Justin McHood - 2/24 - Arizona Mortgage Team

Neighborhood Stabilization Program in Arizona: Free Money

August 18, 2009 2 Comments

If you are a local Realtor or someone who is thinking about buying a bank-owned home, you really can’t afford not to know about the Neighborhood Stabilization Program.

The federal Government gave about $120 million to this program and it is designed to help people who are buying a bank owned home live in the home for a period of time and in return, the government will give you money to do so.

How much money?

22% of the purchase price of the home.

Yes, you read that right – the Neighborhood Stabilization Program will give you 22% of the purchase price of your new home as long as it is currently owned by the bank no matter whether the house is a foreclosure near the light rail or in Buckeye or Tucson. And that is on top of the $8000 tax credit.

Neighborhood Stabilization Program in Arizona: Free Money %spacebasename

Some of the highlights of the Neighborhood Stabilization Program include:

You must occupy the property as your primary residence.
You must attend a Homebuyer Education Class prior to writing an offer for your home.
You must have a maximum debt‐to‐income ratio of 31/43.
You must be AUS approved eligible.
You must have two months PITI reserves.
You must be approved and have your paperwork completed for the program prior to submitting an offer on a house.

The NSP program is not a loan program – it is a grant program. This means that you can use any type of loan with the NSP program (FHA, VA, USDA, etc.) and still get a grant of 22% of the sales price of your home.

Sound too good to be true?

It isn’t.

Call us anytime with questions.

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Tough Choices: What To Do When You Owe Far More Than Your Home Is Worth

August 17, 2009 Leave a Comment

If you bought a house between 2004 and 2006, chances are you have talked with someone about how far under water you are in your house. If you haven’t lost your job or suffered a decrease in personal income, it isn’t really that big of a deal, you just keep making your house payment and think to yourself “it will come back, I just have to wait out the dip in value.”

Will it?

I don’t know, and the truth is no one else knows either.

But for those of you who have had some kind of “hiccup” in your income – meaning you make less money now than you did when you bought the house… you have some tough choices to make. I know, because many of you call me asking me what you should do and my only advice is to “pick” one of the choices that are available to you rather than just “let” one of the choices happen to you.

Tough Choices: What To Do When You Owe Far More Than Your Home Is Worth %spacebasename

But here are your choices (in a nutshell) of what your options are if you are severely under water in your home (you owe more than 125% of the value of the home) and you have had a hiccup in your income:

Tough Choices:

Keep making your payment.
Attempt to get a loan modification by calling your lender.
List your house for a “short sale”.
Negotiate for a deed-in-lieu of Foreclosure with your lender.
Go through the foreclosure process.

Keep Making Your Payment

The simple fact is that if you find some way to keep making your payment, then nothing will change. True, it may be harder to keep making your payment now than it was before your income was reduced – but as long as you keep making your payment, most likely nothing will change. It is possible that you could get a loan modification if you keep making your payment, but not a 100% for sure thing.

Work With Your Lender For A Loan Modification

Most people are aware of what the term “loan modification” means – and the easiest way to get a loan modification (note: they are not easy to get in my opinion) is to simply call your lender and start the process with them. Be prepared for a loan modification to take months. Most of the time, a loan modification will reduce your interest rate and/or extend the term of your loan (usually from 30 to 40 years) but will not reduce the amount of money that you owe.

Short Sell Your Home

List your home for less than you owe your lender and attract a buyer. Once the buyer submits an offer, the lender must approve the offer – because they will most likely be writing off the difference between what you owe and what they will get from the sale of the home.

Deed In Lieu of Foreclosure

Sometimes your lender will allow you to leave the home in good condition and accept a deed-in-lieu of Foreclosure. The Deed in Lieu is better than foreclosure in my opinion only because once you have a deed-in-lieu negotiated out with the bank, you can get on with trying to repair your credit. With a foreclosure, there will still be negative reporting on your credit until the bank has disposed of the property.

Foreclosure

The last resort is foreclosure. The truth is that the best way to prevent foreclosure is to know what your options are and to start at the top of this list and try to get each one done. But in the end, at some point, if you don’t make your payment and you don’t get a loan modification done and you don’t sell your home and if you don’t get a deed-in-lieu of Foreclosure… Foreclosure happens.

