Tag Archives: lenders

Real Estate

Dramatic Easing of Mortgage Standards

 

Photo courtesy of ims.net
Photo courtesy of ims.net

Federal Housing Finance Agency Director Mel Watt on Monday announced plans to expand home buyers’ access to mortgages by loosening up lending standards.

During the Mortgage Bankers Association‘s annual conference, Watt said FHFA will release guidelines “in the coming weeks” to allow increased lending to borrowers with down payments as low as 3 percent. FHFA, which regulates Fannie Mae and Freddie Mac, also will help lenders who sell loans to the mortgage giants by easing standards on borrowers who don’t have perfect credit profiles. The move is expected to help open up the credit box to first-time buyers, self-employed borrowers, borrowers who have had recent job switches, and borrowers who faced financial hardship during the recession.

Watt said on Monday that Fannie and Freddie would not force repurchases from lenders of mortgages that are later found to have minor flaws in them, as long as borrowers have kept up with their mortgage payments for 36 months. Watt also said that lenders wouldn’t be forced to buy back bad loans if flaws were later discovered in the reporting of borrowers’ finances, debt loads, and down payments — as long as the borrowers would have qualified for the loans had the information been accurate.

“Minor, immaterial loan defects should not automatically trigger a repurchase request,” says David Stevens, CEO of the Mortgage Bankers Association. “As a result, lenders will be more confident in offering mortgages to qualified borrowers.”

FHFA said it will clarify to lenders when it will force buy-back loans that were issued based on inaccurate information. FHFA acknowledges that it failed to provide lenders with enough clarity in the past. That caused lenders to get cautious with lending after facing a flood of high-dollar settlements from loans they issued that later turned sour.

“We know that this issue has contributed to lenders imposing credit overlays that drive up the cost of lending and also restrict lending to borrowers with less than perfect credit scores or with less conventional financial situations,” Watt said. Addressing such issues are “critical to ensuring that there is liquidity in the housing-finance market and to providing access to credit for borrowers.”

Source: “Regulator Unveils Plan to Spur Lending by Fannie, Freddie,” Los Angeles Times (Oct. 20, 2014) and “Fannie-Freddie Clarify Buyback Rules in Bid to Ease Credit,” Bloomberg (Oct. 20, 2014)

Related articles

Please help to keep this blog going
Let us Sell or help you buy your new home or land

John J. O’Dell Realtor® GRI
O’Dell Realty
(530) 263-1091
Email John

BRE#00669941

Real Estate

Major Foreclosure Servicer Charged With Forgery

 

Photo courtesy of Riverfront Times
Photo courtesy of Riverfront Times

Finally, someone is getting indicted for robo signing. Robo signing, if you haven’t heard or know what it was, is having  employees signing thousands of  false mortgage documents. Read the story below from the New York times for further explanation:

“DocX, one of the largest companies in the nation to provide foreclosure services to lenders nationwide, has been indicted by a Missouri grand jury on forgery charges stemming from foreclosures against home owners in the state.

The indictment marks one of the “few criminal actions to follow reports of widespread improprieties against home owners” nationwide, The New York Times reports.

According to the indictment, DocX is accused of making “mass-produced fraudulent signatures on notarized real estate documents” and could face up to 136 counts of forgery in the preparation of documents used to evict defaulting home owners from their homes. DocX could face a fine of up to $10,000 for each forgery conviction.

DocX is a unit of Lender Processing Services of Jacksonville, Fla. The company is accused of executing and notarizing millions of mortgage documents for banks and lenders the last few years. Lender Procession closed in April 2010 after allegations surfaced of alleged forged documents.

Some of its employees were also indicted last week and could face several years in prison if found convicted.

An attorney for DocX says the company will enter a plea of “not guilty” and declined to comment further about the charges.”

Source: “Company Faces Forgery Charges in Mo. Foreclosures,” The New York Times (Feb. 6, 2012)

Related articles

Thinking of buying or selling?
For all your real estate needs
Email or call:
John J. O’Dell Realtor® GRI
(530) 263-1091
Email jodell@nevadacounty.com

Enhanced by Zemanta
Real Estate

Shopping For The Best Mortgage Interest Rates

Loans
Image by jferzoco via Flickr

 

 

 

 

 

 

 

 

Shopping for the best rates
Interest rates are the lowest in decades, enticing many borrowers to shop for a loan.  Mortgage lenders adjust their rates based on perceptions of risk, so unless the borrower can show they’re a low-risk individual, the borrower is unlikely to qualify for a rate that matches those seen in recent advertisements and headlines.

