BANK OF AMERICA TO HELP BORROWERS

Bank of America is going to forgive up to 30% of some customers' home loans to help troubled homeowners. it will start forgiving principal for those who owe more than 120% of their home'svalue. It is to begin in May.

So if you think you qualify, CALL ME and I will do a free market analysis.

REFI WITH LOWER RATES IN ABQ, NM

The lenders are swamped refinance everyone and their uncle with the new lower home loan rates. One lender told me, however, that rates for jumbo loans, so homes over $500,000 are still high. Call me if you want some recommendations on good lenders!

LOANS FOR FIXER-UPPERS

After last week’s email I received many questions about the FHA Streamlined 203k Limited Repair loan. Here are some basics:

- Must be owner occupied home
- Maximum loan amount (including repair escrow) is $271,050 (in most New Mexico counties)
- Borrower must meet standard FHA credit and debt-to-income ratio guidelines
- No minimum amount for repairs; maximum repair amount is $35,000
- Can be used for purchase or refinance
- Home improvements are limited to those for which plans, engineers or architects are not needed (i.e., cannot be used to add rooms or move load bearing walls) and cannot be used for landscaping
- Can be used for things like roof repairs, upgrades of HVAC, plumbing or electrical systems, kitchen or bathroom remodeling, new flooring or windows, to purchase new appliances, painting, and weatherization
- Work must be completed within 90 days of closing

This is a great program for people who are buying a foreclosed property that is in disrepair or an older home that needs updating. Call me for more information.

Thanks for this summary goes to Heidi Snow, Perennial Mortgage.

NEW MORGAGE LENDING RULES

Paramount in new federal regulations approved to foster more responsible mortgage lending, are the implications for consumers shopping for a home loan. The Federal Reserve Board's new rule amends the "Truth In Lending Act," Regulation Z under the "Home Ownership and Equity Protection Act (HOEPA)". HOEPA was originally passed in 1994 to target abusive practices in home equity lending. The Fed's new move extends protections to home purchase loans. Critics complain the rule is long over due because unfair, abusive and deceptive home mortgage lending practices get much of the blame for the current housing crisis that has already put millions of properties in foreclosure and former owners on the street. Also, most lenders long ago curtailed many of the practices now forbidden by the new regulations, critics say. The horse is already out of the barn, so to speak, and the new regulations will do little to corral the market's downward stampede. However, the new rules should help prevent future runs on bad loans by helping remove them from the market. Perhaps more important, key provisions in the new rules will give consumers cause to pause before shopping for a mortgage. Effective October 1, 2009, the new rule's four key provisions (along with how each will impact consumers), for a newly defined, but yet to be detailed category of "higher-priced mortgage loans," include protections that will:
Prohibit a lender from making a loan without regard to borrowers' ability to repay the loan from income and assets other than the home's value.
This forces lenders to more closely scrutinize a borrower's debt-to-income ratio, looking for less debt, more income and savings, larger down payments and other liquid assets the borrower can fall back on. Consumers may have to take more time saving and paying off debt before buying a home.
Require creditors to verify the income and assets they rely upon to determine repayment ability. This provision will make it especially tough for home-based business owners, self-employed people, contract workers and others who don't get a regular pay stub. Lenders were already asking many of these borrowers for a CPA's or other tax professional's certified profit-
and-loss statement to reveal income viability.
Ban any prepayment penalty if the payment can change in the initial four years. For other higher-priced loans, a prepayment penalty period cannot last for more than two years. Without this lender risk-reducing tool they are more likely to offer a narrower variety of loans, forcing some consumers out of the market and more of them to spend more time shopping around. Shopping around, of course, is a smart practice.
Require creditors to establish escrow accounts for property taxes and homeowner's insurance for all first-lien mortgage loans. This means borrowers will have to figure on paying more each month than just the home loan's principle and interest (or interest only, where available). This is actually a useful tool for borrowers, especially those who procrastinate and gamble they'll have the lump sum cash when the insurance premium or property tax comes due. Financial counselors have always advised spreading out the cost of insurance and taxes over 12 monthly payments is much easier to fit into a household budget than the lump sum risk. In addition to rules for higher priced home loans other rules include:
Creditors and mortgage brokers are prohibited from coercing a real estate appraiser to misstate a home's value.
Companies that service mortgage loans are prohibited from engaging in certain practices, such as pyramiding late fees. Servicers are also required to credit consumers' loan payments as of the date of receipt.
Creditors must provide a good faith estimate of the loan costs, including a schedule of payments, within three days after a consumer applies for any mortgage loan secured by a consumer's principal dwelling, such as a home improvement loan or a loan to refinance an existing loan. Currently, early cost estimates are only required for home-purchase loans.
The rules also specifically outlaws seven deceptive and misleading advertising and requires more extensive information about rates, monthly payments and other loan features.

