| | News & Notes | February 7, 2012 HARP Mortgage Program Allows Homeowners to Refinance to Current Low Interest Rates.
Editor’s Note: The November 15 announcement included comprehensive rules for the new HARP, which people in the industry are calling “HARP 2.0.” How lenders will implement these changes in their underwriting process has yet to be established. Bookmark this page and check back regularly, as Bills.com will keep you informed of updates to HARP. Update: HARP 2.0 debt-to-income requirements have changed. According to a Fannie Mae announcement on December 20th, lenders will not longer have to demonstrate that the borrowers have a “reasonable ability to pay, unless the loan payment increases by 20% or more.” This applies only to loans borrowers do with their current lenders through the manually underwritten Refi Plus system. Loan applications that go through the automated DU system (expected to be updated for HARP 2.0 by mid-March) will have to meet the basic DU 45% maximum debt-to-income requirement.
New guidelines for the Home Affordable Refinance Program (HARP) were released by Fannie Mae and Freddie Mac on November 15th, 2011. The updated guidelines come on the heels of the October 24th announcement by The Federal Housing Finance Agency (FHFA) about expanding HARP. The goal of expanding HARP is to allow borrowers who are upside-down on their homes or who have little equity to refinance at today’s low interest rates. The hope is that this will both stabilize the housing market and boost the overall economy, by putting extra dollars in the pockets of consumers who are likely to spend them.
Quick Tip: Bills.com can help you find your best rate on a home loan refinance. With rates at historic lows, it pays to apply now.
Mortgage experts are optimistic about the new HARP. “Although there is still a good deal of uncertainty surrounding the specifics of how the expanded HARP program will be implemented at the individual lender level, the November 15 announcements from Fannie and Freddie do provide a source of encouragement for the equity challenged segment of the market,” said Peter Citera, vice president at Chicago Bancorp and mortgage education director at the Real Estate Institute. Approximately 4 million Fannie and Freddie borrowers owe more on their mortgage than their homes are worth. Across the US, nearly 11 million are underwater, or about 22.5% of all outstanding loans, according to CoreLogic, a data provider to mortgage underwriters. About 2.4 million hold less than 5% equity in their homes. HARP At a Glance
HARP allows homeowners facing difficulties refinancing their mortgage through conventional methods to apply for a refinance of their mortgage. A homeowner that is current with their monthly payments but unable to refinance due to a drop in the value is the typical prime candidate for the HARP program. The ultimate goal is to allow a homeowner to do a mortgage refinance for a lower interest rate and overall monthly payment. Here are the general eligibility guidelines for HARP: •There is no loan-to-value cap in the new HARP, for fixed-rate loans. This is the most significant change of HARP 2.0. Under previous versions of HARP, the LTV could not exceed 125%.
•The loan on your property is owned or guaranteed by Fannie Mae or Freddie Mac. Determine if you have a Fannie Mae or Freddie Mac loan by going online (check Fannie; and check Freddie) or by calling 800-7FANNIE or 800-FREDDIE (8 am to 8 pm ET).
•At the time you apply, you are current on your mortgage payments. You can have one 30-day late payment in the past 12 months, but none within the past 6 months.
•You have a reasonable ability to pay the new mortgage payments. Editor’s note: Fannie Mae removed the "reasonable ability to pay" clause. Please read the update at the top of the page for more information.
•The refinance improves the long-term affordability or stability of your loan.
