The Housing bill is now close to passage. The Senate is about ready to approve their version and the House is planning for conference committee meetings to reconcile differences between their version and the Senate’s version. The President is indicating that he is leaning toward approval, even though he has reservations about certain elements of the bill.
What does it all mean? Opinions on the bill range from “we should do nothing and let the market self-correct” to “it is a gigantic bailout for reckless lenders and borrowers” to “it is probably not enough and we will need to do more.” The fact is that there is no one right answer or solution.
The major provisions of the bill are:
1) A key element would allow for “qualified” homeowners to refinance their existing loans (in their primary residence) to a new 30 year fixed rate mortgage with the federal guarantee. The lender would have to agree to reduce the balance of existing loans as a precondition of the refinance.
2) Another provision would allow first time borrowers to a refundable tax credit of up to $8000 or 10% of the value of a home on unoccupied housing.
3) The bill would also allow a permanent increase from $417,000 to $625,000 loan limits that Fannie and Freddie can finance on jumbo loans.
As more information on the bill becomes available, we will pass it on to you.
Monday, June 30, 2008
Tuesday, June 17, 2008
FHA Suspends Waiting Period on Foreclosed Homes
The FHA just announced a one year suspension of the 90 day waiting period before foreclosed properties can be sold to receive government backed loans. The intent of the rule was to prevent “flipping.” However, the glut of foreclosed homes on the market was serving as an impediment to getting these home sold.
As we hear more on these issues, we will keep you informed.
As we hear more on these issues, we will keep you informed.
Monday, June 16, 2008
USDA Rural Development Home Loan Programs
During the subprime loan era, a number of government loan programs originally established to help low- to moderate income individuals and families afford home ownership, fell out of favor. We previously discussed how FHA and VA loan programs are now making a resurgence.
Similarly, the US Department of Agriculture Rural Development (RD) programs are making a comeback. These 100% financing loan programs are available for low to moderate income residents in rural areas across the country. The advantages of these programs, in addition to no down payment, are no private mortgage insurance, a 30-year fixed rate, all fees can be rolled into the loan, as well as flexible credit and qualifying guidelines. As with all loan programs, there are certain restrictions that are part of the program. However, these programs are specifically designed to enable individuals or households who cannot get conventional financing, afford a home. Let’s review how they work.
There are two types of RD loan programs: “direct” and “guaranteed.” Before we discuss the differences, let us review the common elements of the programs. First, you need to determine if the subject property is located in an eligible area. Second, you need to determine if you are income eligible. This information can readily be obtained by logging onto www.rurdev.usda.gov and clicking on “housing and community facilities.” Each State, at the County level, has identified areas that qualify for these programs. In addition, qualifying income levels can vary at the County level. Qualifying income is determined by adding all income from those individuals that will be living in the home less certain expenses for children, child care and certain other expenses.
You must meet RD guidelines for housing and debt loads and pay your bills on time. You must also be a citizen or here legally, planning to be a citizen.
The subject property can be for new or existing homes and must meet minimum FHA standards. Construction to permanent loans are also allowed. Other types of properties that also qualify are modular and Condo / Town homes.
Direct Loans are initiated and funded directly by the USDA. These loans are for low income households (under 80% median income for the area.) Applicants for these loans need to prove that they can make payments on the property and have “reasonable’ credit histories.
Guaranteed Loans are loans for moderate income families (with an income level of up to 115% of the median income for the area.) Applicants for these loans apply with Lenders approved by the USDA. In these cases, the lenders set the interest rates, which are guaranteed by the government.
As these USDA loan programs are generally not well understood by Realtors or builders, let alone the consumer, the USDA has area offices for all eligible counties throughout the U.S. ready to assist with information on these programs as well as Lenders involved in making these loans. That contact information is also available on the previously mentioned website.
While there are significant differences from traditional loan programs, there are resources readily available to help determine eligibility of potential buyers. Getting these loans approved and closed are comparable to FHA loans. These USDA loans are generally the lowest cost loans available on the market. They should be an obvious choice of a loan product for low and moderate income individuals in rural markets.
Similarly, the US Department of Agriculture Rural Development (RD) programs are making a comeback. These 100% financing loan programs are available for low to moderate income residents in rural areas across the country. The advantages of these programs, in addition to no down payment, are no private mortgage insurance, a 30-year fixed rate, all fees can be rolled into the loan, as well as flexible credit and qualifying guidelines. As with all loan programs, there are certain restrictions that are part of the program. However, these programs are specifically designed to enable individuals or households who cannot get conventional financing, afford a home. Let’s review how they work.
