Karl's Mortgage and Related Info Site

New HUD Policy Created to Allow Quicker Foreclosure Re-sales!

Effective February 1, 2010 the Department of Housing and Urban Development (HUD) will relax FHA rules that prohibit insuring mortgages on homes that are owned by the seller for less than 90 days - a move that could help expedite the rehabilitation and resale of foreclosure properties.

In a housing market where tighter lending requirements have made FHA financing the only option for some buyers, this 90-day policy has (1) kept some homebuyers from being able to purchase affordable homes and (2) prevented the quick resale of foreclosed properties, which affects the ability of communities to stabilize and rebuild.

Research has shown that the buying, fixing, and reselling of foreclosed properties is often achieved in less than three months time.

The temporary waiver, which will expand access to FHA mortgage insurance to many, will be in effect for a period of one year, unless extended or withdrawn by the FHA. With this in mind, now may be an excellent time to contact clients who have recently purchased a foreclosed property and those who may be on the fence about purchasing a foreclosure as a short-term investment.

"FHA borrowers, because of the restrictions we are now lifting, have often been shut out from buying affordable properties," said FHA Commissioner David H. Stevens. "This action will enable our borrowers, especially first-time buyers, to take advantage of this opportunity."

To ensure FHA borrowers are protected from inflated prices, the policy has certain restrictions, including:

• All transactions must be arms-length and there can be no identity of interest between the buyer and seller.
• If the sales price of the property is 20 percent or more above the seller's acquisition cost, the lender must meet specific conditions for the waiver to apply.
• The waiver is limited to forward mortgages, and cannot be used under the Home Equity Conversion Mortgage (HECM) purchase program.

You can read the full text of the waiver on HUD.gov.

Karl Peidl
Accredited Loan Consultant
Pleasant Valley Home Mortgage Corp.
Phone: 856-252-1224
Cell: 609-254-6687
kpeidl@pvhmconline.com
www.karlpeidl.com

Avoid Changes to Your Financial Profile
During the Loan Process

 

Once your loan package has been sent to the lender, there are a number of things you should avoid doing that will change your financial picture. Remember, the lender is looking for stability and consistency. If you want the best interest rate, keep that in mind. Here are a few things to consider:

The lender is looking to see what your source of down payment is.

Your lender will most likely ask you to provide proof of your liquid assets. This includes bank statements for checking and savings accounts, verification of investments, and any other liquid assets. Some of the things they ask for may seem trivial, but keep in mind, if you are planning a move to a new home, it's important to have all documentation readily available. If the lender asks for cancelled checks or deposit receipts to meet certain conditions, you want to be able to find these things quickly to avoid delaying the closing of your loan. Make sure your paper trail is easy to document, and don't move money from one account to another.

Major purchases tip the scales against your favor.

Avoid making any major purchases. You might be thinking about purchasing new appliances for the new home. This is not the time to do it. Avoid making any major purchases on jewelry, appliances, furniture, vacations, or anything with a significant price tag.

Buying or leasing a car can make a negative impact on the way the lender views your financial status. This is a big ticket item that dramatically affects your debt-to-income ratio. You may feel you have room in your budget to purchase a new car, and think this is a worthy investment if you are looking for a home that will mean a longer commute for you on a daily basis. But by tacking a car payment onto your existing debt, you reduce the amount that you will qualify for in a home loan. A $400 a month car payment can reduce your approved loan limit by as much as $50,000. Think about doing this after your loan is approved if you really need it.

If you have to change jobs, you may be asked to document why this change occurred.

If you are changing jobs to increase your income, that's a no-brainer for the lender. If you have an erratic work history to start with, another job change may make it look worse for you.

If you are an hourly wage employee, most likely a job change will have no effect on your ability to qualify for a loan. If you have a track record of a consistent amount of overtime or consistent bonuses over the last two years, the lender views this favorably. If you change jobs, there is no way of knowing if the new employer will pay overtime. Many do not! If you work on a salary + commission or straight commission basis, it has a dramatic effect on your stability. If you are considering starting your own business, again, this is something to consider after your loan is funded.