HARP Changes for Lenders and Effects on Borrowers
The following is a summary of key changes found in HARP 2.0. Some key underwriting details are not yet announced, and are expected to be released before March 2012. Limited Liability
What’s new: A key provision of the new HARP is that it limits lenders' liability in cases of loan default. Essentially, Fannie and Freddie will not force the lender to buy back a non-performing loan. Effect on you: This change should greatly expand HARP's reach. Lenders will be much more eager to offer HARP loans, where they were previously reluctant. With more lenders participating, you will have an easier time getting a HARP mortgage. Lender Fees Dropped
What’s new: Fees that Fannie and Freddie charge lenders for high LTV loans are being cut. Effect on you: The reduced fees are passed on to you, making your loan cheaper. If you are financing to a 15-year or 20-year loan, the fees are cut even further. Credit Score and Income Requirements Relaxed
What’s new: As long as your new HARP monthly payment is not more than 20% greater than your current payment, specific credit and income guidelines do not apply. The lender will have to determine that the borrower is an “acceptable credit risk” (and what that means is yet to be determined). Effect on you: A low credit score or high DTI is not enough to automatically disqualify a borrower. Also, if your family is now a one-income family when it was a two-income family on the original loan, you only have to show proof of one income, as opposed to conventional loans where all borrowers listed on the application must document income. Underwriting Requirements Relaxed
What’s new No. 1: Mortgage Payment History: A HARP lender can approve a loan that has one late mortgage payment in past 12 months, as long as it did not take place in the last six months. Effect on you: You won't be counted out for a mortgage late, when that could normally eliminate your ability to get refinanced at the lowest rates available. If you have a recent mortgage late, you can still apply for HARP, once you meet the relaxed mortgage late requirements. What’s new No. 2: Relaxed Foreclosure & Bankruptcy rules: Your HARP loan could be approved, regardless of how recently a borrower filed bankruptcy or experienced a foreclosure. Effect on you: Normally, if you filed for bankruptcy or experienced a foreclosure you would have to wait years before you could successfully refinance. Occupancy Requirements Relaxed
What’s new: Owner Occupancy: HARP loans are no longer restricted only to owner-occupants. Effect on you: You can now use HARP to refinance your second home or investment property. Lenders Must Show that a Borrower Benefits
What’s new: Lenders must show that the HARP mortgage borrower derives one or more of the following four benefits in the new loan: 1.Reduce the size of the monthly payment
2.Change to a more stable loan product, such as moving from an adjustable-rate mortgage to a fixed-rate mortgage
3.Reduce the interest rate
4.Reduce the loan amortization term (moving to a shorter-term loan)
Relaxed Condominium Requirements
What’s new: HARP eligibility used to require that no more than 10% of units in the complex be owned by one person and that no more than 20% of owners in the complex be behind on their HOA dues. These requirements are now removed. Effect on you: More condo owners will now qualify for HARP. If you own a condo, your qualifying for the HARP program is no longer dependent on your neighbors' finances. “Condominium owners have perhaps the best reason to be optimistic; lenders are being relieved of the responsibility (for HARP refinance loans only) to ensure that condo projects meet the often strict project approval requirements of Fannie Mae and Freddie Mac,” Citera said. “Borrowers living in condominium projects that have seen a sharp increase in the number of renters, or those that have experienced some level of budgetary stress, will be much more likely to find relief under HARP 2.0 than they have under existing programs (as long as their loans are owned by Fannie or Freddie).” Hold Your Horses
Although applications may be submitted for new HARP 2.0 mortgages in December, 2011, Bills.com believes the bulk of HARP mortgages will not be approved until March, 2012. Both Fannie and Freddie must update their automated loan underwriting/approval software by March, 2012. Until then, while lenders may approve HARP mortgages by manually underwriting the loans, loans that are manually underwritten expose the lender to greater risk. If a manually underwritten loan defaults, the lender will be required to buy back the loan. Given the protections that the lender will have once the automated underwriting programs are updated and ready in March, 2012, it seems very likely that most loan originators will wait until March, 2012. Be ready to move forward with an application, once lenders start taking them, but be prepared for a very long process before your loan closes. Before refinancing, borrowers should know whether their current loan is a recourse or non-recourse loan and also be familiar with their state’s anti-deficiency laws. Refinancing a non-recourse loan could expose the borrower to responsibility for a potentially huge financial obligation where no such obligation currently exists. Recourse, Non-recourse, and Anti-deficiency
In some states, refinancing can remove the consumer protections, called anti-deficiency laws, which protect underwater homeowners who default on their mortgages. Bills.com recommends homeowners learn the anti-deficiency laws in their states, and determine if a mortgage refinance changes their rights. Anyone with a non-recourse loan should carefully weigh the decision to turn a non-recourse loan into a recourse loan. Basic HARP Requirements
Not everyone who is underwater will qualify for HARP 2.0. Below is a summary of the basic requirements: 1.The loan must be owned or guaranteed by Fannie Mae or Freddie Mac
2.The loan was sold to Fannie Mae or Freddie Mac on or before May 31, 2009.
