Borrowers want specific things that they believe would help the mortgage process when buying a home.
This infographic is from the CALIFORNIA ASSOCIATION OF REALTORS.
This infographic is from the CALIFORNIA ASSOCIATION OF REALTORS.
How to shop: If you simply call up and ask a lender for interest rates the lender can tell you almost anything. One lender might offer a floating rate, while the next would offer you a forty day rate. Instead, before you call up you need to know two things: how many points you want to pay and how long you want to lock in the rate. You also want to call all the lenders on the same day. This way you will get a common basis of comparison for the different quotes.
Getting a reliable quote: Beware of lenders who promise unreasonable low rates. This does not mean that lenders are unreliable; however there is an incentive for the lender to fudge the quote in order to gain your business (the bait). Then when you go in to fill out the paper work the lender will change the rate on you (the switch).
How to Really Shop for a Lender: The best way is to get a referral, then shop other lenders. Do it properly, telling the lenders how much you are willing to pay in points and how long you want to lock in the rate. Make all your calls on the same day. Tell the lender you have filled out an application and that you will fax it in, so the rate has to be something he can deliver.
According to the Consumer Federation of America’ research, it’s not just creditors who are looking at your credit scores.
You may not realize this, but creditors are only required to inform consumers that their scores are being checked when consumers have one of the three happen:
Who else may be looking at your credit?
This infographic is from the CALIFORNIA ASSOCIATION OF REALTORS at CAR.org.
As of January 10th, the Consumer Financial Protection Bureau has begun implementing new lending guidelines that, according to U-T San Diego’s article on the topic, “federal regulators say will protect against the risky lending practices that powered the housing bubble and caused a huge collapse in home prices that led to the Great Recession” Continue reading
San Diego County closed out 2012 with foreclosures at their lowest level in six years, says a report released Wednesday from local real estate information company DataQuick.
The consistent drop in the number of people losing their homes to bank repossessions appears to be a product of an economy on the mend, increasing home values and government-led deals with major banks that promise borrowers alternatives to foreclosure, DataQuick officials said.
December foreclosures plummeted to 355, the lowest level since December 2006, when 288 were recorded. December’s total is nearly 18 percent lower than November’s and half of December 2011’s.
Default notices, the first official filing in the foreclosure process, totaled 878. That’s up 7.2 percent from November but down nearly 30 percent from the same month a year ago…
Read the rest of this article by U-T San Diego here: “San Diego foreclosures at 6-year low”.
A fund used to support the Federal Housing Administration’s single-family mortgage and reverse mortgage insurance programs ended fiscal year 2012 with a $16.3 billion deficit, according to an annual report submitted to Congress.
The shortfall raises the specter that the agency will require a taxpayer bailout next year for the first time in its 78-year history.
In order to avoid a bailout, FHA will raise annual insurance premiums, sign off on more short sales, streamline sales of foreclosed properties, offer “deeper levels” of payment relief through its loss mitigation program, expand sales of delinquent loans, and, for new loans, reverse a policy instituted in 2011 that canceled required premium payments after loans reached 78 percent of their original value.
Next year, FHA plans to raise the annual insurance premium paid by borrowers on an FHA loan by 10 basis points, or 0.1 percent, which is expected to add $13 a month to the average borrower’s monthly payments.
The agency has also vowed to expand its sales of delinquent loans under its Distressed Asset Stabilization Program, committing to sell at least 10,000 such loans per quarter over the next year. Because such sales require investor purchasers to delay foreclosures for a minimum of six months, they represent an opportunity for borrowers to possibly avoid foreclosure while reducing FHA’s costs, according to the U.S. Department of Housing and Urban Development (HUD), of which FHA is a part.
The FHA has been hard-hit by defaults from housing bubble-era loans made from 2005 and 2008, with future losses estimated at $70 billion for loans made in 2007, 2008 and 2009 alone.
The agency has taken steps to strengthen its capital reserves in recent years, including raising mortgage insurance premiums three times in 2010 and again earlier this year. The agency has also tightened credit standards and prohibited seller funding of buyer down payments, a practice the agency now estimates will cost it more than $15 billion on loans issued before 2009.
“While the loans made during this administration remain the strongest in the agency’s history, we take the findings of the independent actuary very seriously,” said FHA Acting Commissioner Carol Galante in a statement.
“We will continue to take aggressive steps to protect FHA’s financial health while ensuring that FHA continues to perform its historic role of providing access to homeownership for underserved communities and supporting the housing market during tough economic times.”
In the report, the FHA said its capital reserve ratio, which measures reserves in excess of what’s needed to cover projected losses over the next 30 years, had dropped to -1.44 percent from an already slim 0.24 percent in 2011. Congress requires the agency to maintain a 2 percent ratio — a mandate the FHA now projects it will meet in 2017, up from 2014 in last year’s projections.
