Tag Archives: mortgage loan

87% of Homes Qualify for Down Payment Aid

February 5, 2015 jd

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More prospective home buyers would likely qualify for down payment assistance than they think. Indeed, more than 68 million single-family and condo households – or about 87 percent — would qualify for a down payment program available in the county where they are located, according to a new study by Down Payment Resource and RealtyTrac in an analysis that included a look at nearly 2,300 down payment programs nationwide.

“Many homebuyers, especially Millennials, haven’t fully investigated their home financing options because they are pessimistic about qualifying for a mortgage,” says Rob Chrane, president and CEO of Down Payment Resource. “Our Homeownership Program Index highlights the wide range and availability of down payment programs available to today’s homebuyers. In fact, 91 percent of the 2,290 programs in our registry have funds available to lend to eligible buyers. Plus, income limits vary depending on the market and programs extend beyond just first-time homebuyers. It’s important for buyers to research down payment programs as part of their loan shopping process.”

Read the rest of the story here

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Real Estate

Five Real Estate Predictions for 2015

November 19, 2014 jd

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Expect the home-purchase market to strengthen along with the economy in 2015, according to Freddie Mac‘s U.S. Economic and Housing Market Outlook for November.

“The good news for 2015 is that the U.S. economy appears well-poised to sustain about a 3 percent growth rate in 2015 — only the second year in the past decade with growth at that pace or better,” says Frank Nothaft, Freddie Mac’s chief economist. “Governmental fiscal drag has turned into fiscal stimulus; lower energy costs support consumer spending and business investment; further easing of credit conditions for business and real estate lending support commerce and development; and consumers are more upbeat and businesses are more confident, all of which portend faster economic growth in 2015. And with that, the economy will produce more and better-paying jobs, providing the financial wherewithal to support household formations and housing activity.”

Freddie Mac economists have made the following projections in housing for the new year:

Mortgage rates: Interest rates will likely be on the rise next year. In recent weeks, the 30-year fixed-rate mortgage has dipped below 4 percent. But by next year, Freddie projects mortgage rates to average 4.6 percent and inch up to 5 percent by the end of the year.
Home prices: By the time 2014 wraps up, home appreciation will likely have slowed to 4.5 percent this year from 9.3 percent last year. Appreciation is expected to drop further to an average 3 percent in 2015. “Continued house-price appreciation and rising mortgage rates will dampen affordability for home buyers,” according to Freddie economists. “Historically speaking, that’s moving from ‘very high’ levels of affordability to ‘high’ levels of affordability.”
Housing starts: Homebuilding is expected to ramp up in the new year, projected to rise by 20 percent from this year. That will likely help total home sales to climb by about 5 percent, reaching the best sales pace in eight years.
Single-family originations: Mortgage originations of single-family homes will likely slip by an additional 8 percent, which can be attributed to a steep drop in refinancing volume. Refinancings are expected to make up only 23 percent of originations in 2015; they had been making up more than half in recent years.
Multi-family mortgage originations: Mortgage originations for the multi-family sector have surged about 60 percent between 2011 and 2014. Increases are expected to continue in 2015, projected to rise about 14 percent.

Source: Freddie Mac

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Real Estate

Dramatic Easing of Mortgage Standards

October 23, 2014 jd

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)

Fannie, Freddie to accept lower down payment mortgages

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Real Estate

Buying a Home? Don’t Forget This Expense, Private Mortgage Insurance

June 9, 2014 jd

Sixty-five percent of home owners with private mortgage insurance say that the additional cost of PMI prompted them to pay a higher monthly mortgage payment than they had originally expected, according to a new survey released by TD Bank of more than 2,000 Americans who purchased a home in the past 10 years.

“PMI has had a definitive impact on many home buyers – including making them rethink or delay the purchase of a home in light of not being able to meet monthly mortgage payments,” says Michael Copley, executive vice president of retail lending at TD Bank.

Borrowers are required to get PMI if the loan exceeds 80 percent of the home’s value. The insurance protects the lender in case the borrower defaults on their loan.

Many buyers say that PMI has an impact on their home purchasing decisions. For example, 35 percent of people who purchased a home in the past two years said that PMI influenced their decision of which house to buy. Also, 53 percent reported facing a negative impact due to the additional cost of PMI. About 40 percent of those surveyed said that having to pay PMI forced them to curtail small and daily purchases or larger household purchases.

The survey showed that PMI is fairly common: 37 percent of those who purchased a home in the past 10 years said they were required to have PMI, and 43 percent in the past two years. Forty-five percent of home owners aged 18 to 34 years old have PMI; 37 percent of home buyers aged 35 to 54 have it; and 23 percent of people older than 55 had required mortgage insurance on their loans over the past decade, the TD Bank study found.

On average, home owners reported that PMI cost about $100 extra a month, according to the study.