3.The loan was not refinanced under HARP previously, unless it is a Fannie Mae loan that was refinanced under HARP from March through May, 2009.
4.The loan’s current loan-to-value (LTV) is greater than 80%.
More HARP updates will be released both by lenders and by Fannie and Freddie, so keep checking with Bills.com to stay updated on details of the new HARP program. Reprinted from http://www.bills.com/ January 11, 2012You may owe federal income taxes in 2013 if you have a short sale, foreclosure
Now is the time to make the hard decision: Are you going to walk away from your underwater home? Uncle Sam is still giving homeowners until Dec. 31 to go through a short sale or foreclosure without tax consequences -- as long as the lender officially releases the debt. But on Jan. 1, 2013, the rules change: The amount a lender forgives, ether in a short sale or foreclosure, on a primary residence will be taxable on federal income taxes. So if a house sold $50,000 short of what is owed on the mortgage, then the selling homeowners will owe federal income taxes on that $50,000. Homeowners would owe $12,500 in they're in the 25 percent bracket; $7,500 if in the 15 percent tax section. Homeowners would be on the hook even if the house sold but the bank had not formally forgiven the loan in a letter: The banks must officially sign off in writing before Dec. 31. "It's a huge issue -- it will be a shock to many taxpayers after 2012,'' said Mark Steber, the Florida-based chief tax officer for Jackson Hewitt Tax Service. The law first came into affect five years ago as the housing market went bust nationwide. The Mortgage Debt Relief Act of 2007 "generally allows taxpayers to exclude income from the discharge of debt on their principal residence,'' according to the Internal Revenue Service. "Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief." Up to $2 million of forgiven debt can be forgiven this year, $1 million if married and filing separately, according to the IRS.
Homeowners declaring bankruptcy could escape paying income taxes on any cancellation of debt income if the debt is forgiven in the bankruptcy even if the debtor is solvent, said Nick Jovanovich, a board-certified tax attorney in Fort Lauderdale.
"Bankruptcy trumps everything,'' he said. Or homeowners might not have to pay income taxes on any cancellation of debt income to the extent that they are insolvent immediately before the cancellation -- that is, their debts exceed the value of their assets Jovanovich added. Steber and Jovanovich said homeowners should decide now what they are going to do -- to give themselves time. Short sales can take a long time, said Timothy Singer of Coldwell Banker in Fort Lauderdale. He said he knows of one that had been pending for three years. But lenders "have been gearing up" and speeding up the process, Singer added. But even if banks quickly approve a short sale, the would-be buyer may get cold feet and the deal fall through, Singer said. Then the sellers have to begin again, he said.
(reprinted from the Business section of the Sun-Sentinel January 04, 2012|By Donna Gehrke-White, Sun Sentinel)
January 9, 2012Rate on 30-year mortgage down to record 3.91%  Cheers to another year of opportunity for investors and consumers who can afford to buy or refinance their homes in 2012. Last Thursday, Freddie Mac announced that the average rate on the 30-year fixed mortgage fell to 3.91 percent this week. This rate matches the record low reached just two weeks ago.
Even though the 15-year fixed mortgage is up from 3.21 two weeks ago, the average on the 15-year fixed mortgage went down to 3.23 percent from 3.24 percent. It is surmised that the mortgage rates are lower because they typically track the yield on the 10-year Treasury note, which fell below 2 percent this week.Despite the favorable mortgage rates, the lower rates have done very little to pick up the lagging housing market, particularly because people have no way to take advantage of the favorable rates or they have already taken advantage of them earlier. Several reasons for the lagging market include high unemployment, little to no wage gains making it nearly impossible for people to qualify for loans and fear that home improvements won't do anything to increase home values over the next few years.