And it isn’t the end of the world.

But it is time to start picking up the pieces and start re-building your credit.

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Filed Under: Loan Modification, The Business of Mortgages Tagged With: negative equity

Are You Self Employed? Be Ready To Show All Income When Applying For A Mortgage

July 29, 2009 1 Comment

I had a conversation recently with someone who was self employed and thinking about buying a new home. At the end of the conversation, it became pretty clear that he wouldn’t be able to “document” his income – which is not all that uncommon.

About 20 minutes after I had that conversation, I got a memo (man I hate these things, but I can’t ignore them because sometimes they have good information in them) from our corporate compliance department that anyone who is self employed should probably be aware of when applying for a mortgage.

Are You Self Employed? Be Ready To Show All Income When Applying For A Mortgage %spacebasename

ATTN ALL MANAGERS

It is extremely important tha tyou be aware that ALL self-employment MUST be disclosed on teh initial loan application, regardless of whether or not the income is being used for quallification.

If you have an applicant that is self-employed with more than one business, all self-employment from all businesses must be disclosed. You must disclose all income for self employed borrowers, not just the income that you used to qualify for the loan.

Any negative income from self-employment must be considered. For example, if you have a husband and wife applying for a loan. The wife is self-employed, but you think you don’t need to disclose her income because you are not using her income from her self employment to qualify for the loan. Wrong! The wife must disclose her self-employment and her income. If the income is negative, it will be subtracted from the other positive income being used for qualification purposes.

Translation:

There is a form called the 4506T that states the lender will pull your tax records and compare them to what you declared as income on your application. This is only one of the reasons there is no such thing as a “stated income” loan anymore.

So if you are self employed, be sure to plan on putting all of your self employed income on your loan application — both positive and negative.

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Filed Under: The Business of Mortgages Tagged With: 4506T, arizona self employed, az self employed, mortgages for self employed, self employed mortgages

Arizona Jumbo Mortgage Loans: Ballpark Estimates

July 28, 2009 5 Comments

Recently more than one person has called me asking about whether or not they could get a “jumbo mortgage loan” – meaning a loan that was over the Arizona conforming loan limit of $417,000. Since the answer is “yes, assuming that you have good credit, assets and income” I thought that other people may be interested to know what kinds of ballpark numbers we see for Arizona jumbo mortgage loan products from the various lenders.

Arizona Jumbo Mortgage Loans: Ballpark Estimates %spacebasename Arizona Jumbo Mortgage Loan LTV Requirements:

Three years ago, it wasn’t uncommon for a lender to loan up to 100% to millions of dollars. Now, there are significant loan to value restrictions and generally speaking the higher the loan amount, the lower the loan to value ratio.

For loans up to $900,000 expect the loan to value ratio to be around 75%.
For loans up to $1,200,000 expect the loan to value ratio to be around 60%.
For loans up to $1,500,000 expect the loan to value ratio to be around 50%.

Arizona Jumbo Mortgage Loans: Credit Score Requirements

If you are considering a Jumbo mortgage, chances are that you have good credit and know it. If your credit score is over 750, you should be fine. Anything less than 750, double -check. Anything less than 680, your jumbo loan choices are slim.

Arizona Jumbo Mortgage Loans: Income Requirements

Your ability to make your monthly payment for a Jumbo mortgage is something that the underwriters will pay special attention to. Generally speaking, lenders like to see no more than 35% of your total income spent on your monthly mortgage payment and no more than 45% of your total income being spent in monthly bills. For all of the mortgage folks who like to speak in terms of “DTI” (debt to income) that would translate to to a 35% front end DTI and a 45% back end DTI.

Arizona Jumbo Mortgage Rates

So what kind of rates are there currently for Jumbo loans? Generally speaking, the mortgage rates for Jumbo loans in Arizona are in the 5%’s for any adjustable rate (3/1, 5/1 ,7/1) and in the 6%’s for any fixed rate Jumbo loan.

So while the Arizona Jumbo loan market is not completely dead, there are far fewer lenders who are lending money in this market than just a few years ago. If you are in the market for a Jumbo loan, hopefully you will have a pretty good idea of what the “range” is regarding rates, income requirements, credit score requirements and loan to value ratios.

