Maryland Real Estate Blogsite » Financing Options

Everything about living in Howard County

specialed — Fri, 11 Mar 2011 19:21:46 +0000

Everything about living in Howard County

On April 9th, Over 40 exhibitors and educators alike will be on hand to pass along to your readers the “why” and “how” to live in Howard County. Real estate companies, mortgage brokers, housing specialists and county personnel will be in attendance. Everything from the mortgage process, to finding the right community, to the nuts and bolts of the home buying process will be covered. Here is some more information on the fair:
- http://howardcountyhousing.com/housing-fair

The fair is also being held in conjunction with the quarterly Moderate Income Housing Unit (MIHU) Housing Lottery. This program is a Howard County Government program that provides houses (both for sale and rentals) at affordable costs for moderate income families.

More information on the Housing Lottery can be found at:
- http://howardcountyhousing.com/housing-lottery

Fair

Education Sessions

Don’t Miss the 2011 Come Home to Howard County Housing Fair!

Saturday April 9, 2011 from 10:00am – 2:00pm

Long Reach High School

6101 Old Dobbin Lane
Columbia, MD 21045

FREE EVENT!

Click here to register now!

ONLY event where you can learn everything about living in Howard County.

Here’s your chance to talk ONE-ON-ONE with more than 40 mortgage lenders, homebuilders & remodelers, housing specialists and real estate experts! At this annual FREE event you will:

Meet real estate agents, mortgage lenders, housing specialists and county personnel.
Learn about buying a home, mortgage programs, and more at our signature education sessions.
Discover new communities and new homedevelopments on our narrated bus tour.
Enjoy some family FUN with plenty of kids activities!

Go to my Maryland Real Estate Web Page

Maryland Mortgage Loans and Solutions – Gordon Haraway

specialed — Wed, 11 Aug 2010 01:57:08 +0000

Gordon’s Mortgage News

Recent and Pending Changes for FHA loans

August 10th, 2010 4:27 PM

There are a number of changes that have taken place recently and more on the way in the FHA loan arena. Some of these changes are specific to certain lending situations so will not effect all loans, while others are global in nature so everyone will be affected. While there have been many changes of late and more possibly to come, this column attempts to highlight the changes affecting the most borrowers .

Mortgage Insurance: Currently the UP Front Mortgage insurance or (MIP) as it is known is 2.25% of the base loan amount. HUD Secretary Stevens announced this will be reduced to 1.0% while at the same time increasing the annual mortgage insurance from its current 0.55% to 0.90% This change will be in effect as of any new FHA case number issued starting September 7, 2010
Condo Rules: No more spot approvals, For FHA approval at least 50% of the units must be owner occupied.
Property Flipping: If a home is resold within by an investor less than one year after the investor purchase. The price appreciation may be limited to 20% of the investors purchase price. A second appraisal may be ordered to justify the new price and documentation may be required of the seller showing substantial improvements have been made to the home. This documentation may include, material receipts, contractor invoices ect. Tell your investors to take a lot of pics, before and after.
Credit Scores: FHA plans to impose a minimum credit score of 500 later this year, and scores 580 will need a down payment of 10%. Credit scores over 580 will still only need the FHA minimum 3.5% down payment. This rule is really a waste of in on paper since virtually all lenders now requires a minimum credit score of 620 and some are even require a score of 640.
Seller Concessions: FHA at present allows seller concessions up to 6% of the sales price. The new rule will be 3%. The new rule is expected to have a hugh impact on first Time Home buyers. This new rule is now in a comment period and is expected to be put into effect in the very near future.
Underwriting Guidelines: Changes have been made to the underwriting guidelines over the last few months. These changes will be incorporated into the revised 4155 lenders manual that should be updated in the near future. Until then all the recent changes are available on Hudclips, (under mortgagee letters) The 4155 lender manual and hudclips are both available on line at the HUD website.