Additionally, resales are just slightly ahead of 2010 figures. 2011 will go down in the books as being the worst year on record in the past 50 years for new home sales. If anyone is thinking positively, it's the builders, as they are hopeful that these low rates can boost future new home sales. However, according to the Mortgage Bankers Association, it seems that the low mortgage rates have not had a major impact on refinances or new loans. December 7, 2011
Leading U. S. economists: Fla.’s housing market bouncing back  ORLANDO, Fla. Despite national and global headwinds, Florida’s real estate market is entering 2012 on an upward trend, according to three leading U.S. economists.
“Our state is in a mini-recovery,” said Florida Realtors® Chief Economist Dr. John Tuccillo at the state association’s 2012 Real Estate and Economic Forecast Conference in Orlando. “Sales are trending up, listing inventories are falling, the supply of lender-related properties has stabilized, and we are seeing multiple offers on homes in some local markets.”
In fact, Florida homes today may be undervalued, Tuccillo added. “That may seem like a drastic statement,” he said. “But a buyer who plans to own the home for five to seven years can get some great bargains today.”
Mark Vitner, senior economist at Wells Fargo in Charlotte, N.C., said the U.S. economy will continue to face significant challenges, particularly financial concerns related to the European debt crisis. But he expects the U.S. economic recovery will continue next year, making it easier for Midwesterners, for example, to buy Florida homes.
“Florida’s economy is recovering, with tourism and healthcare leading the way,” Vitner said. “International tourism has been particularly strong in Miami and Orlando.”
Looking around the state, Vitner said Jacksonville’s unemployment rate has dropped and home prices are stabilizing. In Orlando, prices have not yet reached bottom, he said, but the winter tourism season should help the regional economy. Tampa and Southwest Florida have seen solid job growth, with little new home construction.
South Florida’s economy is growing thanks to trade relationships with Latin America and the Caribbean, while in the Panhandle, Fort Walton Beach is outperforming Panama City and Pensacola, according to Vitner.
Dr. Lawrence Yun, chief economist for the National Association of Realtors®, said many Florida markets are showing sharp drops in inventories of homes for sale – a sign that demand is picking up and prices are stabilizing. “That’s a major change from just a year ago,” he said. “Buyers have stepped back into the Florida market.”
Noting the state’s powerful appeal to international buyers, Yun said he was particularly optimistic about the outlook for South Florida. “Don’t be surprised to see a gain in home prices in the Miami and Naples markets in the next 18 months,” he said. “From there, the recovery is likely to roll northward to Central Florida and then North Florida.”
Tuccillo noted that foreclosed and distressed properties will remain a significant part of the Florida market in 2012, but lenders are feeding these properties into the market at a gradual pace rather than pushing them out all at once.
The event also featured a panel of Florida real estate professionals, who discussed the 2012 outlook for several sectors of the state’s real estate market from a practitioner’s point of view. Panelists were Clark Toole, president and COO, Coldwell Banker Residential Real Estate Inc. in Florida, discussing residential real estate; Cynthia Shelton, 2009 president of Florida Realtors and a director at Colliers International in Orlando, discussing the commercial market; and Dean Saunders, accredited land consultant and broker-owner of Coldwell Banker Commercial Saunders Real Estate in Lakeland, covering the market for land and undeveloped property.
Florida Realtors real estate and economic summit was webcast to 32 local association or satellite sites around Florida. “Turnout was high for our statewide event,” said 2011 Florida Realtors President Patricia Fitzgerald, manager/broker-associate with Illustrated Properties in Hobe Sound and Mariner Sands Country Club in Stuart. “We hope to hold more of these forums on a regular basis – sharing knowledge of market trends is a powerful way for our Realtor members to connect with buyers and sellers.”
