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Having Trouble Making Your Mortgage Payment? Bailout Talk Live On KTAR!
Arizona Mortgage Team on KTAR Radio
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This morning we were live on the radio with KTAR superstar Darrell Ankarlo talking about the 700 billion bailout and what it means to people who are having trouble making their mortgage payment. The discussion centered around “what should I do if I am having trouble making my mortgage payment?”
My general answer was “keep talking to your lender about what your options are because the rules are changing almost daily about what lenders are and aren’t willing to do. If you spoke to your lender last week and they told you that they couldn’t help you, call back again this week. And next week. And the week after that.”
Why?
Because as I said on the air – the rules are changing and the federal government may soon be coming out with packages that will incentivize lenders to get better at working with borrowers.
Arizona Mortgage Rates for November 14, 2008
New Standard Good Faith Estimate Effective January 2010
Today it was announced that HUD has adopted a new 3 page Good Faith Estimate as part of its RESPA reform package that will be standard among all lenders and go into effect in January of 2010.
The new standard Good Faith Estimate is part of a RESPA Reform package that has been in the works for years. Before the announcement, HUD reviewed approximately 12,000 comments and in considering these comments made changes to what was going to be a 4 page Good Faith Estimate.
According to Brian Montgomery, HUD’s Assistant Secretary of Housing:
“We have carefully considered the concerns expressed from every corner of the mortgage market in developing this rule. I am convinced that we successfully balanced the needs of consumers with those in the business of homeownership. None of us can lose sight of the fact that millions of Americans simply don’t understand all the fine print of their mortgages and this, in many respects, is at the heart of today’s mortgage crisis.”
Personally? I think it is a good idea. It will help standardize information that the consumer is getting from different lenders so that the consumer can make an informed choice and more easily match up the Good Faith Estimate with the Final HUD-1.
See the new Good Faith Estimate Form.
See the new HUD-1 Settlement Statement Form.
Arizona FHA Reverse Mortgages: Bad Credit Doesn’t Matter
Are you over the age of 62 and currently late on your mortgage payment?
Here is something that I bet you didn’t know — according to a data provider that I use, there are currently 499 seniors in Arizona who are over the age of 62, have a loan-to-value ratio of 60% or less and they are currently late on their mortgage payment by either 30, 60 or 90 days.
When digging a little deeper into the “senior debt problems” that we have in our country, you don’ t have to look very far to see that credit card and bankruptcies among the senior population is rising. According to the National Consumer Law Center:
An increasing number of older consumers are experiencing problems with debt, often by using credit cards to pay for groceries, prescription drugs, major home repairs, loans to children or grandchildren, and other necessities. The average credit card debt of Americans over 65 increased by 89 percent between 1992 and 2001, from $2,143 to $4,041. Elders between 65 and 69 years old saw the most staggering rise in credit card debt—217 percent— to an average of $5,844.1 One study of individuals who file chapter 7 bankruptcy found that seniors (65 or older) on average have nearly four times as much credit card debt as filers under the age of 25.
So.
If you are a senior living in Arizona and are currently late on your mortgage payment, be aware that having good credit is NOT one of the criteria for qualifying for an FHA-insured reverse mortgage.
Is the FHA reverse mortgage program right for you?
If you are late on your mortgage payments, are over age 62 and have equity in your house… It just might be.
Reverse Mortgages: Top 10 Things HUD Wants You To Know
Many seniors are searching for more information about reverse mortgages and with the FHA-insured HECM Reverse Mortgage, FHA has done a nice job of putting some information out on their website about it.
Here is an parahprased list of the top 10 things HUD wants seniors to know about the HECM Reverse Mortgage program:
Top Ten Things to Know if You’re Interested in a Reverse Mortgage
1. What is a reverse mortgage?
A reverse mortgage is a type of FHA-insured loan that allows seniors to turn their home equity into cash. The equity can be paid to you in various ways (a lump sum, in payments or a line of credit) and you don’t have to pay it back until you no longer live in the home as your principal residence.
FHA’s reverse mortgage program provides these benefits and is also federally-insured so you won’t have to worry about any bank failures impacting your payments.
2. Can I qualify for a HUD reverse mortgage?
The FHA reverse mortgage program requires that you live in your home, have equity in your home and are age 62 or older. Credit scores, income or assets are not taken into account when qualifying for a reverse mortgage. Prior to closing, you will also need to attend a counselling session with an FHA approved counselor (aproximately an hour) who will be available to answer any questions you have about a reverse mortgage.