NEW FHA REQUIREMENTS

FHA Raises Its Premiums to Insure Repayment of Mortgages Wall Street Journal (08/27/08) P. A11; Hagerty, James R. Effective Oct. 1, upfront charges imposed on most FHA borrowers will climb to 1.75 percent of the mortgage amount from 1.5 percent prior to implementation of the agency's new risk-based pricing system that bases fees on credit scores, down-payment amounts and equity levels. The FHA is holding annual premiums steady, however, at 0.50 percent to 0.55 percent. With investors increasingly avoiding mortgages not backed by the FHA, Fannie Mae or Freddie Mac and the government-sponsored enterprises becoming more selective about which loans to buy or guarantee, Inside Mortgage Finance reports a jump in FHA-insured mortgages to 23 percent of all home loans last month from 1.8 percent two years ago; the publication predicts that the figure could hit 30 percent by the end of 2008. While the FHA reports $19 billion in reserves, rising defaults have generated concerns that the agency might need money from the government to cover losses.

MORTGAGE FRAUD ON THE RISE

This just in from my favorite lender, Jason Pike from Countrywide.
Arresting Times: Law Enforcement Agencies Cracking Down on Mortgage Fraud Fort Worth Business Press (07/07/08); Howe, Aleshia The FBI has seen its mortgage fraud caseload double to more than 1,400 pending cases over the past three years, and the agency expects the number to rise in the years to come. In fiscal 2007, the bureau pursued 1,204 cases, which produced 321 indictments and 260 convictions of mortgage fraud perpetrators. Appraisers are seen as key figures in mortgage fraud; and the FBI will continue to focus its efforts on industry insiders and schemes that involve inflated appraisals, fake buyers also known as "straw buyers" and loans impacted by identity theft. "The problem is going to get worse before it gets better and just because there's a downturn in the housing market doesn't mean the problem will go away," says Michael Anderson, an assistant special agent in charge of the Dallas division that oversees the FBI's white collar crime program.

CLARIFICATION ON DECLINING MARKETS

This just in from one of my readers.......Declining-market surcharge droppedFannie and Freddie reverse the policy that made buyers cough up bigger down payments in certain locales.By Kenneth R. Harney, Washington Post Writers Group May 25, 2008 WASHINGTON -- Could the controversial mortgage industry practice of listing hundreds of local real estate markets as "declining" -- and restricting lending through higher down payments or credit scores -- be scrapped?The two biggest players in the home mortgage field, Fannie Mae and Freddie Mac, did precisely that on May 16. Reversing its policy of penalizing buyers in troubled real estate markets with 5% higher down payments, Fannie Mae switched to a nationally uniform policy of charging borrowers the same minimum down payments irrespective of location. A spokesman for Freddie Mac, Brad German, said his company would be "suspending" its declining markets policy indefinitely as well.Starting June 1, mortgage applicants who are underwritten by Fannie Mae's automated system online will qualify for 3% minimum down payments, wherever the property is located.Borrowers whose applications require "manual" underwriting will pay 5% minimum down payments.Under Fannie Mae's prior system, applicants buying in designated declining markets had to contribute 5% extra in upfront equity compared with borrowers in nondeclining market areas.Freddie Mac's policy, which never employed a list of areas designated as declining, relied instead on lenders to flag applications using appraisal data or home price indexes. Freddie's policy also required 5% higher equity contributions upfront.Critics -- including the National Assn. of Realtors and consumer advocacy groups -- had charged that Fannie Mae's policy served to further depress sales and real estate values in areas tainted as declining.They also argued that many metropolitan markets experiencing price decreases contain sub-markets performing relatively well, and they do not deserve to be underwritten as high risk.Marianne Sullivan, Fannie Mae's senior vice president for single-family credit and risk management, said the policy reversal was possible because of improvements to the company's automated underwriting system, allowing it to "assess each loan more precisely."The change was welcomed by national real estate and housing groups. Dick Gaylord, president of the National Assn. of Realtors, said the termination of a policy that "stigmatized" certain communities will "help stabilize the credit markets." David Berenbaum, executive vice president of the National Community Reinvestment Coalition, said his group hopes the revised policies at Fannie Mae and Freddie Mac will prove to be "a model for others to follow."Whether that happens any time soon, however, is far from certain. Private mortgage insurers, who provide loss protection to lenders on loans with low down payments, have virtually all adopted highly restrictive policies affecting ZIP Codes or metropolitan areas they designate as declining.MGIC, the largest-volume insurer, recently expanded its list of distressed markets along with a series of cutbacks on specific types of low-equity loans. As of June 1, MGIC will not insure condominium mortgages in the state of Florida. It also has abandoned cash-out refinancings and loans on investment properties.PMI Group, another major underwriter, has banned cash-out refis or investor loans in areas it judges to be distressed. Genworth Financial will not consider applications on second homes anywhere in Florida. AIG United Guaranty no longer will write insurance on condominiums in any of hundreds of ZIP Codes around the country that are on its declining markets list.Asked whether his firm might reevaluate its declining markets restrictions in light of the abrupt changes at Fannie Mae and Freddie Mac, Terry Souers, a spokesman for Genworth Financial's mortgage insurance unit, said: "We're aware of their actions and will take them into consideration to see if additional steps are necessary."But Michael J. Zimmerman, senior vice president of investor relations for MGIC, shot down hopes for any quick abandonment of declining markets restrictions at his firm. "We're not contemplating any changes," he said. MGIC, which reported a $1.4 billion loss for the fourth quarter of 2007 and a $34 million loss for the first quarter of this year, has been hit hard by claims following foreclosures and extended delinquencies in once-booming housing markets.What's the trend line here? Fannie Mae's and Freddie Mac's policy switches should open the door to some additional low-down-payment mortgages -- and home sales -- in local areas once tagged as declining.However, without the participation of private mortgage insurers -- who report solely to stock market investors rather than to Congress -- many borrowers will likely have to turn to the Federal Housing Administration, which accepts 3% down, does not have declining markets restrictions and whose loans can be purchased by Fannie Mae and Freddie Mac. Ken Harney can be reached at kenharney@earthlink.net.