  • The rates quoted are averages drawn from a variety of financial institutions, and lenders use varied approaches to set them.  Consumers who want to try for the lowest rates available need to consider basic factors, such as credit score, points, property type, down payment, and length of the loan.
  • Credit score: The ideal borrower has a FICO score of 740 or higher, which puts the individual in the best place for pricing.
  • Points: The lowest rates usually are decreased by paying a fee called a point, or 1 percent of the loan amount.  Borrowers may buy points in order to get the best rates at many banks.  Points might make sense depending on the borrower’s financial situation and how long they expect to stay in the home.
  • Property type: Borrowers planning to buy a duplex or a four-unit build likely will have a higher interest rate.  Condominiums also may have a rate premium rate, especially if they are newer or the down payment is less than 25 percent.  Lenders also may charge more if the borrower is not planning to live in the home.
  • Down payment: Borrowers who put down at least 25 percent are more likely to obtain the best interest rates.  Lenders offer different breaks on rates if equity in the property is higher, so borrowers should ask what is available.
  • Length of loan: Borrowers who are likely to move in a few years may want to look into an adjustable-rate loan with a low interest rate fixed for a few years, and adjusted afterword.

 

Read the full story

 

 

Related articles

Thinking of buying or selling?
For all your real estate needs
Email or call:
John J. O’Dell Realtor® GRI
(530) 263-1091
Email jodell@nevadacounty.com

Enhanced by Zemanta
Real Estate

Good Rental History Can Help Borrowers


First-time home buyers planning to purchase a house later this year may have a better chance of qualifying for a mortgage if they have had a history of paying their rent on time.

  • Last year, credit-reporting agency Experian added a section to millions of credit reports showing on-time rent payments and raised the credit scores of many people.  The company said that this year it would add in negative marks, including mentions of bounced checks or of tenants’ leaving before a lease was up.
  • Incorporating rental payments into credit scores could affect millions of people who have not established credit histories through credit cards, student loan repayments, and other credit sources.
  • Almost half of consumers considered “high-risk” experienced an increase of 100 points or more after their positive rental history was added, according to Experian’s rent bureau.  Those with average or higher scores did not experience major movement.
  • Although it is still too early to show the effects of the new credit report, which began in December, the changes are intended to allow lenders and consumers to have greater transparency, according to Corelogic.
  • People who have lost their homes to foreclosure and are now leasing may be able to rebuild their credit histories by being responsible renters.
  • However, consumer groups and advocates are skeptical, noting that reports are sometimes riddled with mistakes and some landlord-tenant disputes may be difficult to capture in a credit report.  Rent may not have been paid, for example, because the furnace was left unrepaired for months.

Read the full story

Related articles

For all your real estate needs:
Call or email
John J. O’Dell Realtor® GRI
Real Estate Broker
(530) 263-1091
Email jodell@nevadacounty.com

DRE #00669941

 

Enhanced by Zemanta
Real Estate

Lots of Home Bargains, But Few Willing Lenders

Bank of America Nevada City Photo by John J. O'Dell
Bank of America Nevada City Closing in 2012 Photo by John J. O'Dell

Faced with finicky lenders, would-be home buyers are increasingly turning to family members, friends, and even strangers they meet online.  While this is understandable, given the abundant bargains on the market, they also present significant risks.