Source: TD Bank and “Most Homebuyers Don’t See This Cost Coming,”” Credit.com (June 2, 2014)

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Real Estate

312,000 Residential Properties Regain Their Equity

June 7, 2014 jd

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FRIDAY, JUNE 06, 2014
About 312,000 residential properties regained equity in the first quarter of this year, raising the total of residential properties with equity to more than 43 million, CoreLogic reported Thursday in its annual home equity report.

Still, as of the first quarter, about 6.3 million homes – or 12.7 percent – have negative equity compared to 6.6 million or 13.4 percent in the fourth quarter of 2013. Negative equity refers to borrowers who owe more on their mortgage than their homes are currently worth.

What’s more, of the 43 million residential properties who do have equity, about 10 million have less than 20 percent equity, an at-risk position to be in if home prices were to fall, according to CoreLogic’s report. About 20.6 percent of all residential properties are in what’s considered such an “under-equitied” position.

“Despite the massive improvement in prices and reduction in negative equity over the last few years, many borrowers still lack sufficient equity to move and purchase a home,” says Sam Khater, CoreLogic’s deputy chief economist. “One in five borrowers have less than 10 percent equity in their property, which is not enough to cover the down payment and additional costs associated with a conventional mortgage.”

But CoreLogic is projecting an additional rise in home prices of 5 percent over the next 12 months which is expected to lift another 1.2 million properties “out of the negative equity trap,” says Anand Nallathambi, president and CEO of CoreLogic.

CoreLogic’s report shows the following states have the highest percentage of all mortgaged properties in negative equity:

Nevada: 29.4%
Florida: 26.9%
Mississippi: 20.1%
Arizona: 20.1%
Illinois: 19.7%
Source: CoreLogic

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CoreLogic: Year Over Year, the Negative Equity Share Has Declined by 3.5 Million Properties

Real Estate

May 2014 U.S. Economic and Housing Market Outlook

May 21, 2014 jd

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MCLEAN, VA–(Marketwired – May 19, 2014) – Freddie Mac (OTCQB: FMCC) released today its U.S. Economic and Housing Market Outlook for May, showing that regular supply and demand forces continue to produce unexpected results as the housing recovery readies to shift into a higher gear during the spring home buying season. The complete May 2014 U.S. Economic and Housing Market Outlook and forecast table are available here.

Outlook Highlights

Projecting new home construction to increase by 18 percent, and house price appreciation moderating to an annual growth of 5 percent in 2014.
Maintaining new and existing home sales at 5.5 million for 2014, the same as for 2013, as the inventory of homes available for sale remains low in many markets.
Single-family originations are expected to drop about 35 percent in 2014 relative to 2013, based on the large decline in refinance volume. Refinance is expected to represent about 40 percent of this year’s originations, down from about 60 percent in 2013.
While net household formation continues to increase, the overall level remains lower than what would be expected; stronger job and income growth are necessary to support additional household formation.
Expect the 30-year fixed-rate mortgage to gradually rise higher, ending the year around 4.6 percent. We expect fixed rates to rise gradually during the second half of the year in part as a result of the Federal Reserve’s “tapering” of net MBS acquisitions.

Quote
Attributed to Frank Nothaft, Freddie Mac vice president and chief economist.

“The housing recovery is struggling to shift into a higher gear, and obviously there are various imbalances holding this back from happening, but at the heart of the matter it comes down to jobs. Housing needs stronger, and just as important, sustained levels of job creation to get the housing engine firing on all cylinders. April’s jobs numbers were encouraging, and nothing will solve the supply and demand factors faster than keeping employment growth going. Until we see this happening, we’re revising our forecast lower in several areas on an annualized basis. While we still see an improving trajectory for the housing market, we’re pushing it out a few months from our earlier forecast because we expect GDP growth to pick up in the final three quarters of the year from what was clearly a dismal first quarter reading.”

Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation’s residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Today Freddie Mac is making home possible for one in four home borrowers and is one of the largest sources of financing for multifamily housing. Additional information is available at FreddieMac.com, Twitter @FreddieMac and Freddie Mac’s blogFreddieMac.com/blog.

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Real Estate

City of Grass Valley Has Funds for First Time Home Buyers

May 20, 2014 jd

The City of Grass Valley’s has available funding to provide down payment assistance to qualified low-income potential home buyers. This program is separate from the County’s and offers agents and their clients an additional funding source to access.