Call me directly for a free consultation.

 

Karl Peidl
Accredited Loan Consultant
Pleasant Valley Home Mortgage Corp.
Phone: 856-252-1224
Cell: 609-254-6687
kpeidl@pvhmconline.com
www.karlpeidl.com

 

 

Mortgage pricing ended the week slightly better by about .300 and kept the 30-year conforming fixed mortgage rate around 5.00%,

The Employment report was weaker than expected last week and the unemployment rate remained at unchanged at 10.0%.

The release of the Fed minutes was no surprise- they are committed to keep rates low "for an extended period of time." The minutes also revealed they care contemplating the continuation or extension of the MBS purchase program which has helped keep mortgage rates low through 2009. If they do not, the market will have to organically absorb $15-$20 billion per month on it's own- likely to increase rates due to supply/demand dynamics.

The Week Ahead:

While this week will bring us a few data points that could move markets, it will mostly be about the Treasury Note auctions. We have 3yr, 10yr, and 30yr Note auctions this week (Tues-Thurs) that will be very important. If these auctions go well- we could see mortgage pricing improve slightly more this week, but if these auctions do not go well, we could see mortgage rates back on the path to going higher.

On Thursday we will get a look at how retail sales are going as well as the weekly jobless claims.

On Friday we will get a look at how consumers are feeling and a view of how inflation is (or is not) working it's way through the economy with the CPI report.

Monday: No important data. We do have a 10-year inflation indexed note auction at 1:00.

Tuesday: We have the 3-year note auction at 1:00 and this could set the tone for the rest of the week, although the markets will be watching the 10-yr and 30-yr much closer on Wed and Thurs.

Wednesday: We get the very important 10-yr note auction at 1:00 and the Fed releases the Beige Book at 2:00.

Thursday: Retail Sales - we get a look at the retail sales report and traders will be watching closely. We also get the Weekly jobless claims report at 8:30 and the 30-yr note auction at 1:00.

Friday: We get a view of inflation at the consumer level with the CPI report at 8:30 as well as a look at how consumers feel with the Univ. of Michigan Consumer Sentiment report at 9:55.Mortgage pricing was a little volatile last week, but ended the week unchanged. However, mortgage rates moved up by .60 for the month of December, or down by about 200 bps in price/rebate. We are still hovering around 5.00% for a Conv. 30-Year fixed mortgage.

It appears low mortgage rates will be with us at least until the Fed's MBS purchase program comes to an end in March 2010 as scheduled. There are many speculating that the Fed may find a way to extend this program in some form to continue to support housing as it appears to be just getting legs under it. Low market rates in general will be with us for "an extended period of time" as committed by the Fed and Ben Bernanke. While there are discussions around possible exit strategies, none of the members seem to feel that any immediate or urgent action must be taken anytime soon relative to market rates.

If the data continues to support an economic recovery, we expect mortgage rates to wander in a range from about 5.00% to 5.25% on the Conv. 30-year fixed, but to be choppy over the next 60 days.

Mortgage Market Advisory Disclaimer

This is only our opinion and cannot be guaranteed to be in the best interest of any or all parties. This service is provided for informational purposes only and is not intended for trading purposes. None of the information provided constitutes a solicitation, offer, or recommendation by NHLA to buy or sell any security, or to provide legal, professional, tax, accounting, or investment advice. Every lender's price desk has their own strategies and reactions to market movements. Our information is simply based on market movements and does not predict or report potential pricing adjustments by particular lenders.

Karl Peidl
Accredited Loan Consultant
Pleasant Valley Home Mortgage Corp.
Phone: 856-252-1224
Cell: 609-254-6687
kpeidl@pvhmconline.com
www.karlpeidl.com

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