Today's Mortgage View in Utah: November 2009

Wednesday, November 25, 2009

News from Freddie Mac Regarding Loan Prospector

I wanted to make you aware that there are some changes coming to LP (Loan Prospector). Please read the following:

On December 13, we’re updating Loan Prospector to align with previously announced underwriting and credit requirement changes. To help you identify these changes at origination, Loan Prospector will be updated with new and revised feedback messages to reflect:

• Revised underwriting requirements announced in our July 10 Single-Family Seller/Servicer Guide (Guide) Bulletin 2009-18.

• Revised credit and property eligibility requirement changes announced in August 20 Guide Bulletin 2009-22 and October 9 Guide Bulletin 2009-24.

We are also updating Loan Prospector to reflect the reduced maximum loan-to-value (LTV) ratios for all cash-out refinance mortgages secured by 1-unit primary residences announced in the October 9 Guide Bulletin 2009-24.

New and Updated Feedback Messages to Support Revised Underwriting Requirements

On December 13, we are adding new and updated Loan Prospector feedback messages to provide you with additional guidance on our revised underwriting requirements announced in our July 10 Guide Bulletin 2009-18 for employment, income and assets. As announced in our October 9 Guide Bulletin 2009-24, these changes are effective for all mortgages with application dates on or after December 14, 2009, and Freddie Mac settlement dates on or after April 1, 2010.

Review the attached at-a-glance chart for the new and updated feedback messages, effective on December 14 for all Loan Prospector submissions, including new submissions and pipeline loans.

We encourage you to begin underwriting mortgages with the underwriting requirements announced in the HYPERLINK "http://www.freddiemac.com/sell/guide/bulletins/pdf/bll0918.pdf"July 10 Guide Bulletin 2009-18 prior to the December 13 Loan Prospector release to strengthen your origination process and enhance the quality of mortgages you deliver to Freddie Mac. For assistance, please use the Loan Prospector Processing Reminders for Mortgages With Submission Dates Prior to December 14, 2009 tool. This tool provides the necessary information to apply the manual overlays and manage the existing Loan Prospector feedback messages.

New and Updated Feedback Messages to Reflect Recent Single-Family Seller/Servicer Guide Changes

On December 13, we are also updating Loan Prospector with the following new and updated feedback messages to support credit and property eligibility requirement changes announced in the August 20 Guide Bulletin 2009-22 and October 9 Guide Bulletin 2009-24.

The new and revised feedback messages are effective for all new submissions and resubmissions on or after December 14, 2009.

Updating Loan Prospector to Align With Revised Loan-to-Value Ratios for Cash-Out Refinance Mortgages

In our October 9 Guide Bulletin 2009-24, we lowered the maximum loan-to-value (LTV) without and with secondary financing/total LTV (TLTV)/home equity line of credit TLTV (HTLTV) ratios for cash-out refinance mortgages secured by one-unit primary residences from 85%/80%/85%/85% to 80%/75%/80%/80%. This change is effective for mortgages with settlement dates on or after February 1, 2010.

On December 13, we will update Loan Prospector to align with the new ratios. On or after December 13, if you resubmit a cash-out refinance mortgage using the higher LTV ratio, you will receive the following purchase restriction message:

Message Code Feedback Message Purpose

PUR 25 LTV/TLTV exceeds product limits. Indicates the LTV/TLTV/HTLTV ratios exceed Freddie Mac’s limit on a 1-unit cash-out refinance.

You may disregard this message if the mortgage:

• Has a settlement date before February 1, 2010.

• Meets the LTV/TLTV/HTLTV ratios in effect prior to this date.

Please review the Guide section 23.4 for the maximum LTV/TLTV/HTLTV ratios for cash-out refinance mortgages with Freddie Mac settlement dates on or after February 1, 2010.

