Sunday, April 7, 2013
Federal Housing Finance Agency reports mortgage interest rates
The Federal Housing Finance Agency (FHFArecently reported that the national average contract mortgage rate for the purchase of previously occupied homes by combined lenders, used as an index in some adjustable-rate mortgage (ARM) contracts, was 3.43 percent based on loans closed in February. The rate increased 0.08 percent from the previous month.
The average interest rate on conventional, 30-year, fixed-rate mortgage loans of $417,000 or less increased 9 basis points to 3.62 in February. These rates are calculated from the FHFA’s Monthly Interest Rate Survey of purchase-money mortgages.
These results reflect loans closed during the February 22 - Feb. 28 period. Typically, the interest rate is determined 30 to 45 days before the loan is closed. Thus, the reported rates depict market conditions prevailing in mid- to late-January.
Thursday, August 11, 2011
Cosigning on the dotted line
Tighter lender standards and an unstable job market have made it tougher for some people, especially those just starting out, to qualify for a home mortgage on their own. So, some home buyers are turning to family members or close friends with good credit to co-sign a home loan.
Making sense of the story
• While becoming a cosigner may seem like a good solution, money manager and lenders caution against those who are asked to be the cosigner.
• A cosigner, even if not living in the house, is really a coborrower, meaning he or she still is responsible for payments if the occupant is unable to meet his or her obligations. In other words, if the principal party defaults on the loan, the cosigner is on the hook.
• One financial planner suggests potential cosigners take a less risky alternative, such as providing a cash gift for the down payment. Under current tax laws, a person can give as much as $13,000 to a person, free of gift taxes, or $26,000 per person, if a married couple filing jointly is giving the money.
• Those considering cosigning a mortgage must conduct due diligence. First, the cosigner must understand why the family member or friend is asking for help. Potential cosigners shouldn’t be afraid to look into the requestor’s personal finances to help determine whether he or she will be able to repay the loan. Perusing credit reports also will show the track record he or she has for paying off debts.
• A discussion about worst-case scenarios also should take place before signing on the dotted line. Working out a written contract containing an agreement about what would happen in the event of a default, also is recommended.
• Cosigners also should keep in mind that the mortgage will show up on their credit report, and could affect their own ability to borrow money or buy a second home. If the principal borrower makes a late payment, that also will show up on the cosigner’s report.
The New York Times
By VICKIE ELMER
Published: August 4, 2011
Making sense of the story
• While becoming a cosigner may seem like a good solution, money manager and lenders caution against those who are asked to be the cosigner.
• A cosigner, even if not living in the house, is really a coborrower, meaning he or she still is responsible for payments if the occupant is unable to meet his or her obligations. In other words, if the principal party defaults on the loan, the cosigner is on the hook.
• One financial planner suggests potential cosigners take a less risky alternative, such as providing a cash gift for the down payment. Under current tax laws, a person can give as much as $13,000 to a person, free of gift taxes, or $26,000 per person, if a married couple filing jointly is giving the money.
• Those considering cosigning a mortgage must conduct due diligence. First, the cosigner must understand why the family member or friend is asking for help. Potential cosigners shouldn’t be afraid to look into the requestor’s personal finances to help determine whether he or she will be able to repay the loan. Perusing credit reports also will show the track record he or she has for paying off debts.
• A discussion about worst-case scenarios also should take place before signing on the dotted line. Working out a written contract containing an agreement about what would happen in the event of a default, also is recommended.
• Cosigners also should keep in mind that the mortgage will show up on their credit report, and could affect their own ability to borrow money or buy a second home. If the principal borrower makes a late payment, that also will show up on the cosigner’s report.
The New York Times
By VICKIE ELMER
Published: August 4, 2011
Saturday, July 16, 2011
LAW AGAINST SHORT SALE DEFICIENCIES EXPANDED
In a major victory for REALTORS®, Governor Brown signed into law today a C.A.R.-sponsored bill, Senate Bill 458, prohibiting a deficiency after a short sale for one-to-four residential units, regardless of whether the lender is a senior or junior lienholder. Effective immediately for transactions closing escrow from this day forward, both senior and junior lienholders cannot require a borrower to owe or pay for a deficiency in a short sale. This law also prohibits any deficiency judgment to be requested or rendered for senior or junior liens after a short sale of one-to-four residential units. Any purported waiver of this rule shall be void and against public policy.