  • So-called peer-to-peer lending sites, such as Prosper and Lending Club, say demand for home-related financing is on the rise.  In September, Weemba, a social-networking site, launched a platform to connect lenders directly with prospective home buyers and other borrowers.
  • Despite historically low mortgage rates, traditional lenders remain reluctant to provide mortgages to anyone with less than stellar credit.  And, in certain markets, lenders are requiring down payments of more than 20 percent of the home’s purchase price.
  • Borrowers taking loans from family members – so-called intrafamily loans – save on interest since family members are likely to charge less than the banks.  Additionally, parent lenders can earn a higher return from their child’s interest payments than they would on a certificate of deposit or money-market fund.  Under federal law, on a loan of more than nine years, parents must charge at least roughly 2.8 percent, in most cases.
  • Consumers who prefer to look for loans beyond the family can apply at peer-to-peer lending sites.  If approved for a loan after a screening by the companies, applicants may then receive money from investors.
  • However, these alternative routes to financing can be expensive for borrowers.  Rates at Lending Club run from around 7 percent to 28 percent.  At Prosper, rates run roughly 7 percent to 35 percent.  The companies say these rates, which are fixed, are higher than traditional mortgage rates in part because their loans are unsecured.

Real Estate

Co-signing Or Not To Co-sign?


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 co-signer 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 co-borrower, 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 co-signers 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 co-signing a mortgage must conduct due diligence.  First, the cosigner must understand why the family member or friend is asking for help.  Potential co-signers shouldn’t be afraid to look into the requester 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 co-signer’s report.

Read the full story

 

John J. O’Dell Realtor® GRI
O’Dell Realty
(530) 263-1091
jodell@nevadacounty.com

Real Estate

Banks Continue Their Tight Lending Practice, Shutting Out Home Buyers

Photo courtesy of Empirestatefx.com
Photo courtesy of Empirestatefx.com

We all know that this recession we are in now is all due to our banks and Wall Street. With their haste to make as much money as possible, by reducing lending requirements, they created a housing market that had only one direction to go., down. They created a wave of foreclosures, Wall Street firms going out of business, along with some of the banks which created this mess. (An excellent analysis of what happened is in the book “Inside the Big Short, The Doomsday Machine” by Micheal Lewis)

Now, to compound this mess, banks have tighten credit requirements for home mortgages to the other extreme.  What this means of course, is that it is not helping the housing market to recover.

Here’s a portion of an article appearing in the Wall Street Journal giving an example of the “new lending practices.”

“With the tightening of credit over the last few years by banks, more potential buyers find they are being shut out of home ownership, unable to obtain financing for their home purchase. And it’s not just buyers with poor credit histories being rejected for home loans–some buyers are even coming with stellar credit scores and big down payments, experts say.

For example, Amy Menell told The Wall Street Journal how a bank denied her for a home loan, despite her credit score being above 800, no debt, and having a down payment of more than 50 percent of the cost of the $400,000 home. However, Menell, who was in the process of finalizing a divorce, works as a real estate agent and didn’t have much income in 2009. While her business has picked up since then, she did not have the two years of documented income the banks wanted to process her loan application.

Other qualified buyers coming with good credit scores and credit histories are also finding themselves unable to get a home loan. Those who are having the toughest time are those who have seen their incomes drop or interrupted by a time of unemployment and self-employed applicants.

The percentage of mortgage applications rejected by the nation’s largest lenders increased last year: The country’s 10 largest mortgage lenders denied 26.8 percent of loan applications in 2010, which is up from 23.5 percent in 2009, according to an analysis by The Wall Street Journal.

The analysis showed denial rates for loans were highest in Miami, Detroit, and New Orleans. In Miami, for example, nearly 44 percent of home loan applications were denied last year (home prices in Miami have dropped by 50 percent since their 2006 peak), according to The Wall Street Journal. Lenders denied the fewest loans in Raleigh, N.C.; Bethesda, Md.; and San Jose, Calif.

An Ease in Sight?

Banks continue to be under pressure to avoid heavy losses, which fueled the tightened standards in the first place.

“Clearly we got too loose. This is a return to historical standards,” says Doug Duncan, Fannie’s chief economist.

Lenders don’t appear to have plans to ease credit soon either. Nearly four in 10 banks reported even tighter mortgage lending standards for the 12-month period ended in February, according to a survey by the Office of the Comptroller of the Currency. Only 8 percent of the banks surveyed said they had eased their credit standards”

Source: “Tighter Lending Crimps Housing,” The Wall Street Journal (June 25, 2011)

So let me know what you think.