And of course…

These numbers can all change quickly.

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Filed Under: Jumbo Loans Tagged With: Arizona Jumbo Loan, Arizona Jumbo Mortgage, Arizona jumbo mortgage rates, AZ jumbo loan, AZ jumbo mortgage

Arizona Mortgage Fraud: Investigated By FBI

July 21, 2009 Leave a Comment

FBI Investigates Mortgage Fraud Cases in Arizona

Mortgage fraud seems to be a hot topic in the media lately, both right here in Arizona as well as in the national news. Because of the current housing crisis that the country is in, many people point to “mortgage fraud” as being on the main contributing factors that put the country in crisis. And although to some people it may seem to be a case of “too little, too late”, agencies such as the FBI are cracking down on mortgage fraud.

Arizona Mortgage Fraud: Investigated By FBI %spacebasename From A Warning Posted on The FBI Website:

Mortgage Fraud is investigated by the Federal Bureau of Investigation and is punishable by up to 30 years in federal prison or $1,000,000 fine, or both. It is illegal for a person to make any false statement regarding income, assets, debt, or matters of identification, or to willfully overvalue any land or property, in a loan and credit application for the purpose of influencing in any way the action of a financial institution.

Some of the applicable Federal criminal statutes which may be charged in connection with Mortgage Fraud include:

18 U.S.C. § 1001 – Statements or entries generally

18 U.S.C. § 1010 – HUD and Federal Housing Administration Transactions

18 U.S.C. § 1014 – Loan and credit applications generally

18 U.S.C. § 1028 – Fraud and related activity in connection with identification documents

18 U.S.C. § 1341 – Frauds and swindles by Mail

18 U.S.C. § 1342 – Fictitious name or address

18 U.S.C. § 1343 – Fraud by wire

18 U.S.C. § 1344 – Bank Fraud

Arizona Mortgage Fraud: It Isn’t Over

Believe it or not, mortgage fraud is still happening right here in Arizona. Do everyone a favor and if you are aware of anything that may be considered mortgage fraud, be sure to let the FBI know.

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Filed Under: Government Tagged With: Arizona Mortgage Fraud, AZ Mortgage Fraud

Are Any Lenders Doing The 8000 Tax Credit Monetization?

June 23, 2009 5 Comments

Are you a loan officer reading this blog?

Welcome. Pull up a chair today and feel free to show us your mortgage expertise. Flex your mortgage muscles if you will.

Feel free to advertise right here on this post with your name, contact information, picture – pretty much whatever you want – if you are actually able to help people “monetize” the 8000 tax credit.

Based on the number of times each week that I am asked “hey, do you know anyone who is helping people actually monetize the 8000 tax credit?” you will probably get tons of business.

Are Any Lenders Doing The 8000 Tax Credit Monetization? %spacebasename I have searched and searched for a lender who can help first time home buyers monetize the 8000 tax credit since it was announced that it was possible – with no luck.

I am currently not aware of any lenders in Arizona who are able to help people monetize the 8000 tax credit – and if you know of any please spread the word and have them announce it here so I can help drive business their way!

These are crazy times in the mortgage business.

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Filed Under: 8000 tax credit Tagged With: 8000 tax credit, 8000 Tax Credit Bridge Loan, tax credit monetization

Obama Refinance: Is 105% Going To 125%?

June 22, 2009 1 Comment

Many people in who are current on their mortgage payments and want to refinance their home have spoken with their lender about the Obama refinance — where they can be up to 105% “under water” and still get a Fannie Mae / Freddie Mac loan.

What they are finding out once their appraisal comes back is that they are actually “under water” by more than 105% — and now they are trying to decide what to do. Should they just keep making payments at their high interest rate? Should they stop making payments and try to get a loan modification? Should they try for a loan modification even though they are current?

All of these are good questions – and really, there is no easy answer. There for sure is not an answer that will fit everyone’s situation perfectly — each situation is different and individual.

But…

There is a possibility — note the word possibility — that the guidelines on the Obama refinance will soon be expanded where you can be up to 125% upside down on your home and qualify for the Obama refinance.