Have a Happy Thanksgiving

What is happening today in mortgage lending: Shirley Nault has been a mortgage professional for over 20 years. Visit her other mortgage web sites go to: www.naultfhatips.blogspot.com or www.dutips.blogspot.com

Thursday, November 19, 2009

Why use Utah Housing Loans for your borrower

Do you want to know more about Utah Housing? Utah Housing can be a different animal here are a few tips that might help you:

1-Utah housing does 30 year fixed loans 1st mortgage they also have a 2nd mortgage allowing a CLTV of 102.5% (The second can be for 6% of the senior loan amount)

2-Utah Housing is for first time homebuyers, unless property is in a targeted area, a veteran or borrower is a single parent (Go to my blog to see target areas www.mtgview.blogspot.com right hand side of screen)

3-Single Parent Set Aside Loans require recent signed tax return showing filing head of household with at least one dependent child

4-The borrower’s current Household income can not exceed posted income limits (You can go to my blog for this information www.mtgview.blogspot.com)

5-Current Acquisition cost cannot exceed FHA loan amount limits (go to my blog)

6-Property does not exceed ½ acre

7-Co-signors debt ratio (including Proposed housing expense)can not exceed 41%

8-Middle of 3 FICO 660 or above (middle of 3, lowest of 2). If borrower does not have any FICO Scores UHC will accept these loans as long as HUD guidelines are followed. Borrower is not renting any portion of the home and property does not have the ability to be rented (i.e. no second kitchen)

9-Subject property will not be used more than 15% of the residence for a business

10-PUD & Condo’s that are FHA/VA compliant are acceptable

11- Large deposits on bank statements must be address and documented from an acceptable source

12-All income must be counted in calculating max income even if the income does not qualify to be used as qualifying income to calculate debt ratio

13-Income must be projected out for the next 12 months.

14. All income for household members over 18 must be addressed an projected forward 12 months

and income documented

15. You must have a CURRENT paystub. Review the project paystub out for 12 months. If current income is more than previous income it must be within the income limits. The income should be calculated at time of application.

16-Bonus income/overtime, etc. has to be averaged over the past few months and projected forward 12 months (this is for the calculation to see if the exceed max income limits not for qualifying purposes). For qualifying pupose they must meet FHA and/or VA guidelines for overtime/bonus income.

17-The VOE must support paystubs

18-Application must show a least 2 year residency history and the credit report should not show any history of a mortgage loans

19-All employment on the application must be documented even if it is not being used to qualify (it will be used to see if the exceed the income limits for Utah Housing)

20-All self employed income requires a current Profit and Loss Statement dated at time of application, no matter when tax returns were or were not filed.

21-Paystubs must be dated within a couple of weeks of the initial application date

22- Refinances are not eligible, except for construction loans or similar temporary initial financing have a term of twenty four months or less.

23-You can use FHA or VA loans for Utah Housing

24-No cash back to borrower at closing (borrower can receive any funds paid upfront)

25-BOU requires and AUS approval. If DTI is over 45% even with the AUS approval you must document compensating factors for the borrower

Remember Bank of Utah will do Utah Housing Loans on our Wholesale side.

Wednesday, November 18, 2009

FHA changes streamline guidelines

FHA recently changed the guidelines to do a Streamline Loan. You can see more details on this by clicking on the FHA Menu.

Monday, November 16, 2009

Obama sigend the extension and expansion of the tax credit

Looks like President Obama signed the extension and expansion of the tax credit about an hour ago. Please find the below article from CNN Money below.

$8,000 homebuyers tax credit extended

President Obama reups popular tax credit through June 2010 and expands it to include people with higher incomes and some who want to trade up into new homes.

NEW YORK (CNNMoney.com) -- President Obama signed an extension and expansion of the first-time homebuyers tax credit on Friday.

The $8,000 credit was scheduled to lapse on Dec. 1 but will now be in effect through the end of June. Homebuyers must sign a contract before April 30 and close by June 30. The income limits were also raised: Single buyers can now earn up to $125,000 and still get the full credit while a married couple can earn $225,000.

