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Archive for the ‘Consumer News’ Category
Friday, November 6th, 2009
 Fannie Mae announced a plan on Thursday that will allow borrowers facing foreclosure to lease their homes. The program, called Deed for Lease or D4L for short, allows borrowers facing foreclosure to hand their deed to the lender in exchange for paying the market rate rent on the home for at least 12 months.
To qualify for the program, borrowers have to have mortgages insured by Fannie Mae, be unable to qualify for President Obama’s mortgage modification program, and be unsuccessful renegotiating with their lenders. While eligible borrowers would have to voluntarily give up the deeds to their homes, they would be able to stay for at least a year, providing that they paid the market rate rent. Rents would then be renewable on a month-to-month basis. Eligible borrowers must document that the new market rate rent is no greater than 31% of their gross income to qualify for Deed for Lease.
The Deed for Lease program is an extremely interesting and valuable way to keep delinquent borrowers in their homes, or merely to allow time for a transition. The program may be especially valuable for families with children, whom they do not want to remove from their schools in the middle of the year. It will help give families more time to come up with options. It will also help underwater homeowners– especially in areas that have seen property values drop significantly.
Furthermore, since tenants of qualifying borrowers are also eligible for the program, Deed for Lease will help tenants whose landlords face foreclosure. As a result, it appears that, though Fannie Mae provided no estimates for how many borrowers will be eligible for the program, Deed Lease looks to be a promising alternative to severely delinquent borrowers with Fannie Mae loans facing foreclosure–and for their tenants.
More information about the program can be found at www.efanniemae.com.
Tags: borrower, borrowers, D4L, Deed for Lease, fannie mae, foreclosure, homeowner, homeowners, landlord, landlords, lease, Mortgage, mortgage modification, mortgages, tenants
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Monday, November 2nd, 2009
This week’s reverse mortgage rates are below. These rates are effective for the week beginning November 3, 2009.
APR:
HECM LIBOR 225: 2.494
HECM LIBOR 250: 2.744
HECM LIBOR 275: 2.994
HECM LIBOR 300: 3.244
Expected Rates:
HECM LIBOR 225: 5.91
HECM LIBOR 250: 6.16
HECM LIBOR 275: 6.41
HECM LIBOR 300: 6.66
The HECM LIBOR APR remained almost unchanged for the sixth consecutive week. However, the expected rates continued to rise. This week saw a dramatic increase by .08 for the borrowers. It will be interesting to see when the APR finally changes, and, when it does, whether the expected rates will adjust is the same direction.
Tags: 2009, APR, borrowers, expected rate, expected rates, hecm, hecm rates, interest rate, LIBOR, november, rates, reverse mortgage, Reverse Mortgage Rate, reverse mortgage rates, reverse mortgages, This Week, weekly hecm rate, weekly hecm rates
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Monday, November 2nd, 2009
 Last week a bi-partisan deal was announced in the Senate that will likely pave the way for the new homebuyer’s tax credit to be extended through April 2010. The deal also includes plans for a significant expansion of the tax credit, raising the income requirements to $125,000 per individual and $225,000 per couple from $75,000 per individual and $150,000 per couple. This expansion means that many more individuals will be eligible for the tax credit than were previously. Finally, the deal added a $6,500 tax credit will be available to homeowners wishing to move out of their current home into a more expensive one.
I have been thinking about the deal all weekend, and I worry about its effects. While the goal of the credit is to strengthen the market and help bring home prices back up, increasing income requirements and adding a tax credit to incentivize trading up seems like it risks exacerbating the current problems in the housing market. Many of the current problems in the housing market have been created by homeowners (many first-time homeowners) taking out mortgages that were more than they could afford to pay in order to buy homes. Even when they could afford the mortgage, the recent economic problems have led many to be out of work or find their401(k)s and pensions to be less than they had expected. Consequently, the number of foreclosures and mortgage delinquencies reached all time highs in recent months.
In light of these developments, some proposed that maybe homeownership should no longer be an essential part of the American Dream. It was argued that it is a disservice to put people into homes they cannot afford. While the tax credit is not a very large sum of money, it is enough money to push individuals to act in uncertain times. A realtor in Portland, ME commented that nearly 70% of their clients were motivated by the tax credit. Yes, the housing market could use a boost, but when individuals are making a significant long-term financial decision for a short-term financial incentive, it seems like many poor choices can occur.
