FHA Trims Waiting Period for Borrowers Who Experienced Foreclosure

Great news for those who experienced hardships during the economic downturn!

FHA Trims Waiting Period for Borrowers Who Experienced Foreclosure

The Federal Housing Administration (FHA) is allowing borrowers who went through a bankruptcy, foreclosure, deed-in-lieu, or short sale to reenter the market in as little as 12 months, according to a mortgage letter released Friday.

Borrowers who experienced a foreclosure must wait at least three years before getting a chance to get approved for an FHA loan, but with the new guideline, certain borrowers who lost their home as a result of an economic hardship may be considered even earlier.

For borrowers who went through a recession-related financial event, FHA stated it realizes “their credit histories may not fully reflect their true ability or propensity to repay a mortgage.”

In order to be eligible for the more lenient approval process, provided documents must show “certain credit impairments” were from loss of employment or loss of income that was beyond the borrower’s control. The lender also needs to verify the income loss was at least 20 percent for a period lasting for at least six months.

Additionally, borrowers must demonstrate they have fully recovered from the event that caused the hardship and complete housing counseling.

According to the letter, recovery from an economic event involves reestablishing “satisfactory credit” for at least 12 months. Criteria for satisfactory credit include 12 months of good payment history on payments such as a mortgage, rent, or credit account.

The new guidance is for case numbers assigned on or after August 15, 2013, and is effective through September 30, 2016.

I read this article at: http://www.dsnews.com/articles/fha-trims-waiting-period-for-borrows-who-experienced-foreclosure-2013-08-19

Got Questions? – The Caton Team is here to help.

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Thanks for reading – Sabrina

Changes are Coming to FHA Home Loans…

Changes are Coming to FHA Home Loans

I am a fan of the FHA home loan because it helps so many first time buyers get a home here on the SF Peninsula where home prices are an the high side.  What saddens me are the recent changes in store for FHA clients.

Newly Originated FHA-Insured Loans Will Become More Expensive Beginning June 3, 2013.

One of the attractive features of FHA mortgages is the low down payment option. In fact, many FHA loan programs require as little as 3.5% down.

Today, mortgage insurance on FHA loans remains in place for a finite period of time. However, on most new FHA loans originated on or after June 3rd, the MI premium will remain for the life of the loan. 

Now sure how this will impact you?  Give The Caton Team a call or email!

If you or someone you care about have considered purchasing a home, please contact us immediately to ensure this new FHA policy doesn’t increase the lifetime cost of the transaction. Beating the June 3rd clock could potentially save thousands over the life of the loan.

And please do not be discouraged – there are several different loan options and programs available!

Thank you Melanie Flynn of First Priority Financial for this information.  If you would like to connect with Melanie – give us a call or email!

Got Questions? – The Caton Team is here to help.

Email Sabrina & Susan at:  Info@TheCatonTeam.com

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Please enjoy my personal journey through homeownership at:

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Thanks for reading – Sabrina

FHA to Increase Fees on Mortgages!

Difficult news for FHA clients.  As home prices climb on the San Francisco Peninsula, saving money for your down payment feels like a heroic act.  FHA offers low down payments, 3.5% of the purchase price, but now the strings attached are growing tight.  Please enjoy this article from CNNMoney.

FHA to hike premiums on mortgages

The Federal Housing Administration, which is the largest insurer of low-down payment mortgages, announced that it will raise premiums by 10 basis points, or 0.1 percent, on most of the new mortgages it insures.

Making sense of the story

  • A borrower opting for a 30-year, fixed-rate mortgage who puts down 5 percent or more will now pay an annual insurance premium of 1.3 percent of their outstanding balance. Someone who puts down less than 5 percent will pay a premium of 1.35 percent.
  • The FHA said it also will raise premiums for borrowers with jumbo loans – loans of $625,000 or more – by 5 basis points, and increase the minimum down payment requirement on these loans to 5 percent from 3.5 percent.
  • Additionally, the FHA said it will require most buyers to pay insurance premiums for the life of their loan. A policy that was put in place in 2001 allowed borrowers to cancel premium payments once their debt fell below 78 percent of the principal balance. One exception will be for borrowers who put more than 10 percent down at the time of purchase.
  • Other new policies include a requirement that any mortgage for an applicant with less than a 620 credit score and debt-to-income ratio above 43 percent must be underwritten manually. Lenders who want to issue loans to these applicants must be able to adequately document why they decided to approve the loans.

The FHA also decided to put new restrictions on reverse mortgages, no longer permitting retirees to take such large, upfront payments.

More on this story from CNNMoney

By Les Christie @CNNMoney

Government-insured mortgages are about to get more expensive.