The bill also made more homeowners eligible to claim the credit on their taxes. First-time buyers -- those who have not owned a home in the past three years -- still qualify for an $8,000 rebate. But now people who want to trade up can also qualify. Those who have owned and occupied a residence for at least five years out of the past eight can claim a $6,500 tax credit if they close on a purchase by the end of June.

"The new version of the tax credit has the potential to stimulate the housing market even more than the old version due to the fact that more people will qualify under the new rules," said Gibran Nicholas, chairman of the CMPS Institute, an organization that certifies mortgage bankers and brokers.

Who qualifies?

Nicholas provided four scenarios illustrating how the tax credit rules for existing homebuyers will apply:

• Harry owned a home in 2001 and 2002 but sold it to relocate for a job. He would qualify for the $8,000 first-time-buyer credit because he has not owned a home in the past three years.

• Sue purchased a home in 2004 and has lived there since. If she decides to buy a new home, she would qualify for the $6,500 tax credit because she has lived in the same residence for five consecutive years in the past eight.

• Jane purchased her home in 2002, lived there for five consecutive years before she rented it out in 2007. She would qualify because she was an owner/occupier for at least five consecutive years in the past eight.

• Mark purchased a home in 2006 and lived there for the past three years. He would not qualify because he is neither a first-time homebuyer nor someone who lived in the same primary residence for five consecutive years out of the past eight.

How it helps the economy

Legislators and industry experts expect that the credit will encourage buyers such as Jane and Sue to move up their purchase plans.

"This bill will shift demand from the second half of 2010 into the first half," said Pat Newport, a real estate analyst with IHS Global Research. "As a result, home sales and prices will get a boost in the first half of 2010, with payback in the second."

That's not a bad thing, according to Bill Kilmer, vice president of advocacy for the National Association of Home Builders. It's important to stabilize real estate markets quickly to help bring the economy out of its tailspin.

The original $8,000 tax credit appears to have helped accomplish that goal: Home prices have inched up the past few months, according to the S&P/Case-Shiller Home Price Index.

Would it have happened anyway?

But critics still see the program as being ineffectual because it rewards buyers who would have purchased a home anyway. Newport estimates that fewer than 400,000 of the 2 million who have claimed the original credit made their purchases solely because of the tax advantages.

Furthermore, buyers do not, in reality, receive the entire benefit. "The credit helped prices stabilize," said Newport. "So the credit has been split between seller and buyer. The sellers are getting higher prices and buyers paying more than they would have without it."

The housing industry, however, is pleased with the extension, although the credit has not been quite as effective as they hoped.

The industry thought the credit would provide a ripple effect, with sales to first timers triggering as many three additional "move-up" sales.

That did not happen, according to Lawrence Yun, NAR's chief economist.

"It did not have the chain reaction impact it was supposed to," he said. "Instead, many first-timers turned to vacant, foreclosed or other distressed properties the sellers of which were unlikely to be move-up buyers."

So, the tax credit helped prop up the low end of the market without having much impact on the rest of the spectrum. Expanding the benefit to existing homeowners should boost those segments. That should produce additional benefits, according to Yun.

"Preventing further price decline or even nudging prices up a bit stabilizes housing wealth, which makes homeowners more comfortable in their spending," said Yun. "They're more likely to go out to the stores or buy a new car. That provides a boost to the overall economy."

Friday, November 6, 2009

Extension of the Tax Credit

The Senate has approved extending the Tax Credit and has added a new provision that would allow non-first time homebuyers to get a claim for $6,500. The extension would run through June as long as there is a signed REPC by April.

At this point, the Senate is also trying to add some other provisions to the bill related to unemployment insurance and business loss tax credit. With that, it has to get approved by congress and then signed into law. The important thing here is that both the House and the Senate are in agreement on extending the Housing Tax Credit. So there is little doubt that it will get signed into law. However, IT IS NOT officially law just yet.

Today's Mortgage View in Utah