NEW HOME SALES PICK UP

The demand for lower priced homes was there all along, but the builders targeted a higher income group in subdivisions at the far edges of the city. That marketing strategy did not work for them. I've been saying that the builders were not building for the right target market for two years, but who listens to me! Anyway, my favorite wizard on builders, David Murphy of SalesTraq, reports that the price of new homes has declined as builders get back to that first time homebuyer market. And guess what? Sales have picked up with the absorption of the new home inventory happening rapidly.

Our own stats show that the resale market is off by about 30% from last year even though the prices have stayed steady. The only area that has the same number of sales volume is the high end area of High Desert and the Far Northeast Heights.

Buyers should buy now. The rates are great and the inventory is fantastic. Ya'all come on. Call me 505-220-9193.

This Weeks Real Estate Update

Here is a link to my weekly "REAL ESTATE NEWS CHANNEL":Click Here This week's segments are full of interesting and useful information that I think you will enjoy whether you are a buyer, seller, homeowner, or renter.Some of the topics covered this week are:Real Estate Outlook - Every week, it seems, there's a battle of conflicting numbers when it comes to housing. The latest existing home sales survey from the National Association of Realtors is a perfect example.Mortgage Moment - Jan Demas discusses "Stated Income Loans"Market Condition - Local market expert Realtor Craig Martin, reports Greenville, South Carolina, is one of the few cities bucking the national trends.Ask the Expert - "Can anyone steer me to a report that will tell me the U.S Real Estate Appreciation Rates by state for the last 15 to 20 years?" Video of the Week - This week's amazing video.You can also tour my latest listing as well as view some of my personal favorites.I hope you enjoy this week's show. If you have any comments, please e-mail them to me.If you do not wish to receive this each week, please reply to this e-mail with the word 'REMOVE' in the subject line.Sincerely,Judy Pierson

REAL ESTATE NEWSLETTER

Here is a link to my "March Real Estate Update":http://realtytimes.com/112/JudyPierson

This Newsletter is full of interesting and useful information that I think you will enjoy whether you are a buyer, seller, homeowner, or renter.This month's issue includes topics such as: "When Selling Your Home, Using Scents Makes Sense!";"Condos Pay Off As Second Homes";"Timing Is Everything: When And How To Move"; "How To Stop ID Theft Cold";"Use Home Equity Protection"; Plus a roundup of February real estate activity as well as much more advice and information.I hope you enjoy this monthly newsletter. If you have any comments, please e-mail them to me. Or, if you would like to see a certain topic covered in future months, let me know that too! If you do not wish to receive this Newsletter each month, please reply to this e-mail with the word 'REMOVE' in the subject line.Sincerely,Judy Pierson

Mortgage Rate Adjustments in Some ABQ Areas

This just in from my friend, Jason Pike at Countrywide: You might have heard about a 5% reduction to the maximum loan-to-values (LTV) on properties that are classified as "soft market". This is starting to hit the street and if you have concerns, pay close attention to offers that are coming in with zero down payment. In December, the Albuquerque Area made the map as an area that could see values decline. The category that our area falls into requires the lenders to rely on the appraisal. Other areas such as Phoenix and Las Vegas are mandated to follow this policy regardless of what the appraisal states. The MAXIMUM LTV must be reduced by 5.00% IF the appraiser identifies the property as follows: 1. The property is located in a declining market. 2. OR the area has an over supply of inventory. 3. OR the property lies in an area that has a marketing time of six months or greater. What does this mean? The first thing to understand is that it means NOTHING on FHA or VA transactions!!!!!!!!!!!!!!!!!!!!!!!!!! This only affects HIGH LTV's. So if a borrower planned on a 5% down payments and the property was identified as above, the borrower would need to be relocked into a 100% program. If the borrower planned to finance 100%-they would be out of luck!!! INVESTORS - Assume the required down payment is 20% and the property falls in one of the categories. The investor would be required to have an additional 5% down payment.