Although a lender cannot require a borrower to pay any additional compensation in exchange for a short sale approval, the new law does not prohibit a borrower from voluntarily offering a monetary contribution to a lender in hopes of obtaining a short sale. A lender is also permitted under the new law to negotiate for a contribution from someone other than the borrower, such as other lenders, agents, relatives, and the like.
Exceptions to the new law include a lender seeking damages for a borrower’s fraud or waste; a borrower that is a corporation, LLC, limited partnership, or political subdivision of the state; a lien secured by a bond as specified; a public utility lien; and additional rules apply if a note is cross-collateralized by more than one property.
This law is fully set forth as Senate Bill 458 (Corbett) at www.leginfo.ca.gov.
Although a lender cannot require a borrower to pay any additional compensation in exchange for a short sale approval, the new law does not prohibit a borrower from voluntarily offering a monetary contribution to a lender in hopes of obtaining a short sale. A lender is also permitted under the new law to negotiate for a contribution from someone other than the borrower, such as other lenders, agents, relatives, and the like.
Exceptions to the new law include a lender seeking damages for a borrower’s fraud or waste; a borrower that is a corporation, LLC, limited partnership, or political subdivision of the state; a lien secured by a bond as specified; a public utility lien; and additional rules apply if a note is cross-collateralized by more than one property.
This law is fully set forth as Senate Bill 458 (Corbett) at www.leginfo.ca.gov.
Monday, June 13, 2011
Fannie Mae Issues Servicing Standards for Delinquent Mortgages
Standards are First Step in Fannie Mae's Implementation of the Aligned Servicing Requirements Announced by FHFA on April 28, 2011
WASHINGTON, DC — Fannie Mae today issued new standards for mortgage servicers regarding the management of delinquent loans, default prevention and foreclosure time frames under the Federal Housing Finance Agency's Servicing Alignment Initiative. The new standards, reinforced by new incentives and compensatory fees, require servicers to take a more consistent approach for homeowner communications, loan modifications and other workouts, and, when necessary, foreclosures.
"These new standards give homeowners facing difficulty making their mortgage payments a clear, consistent process," said Jeff Hayward, Senior Vice President of Fannie Mae's National Servicing Organization. "We want homeowners to be able to understand their options when facing foreclosure, and we want servicers to reach homeowners early in the process, communicate frequently and clearly, and help homeowners avoid foreclosure."
These standards require servicers to implement consistent processes across a number of areas, and hold them accountable if they do not.
Borrower Contact. Under the new standards, servicers must achieve "quality right party contact" with borrowers. This includes building a strong customer-service relationship with homeowners, determining the reasons for their delinquency, assessing their ability to pay, and educating homeowners on the availability of foreclosure prevention options. Fannie Mae's borrower contact standards will increase servicer effectiveness in reaching homeowners, bring greater consistency and clarity to servicer communications with homeowners, and increase the likelihood that servicers will contact homeowners early in the default process, which is one of the most important factors in reaching a resolution that avoids a foreclosure. During the first 120 days of delinquency, homeowners will be contacted both verbally and in writing to complete a mortgage modification or other solution to remain in the home, or enter into an arrangement to exit the home without a foreclosure.
Foreclosure Timelines. Servicers must follow clear timelines for referring loans to foreclosure, setting a date of sale for foreclosed properties, and use of designated counsel, and they will face compensatory fees for timeline violations. These standards will bring greater consistency, fairness, and efficiency to a process that has too often been characterized by inconsistency, abuse, and delay — to the detriment of mortgage investors, homeowners, and communities alike. Once 120 days of delinquency have passed, the foreclosure process will begin.
"We hope this step will encourage any homeowner who has not yet acted to work with the servicer to pursue all options to avoid foreclosure," said Hayward. "But even in situations where foreclosure can't be avoided, we believe this process and this timetable will help motivate all participants toward resolutions that will ultimately stabilize neighborhoods as quickly as possible."
Incentives and Compensatory Fees. Fannie Mae will provide incentives for servicers to complete loan workouts earlier in a homeowner's delinquency, and charge compensatory fees when servicers fail to make quality right party contact. Incentives and fees will be based on clear benchmarks. These steps are intended to help improve servicer performance and hold servicers accountable for their effectiveness in assisting homeowners. Compensatory fees remain a possibility for servicers who do not process foreclosures in a timely manner.