A PDF of PowerPoint slides used during the 2012 Real Estate and Economic Forecast Conference is available on the floridarealtors.org research page.
(Reprinted from http://www.floridarealtors.org/ © 2011 Florida Realtors®)
October 10, 2011 October 10, 2011 New addendum allows sellers, buyers to highlight energy improvements for appraisals
Here's some good news for homeowners who've gone green and installed energy-saving features but haven't been sure whether appraisers will credit them with higher valuations: Thanks to a new industry-issued appraisal addendum, the odds have improved that they'll get the fairer market value they're due.
The Appraisal Institute, the country's largest and most influential association in its field, published the long-awaited addendum Sept. 29. It's designed to be attached to any standard appraisal report covering a property with significant green features. Owners, sellers, buyers, refinancers and real estate agents don't have to wait for an appraiser to use it. They can download it at no cost and ask that it be made part of the appraisal submitted to the lender.
The new addendum won't guarantee you that the appraiser will raise your property value by the tens of thousands of dollars you spent on your solar panel array, high-efficiency windows or geothermal system. But it should guarantee at the minimum that he or she will take notice of the energy improvements and seek to come up with a value adjustment for your local market conditions.
The three-page form is a response to growing concerns that although the Obama administration and many state governments and utilities are pushing homeowners to invest in energy-conserving components, standard appraisal forms -- including those used by financing giants Fannie Mae and Freddie Mac -- are not set up to give adequate recognition to those often costly improvements.
The inevitable result: Owners are frustrated at what they consider lowball valuations. Refinancers can't get the loan amounts they seek because the appraisal report doesn't factor in the monthly utility savings they're getting from their solar panels. Appraisers, for their part, say local real estate listing documents often don't spell out in detail all the energy-efficiency improvements or they get the facts wrong. For example, appraisers complain that some real estate listings claim that the house is an "Energy Star Home" when in fact there's nothing more than a few Energy Star appliances installed in the kitchen. The Energy Star Home designation is a much higher standard: It requires qualifying under a comprehensive set of criteria for the building envelope, lighting, windows, water heating and high-efficiency appliances, among others.
The institute's addendum runs the gamut of improvements and ratings, and goes well beyond energy efficiency. Though it has basic sections covering insulation, windows, lighting, heating, air conditioning and solar, it also covers sustainability features such as the presence of water-saving or reclamation systems, landscaping that lowers either water or energy use, and even the presence -- or lack -- of public transportation nearby that might help lower fuel usage.
(article reprinted from The Real Deal) Kenneth Harney is a syndicated real estate columnist. FLORIDA BECOMES HOT SPOT FOR HOME LOANS 
Record low interest rates and bargain home prices are creating a mini-boom in Florida mortgages, a new national survey shows. Florida accounted for more than one out of every five home loans added in the nation from April to June, according to the most recent survey of U.S. lenders from the Mortgage Bankers Association. Lenders reported adding 34,250 more loans for Florida homes in the second quarter of the year than between January and March, according to the survey. During the same period, there were 121,342 more loans nationwide than in the first quarter of the year. No statistics are available for how many mortgages were in South Florida. Jay Brinkman, the association's chief economist, said the survey shows that the Florida housing market is stabilizing after it became the country's top spot for foreclosures. It also indicates fewer Floridians are missing house payments, he added. In fact, the Sunshine State's delinquency rate peaked nearly two years ago in late 2009 and continued to decline. "I think this is the biggest sign of improvement in Florida,'' said Brinkman. He noted the survey is a snapshot of the nation's mortgage trends and that it may not include all loans. "While we attempt to track them all down,'' he said, "it often takes more than one count to do so.'' The declining rate of delinquent loans is bolstering some South Florida lenders' confidence. Rich Helber, CEO and president of Tropical Financial Credit Union of South Florida, is one. "There is a lot more stability," said Helber, referring to his company's mortgages. "We don't have the charge offs, the loan losses, we did a year ago.'' There's also "no longer a free fall of home prices," added Helber, whose firm has 10 outlets in Broward, Palm Beach and Miami-Dade counties, 55,000 members and $600 million in assets. He said his credit union has loosened mortgage requirements and doesn't automatically reject applicants who have high debt, as long as they have a good history of paying their bills. Mortgage applicants may not need to make a 20 percent down payment if they have a credit score of 650 or above, he added. More home buyers have been attracted to falling mortgage rates in the second quarter, said Claudine Claus, president of Home Financing Center in Coral Gables. Her company saw loans jump 20 percent during that period. (Article reprinted from the Sun-Sentinel August 31, 2011 | By Donna Gehrke-White) ( ( MORTGAGE RATES THE LOWEST IN 50 YEARS! 