Maryland Mortgage Loans and Solutions – Gordon Haraway Southern Trust Mortgage, specializing in helping home buyers realize the dream of home ownership. Purchase and Refinance home loans. Gordon Haraway is a Senior Loan Officer with Southern Trust Mortgage in Crofton MD (301) 938-1655

Treasury hopes new rules send short sales to the rescue of underwater mortgages

admin — Sun, 14 Mar 2010 04:35:29 +0000

This Article appeared in the Washington Post on March 13th, 2010

Treasury hopes new rules send short sales to the rescue of underwater mortgages

By Tracey L. Longo
Special to The Washington Post
Saturday, March 13, 2010; E01
With new Treasury Department rules designed to expedite short sales set to take effect April 5, relief can’t come soon enough for some area buyers, sellers and real estate agents who have waded through a long and arduous process to get short sales approved by the bank.
In a short sale, a homeowner sells the property for its current market value, which is less than what’s owed on the mortgage, and the lender agrees to accept the lower amount. The new rules that offer participating lenders cash incentives to get them to approve more short-sale deals also allow them only 10 days to approve or reject short-sale purchase offers, said Treasury spokeswoman Meg Reilly.
Incentive payments written into the Home Affordable Foreclosure Alternatives Program are designed to help offset some of the financial pain that banks experience when they agree to settle for less than they are owed on a home loan. Mortgage servicers (the companies that accept and process homeowners’ mortgage payments) may receive up to $1,000 for the successful completion of a short sale. Treasury will also pay up to $1,000 to those holding second liens and home equity loans, if they agree to the deal. While junior lien holders have begun to ask for more compensation, the rules now limit incentives to $3,000.
To help speed up short sales, the program calls for lenders to use standardized paperwork and to establish an acceptable sale price before the home is put on the market. Sellers will be allowed at least 120 days to market the home and possibly as long as one year. During that time, the lender cannot foreclose. At closing, the government will give sellers up to $1,500 to cover relocation expenses.
Banks participating in the program have also agreed not to negotiate reductions in real estate agents’ sales commissions after they receive a short-sale contract. Such commission reductions have discouraged some agents from listing and showing short sales, according to the National Association of Realtors.
According to the Treasury rules, a participating loan servicer must offer the short-sale program to a borrower who does not qualify for, or did not succeed at, a loan-modification under the administration’s home affordable mortgage program.
Nationally, 38 percent of all sales in January were distressed sales, which include short sales and foreclosures. In the Washington area, short sales accounted for 6 percent of all sales in Maryland and 8 percent in Virginia during the last four months of 2009. That number is expected to rise significantly in the next several months, according to NAR. Agents have not yet reported short-sale activity in the District.
Some who have worked with short sales, however, are skeptical that the new rules can compress the approval process into 10 days.
“I’ve done five short sales in the past year and, frankly, I don’t want to do another one,” says Cyndy Davis, president of Flaherty Group Realty in Kensington. Her most recent short sale, which required a sign-off from Bank of America, took 10 months.
“I contacted the bank at least every other day, and it still took them 90 days to respond to our first offer on a Silver Spring townhouse,” Davis said. “They took from June until August. Then when we ordered the appraisal, it came in $33,000 below my buyer’s offer. When we resubmitted the new offer, it took the bank another 45 days to respond.”
Mortgage servicers take 90 to 120 days on average to approve short sales, according to NAR.
Juwana Bauwens, a spokeswoman for Bank of America, acknowledged that the process did take that long.
“When the buyer lowered the offer, we had to almost start the process all over again,” Bauwens said. “Short sales are a very complicated process, and at times we have to get approval from the bank and the investor on the loan and the second lien holder. We are working on ways to improve technology and resources so we can get an approval in the hands of Realtors as quickly as possible.”
Sometimes buyers are willing to wait on what they believe is a good deal. Sometimes they walk away. Davis’s client, two aid workers currently stationed in Kenya, didn’t mind the 10 months it took to purchase the property. They bought the Silver Spring townhouse for $214,000. It originally sold for $380,000 in 2005 and had been on the market for 285 days.
Writing down loans is a tough business. Short sales involving home-equity lines and second liens often require the junior lien holders to write off the loans altogether. But when lenders hold on to offers, hoping that a better one will be presented, they risk not only losing the buyers, but that real estate prices will fall.
“We see this all the time,” Davis said. “Banks stop communicating as they wait for better offers. Then months go by.”
When an offer is finally accepted, if a home doesn’t appraise at the buyer’s first offer price, they lower their offer. That’s what Davis’s buyers did — lowering the offer on the townhouse by $33,000 after it didn’t appraise.
To avoid such long delays, the new Treasury rules requires banks to establish fair market-value prices on homes at the front end of the short-sale approval process, instead of waiting until after offers start rolling in. They can modify that price if a real estate agent is willing to sign an affidavit stating that the new price reflects its market value.
“I think if lenders can make it work, it could be amazing. But the issue we see time and again is a hold up getting banks’ approvals,” said Guled Kassim, who works on more than 40 closings a month as a settlement officer with Atlantic Title & Escrow in Bethesda.
“Banks have to be convinced that the sales price is market value and that a reduced payoff amount is better than foreclosure,” added Kassim, who bought a distressed property using Flaherty Group last year. “Essentially, you’re asking lenders to take a bath. It’s not a business model most companies have set up. They are very doubtful about pricing, which is why I think the 10-day timeline may be wishful.”
Pilot program launches
To quicken the pace of its own short sales, Bank of America has launched a pilot program for customers and real estate agents to help them through the process.
“If an offer is received, we will be in a position to approve the sale within two weeks,” Bauwens said. “This program is currently in a limited pilot stage, and we hope to expand it soon.”
The bank has also deployed a password-protected Internet portal that agents, sellers and bank employees can use to track short sales in real time, communicate and exchange documents, Bauwens said.
“We hope the new rules revolutionize the short-sale situation,” said Jeff Lischer, managing director of regulatory policy at NAR. “It has the potential — by setting deadlines, identifying property values upfront and providing standardized forms.”

