mortgage

ScamDeedNotice
Example of Scam Notice

Attorney General Mark R. Herring is warning Virginia property owners to be cautious of companies offering to sell them a copy of the deed to their home. Homeowners throughout the state have been receiving official looking letters, often titled as a “Deed Processing Notice,” that offer to sell homeowners a copy of their deed for $83. The letters include language that may result in the homeowner believing he or she must comply by a specific date.

“Even though these letters look like official notices, they are actually solicitations and should be treated as such,” Attorney General Herring said. “Most home and property owners will receive a copy of their deed at the time of purchase, but if a deed is lost or needs to be replaced, county clerks can often do so at a much lower price. Consumers should read these letters carefully and know they are under no obligation to take action by any artificial deadline.” Or any action at all, for that matter.

Herring said homeowners should know that they are under no obligation to pay these entities or to purchase a copy of their deed. In fact, copies of deeds are usually available from the local clerk of court at a much lower rate than offered in these letters. For example, copies of deeds (typically 2-3 page documents) are available from some local court clerks for as little as $0.50 per page, plus $2 if a certified copy is desired. Consumers are encouraged to check with their local court clerk for pricing information.

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preapproveA raft of new mortgage lending rules that went into effect this year change the way consumers borrow and pay back home loans. Designed to put behind us the irresponsible lending that disrupted the housing market and badly damaged the U.S. economy, the changes are designed to protect you from bad mortgage lenders and set clear standards for what a homebuyer or homeowner can afford (and should pay) for a mortgage.

The rules come care of the Consumer Financial Protection Bureau. Its director, Richard Cordray, said that consumers whose income, debts, or credit profile fall outside the rules won’t be stopped from getting a loan. Lenders can continue to use their own reasonable judgment when looking at a consumer’s ability to repay.

But lenders who go outside the standards lose some legal protection from consumer lawsuits, so it’ll be interesting to see which borrowers they’re willing to make those outside-the-box loans to.

Meanwhile, here’s how consumers are most likely to be affected by the CFPB rules, plus other recent mortgage market changes, like the lowering of the maximum size of FHA loans.

Winners

  • Homeowners with solid income, lots of home equity, and excellent credit. If you want to borrow much less than your home is worth and have great credit and plenty of income to pay your monthly bills, you’ll easily meet the new standards.
  • First-time homebuyers. Most FHA and many low downpayment loans will meet the new safe loan standards. Those with marginal credit or other impairments that raise questions about their ability to repay a mortgage will likely face the same hurdles they faced before the rule.
  • Homeowners whose lenders don’t treat them right. If your servicer loses your payments, doesn’t answer when you write to ask questions, or forces you to buy expensive insurance you don’t need, things are looking up. The new mortgage rules set standards for posting payments and answering your questions promptly, and stop mortgage lenders from forcing you to buy insurance you don’t need.
  • Homeowners who don’t like to shop around. In the past, lenders paid loan officers a bonus for pushing customers into higher-interest rate loans. Now, lenders can’t do that anymore. Plus, lenders who charge you more than 1.5% above the going interest rate will lose protection from lawsuits.

When you’re shopping, ask if you’re getting a “qualified mortgage” – that’s the official name for a loan that meets the new guidelines. You’ll know that your loan is amongst the safest for you and within 1.5% of the rate most people with good credit are paying.

With the added protections, and more stringent lending policies, come potential hardships for some people. The new rule could restrict lending by at least 10%, and higher than that in some regions, which can create some difficulties in our economic recovery, says Jeff Kibbey, primary legal counsel for Century Mortgage Co. The future of homeownership depends on greater access to credit. “Over the past 8 years, homeownership in the U.S. has decreased while many in the growing population have turned to renting instead of buying a home,” said NAR’s chief economist Lawrence Yun. “We need to ensure that good, creditworthy renters can someday have the appropriate access to credit so they can build equity through homeownership.”

So who stands to have a tougher time in the new lending environment?