Reverse mortgages and refinances are available to help homeowners who find themselves over-extended, but reverse mortgages are only available to those over 62, and refinances and short pays have been extremely hard to get. To avoid another housing crisis, the government does need to stimulate the market, but putting more borrowers into homes they cannot afford does not seem to be a safe way to do so.
Tags: home, home prices, homeowner, homeowners, housing crisis, housing market, money, refinance, reverse mortgage, reverse mortgages, Senate, tax credit
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Friday, October 30th, 2009
 The Senate announced a bi-partisan deal yesterday to extend the new homebuyer’s tax credit through April 2010. The deal will extend the $8,000 tax credit, which was set to expire in weeks, on homes with values up to $800,000. While the previous tax credit only applied to homebuyers with salaries of up to $75,000/year for individual and $150,000/couples, the deal raises the requirement, so that the tax credit will now apply to homebuyers with salaries of up to $125,000/year for individuals and $225,000 for couples. This will serve to make the vast majority of homebuyers available for the tax credit. In addition, a new $6,500 tax credit will be available to home owners wishing to move out of their current homes into more expensive ones.
The extension of the tax credit is expected to cost the government $10.2 billion, which will be offset by delaying a tax-break for U.S. based international corporations from 2010 to 2017.
The extension of the tax credit (as well as the new credit for current homeowners) is expected to help the housing market and real estate industry bounce back from the housing crisis. It is hoped that the tax credit, which has been successful in the past year, will help the market return to its former strength in 2010.
Tags: homebuyer, homebuyers, homeowner, homeowners, housing market, new homebuyer's tax credit, real estate, Senate, tax credit
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Friday, October 30th, 2009
 Yesterday, Congress passed the continuing resolution we discussed yesterday, extending the HECM loan limit through the 2010 fiscal year. The continuing resolution is now headed for the President’s signature, which it is expected to receive. The continuing resolution means that the reverse mortgage loan limit will remain at $625,500. The change reduces uncertainty about the future of the loan limits for HECM reverse mortgages. As mentioned yesterday, the continuing resolution also includes jumbo conforming loans and conforming loans, two kinds of forward mortgages.
Tags: conforming loans, Congress, hecm, jumbo conforming loans, loan limit, loan limits, Mortgage, mortgages, reverse mortgage, reverse mortgages
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Thursday, October 29th, 2009
 An appropriations bill has been proposed that will extend the FHA reverse mortgage limits until the end of 2010. The current limit of $625,500 is currently set to expire at the end of the year unless new appropriations are made. The appropriations bill still needs to pass the House of Representatives and the Senate. The extensions would also apply to Jumbo Conforming Loans and Conforming Loans, two kinds of forward or conventional mortgages.
Many in the industry appear to be hopeful that the bill will be passed before the limits expire. It is probably too early to become extremely concerned about the expiring limits, but with the bill needing to pass through both houses of Congress, it is something to keep an eye on.
Tags: appropriations bill, bill, conforming loans, Congress, House of Representatives, jumbo conforming loans, Mortgage, mortgages, reverse mortgage, reverse mortgages, Senate
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Wednesday, October 28th, 2009
 A day after positive news about existing home sales and housing prices, the data on new home sales sent a negative current through the economy. This morning it was reported that new home sales fell unexpectedly after 5 months of consecutive increases. Home sales fell from a seasonally-adjusted 417,000 new home sales in August to 402,000 in September, a decrease of 3.6%. But a survey of economists had predicted that the number of home sales would rise to 440,000 in September, leading to a prediction nearly 10% higher than the actual amount.
This is not the first time we have seen mixed housing data. While it is easy to speculate on the ups and downs of the market, only time can tell whether the bumps are telling of actual trends or merely slight deviations from the mean. This month, all the positive data about home prices and existing home sales, as well as climbing orders for long lasting goods, show that the industry may be beginning to recover, even if that recovery is a slow one with some set backs along the way.