Teachers, Firemen, EMT or Police Officers can Save 50% on new home!

specialed — Thu, 18 Feb 2010 19:37:57 +0000

Are you a teacher, fireman, EMT or police officer looking to purchase a new home?

If so, you can qualify for HUD’s Good Neighbor Next Door program and save 50% on the purchase of your home!.
WHAT IS THE GOOD NEIGHBOR NEXT DOOR PROGRAM?
• The Good Neighbor program is specially designed to help full-time firemen,
EMTs, police officers and teachers (pre-K- 12th grade) purchase affordable
homes in their community
• HUD will offer a 50% discount off of the purchase price of the home
• Home financing is available through FHA
HOW DOES THE PROGRAM WORK?
• The subject property must be located in a HUD revitalization area and be
listed for sale through the Good Neighbor Next Door program.
• The homebuyer can not have owned a home for a period of not less than
one year prior to submitting an offer
• The homebuyer must commit to living in the home as their primary residence
for three years
• HUD will subsidize the sales price of the home by 50% through a “silent”
second mortgage, which requires no payments or interest (provided the
homeowners fulfills the three year occupancy requirement)
• At the end of the three year period, the second mortgage is forgiven and the
homeowner keeps all equity in the home

Call Ed @240-375-2871 if you would like more information

Low Mortgage Rates, Catch Them While You Can

admin — Sat, 09 Jan 2010 13:56:28 +0000

Now might be the best time to lock in a low mortgage rate

Low interest rates have been gracing the real estate market with their presence for the past year but the word on the street is that they won’t be here much longer. While mortgage rates aren’t going to skyrocket out of sight, it is doubtful that they will decrease and certain that they will steadily begin to rise.

For those wishing to lock in at below 5%, the time just might be now or never (or at least for a very long time). This past week, the first week in January, the average 30 year fixed mortgage rate was 5.09%. The general sentiment among economists is that rates are not going anywhere but up from here.

The strengthening of the economy equals less chance for discounted rates. If you want to refinance or purchase real estate, now might be the best time to do so.

For more information on mortgage rates click here to look at a recent article from CNNMoney.com.

FHA May Be Changing the Rules and trying to close down more fraudulent lenders.

specialed — Wed, 09 Dec 2009 22:46:39 +0000

The Federal Housing Administration is proposing to increase the up-front cash paid by borrowers as part of an effort to shore up the agency’s finances, which have been staggered by rising defaults in its flagship mortgage insurance program, according to FHA officials.

The changes also include raising minimum credit scores for borrowers who receive FHA-backed mortgages and limiting the amount of money sellers can kick in, including paying closing costs or giving free upgrades.

These measures are designed to increase the amount borrowers invest in the homes they buy, thereby making it less attractive for them to default on loans and walk away from properties, as many people have done during the current housing crisis.

Housing and Urban Development Secretary Shaun Donovan is scheduled to announce the agency’s policy changes when he testifies Wednesday before the House Financial Services Committee.

The FHA has played a critical role in propping up the housing market by insuring lenders against default after the mortgage market unraveled. Currently, the agency backs about 30 percent of all loans for home purchases and 20 percent of refinancing. In the past, the FHA has resisted raising down payments or insurance premiums for fear of shutting out qualified borrowers and stunting the housing market’s slow but steady recovery.