There are two types of RD loan programs: “direct” and “guaranteed.” Before we discuss the differences, let us review the common elements of the programs. First, you need to determine if the subject property is located in an eligible area. Second, you need to determine if you are income eligible. This information can readily be obtained by logging onto www.rurdev.usda.gov and clicking on “housing and community facilities.” Each State, at the County level, has identified areas that qualify for these programs. In addition, qualifying income levels can vary at the County level. Qualifying income is determined by adding all income from those individuals that will be living in the home less certain expenses for children, child care and certain other expenses.
You must meet RD guidelines for housing and debt loads and pay your bills on time. You must also be a citizen or here legally, planning to be a citizen.
The subject property can be for new or existing homes and must meet minimum FHA standards. Construction to permanent loans are also allowed. Other types of properties that also qualify are modular and Condo / Town homes.
Direct Loans are initiated and funded directly by the USDA. These loans are for low income households (under 80% median income for the area.) Applicants for these loans need to prove that they can make payments on the property and have “reasonable’ credit histories.
Guaranteed Loans are loans for moderate income families (with an income level of up to 115% of the median income for the area.) Applicants for these loans apply with Lenders approved by the USDA. In these cases, the lenders set the interest rates, which are guaranteed by the government.
As these USDA loan programs are generally not well understood by Realtors or builders, let alone the consumer, the USDA has area offices for all eligible counties throughout the U.S. ready to assist with information on these programs as well as Lenders involved in making these loans. That contact information is also available on the previously mentioned website.
While there are significant differences from traditional loan programs, there are resources readily available to help determine eligibility of potential buyers. Getting these loans approved and closed are comparable to FHA loans. These USDA loans are generally the lowest cost loans available on the market. They should be an obvious choice of a loan product for low and moderate income individuals in rural markets.
Thursday, June 5, 2008
Where to Now
The Federal Reserve Chairman, Mr. Bernanke, has recently stated that the threat of inflation has virtually assured the end of interest rate reductions. The head of the European Central bank has just commented on the likelihood of an interest rate increase there to combat inflation.
Food and energy prices are soaring out of control worldwide. Our Leaders in Washington are caught up in partisan politics which benefits no one. In an election year, especially this one, we should not expect the "common good" to be on the mind of our leaders. They are too busy blaming the other party for everything that ails us and take credit for anything that goes right.
What does all this mean? Unfortunately, it will be more of the same for the housing market. Foreclosures are increasing by the day, with property values continuing to decline in many parts of Florida. Mortgage interest rates continue to be at near record lows but lending policies have placed so many restrictions on remaining loan programs that financing options for home sales are limited. Conventional loan programs are changing by the day.
Fannie Mae and Freddie Mac have recently announced eliminating their declining market policies; however, some major banks still have much of Florida as a declining market.
What are our options? We have previously published articles on FHA and VA loans, along with Hard Money loans. These articles are all posted on our blog, http://www.diversitymortgagenews.com/.
Next week we will focus on two articles, the US Department of Agriculture Rural Development loan program and a second comparing FHA and Fannie Mae financing options.
Our goal continues to be to be provide you with timely, pertinent information for you and your clients.
Food and energy prices are soaring out of control worldwide. Our Leaders in Washington are caught up in partisan politics which benefits no one. In an election year, especially this one, we should not expect the "common good" to be on the mind of our leaders. They are too busy blaming the other party for everything that ails us and take credit for anything that goes right.
What does all this mean? Unfortunately, it will be more of the same for the housing market. Foreclosures are increasing by the day, with property values continuing to decline in many parts of Florida. Mortgage interest rates continue to be at near record lows but lending policies have placed so many restrictions on remaining loan programs that financing options for home sales are limited. Conventional loan programs are changing by the day.
Fannie Mae and Freddie Mac have recently announced eliminating their declining market policies; however, some major banks still have much of Florida as a declining market.
What are our options? We have previously published articles on FHA and VA loans, along with Hard Money loans. These articles are all posted on our blog, http://www.diversitymortgagenews.com/.
Next week we will focus on two articles, the US Department of Agriculture Rural Development loan program and a second comparing FHA and Fannie Mae financing options.
Our goal continues to be to be provide you with timely, pertinent information for you and your clients.
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