It hasn’t been made official yet — but for many people who currently have been turned down by their lender and are trying to decide whether to:

Just keep making their mortgage payments as normal
Stop making payments and try to get a loan modification
Try for a loan modification even though they are current

Now there is at least one more option on the table — wait and see if the Obama refinance guidelines get expanded.

According to Bloomberg:

Fannie Mae and Freddie Mac may get permission to begin refinancing mortgages with loan-to-value ratios above 105 percent as the Obama administration seeks to boost participation in its anti-foreclosure programs.

“We’re actively considering how to structure a program that makes sense over 105 percent,” Federal Housing Finance Agency Director James Lockhart said yesterday. He said a ratio of 125 percent “is a number” that’s on the table, though “not necessarily the number we’re going to end up with.”

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Filed Under: Arizona Refinance, The Business of Mortgages Tagged With: 125% Refinance, Obama Refinance

Monetizing 8000 Tax Credit for New Home Buyers: Popular Questions and Answers

June 9, 2009 5 Comments

It seems to me like pretty much anyone who is using the FHA loan program to buy a house is probably asking their loan officer:

“What is this I hear about being able to monetize my tax credit so I can use it for closing costs and down payment?”

So I thought I would post some of the most frequently asked questions and answers as provided by NAHB.org:

1. What exactly does “monetizing” the tax credit mean?
The term “monetization” is defined as the act of converting something into money. In the context of the first time home buyer tax credit, monetization means to treat the payment of the credit as if it was cash and allow its use as a payment for certain closing and downpayment expenses.

2. What is a “bridge” loan?
A bridge loan is a type of loan that is intended to be outstanding for a very short time period, often only a few days or weeks. Bridge loans are use to provide funds in situations where the borrower is expected to receive funds, such as the payment of this tax credit, within a very short time.

3. What is a state housing finance agency?
A state housing finance agency, often referred to as an “HFA,” is an organization that provides funding for a variety of loan and grant activities related to for-sale and rental housing. HFAs are also typically responsible to distribute grant funds from federal agencies, such as the U.S. Department of Housing and Urban Development (HUD).

4. How do I find out if my state housing finance agency is providing this service?
The best way to locate information about your state’s HFA is via the Internet. The National Council of State Housing Agencies (NCSHA) maintains a directory of state HFAs at: http://www.ncsha.org/section.cfm/4/39/187

5. What kinds of lenders are doing this? How can I find a list of lenders who are providing these short-term loans?
Many state housing finance agencies are either running or sponsoring programs that will use a tax credit for a downpayment. These programs often place a second lien on the home as collateral to secure the eventual repayment of the tax credit funds. Some state HFAs lend directly to home buyers while other HFAs work through networks of state-approved lenders.

In addition to state agencies, FHA-approved lenders may be offering to purchase a first time home buyer’s tax credit in conjunction with an FHA-insured mortgage loan.

Interested buyers should check with area lenders, home builders, or real estate agents for the names of participating lenders.

The Federal Housing Administration (FHA) also has an online tool to find FHA-approved lenders: http://www.fhaoutreach.gov/FHALookup/

6. What types of loans qualify?
Any lender could offer a program that would permit a first-time home buyer to apply the tax credit to funds needed for a loan that is obtained in conjunction with a home purchase. At this time, however, only the Federal Housing Administration (FHA) has issued guidance regarding the monetization of the first-time home buyer tax credit in conjunction with FHA-insured mortgage loans.

7. Can this short-term loan be applied to the minimum 3.5% downpayment required by my FHA loan or is it only available above and beyond the initial downpayment required?
If an FHA-approved lender or state housing finance agency is purchasing a tax credit and therefore making a short-term loan that is secured only by the repayment of the first-time home buyer tax credit, these funds cannot be applied to a downpayment in lieu of the home buyer’s funds. A home buyer still has to provide the 3.5 percent downpayment from his or her own funds. The money from the short-term loan can be used to pay closing costs and prepaid expenses, such as escrows for taxes, insurance, and community association assessments. These funds could also be used to make a larger downpayment or to “buy down” the interest rate on the mortgage loan.