HUD said this year’s deficit “does not mean FHA has insufficient cash to pay insurance claims, a current operating deficit, or will need to immediately draw funds from the Treasury.” The deficit, calculated by an independent actuary, also does not take into account an estimated $11 billion in capital accumulation expected by the end of fiscal year 2013.
“Coupled with the $11 billion in additional capital from expected new insurance guarantee volumes in fiscal year 2013, we believe it is possible to return the (fund’s) capital ratio to a positive level within the year, and reduce the likelihood that FHA will need to call upon the Treasury for any special assistance this fiscal year,” wrote HUD Secretary Shaun Donovan in the report.
Whether FHA actually ends up needing a bailout will be determined not by this report, but by a valuation of the fund made for the president’s budget proposal for fiscal year 2014 to be released in February. A final decision on whether to draw funds for FHA from the U.S. Treasury will be made in September.
This year’s report projections are less sanguine than last year’s because of changes in its economic modeling, lower interest rates that have spurred refinancings and yielded lower premiums, and lower expectations for home prices, which turned around later than projected this year. Appreciation estimates do not include home price improvements since June.
The Center for American Progress (CAP), which describes itself as a nonpartisan research and educational institute, said the news was “almost inevitable” after the FHA stepped in after the housing bubble burst and private capital fled the housing market.
“By living up to its congressional mandate to provide support to the housing market in hard times, the Federal Housing Administration not only funded home loans for 7 million families, but prevented even more catastrophic home price declines,” said Julia Gordon, CAP’s director of housing finance and policy, in a statement. “Such declines could have cost 3 million additional jobs and sent our economy spiraling into a double-dip recession.”
Gordon noted that FHA still has more than $30 billion to settle claims, but federal budgeting rules require the agency to hold enough capital to cover all claims over the next 30 years.
Debra Still, chairman of the Mortgage Bankers Association, agreed that FHA plays a crucial role in today’s market, particularly since the agency is nearly the sole backer of credit for first-time buyers with less than 20 percent down payments.
“These buyers are a necessary support for the housing market. While there is near-unanimous agreement that FHA’s role in the single-family housing market today is too large, we must remember that the housing market would be far worse off, today and in the future, without FHA,” Still said in a statement.
She added that MBA stands ready to work with policymakers to protect the fund and enable FHA to continue to perform its mission in the single-family market. She cautioned, however, that “ensuring the right balance” in forthcoming regulations defining rules for a qualified mortgage (QM) and a qualified residential mortgage (QRM) were important for future credit availability.
QM would establish standards for borrowers’ “ability to pay” the mortgages they seek, while QRM would establish certain baseline standards for safe underwriting and require lenders to retain a 5 percent minimum ongoing stake in any loans they originate that don’t meet QRM requirements.
“For example, a final QM rule could drive an even higher share of the single-family market to FHA if it is not carefully crafted to protect consumers while ensuring the availability of credit from private sources,” Still said.
“More broadly, the best medicine for FHA is a steadily growing housing market with stable home price appreciation, a less likely outcome if the rules cause lenders to increase cost or tighten qualification requirements for borrowers.”
The regulations are under the aegis of the Consumer Financial Protection Bureau (CFPB), which postponed action on both rules in June after protests from Realtors, builders, banks, unions and consumer groups. Under Dodd-Frank, the CFPB is required to issue the qualified mortgage rule by Jan. 21, 2013.
The FHA has repeatedly said it will not require a taxpayer bailout. The National Association of Realtors has supported that stance, and urged Congress not to take steps that might discourage homebuyers, such as raising FHA minimum down payment requirements.
Earlier this year, the FHA got some breathing room after receiving a one-time payment of almost $1 billion from a $25 billion national mortgage settlement with the nation’s five biggest loan servicers.
The government has since sued one of the loan servicers, Wells Fargo, for “hundreds of millions of dollars” due to alleged “reckless origination and underwriting of its retail FHA loans over the course of more than four years, from May 2001 through October 2005.” The bank claims that the lawsuit violates the terms of the $25 billion settlement and has asked a federal judge to throw the case out.
Read the full story
Borrowers shopping for a mortgage are obliged to select a lender before the price is “locked.” As a result, borrowers in shopping mode are vulnerable to lowballing — the practice of quoting a price below the market as a way of influencing the shopper’s selection.
Borrowers who have already selected a lender but have not yet been locked are vulnerable to an overcharge at lock, explained to them as being caused by “changes in the market price.” And borrowers who have been locked may overpay if the property appraisal comes in higher than the valuation used to price the loan, and the lender conveniently ignores it.