3. Can I apply if I didn’t buy my present house with FHA mortgage insurance?
Yes. It doesn’t matter what kind of mortgage you currently have on the house - or no mortgage at all.
4. What types of homes are eligible?
First, you must live in the property as your primary residence. Second, your home must be a single family dwelling or a two-to-four unit property. Townhouses, detached homes, units in condominiums and some manufactured homes are eligible. Condominiums must be FHA-approved. It is possible for individual condominiums units to qualify under the Spot Loan program.
5. What’s the difference between a reverse mortgage and a bank home equity loan?
In order to qualify for a home equity loan, you will need to have sufficient income, assets and credit scores. With a reverse mortgage, you can qualify as long as you are 62 or older, live in the property and have significant equity in the property.
If you select the “line of credit” option with a reverse mortgage, both a reverse mortgage and a home equity line of credit will allow you access to your money in much of the same way.
6. Can the lender take my home away if I outlive the loan?
No! You do not need to repay the loan as long as you or one of the borrowers continues to live in the house and keeps the taxes and insurance current. You can never owe more than your home’s value.
7. Will I still have an estate that I can leave to my heirs?
When you sell your home or no longer use it for your primary residence, you or your estate will repay the cash you received from the reverse mortgage, plus interest and other fees, to the lender. The remaining equity in your home, if any, belongs to you or to your heirs. None of your other assets will be affected by HUD’s reverse mortgage loan. This debt will never be passed along to the estate or heirs.
8. How much money can I get from my home?
The amount you can borrow depends on your age, the current interest rate, and the appraised value of your home or FHA’s mortgage limits for your area, whichever is less. Generally, the more valuable your home is, the older you are, the lower the interest, the more you can borrow.
9. Should I use an estate planning service to find a reverse mortgage?
HUD does NOT recommend using an estate planning service, or any service that charges a fee just for referring a borrower to a lender! HUD provides this information without cost, and HUD-approved housing counseling agencies are available for free, or at minimal cost, to provide information, counseling, and free referral to a list of HUD-approved lenders.
In order to get an FHA-insured reverse mortgage, you will need to work with an FHA approved lender and counselor. No estate planning services should be needed.
10. How do I receive my payments?
There are five options to receive your money. The most popular choices are probably “tenure” and “line of credit” and the least popular is “lump sum” because getting a lump sum can often lead to a loss of medicaid eligibility.
The five options are:
- Tenure - equal monthly payments as long as at least one borrower lives and continues to occupy the property as a principal residence.
- Term - equal monthly payments for a fixed period of months selected.
- Line of Credit - unscheduled payments or in installments, at times and in amounts of borrower’s choosing until the line of credit is exhausted.
- Modified Tenure - combination of line of credit with monthly payments for as long as the borrower remains in the home.
- Modified Term - combination of line of credit with monthly payments for a fixed period of months selected by the borrower.
2009 Arizona Conforming Mortgage Loan Limits
Loans that are able to “conform” to the underwriting guidelines of Fannie Mae or Freddie Mac are called “conforming” or “conventional” loans.
Conforming loans are probably the “most popular” option for people with decent credit, a job and a “normal” house because in order to get a conforming loan, you need all three. If one of the three criteria changes (credit, employment, loan amount) then you probably will choose a different type of loan for financing such as FHA, Jumbo, sub-prime or handful of other types of loans.
Today it was released that the 2009 Conforming Loan Limit is going to remain the same as it has been since 2006 — $417,000 for a 1 unit, single family residence. The loan limits for 2, 3 and 4 unit residences also stayed the same as they had been since 2006.
- 1-unit properties : $417,000
- 2-unit properties : $533,850
- 3-unit properties : $645,300
- 4-unit properties : $801,950
Now for the catch:
The maximum conforming loan limits don’t apply to areas that have been named “high cost” by the government.
There are 59 designated high-cost regions in the U.S. and most of them are in California.
For everyone in Arizona, the 2009 conforming loan limit is $417,000.
One question we got recently made us scratch our head…
“So how is it that Salt Lake is considered a high-cost area and Scottsdale isn’t?”
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Arizona Mortgage Newsletter