Translation: A borrower opting for a 30-year, fixed-rate mortgage who puts 5% or more down will now pay an annual insurance premium of 1.3% of their outstanding balance. And someone who puts less than 5% down will pay a premium of 1.35%.

The agency said it will also raise premiums for borrowers with jumbo loans — or loans of $625,000 or more — by 5 basis points, or 0.05%, and increase the minimum down payment requirement on these loans to 5% from 3.5%.

FHA said it will require most buyers to pay insurance premiums for the life of their loan. A policy that was put in place in 2001 allowed borrowers to cancel premium payments once their debt fell below 78% of the principal balance. One exception will be for borrowers who put more than 10% down at the time of purchase.

Additional new policies include a requirement that any mortgage for an applicant with less than a 620 credit score and debt-to-income ratio above 43% must be underwritten manually. Lenders who want to issue loans to these applicants must be able to adequately document why they decided to approve the loans.

The agency also decided to put new restrictions on reverse mortgages, no longer permitting retirees to take such large, upfront payments.

The changes are an effort to reduce the agency’s exposure to risky loans and bolster its financial reserves, which have been depleted due to high delinquency rates from the mortgage crisis. The agency did not say when the new rates will take effect.

Last spring, FHA increased both premiums and upfront costs on mortgages. Such hikes make it tougher for mortgage borrowers — especially first-time purchasers who can’t afford the large down payments most private lenders require today, according to Jaret Seiberg, a Washington policy analyst for Guggenheim Partners. “They are the ones most likely to turn to the FHA for credit,” he said.

And that could have a negative impact on the housing market overall. “You can’t have a healthy housing market without a constant influx of first-time buyers,” said Seiberg.

I read this article at: http://money.cnn.com/2013/01/31/real_estate/fha-mortgage-premiums/index.html?iid=HP_LN&hpt=hp_t2

Got Questions? – The Caton Team is here to help.

Email Sabrina & Susan at:  Info@TheCatonTeam.com

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Please enjoy my personal journey through homeownership at:

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Thanks for reading – Sabrina

 

A Cinderella Story – Michael and Tatjana… A Picture is Worth a Thousand Words

When Michael and Tatjana reached out to The Caton Team – we were very excited to be their Realtors for their first home purchase.  We got them preapproved with Melanie Flynn of First Priority Financial and hit the ground running.  They were so excited, started checking out properties and sooner than later, we began to write some offers.

With fingers crossed and prayers whispered we waited on pins and needles to hear back on their first offer… they didn’t get it.  The first time you lose a house – it’s the pits.  The second and third time it doesn’t get any easier.  Tatjana and Michael started to lose hope.  Who wouldn’t?

But The Caton Team wouldn’t let them lose out on their dream.  As full time Realtors, we’ve spent countless sleepless nights hoping and praying our client’s dreams come true.  We knew – you have to get back on the horse, try, try again….there are other fish in the sea.

And they did – but they had one request.  They no longer wanted to write a letter to the seller that included their adorable family photo.  In shock, I asked why.  They were adamant – ‘what’s the point?  The seller is looking for the most money and highest offer.’  I smiled.  We could hear the disappointment in their voice.  But we had faith.  We couldn’t change what we were doing.  The offer package The Caton Team prepares for each offer is thorough and it is successful.  Sometimes money talks.  But sometimes, it’s the other items in the offer package that get the recognition.

As we waited to hear back on their offer I was looking at the copy of the photo we sent of their family.  I’ve known Tatjana since the 6th grade and here she was, with her husband and two beautiful sons…  The phone rang, couldn’t get to it fast enough.  It was the seller’s agent.  I could hear the happiness in her hello.  They got the house.  Quickly she interjected – it wasn’t about being the highest price, they weren’t.  It was about the letter and the picture.  (It still brings tears to my eyes.)  Turns out the owner was deceased and had charged her best friend with handling her estate.  Her wish was for her home to be sold to a nice family – not an investor.  She had built that home from the ground up, raised her family there, and she wanted her best friend to pick the sweetest family for her home.  And boy they couldn’t have found a better family.

Sometimes it really isn’t just about the money.

Congratulations to Michael and Tatjana – to many happy years and memories in your new home!

 

Got Questions? – The Caton Team is here to help.

Email Sabrina & Susan at:  Info@TheCatonTeam.com

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Thanks for reading – Sabrina

Popcorn Ceilings – No Night At The Movies…

Please enjoy my candid journey through homeownership at http://ajourneythroughhomeownership.wordpress.com where I share my personal stories of being a young homeowner.  My newest blog is about Pop Corn Ceilings… Enjoy!