But Donovan plans to tell the House committee that the exploding volume of loans the FHA is now handling requires stricter risk controls than the previous administration had in place, according to a copy of his prepared testimony. A recent audit shows that the FHA’s financial cushion already has eroded below the level required by law.

“We’ve learned from recent history that the market is fragile, and we have to plan for the unexpected,” Donovan’s prepared statement says. “That uncertainty is complicated by an organization we inherited that, to be honest, was simply not properly managing or monitoring its risk.”

By requiring that borrowers bring more cash to the table, the agency is seeking to ensure they have “more skin in the game and a stronger equity position in their loans,” Donovan says. But he does not specify the size of the proposed increase. FHA officials said they have yet to determine how much cash will be required.

“There are several ways to accomplish this, and so we are currently analyzing various options to determine which is the most effective and consistent with our mission,” Donovan says.

Up-front cash can include down payments as well as other payments. For now, FHA borrowers can put down as little as 3.5 percent, a level that many FHA critics say is too low. One lawmaker has introduced legislation that would boost the minimum down payment to 5 percent.

As for seller concessions, the agency now allows sellers to kick in 6 percent of the home’s value. Donovan said he wants the maximum permissible level to be lowered to 3 percent, in line with industry norms.

Agency staff are reviewing whether to increase the monthly insurance premiums charged to borrowers, officials said. These payments come on top of insurance paid up front.

The current up-front premium is set at 1.75 percent of the value of the loan. FHA may decide that an increase in that premium is needed also, officials said.

To protect itself against the riskiest borrowers, the agency has decided “for the time being” to raise its minimum credit score requirements for new borrowers. Again, FHA staff are still analyzing what the new threshold should be, Donovan’s prepared testimony says.

The minimum credit score requirement is now so low — 500 out of a possible 850 — that it’s basically irrelevant. Many lenders that make FHA-insured loans impose much tougher restrictions. The concern is that if FHA does not toughen up, abusive lenders will get away with financing risky, poor credit borrowers already rejected by more reputable lenders.

Most of the new initiatives do not require congressional approval. Many have previously been suggested by critics and even supporters of the agency.

These measures are meant to build on other actions the FHA has taken to curb its risk and beef up its eroding cash reserves.

An audit released last month found that the agency’s cash reserves have shrunk to a level far below what is required by law, and the agency could need taxpayer funding if worst-case scenarios play out.

The audit, designed to measure the agency’s financial health, examined the excess cash the agency must set aside to deal with unexpected losses and found that those reserves were at about $3.6 billion as of Sept. 30, a drop from the $12.9 billion available a year earlier. The current total represents 0.53 percent of all outstanding single-family-home loans insured by the FHA, well below the 2 percent threshold set by law. This is the first time reserves have fallen under that level since 1994.

To stop the financial erosion, the FHA has focused in part on weeding out abusive lenders. This year, the agency has suspended business with seven lenders, including the now-defunct Taylor, Bean and Whitaker. It has withdrawn FHA-approval for 270 others, including Lend America. On its Web site Tuesday, Lend America said it has ceased its loan origination and operations, effective immediately.

The FHA is currently working on a new rule that would require banks it does business with to have up to $2.5 million in capital that they can use to repay the agency for losses if they were involved in fraud. Now, they are required to hold only $250,000.

On Wednesday, Donovan will ask Congress to grant the agency more authority to close down abusive lenders.

Be Aware That Freddie Mac Has Introduced New Fees And Has Increased Others

specialed — Sat, 21 Feb 2009 18:36:42 +0000

Since home prices have continued to fall, Freddie Mac has determined that they are at a heightened risk of many more mortgage defaults and claims. They report that there may be even more of a housing price decrease in 2009. In light of this news they have increased several fees and added new ones. One of their new fees is a 0.75% fee of the loan amount on certain condominium mortgages when the loan equals more than 75% of the estimated condominium value. Their increases include fees on the following types of mortgages:

Loans that let borrowers pay interest in the primary years and defer principal payments
Refinance loans that allow the borrower to cash out some of their home equity
Loans with certain combinations of low credit scores and down payments
Condominium mortgages

The National Association of Realtors and the National Association of Home Builders have protested these increases, as they claim that these additional costs are discouraging potential home buyers and people considering refinancing their loans.