all the money that you save, has to be listed on a 1099 at the end of the year to be filed as an income.

Filing your short sale as income is kind of seen to be a ridiculous thing to have to do. But, when you take any money away from some of the richest corporations in the world they won’t stop until they see some of that money back. So in the end, you still have to pay all taxes for the value of your home, even with doing a short sale.

Article Source: http://www.articlesnatch.com

About the Author:
California Short Sale Laws– stopping foreclosure dead in its tracks. Get the latest inside info on http://www.nphsrealestate.org/short-sale/law-tax

7 Tips for Short Sale Success.

By: G. M. Filisko

Have to sell your home for less than it’s worth Our seven tips will help you get the best price.

When you owe more on your home than it’s worth, but you have to sell, you need to squeeze every dollar possible from the sale.

Here are seven tips for navigating the short-sale process.

1. Know who you owe
A short sale has to be approved by any company that has a mortgage or lien against your home. That includes your first, second, or even third mortgage lender, your home equity line lender; your homeowners or condominium association; and any contractors who’ve placed a lien on your home. Make a list and start talking to everyone early in the process. Ask what documents they’ll need from you.

2. Pick your short sale team
You’ll need to work with a team of short sale experts, including a real estate agent, real estate attorney, and your accountant. Look for agents and attorneys who advertise themselves as short sale experts. Interview at least three, and listen carefully for signs that they understand the complexities of the short sale process.
Agents should explain how they’ll arrive at a suggested price for your home. Ask them to show you a sample short-sale package or for an example of a prior short-sale success.

3. Get your documents ready
Gather the paperwork your creditors and mortgage lenders asked to see, like your listing agreement and a hardship letter explaining why you need to do a short sale. You’ll also need proof of what you earn and what you owe as well as copies of your federal income tax returns for the past two years.

4. Expect delays
Despite a federal rule saying banks participating in the federal government’s Making Home Affordable loan modification program (http://www.houselogic.com/articles/making-home-affordable-modification-option/) must respond to short-sale offers within 10 days, it may take weeks or months for your lender to decide whether to allow you to sell your home in a short sale–and even longer if you must negotiate with more than one lender or lienholder.
Your lender and lienholders don’t have to agree to your proposed short sale. They can reject your terms or make a counteroffer, which can create further delays.

5. Anticipate demands
Discuss with your short-sale team how you should respond to common short-sale demands from lenders. For example, are you willing to sign a promissory note agreeing to pay outstanding amounts after the sale is complete

6. Know the tax implications
Any unpaid amount of your mortgage “forgiven” by your lender through a short sale may be considered income to you under federal tax rules. Ask your attorney or accountant whether you qualify to exclude that amount as income on your tax returns under the Mortgage Forgiveness Debt Relief Act and Debt Cancellation Act. Also ask if you’ll be required to report amounts “forgiven” by other lienholders, if applicable.

7. Consider how the short sale will affect your credit and what you must pay
Ask whether your lender will report the short sale to credit-reporting agencies. Having a portion of your debt forgiven may negatively affect your credit score, but a short sale typically damages your score less than a foreclosure or bankruptcy.
Ask you lawyer whether you’ll be responsible for paying back the lenders’ loss. If the lender says it will forgive any losses on the sale of your home, get that promise in writing.

Other web resources
More on short sales (http://www.nolo.com/legal-encyclopedia/article-30016.html)

IRS information on the Mortgage Forgiveness Debt Relief Act and Debt Cancellation (http://www.irs.gov/individuals/article/0,,id=179414,00.html)

This article includes general information about tax laws and consequences, but isn’t intended to be relied upon by readers as tax or legal advice applicable to particular transactions or circumstances. Consult a tax professional for such advice; tax laws may vary by jurisdiction.

G.M. Filisko is an attorney and award-winning writer. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.

Visit houselogic.com for more articles like this. Reprinted from HouseLogic with permission of the NATIONAL ASSOCIATION OF REALTORS
Copyright 2010. All rights reserved.

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