Thanks for reading – Sabrina

Home Prices Rebound According to CNN Money – enjoy this shared article…

Home prices rebound

By Chris Isidore CNNMoney

NEW YORK (CNNMoney) — In another sign of a turnaround in the long-battered real estate market, average home prices rebounded in July to the same level as they were nine years ago.

According to the closely watched S&P/Case-Shiller national home price index, which covers more than 80% of the housing market in the United States, the typical home price in July rose 1.6% compared to the previous month.

It marked the third straight month that prices in all 20 major markets followed by the index improved, and it would have been the fourth straight month of improvement across the full spectrum if not for a slight decline in Detroit in April.

The index was up 1.2% compared to a year earlier, an improvement from the year-over-year change reported for June. While home prices have been showing a sequential change in recent months, it wasn’t until June that prices were higher than a year earlier.

The July reading matched levels last seen in summer 2003, when the market was marching toward its peak in 2006. The collapse of the market after that led to the financial crisis of 2008.

“The news on home prices in this report confirm recent good news about housing,” said David Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. “Single-family housing starts are well ahead of last year’s pace, existing home sales are up, the inventory of homes for sale is down and foreclosure activity is slowing.”

Record low mortgage rates and a tighter supply of homes available for sale have helped to lift home prices. Lower unemployment also has helped with home prices, although job growth in recent months has been slower than hoped.

Earlier this month, the Federal Reserve announced it would buy $40 billion in mortgage bonds a month for the foreseeable future. This third round of asset purchases by the central bank, popularly known as QE3, is its effort to jump start the economy through even lower home loan rates.

Related: Best home deals in Best Places

Mike Larson, real estate analyst with Weiss Research, said part of the improvement in the housing market is due to investors using the low mortgage rates to buy up homes that are in foreclosure and renting them in a strong rental market.

But he said that he doesn’t think there’s much chance of housing prices forming any kind of new bubble in the foreseeable future.

“Clearly the worst is behind us for this market., but this is not a market that is going to take off again,” he said. “While you have a firming up, you still have tight lending standards and people who have been burned are reluctant or unable to get back in the market.” He predicts it will take several more years before housing prices can gain more than 1% to 2% a year.

Related: Buy or rent? 10 major cities

But that is good news for a housing market that was plagued by plunging home values and high foreclosure rates for much of the last six years. And the good news has the potential to build on itself, said Joseph LaVorgna, chief U.S. economist for Deutsche Bank.

“Housing remains a rare bright spot in an economy that is otherwise muddling through,” he wrote in a note to clients Tuesday. “The price trend for housing is significant, because it provides economic stimulus via stronger household balance sheets.”

Correction: An earlier version of this article incorrectly reported that home prices had reached a 9-year high. In fact, they rebounded to the level last seen in summer 2003, before their peak several years later.

Curious about the local real estate market on the San Francisco Peninsula?  Email me! 

I read this article at: http://money.cnn.com/2012/09/25/real_estate/home-prices/index.html?source=linkedin

Got Questions? – The Caton Team is here to help.

Email Sabrina & Susan at:  Info@TheCatonTeam.com

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Please enjoy my personal journey through homeownership at:

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Thanks for reading – Sabrina

New Changes in FHA Loans

Just got news that the FHA mortgage is changing its up front fee!  Take a read direct from HUD.GOV…

http://portal.hud.gov/hudportal/HUD?src=/press/press_releases_media_advisories/2012/HUDNo.12-037

Quick Overview…

FHA loans have reported high losses over the last few years, and this has brought up concerns that the FHA program may need a bailout in the future.

In a move to increase their financial standing, on Monday, HUD announced their anticipated increases in the premiums they charge borrowers. The cost of borrowing with FHA is going to go up.

FHA loans, by design, are more liberal in their underwriting guidelines than conventional loan products (in terms of credit, income ratios, required investment from the borrower, and maximum loan amount). HUD is not a lender. Rather, it is a federally-insured insurance company. They insure lenders against default on loans underwritten in compliance with their published guidelines. It is because of this insurance that lenders approve and close loans with more liberal guidelines.

As an insurance company, HUD charges two types of premiums on the FHA mortgages:

•           The UFMIP (Up Front Mortgage Insurance Premium) will be raised effective April 1, 2012 from its current 1% to 1.75%. One advantage to the UFMIP is the fact that it is typically built into the loan amount and does not require additional cash outlay at closing.

•           The MMIP (Monthly Mortgage Insurance Premium) will be raised from 1.15 to 1.25% of the loan amount annually, starting on April 1, 2012 .

On a loan amount of $300,000, we will see an increased monthly payment of $36.41.

Got Questions? – The Caton Team is here to help.  Email us at Info@TheCatonTeam.com or visit our website at:   http://thecatonteam.com/

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