The City’s First Time Home Buyer Program, funded through the State of California Department of Housing and Community Development HOME Investment Partnerships Program, can provide gap assistance to qualifying individuals and families. Gap assistance enables these potential homeowners to borrow part of their down payment and/or closing costs from the City of Grass Valley through the HOME Loan Program. To be eligible, applicants must meet the following requirements:

Be a first-time home buyer, which is defined as an individual who has not owned a home during the three-year period before the purchase of a home with subsidy assistance.
The home being purchased cannot exceed a purchase price of $246,000.
The home being purchased must be located inside the city limits of Grass Valley.
Meet the program income eligibility, based on the U.S. Department of Housing and Community Development standards, developed for Nevada County/Grass Valley by size and income as follows:

Family size 1 2 3 4 5 6

Max. Income $38,650 $44,200 $49,700 $55,200 $59,650 $64,050

Please have interested applicants contact Beth Owens, City of Grass Valley Housing Technician, at (530) 274-4344 or beth@cityofgrassvalley.com for more information regarding the application process

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Real Estate

A Way to Complete With Cash Buyers

May 16, 2014 jd

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Buyers needing financing for their home purchase often struggle to compete with other buyers willing to pay all cash to close the sale. All-cash buyers are making up an increasing part of sales too. The National Association of REALTORS®’ latest existing-home sales report shows that in February all-cash sales accounted for 35 percent of transactions.

Some lenders are helping buyers better compete. Known as “pre-underwriting,” they’re putting loan applications through a more thorough venting process before the buyer even enters into a contract for a home, The New York Times reports.

For example, Luxury Mortgage in Stamford, Conn., has started pre-underwriting some of its clients. Unlike preapprovals for a specified loan amount, lenders take the approval a step further by thoroughly reviewing all documentation that would be required for a formal approval. This type of underwriting is being completed after a house is selected and an offer is accepted, but before the contract is in place.

Another lender – Mortgage Master in Walpole, Mass. – has also taken its preapproval process a step further. The lender says for some of its buyers it is verifying the same income and asset information upfront that it would typically do for a processed loan application. The aim is to put the borrower in the same position as a cash buyer, Paul Anastos, president of Mortgage Master, told The New York Times.

Nearly half of all home sales all-cash deals

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Real Estate

Better Days Ahead in Housing, Freddie Says

April 11, 2014 jd

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The housing market is stronger today than at any point since the Great Recession and has made progress in several key areas after hitting bottom in 2009, Freddie Mac reports in a blog post looking at the state of the housing market heading into spring.

Home sales are up 13 percent since their low point, Freddie Mac reports. Frank Notaft, Freddie Mac’s chief economist, predicts that home sales will rise about 3 percent in 2014.

Also, the agency reports that housing starts are up 50 percent since hitting bottom. Freddie Mac is predicting a nearly 20 percent increase in new-housing starts in 2014, “which will begin to help ease tight inventories in many markets.”

Housing prices have also been on the upswing, about 16 percent higher than their bottom in 2009, Freddie Mac reports. They expect home values to continue to rise this year, but at a more moderate 5 percent pace. Also, researchers say many markets are still posting housing values that are below their 2006 peaks.

Freddie Mac is forecasting mortgage rates to remain near their historic lows this year, but rates are expected to rise about a half-percentage point during the year to around a 5 percent average by the end of the year.

Source: “After Winter Chill, Time to Spring Forward,” Freddie Mac (April 10, 2014)
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Freddie Mac: “Fixed Mortgage Rates Tick Down”

Real Estate

4 Keys to Real Estate Recovery

January 17, 2014 jd

In order to have a fully recovered housing market and economic recovery, economists point to the need for four positive indicators:

1. A healthy job market with low stable unemployment;

2. Mortgage delinquencies that have returned to historical averages;

3. Home prices consistent with an affordable mortgage payment–to–income ratio; and

4. Home sales that are in the range of historical norms.

So, is the housing market inching closer?

Freddie Mac’s U.S. Economic and Housing Market Outlook for January takes a look at how the housing market is performing among these four indicators. Economists note that the unemployment rate — while inching down — still remains high at 6.7 percent. Meanwhile, mortgage delinquencies have fallen to 5.88 percent — nearly half of their peak rate but still higher than the national average of about 2 percent, Freddie notes.

Home prices still have some room to grow without outpacing income growth, economists say.

“From 1999–2006, mortgage payments on a hypothetical 30-year fixed-rate mortgage would have increased by 50 percent more than income growth,” Freddie Mac notes in the report. “Currently, payment-to-income ratios are only 60 percent of the level we had in 1999, suggesting room for continued housing growth.”

Finally, home sales have risen over the past two years but remain below levels from a nearly a decade ago. Home sales, historically, average a rate of about 6 percent of the housing stock every year. They dropped to 4 percent during the housing crisis. Economists are predicting a 5.7 percent pace in 2014.

“As we start 2014, the housing recovery continues its steady pace,” Frank Nothaft, Freddie Mac’s chief economist. “House-price gains will likely moderate from last year’s pace but rise about 5 percent in national indexes. Home sales, as well as other key indicators, continue to trend in the right direction, although in some markets we are seeing the sales recovery strengthen while many others remain weak.”

Source: Freddie Mac and “Are We There Yet? Freddie Mac Says Recovery Has a Ways to Go,” Mortgage News Daily (Jan. 16, 2014)

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