However, many HFAs are offering tax credit loan programs that offer home buyers a short-term loan backed by the anticipated tax credit and secured by a second lien, which in general will be paid off after the homebuyer receives their income tax credit from the IRS. The proceeds of these loans may be used to satisfy the 3.5 percent downpayment requirement for FHA-insured loans. The National Council of State Housing Agencies (NCSHA) maintains a list of such tax credit loans programs at: http://www.ncsha.org/section.cfm/3/34/2920.

NOTE: The strikethrough text above is text that is currently being distributed from the NAHB that is not accurate according to my understanding of HUD Mortgagee Letter 2009-15. Special thanks to Rhonda Porter (one of the best loan officers in America by the way) for pointing that out in the comments of this post.

8. Who should I contact at my state housing finance agency to urge them to participate in this program if they don’t already do so? What should I say?
The best way to locate information about your state’s HFA is via the Internet. The National Council of State Housing Agencies (NCSHA) maintains a directory of state HFAs at: http://www.ncsha.org/section.cfm/4/39/187
Most state HFA web sites include phone numbers and email addresses by which they can be contacted.

9. Is this an interest-free loan or are there fees associated with this type of short-term loan?
If a governmental agency, such as a state housing finance agency, or an FHA-approved lender purchase a first-time home buyer tax credit, they are allowed to charge no more than 2.5 percent of amount of the credit.

10. How can I tell if the short-term loan on the tax credit is being offered by a reputable company?
If the organization is a unit of state government, it is safe to say that it is reputable. Otherwise, a home buyer may want to check with their local Better Business Bureau or through a state or local government’s department of consumer affairs.

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Filed Under: 8000 tax credit Tagged With: 8000 new home buyer tax credit, 8000 tax credit, 8000 tax credit monetization

Making Home Affordable Refinance: Freddie Mac Changes Rules

June 8, 2009 1 Comment

In April, the details of the Making Home Affordable plan were released and it was announced that there was a “refinance” portion to the plan and a “loan modification” portion to the plan.

The rules for refinancing depended on whether your loan was owned by Fannie Mae or Freddie Mac and we talked about how to tell if your loan was owned by Fannie Mae or Freddie Mac (see below).

At that point in time, if your loan was owned by Fannie Mae, you could use whatever lender you wanted to refinance your home under the Making Home Affordable plan (also known as the Obama Refinance). If your current mortgage was owned by Freddie Mac, the rules were that you had to use your current lender to refinance.

Not anymore.

Freddie Mac has announced that you can now refinance under the Making Home Affordable guidelines with whoever you want, you no longer have to go through the lender that you are currently with.

Highlights of the announcement:

You can work with your existing mortgage servicer to refinance your mortgage – and one benefit of working directly with your lender is that they will not have to re-underwrite your file.
If you choose to work with a different lender, they will be required to re-underwrite your file.
You can now roll in up to the lesser of 4 percent of the new refinance mortgage amount or $5,000 of closing costs, financing costs and prepaids/escrows.

According to Freddie Mac Executive Vice President Don Bisenius:

“We are responding to consumers’ desires to have more refinancing options. As an added benefit, we are expanding the program and providing greater flexibility in financing closing costs. Freddie Mac is committed to doing everything we can to bring the benefits of the Administration’s Making Home Affordable program to as many borrowers as possible.”

Does this mean that Freddie Mac has made it easy to use whatever lender you want when trying to refinance your home under the Making Home Affordable plan?

Not really.

But at least it is now possible.

Hurry before mortgage rates go up!

Related Information:

Find out if your loan is owned by Fannie Mae.

Find out if your loan is owned by Freddie Mac.

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Filed Under: Government Tagged With: freddie mac refinance, Making Home Affordable, making home affordable freddie mac, making home affordable refinance

Neighborhood Stabilization Program in Arizona: Free Money

Tough Choices: What To Do When You Owe Far More Than Your Home Is Worth

Are You Self Employed? Be Ready To Show All Income When Applying For A Mortgage

Arizona Jumbo Mortgage Loans: Ballpark Estimates

Arizona Mortgage Fraud: Investigated By FBI

Are Any Lenders Doing The 8000 Tax Credit Monetization?

Obama Refinance: Is 105% Going To 125%?

Monetizing 8000 Tax Credit for New Home Buyers: Popular Questions and Answers

Making Home Affordable Refinance: Freddie Mac Changes Rules

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