  • Minorities and modest-income Americans. Credit continues to be so tight that responsible buyers are having trouble attaining homeownership, Yun said. Homeownership among African-Americans has fallen to just above 43%, down from just under 50% in 2004, and African-American net worth has been cut in half due to higher unemployment and the foreclosure crisis.
  • Owners and buyers of higher-priced homes in high-cost areas. If you’re buying or selling a higher-cost home, finding a mortgage can be costly if the home’s value is more than the FHA or Fannie Mae and Freddie Mac loan limits of $417,000 and $625,500 in the highest-cost areas.
  • If your mortgage is greater than the limits, you (or your home’s buyers) will need a “jumbo” loan, which usually means a FICO mortgage credit score of 720 or better and putting as much as 20% down or buying private mortgage insurance.
  • Middle-income Americans who fall outside the new guidelines. First-time homebuyers trying to purchase a $350,000 house aren’t going to have a lot of loan options if they can’t get an FHA or Fannie/Freddie guaranteed loan, predicts Bankrate.com senior financial analyst Greg McBride. Those with bigger bank accounts, say a homebuyer purchasing a $900,000 home, won’t have the same difficulties. That richer borrower is an appealing customer for related financial products so a bank is more likely to give him a loan that falls outside the new guidelines to land him as a customer.
  • Single homebuyers. Dual-income households tend to have higher credit scores because they have a second paycheck to fall back on in a financial crisis. Restrictive mortgage lending standards favor higher credit scores, McBride said.
  • Mortgage borrowers in Connecticut, Florida, New Jersey, and New York. Borrowers in those four states will pay 0.25% more to use Fannie Mae and Freddie Mac’s loan programs. The fee is being levied because foreclosures take a long time to process in those states, so the mortgage giants lose more money when they have to foreclose on homeowners there.
  • Mortgage borrowers with fluctuating income who’ve had a bad year or two, including business owners, commissioned salespeople, or executives who didn’t get that big bonus. There’s a new emphasis on ability to repay and that starts with proving you have steady income, says McBride.
  • Mortgage borrowers with lots of debt. If your car payments, student loans, or other installment debt take up more than 43% of your income, and you can’t qualify for an FHA or GSE loan, you won’t meet the new lending standards, so you may have a hard time finding a mortgage, McBride said.

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FHA Easing Condo Restrictions

September 14, 2012

This is IMPORTANT for condominium sellers, buyers and owners. FHA has changed its requirements for condos to be certified, making it easier for sellers to sell and buyers to get financing.

Today’s news is a major and positive change.

History: If someone wants FHA financing for a condo, not only do they have to be approved for the loan, but the condo itself has to have been “certified.” In 2011, FHA, tired of having so many delinquent and foreclosed condos on its books, de-certified all of them and required all of them to reapply. The problems:

(1) not every condo board went through the trouble, either because of laziness, confusion, or fear of making a mistake on the paperwork (the regulation threatened prison terms for inaccuracies);

(2) the condo requirements were made more onerous. For example, at least half the units had to be owner-occupied, no more than 15 percent of owners could be delinquent on their condo fees (defined as 30 or more days behind), and three-quarters of the space had to be residential.

No recertification, no FHA loans for potential buyers. Fewer potential buyers, prices tank. Commence uproar by buyers, sellers, Realtors and lenders.

So, the new rules:  investors can own up to half of the units (not just 10 percent), and half the space can be commercial (instead of 25 percent). And delinquency is now defined as 60 or more days behind on condo fees instead of 30.

Some significant hurdles remain. Half a project’s units must still be owner-occupied, although the rule is waived for foreclosed units. Only half of a condominium’s units can be financed through FHA. And the boards are still liable for incorrect information, although less so if they’re following attorneys’ advice.

It should make things easier for  condo owners to sell, and for some buyers to get financing.

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Can You Refi Me NOW?

May 28, 2012

The Home Affordable Refinance Program (HARP) was intended to help folks whose homes were worth less than their mortgages get refinancing on better terms, but has been hamstrung by limitations. First, the mortgage had to be owned by the government and only underwater within certain parameters. Then we had the revision early this year that […]

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