Need help with a short sale?
Call or email:

John J. O’Dell Realtor® GRI
Real Estate Broker
O’Dell Realty
9530) 263-1091
jodell@nevadacounty.com

Real Estate

California Sales, Price Snag in May

Photo courtesy of HDlost.com
Some times we just have dog days! - Photo courtesy of HDlost.com

A weak economy and tightened financing conditions contributed to a slowdown in California home sales and median price during May, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported yesterday.

  • Home sales in May declined 5.8 percent from April and 14.4 percent from the previous year, while closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 471,840 units.  The statewide sales figure represents what would be the total number of homes sold during 2011 if sales maintained the May pace throughout the year.  It is adjusted to account for seasonal factors that typically influence home sales.
  • “Market demand has been sluggish as would-be home buyers remain concerned about the direction of the economy. They may also be weary of delays in the buying process and difficulty in getting a home loan,” said C.A.R. President Beth L. Peerce.  “This, combined with lenders putting distressed properties on the market at a more deliberate pace, is contributing to homes sitting on the market longer.”
  • The statewide median price of an existing, single-family detached home sold in California edged down 0.7 percent in May to $291,760 from a revised $293,800 in April.  May’s median price was down 10.9 percent from the $327,460 recorded in May 2010.
  • C.A.R.’s Unsold Inventory Index, which indicates the number of months needed to deplete the supply of homes on the market at the current sales rate, rose to 5.4 months in May, unchanged from April, but up compared with May 2010’s 4.5-month supply.
  • The median number of days it took to sell a single-family home was 51.8 days in May 2011, compared with 37.8 days for the same period a year ago.

Read the full story

For all your real estate needs, call or email:

John J. O’Dell Realtor®
Real Estate Broker
O’Dell Realty
9530) 263-1091
jodell@nevadacounty.com

Real Estate

You Own My Mortgage? Prove It

Delinquent home owners are finding a wild-card in saving their home from foreclosure. In court, more home owners are successfully arguing that their mortgage companies can’t prove they own the loan and don’t have the right to foreclose on them.

The Wall Street Journal reports: “In some cases, borrowers are showing courts that banks failed to properly assign ownership of mortgages after they were pooled into mortgage-backed securities. In other cases, borrowers say that lenders backdated or fabricated documents to fix those errors.”

In a few cases, home owners have even had their foreclosures reversed as courts blame lenders’ sloppy paperwork.

Some argue that borrowers are using “arcane legal rules” to get free houses when not paying their bills. Banking industry lawyer Laurence E. Platt at K&L Gates in Washington says “the real assault on the legal system” are efforts by judges and local officials to not give lenders their rightful ownership and make foreclosures nearly impossible.

However, attorney Thomas Ice in Royal Palm Beach, Fla., argues that borrowers shouldn’t have to tolerate incomplete or falsified evidence by lenders.

Source: “Banks Hit Hurdle to Foreclosures,” The Wall Street Journal (June 1, 2011)
For all your real estate needs, call or email:

John J. O’Dell Realtor® GRI
Real Estate Broker
O’Dell Realty
(530) 263-1091
jodell@nevadacounty.com

Real Estate

Many Homeowners Refinancing Mortgages to Shorter Terms


Borrowers who can afford higher mortgage payments, and who meet lenders’ stricter loan guidelines, often opt to replace their 30-year mortgages with shorter term loans at near-record low rates.

  • The latest Freddie Mac quarterly survey of homeowners who refinanced found that more than one in three borrowers who refinanced from a 30-year fixed-rate loan opted to replace it with 15-year or 20-year mortgages at near-record low rates.
  • Homeowners considering refinancing into a shorter-term mortgage must have the income or financial reserves sufficient to pay the extra money each month.
  • Borrowers not only need to have the income or financial reserves, they also have to qualify for a refinance, have the credit score needed, and the home appraisal to support it.
  • For some low-cost refi programs, lenders want to see at least 25 percent equity in the house.  Higher FICO credit score requirements by Fannie Mae and Freddie Mac are another impediment, as both companies reserve their best rates for borrows with FICO scores of 740 or higher.

Read the full story

For all your real estate needs, call or email:

John J. O’Dell
Real Estate Broker
O’Dell Realty
(530) 263-1091
jodell@nevadacounty.com