Between January 1, 2009 and March 31, 2011, Fannie Mae helped over 500,000 struggling homeowners avoid foreclosure. Implementation of the new servicing standards will speed further progress and ensure greater clarity for servicers on how to work with homeowners.
The new standards are set forth in two servicing guide announcements. To view the announcements, visit here and here.
Fannie Mae exists to expand affordable housing and bring global capital to local communities in order to serve the U.S. housing market. Fannie Mae has a federal charter and operates in America's secondary mortgage market to enhance the liquidity of the mortgage market by providing funds to mortgage bankers and other lenders so that they may lend to home buyers. Our job is to help those who house America.
Fannie Mae Resource Center Telephone 1-800-7FANNIE
(1-800-732-6643)
WASHINGTON, DC — Fannie Mae today issued new standards for mortgage servicers regarding the management of delinquent loans, default prevention and foreclosure time frames under the Federal Housing Finance Agency's Servicing Alignment Initiative. The new standards, reinforced by new incentives and compensatory fees, require servicers to take a more consistent approach for homeowner communications, loan modifications and other workouts, and, when necessary, foreclosures.
"These new standards give homeowners facing difficulty making their mortgage payments a clear, consistent process," said Jeff Hayward, Senior Vice President of Fannie Mae's National Servicing Organization. "We want homeowners to be able to understand their options when facing foreclosure, and we want servicers to reach homeowners early in the process, communicate frequently and clearly, and help homeowners avoid foreclosure."
These standards require servicers to implement consistent processes across a number of areas, and hold them accountable if they do not.
Borrower Contact. Under the new standards, servicers must achieve "quality right party contact" with borrowers. This includes building a strong customer-service relationship with homeowners, determining the reasons for their delinquency, assessing their ability to pay, and educating homeowners on the availability of foreclosure prevention options. Fannie Mae's borrower contact standards will increase servicer effectiveness in reaching homeowners, bring greater consistency and clarity to servicer communications with homeowners, and increase the likelihood that servicers will contact homeowners early in the default process, which is one of the most important factors in reaching a resolution that avoids a foreclosure. During the first 120 days of delinquency, homeowners will be contacted both verbally and in writing to complete a mortgage modification or other solution to remain in the home, or enter into an arrangement to exit the home without a foreclosure.
Foreclosure Timelines. Servicers must follow clear timelines for referring loans to foreclosure, setting a date of sale for foreclosed properties, and use of designated counsel, and they will face compensatory fees for timeline violations. These standards will bring greater consistency, fairness, and efficiency to a process that has too often been characterized by inconsistency, abuse, and delay — to the detriment of mortgage investors, homeowners, and communities alike. Once 120 days of delinquency have passed, the foreclosure process will begin.
"We hope this step will encourage any homeowner who has not yet acted to work with the servicer to pursue all options to avoid foreclosure," said Hayward. "But even in situations where foreclosure can't be avoided, we believe this process and this timetable will help motivate all participants toward resolutions that will ultimately stabilize neighborhoods as quickly as possible."
Incentives and Compensatory Fees. Fannie Mae will provide incentives for servicers to complete loan workouts earlier in a homeowner's delinquency, and charge compensatory fees when servicers fail to make quality right party contact. Incentives and fees will be based on clear benchmarks. These steps are intended to help improve servicer performance and hold servicers accountable for their effectiveness in assisting homeowners. Compensatory fees remain a possibility for servicers who do not process foreclosures in a timely manner.
Between January 1, 2009 and March 31, 2011, Fannie Mae helped over 500,000 struggling homeowners avoid foreclosure. Implementation of the new servicing standards will speed further progress and ensure greater clarity for servicers on how to work with homeowners.
The new standards are set forth in two servicing guide announcements. To view the announcements, visit here and here.
Fannie Mae exists to expand affordable housing and bring global capital to local communities in order to serve the U.S. housing market. Fannie Mae has a federal charter and operates in America's secondary mortgage market to enhance the liquidity of the mortgage market by providing funds to mortgage bankers and other lenders so that they may lend to home buyers. Our job is to help those who house America.
Fannie Mae Resource Center Telephone 1-800-7FANNIE
(1-800-732-6643)
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