Tags: economy, home prices, home sale, home sales, housing, housing starts, new housing starts, September
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Tuesday, October 27th, 2009
 In the Case-Schiller report data released this morning, US home prices continue to show improvement in August. The Standard & Poor’s/Case-Schiller index showed a seasonally-adjusted 1 percent improvement in August over the previous month. 16 of the 20 cities in the index saw their prices rise. Only four–Cleveland, Las Vegas, Charlotte, and Seattle–saw their home prices decline.
While the numbers are still down compared to last year, the continued upward trend is a nice change from last winter, when all cities saw their prices decline for several months on end. Many believe that the housing market is now turning around. However, the prices are down significantly. The average price today is equivalent to 2003 levels. In Detroit, they are at the same levels they were at in 1995. Compared to last August, prices are down 11.3 percent. As a result, many of the problems we have seen recently in regards to underwater homeowners and foreclosures seem likely to continue in the near future. As the New York Times said, in many places, it’s as if the housing boom never happened.
Tags: Case-, Case-Schiller, case-schiller index, cities, home prices, housing market, real estate, Standard & Poor's, The New York Times, US
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Monday, October 26th, 2009
This week’s reverse mortgage rates are below. These rates are effective for the week beginning October 27, 2009.
APR:
HECM LIBOR 225: 2.494
HECM LIBOR 250: 2.744
HECM LIBOR 275: 2.994
HECM LIBOR 300: 3.244
Expected Rates:
HECM LIBOR 225: 5.83
HECM LIBOR 250: 6.08
HECM LIBOR 275: 6.33
HECM LIBOR 300: 6.58
The HECM LIBOR APR remained almost unchanged for the fifth consecutive week. Meanwhile, the expected rates continued to rise, though they only rose by three hundredths of a point. One wonders when the APR will finally change, and, when it does, in which direction it will go.
Tags: 2009, APR, expected rate, hecm, hecm rates, interest rate, LIBOR, October, reverse mortgage, Reverse Mortgage Rate, reverse mortgage rates, reverse mortgages, This Week, weekly hecm rate, weekly hecm rates
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Monday, October 26th, 2009
 In the past, we have explained reverse mortgage terms. Today, we will explain some home mortgage terms:
Some Important Home Mortgage Terms Explained
Banks and other lenders offer mortgages to borrowers who want to buy homes and don’t have the required cash to make upfront payment for them. The lenders utilize the homes as collateral or security for their loans. If the borrower defaults on the contracted payments, then they can lose their homes to foreclosure. There are various forms of mortgage loans and various mortgage terms used in mortgage related discussions. You can also refer to a dictionary for home mortgage terms to have a better understanding. Following are some important mortgage terms that you would frequently come across in mortgage deals.
Adjustable Rate Mortgage
ARMs or adjustable rate mortgages usually have a fixed rate of interest at the beginning of the loan term and subsequently, they get reset to the market average. For instance, a 5/1 ARM would carry a fixed rate of interest for the initial five years and subsequently, it would get reset to the market rate every year. These loans are beneficial for those people who secure a mortgage when interest rates are escalating.
Fixed Rate Mortgage
Fixed rate mortgages come with a predetermined rate for the whole tenure of the loan. These loans are advantageous for locking in an affordable rate and for borrowers who need the security to understand that they would have a uniform monthly payment.
Annual Percentage Rate
APR or Annual Percentage Rate represents the real borrowing costs of a mortgage loan. Individuals with good credit scores typically qualify for lower APRs.
Down Payment
This is a portion of the home value that you have to pay at the beginning of the loan. A bigger down payment would lead to improved terms for the loan since it guarantees the lender that they would receive the payments.
Loan Term
The loan term is the length of time throughout which the loan has to be paid off. The higher the loan term, the less would be your monthly payments. However, if the tenure is extensive, then you would land up paying a huge amount of interest throughout the whole term of the loan.
Mortgage Points
Mortgage points or discount points are charges that you pay at the beginning of the loan. Every mortgage point is equal to 1% of the loan amount. Hence, if you are asked to pay 3 points on a $200,000 loan, you would pay $6,000. Lenders permit you to pay points or prepaid interest to lessen your interest rate.
Tags: homes, Mortgage, mortgage information, mortgage terms, mortgages, reverse mortgage
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