Siri Stafford/Getty Images (Article reprinted from ABCnews.com) Mortgage rates have reached their lowest levels in 50 years, Freddie Mac says, providing a reason for many homeowners to refinance their mortgages or boost buyers on the hunt. The government-sponsored mortgage corporation Thursday said the 30-year fixed rate averaged 4.15 percent, breaking the previous record low of 4.17 percent set November 11, 2010, according to its Primary Mortgage Market Survey. Long-term, fixed-rate mortgages backed by the Federal Housing Administration averaged 4.08 percent for several months from 1950 to 1951. "With today's record-low mortgage rates, combined with low home prices in many parts of the country, this is a great opportunity for consumers who are looking to buy a new home or are considering refinancing their existing home loan," Frank Nothaft, chief economist with Freddie Mac, told ABC News. Freddie Mac reports show a trend toward people putting "cash-in" at the time of refinancing as well as choosing to shorten their loan terms to take advantage of the low mortgage rates, Nothaft said. More than 95 percent of people who refinanced chose a fixed-rate product and 77 percent either maintained or reduced their loan amount, according to Freddie Mac's reports last quarter. "The 15-year fixed rate mortgage is a popular refinancing product, especially for baby boomers thinking about retiring in that 15- to 20-year time frame who want to have the peace of mind knowing they'll have their mortgage paid off," he said. Freddie Mac announced mortgage rates reached the lowest levels in 50 years, August 18, 2011. But rates will not remain low for the long term. "We don't expect rates to stay this low for long, but we do expect them to start moving up gradually and closer to the 5 percent level around year end," Nothaft said. The Federal Reserve released a statement Aug. 9 that it will keep the federal funds rate low, possibly at 0 to 1/4 percent, at least through mid-2013. Steven Leslie, lead analyst for financial services at the Economist Intelligence Unit, part of the Economist Group, said that although the federal funds rate is a base rate, mortgage rates are also likely remain low. "With the global economy not on a strong footing, my expectation is that mortgage rates will remain low for an extended period of time. So new buyers will not have to worry about purchasing a property and financing it immediately because they will enjoy these low rates," Leslie said. And how low should rates go before you choose to refinance? Leslie said a drop of one percentage point used to be the rule of thumb in determining if a homeowner should refinance their mortgage. "But it depends on the upfront fees, the size of the mortgage and its terms," Leslie said. "A lot of people can calculate and figure out if refinancing is worth it." Leslie also said a homeowner should consider the cost and time to obtain another appraisal and a property title search. Leslie also said the approval time to get a mortgage will still take longer than it did during the housing boom years before 2007. "The boom years of the last decade, there was a lot of bad mortgage lending," he said. "The lesson from that is borrowers should be very wary and attentive." Home buyers and borrowers should read the mortgage terms to understand them and practice due diligence to determine if they are getting a good deal, he said. Freddie Mac's Nothaft said consumers should know their FICO score, cast a wide net and look for a lender who will give them the best rate when refinancing. "In today's lending environment, it's also important to remember the 4-C's when looking for a mortgage: capacity, capital, collateral, credit," he said. "In other words, have stable income, have assets or savings, be prepared to make a common-sense down payment, and have a good credit history." (Reprinted from ABCnews.com) |
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