Another Great Road to Recovery Mortgage Program

Texas Highway

Back in August of 2013 we wrote Buying Today Despite Short Sale Yesterday, which addressed the fact that those who were victims of a recent short sale (less than two years ago) could possibly obtain a mortgage for purchase or refinance, provided certain elements existed.  The elements for success included: 1. No other credit issues, 2. Solid equity/down payment of 30% or more, 3. Solid reserve funds and 4. solid income.  That program has been extremely effective, especially for non-conforming loans; in fact, an existing client is pre-approved for a $2.5mm purchase and the foreclosure occurred only two years ago!

Now, Housing and Urban Development (HUD) has stepped up their game with a similar program, the Federal Housing Administration (FHA) Back to Work Program.  In short, if a borrower lost their home over 12 months ago due to financial hardship and she/he have re-established credit (or maintained otherwise good credit), then they may qualify to get a new mortgage to purchase a home without the standard two to seven year waiting periods required under conventional mortgage programs.  A financial hardship is defined as a loss in income of 20% or more for at least a 6-month period and it must be documented.  The borrower must also document that she/he has fully recovered from the hardship.  Finally, the borrower(s) must attend a credit counseling class prior to submitting an application.  All other FHA requirements apply as well, but the rates are extremely competitive and help to stretch the qualifications of applicable borrowers.

For complete information on this program or any other mortgage program, contact your trusted mortgage advisor at Absolute Mortgage Banking.

What a Government Shutdown Means in the Mortgage World

Capitol

As a courtesy to all of our realtor and business partners, we want you to know that everyone at Absolute Mortgage Banking is prepared with contingency planning and greater communication should a government shutdown occur tomorrow.  It is important to know that a shutdown will cause delays, and everyone needs to plan accordingly.  Believe it or not, the Federal government is directly involved in nearly all U.S. residential mortgages, so any shutdown will have an impact, and it’s important to know where the problem areas are in this case.

Bottom line, if you’re dealing with an FHA, VA, or USDA loan, processing those loans will slow dramatically until the shutdown is over.  Fortunately, if you are dealing with either a conforming or non-conforming loan, processing will continue, but certain government-related elements to complete the file will be on hold, such as:

  • Social Security Administration verifications
  • Income verification by federal tax transcripts known as 4506(T) forms
  • Flood Certifications
  • Employment verifications for certain government employees

Don Frommeyer, President of the National Association of Mortgage Professionals, has said, “With a shutdown, lending isn’t going to stop” and that “the main problem would be for military personnel, who could be affected in the sense that they wouldn’t be getting paid.  We also don’t know if rates are going to be affected because the market often responds to what the government does.” 

Additionally, certain U.S. economic data would likely be delayed. During the 2011 budget battles (the last time we were faced with a possible shutdown), U.S. officials said no data would be coming from the Commerce Department or from the Bureau of Labor Statistics, which handles the closely-watched monthly employment report.  Without data, rates will likely be quite volatile, but our sense is that uncertainty will likely keep rates low.

And what about loans in line to fund..?  Fortunately, the FED wire system will remain intact to process wires and fund transactions, but it’s best to prepare for possible delays. 

Let’s not sound the alarm bells yet, though; aside from 21 days back in 1996, the government rarely shuts down for more than a day or two.  One would hope that this exercise in futility by our legislative branch is short lived enough to not cause us a serious distraction.  Should the shutdown persist, Absolute Mortgage Banking will be closely working with its counterparties to ensure business continuity and as few disruptions as possible.  

If you have any questions, feel free to reach out to any of our qualified mortgage professionals.

FHA Fees Rising Again

 

FHA loans are some of the very best loans available for those who want to preserve cash, have credit issues or are lower income.  Problem is that FHA loans continue to cost more to obtain.  In the latest Mortgagee Letter issued from HUD, we see that fees are increasing, and cancellations of the Mortgage Insurance Premium (MIP) being extended.

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Here’s what you need to know to advise your clients accordingly:

  1.  Effective with all loans originated and case numbers issued on or after April 1, 2013, the monthly MIP premiums are increasing by 10 bps across the board, which ranges from 0.95% to 1.30% of the loan amount depending on loan program, loan amount  and loan-to-value
  2. Effective with all loans originated and case numbers issued on or after June 3, 2013, the automatic cancellation of the annual MIP premiums has been rescinded.  
  3. All FHA loans with a loan-to-value  less than or equal to 90%, will have annual MIP for the first 11 years of mortgage, or until the end of the mortgage term, which ever comes first.
  4. All FHA loans with an LTV greater than 90%, will have annual MIP for the life of the loan, or 30 years, whichever comes first.

Please contact your preferred Mortgage Advisor at Absolute Mortgage Banking for further guidance on FHA loans or to inquire about the literally hundreds of loan programs that AMB provides.