Mortages Hit with Higher Risk Fees

The mortgage giants are adding risk fees to more loans extended to people with stellar credit. To avoid a fee or to get a discount, most borrowers will need FICO scores of 740 or better and down payments of 25% or more. For example, a buyer of a $200,000 house who has a 700 FICO credit score and 20% down payment will pay $1,600 for the Fannie risk fee vs. $1,200 before. If the borrower's score is 680, the fee will be $2,800. Borrowers can pay fees upfront, or lenders will price them into interest rates. While not huge, the new fees are notable in that they're being added to more loans to borrowers with higher credit scores. The other expectation is that lenders may want 25-30% down which is going to take a lot of people out of the market.

My advice: Buy now while home prices are really low and before all these changes kick into high gear. Check out home values on my website under Market Snapshot or MLS search. Then call me.

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.

BUY! BUY! BUY!

So the mortgage rates are dropping still with the lowest rate we have seen in seven months following the government taking over Freddie Mac and Fannie Mae. The 30-year fixed declined to 5.78 percent this week. We are seeing more buyers out there although the gap between the deal the buyers think they can get and the amount the sellers are willing to take is still quite wide. There is a psychological balance that needs to be restored. I would expect that some people will take money out of their stocks right now and put it in real estate especially with all this good deals.

Bring it on! Call me if you want to buy or sell.

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.

CONSUMER REPORTS SAYS BUY NOW!

With regard to homes, Consumer Reports’ has three possible buying opportunities.
Homes – Prices are down and few expect a sharp rise anytime soon. Most markets seem to have stabilized so holding off for more declines is probably a failed strategy unless you want to take the risk of buying foreclosures.

Mortgages – They report accurately that interest rates are relatively low, averaging 5.5% for 30 year mortgages. Credit standards have been tightening though so expect to go through some documentation hoops, but it will be worth it. Lenders are anxious to loan having seen a decline in their business volume too.

Home Remodeling – CR suggests that will lower demand that it could mean room to bargain for those remodels you want. Contractors are easier to get a hold of and have little to no wait times before getting started on a job.

HOUSING RECOVERY LATE 2009

Forecast Positive for Second Half of 2008Thursday, March 06, 2008 National Realty News

WASHINGTON, D.C. - The volume of existing-home sales is expected to hold steady through late spring, with a gradual recovery during the second half of the year as the mortgage situation improves in high-cost areas, according to the latest forecast by the National Association of Realtors®. Lawrence Yun, NAR chief economist, said many buyers have been waiting for higher mortgage loan limits. “The higher loan limits for both FHA and conventional loans will increase consumer choice and provide greater access to lower interest rate mortgages in high-cost regions,” he said. “Therefore, a notable rise in home sales can be anticipated in the second half of the year." Realtors locally report that calls off of signs and activity has picked up in since the start of March.
In ABQ, the number of sales is off by 35% from last year this month, but the average sales price has increase about 1% a month so far this year. A pattern of disparate price performance continues around the country with a roughly even split between up and down markets. Many areas that have lost jobs are showing price declines which might be why ABQ looks good. We are gaining jobs.
“New-home sales nationally should decline 23.7 percent to 590,000 this year before rising 7.2 percent to 633,000 in 2009. Locally, KB Homes has announced that they are leaving ABQ. For years they successfully built for starter-homes at the low end, but their last move to higher priced homes here has proven to be a poor strategic move.
The 30-year fixed-rate mortgage, which has moved erratically in recent weeks, is expected to hover around 5.8 percent most of the year, and then rise to an average of 6.3 percent in 2009. Growth in the U.S. gross domestic product (GDP) should be 1.5 percent this year and 2.4 percent in 2009. The unemployment rate is projected to average 5.4 percent in 2008 and 5.5 percent next year. Inflation, as measured by the Consumer Price Index, will probably be 3.2 percent this year and 1.5 percent in 2009. Inflation-adjusted disposable personal income is expected to grow 1.4 percent in 2008 and 3.1 percent next year.

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.