Mortgage Applications Strong But Slightly Down

The Mortgage Banking Association announced that mortgage applications dropped 7% week over week for the week ended June 22nd in their weekly survey, which covers more than 75% of all U.S. retail residential mortgage applications. Refinance itself had dropped 8% from the previous week, while purchase inquiries fell 1% from the week previous on a seasonally adjusted basis.

Mortgage rates are still extremely low, but the market overall saw a dip downward in a natural response to an influx of application volume last week from the new FHA streamline refinance mortgage insurance requirements – requirements that markedly lowered mortgage insurance for homeowners that had FHA-backed mortgages endorsed by the FHA before June 1st, 2009.

This new guideline allowed homeowners backed by the FHA before June 1st, 2009 to pay an upfront mortgage premium at close equal to only 0.01 percent of the loan size (otherwise known as 1 basis point). This would mean only a $10 upfront mortgage premium (MIP) to be paid by the homeowner at closing.

Compare this to refinancing for FHA-backed loans endorsed on or after June 1st, 2009, where mortgage premium at close is 175 basis points, or 1.75% of the loan size. For a loan of $100,000, the homeowner with an FHA mortgage before June 2009 would pay only $10 for their mortgage insurance premiums, while the homeowner with the FHA mortgage afterwards would pay $1750!

New FHA Streamline Guidelines Cause a Mortgage Application Roller Coaster

It’s no surprise, then, that the announcement of these new FHA Streamline Refinance market created a large mortgage application influx in the market when it came into effect on June 11th, 2012.

“Refinance volume fell last week due largely to a fall-off in refinance applications for government loans, which had more than doubled the prior week. The large swings in activity were due to the implementation of FHA’s new premiums on streamline refinances, and borrowers timing their applications to lower their premiums.”

Michael Fratantoni, MBA’s Vice President of Research and Economics

This reality can be seen in the data, as the proportion of refinance mortgage applications, previously at 80% of total, dropped to 79% week over week. Overall mortgage rates were pretty much static for the week, which didn’t help refinance or purchase rates improve in volume.

On the purchase side, the volume drop of 1.4% reflects that the real estate market is not yet booming back, as the purchase volume is a leading indicator of home sales nationally. The original expectations by the MBA for the purchase market to rebound starting at the end of 2012 and into the 2013 have since been changed to less optimistic tones, as the future state of the purchase market still seems in flux.

Making a Decision on Your Mortgage

Given what you know about the mortgage market, the takeaways from the recent fluctuations for your loan should be fairly clear. If you have a FHA mortgage loan backed before June 1st, 2009, enjoy the lower closing costs you will now face. If you aren’t so lucky, the market is overall well-conditioned for a refinance of your loan if you haven’t already been taking advantage of the low mortgage rates.

On the purchase side, things are still unknown. Looking at a new home from a real estate investment is still possible, but the risk condition is still there with no clear, immediate signs of recovery. Do your research and act accordingly for the best future health of your mortgage.

Are You One of the 19 States? USDA Refi Pilot Program!

Good news. If you currently have a USDA loan, call me about the new refinance program.

  •  No credit report,
  •  no appraisal,
  •  no property inspections,
  •  no income verification.
  • Last 12 months mortgage payments must be made on time.
  • Interest rate must be 1% below current rate borrowers are paying now

With the issuance of AN4615 on February 1, 2012. USDA Rural Development announced a new refinance pilot program  designed to help existing Section 502 borrowers, for both the 502 direct and 502 guaranteed loans, to refinance their homes with greater speed and ease. I like what RD is trying to accomplish under this new refinance pilot initiative but I wish it was available in all states, not just the 19 selected. You can bet that many states outside of this select group and those distressed homeowners living in them feel they are just as deserving.

Only 19 States Allowed in USDA Pilot Refinance Program  – Additional States are not eligible at this time.

  • Alabama,
  • Arizona,
  • California,
  • Florida,
  • Georgia,
  •  Illinois,
  • Indiana,
  • Kentucky,
  • Michigan,
  • Mississippi,
  • Nevada,
  • New Jersey,
  • New Mexico,
  •  North      Carolina,
  • Ohio,
  • Oregon,
  •  Rhode Island,
  • South Carolina,  
  • Tennessee.

Eligible Borrowers: Current Section 502 Direct or Guaranteed Loan borrowers must:

  •  Meet current income eligibility requirements (Comment: While applicants for the program must still meet the income eligibility criteria, repayment income is technically not a factor in that an USDA RD grants an automatic ratio waiver)
  • Reside in an eligible rural area or an area that was eligible at the time of the original loan closing (Comment: In other words, even if the area where the property is located is no longer eligible you can still refinance under this program); and
  • A Rural Refinance Pilot loan may only include the principal balance of the loan plus a portion of or the full upfront guarantee fee. The applicable upfront refinance guarantee fee is 1.5 percent. No cash out is permitted to the borrower. Accrued interest, closing costs, lender fees, and late fees are not eligible to be part of the refinance loan. (Comment: This means that only the principal balance of the loan may be refinanced with only the 1.5% guarantee fee added to the loan amount. All other costs associated with loan must be either paid for by lender premium pricing or the borrower. In this case, I foresee many lenders pricing the loan in such a way as to allow them to pick up much of the borrowers closing costs. For the 502 direct program borrowers any subsidy recapture cannot be included in the refinance loan. RD however could subordinate the subsidy recapture amount)
  • Rural Refinance Pilot loans must be manually underwritten. They cannot be processed through the Guaranteed Underwriting System.

Really detailed information can be found (Trial subscription $1 for 7 days)

If you are located in one of the 19 states, go through your database.  This could be easier than HARP–especially if they “fit” the 1% rule and 12-month, on time payment requirement.  Karen Deis, Publisher.

VA Loans Still Safest Product on the Market

The Department of Veterans Affairs issued a news release this week trumpeting the continued growth of the VA Loan Guaranty program. The agency backed just under 360,000 loans last year, a 14-percent increase from FY10 and a whopping 168-percent increase since FY07.

But that wasn’t the only good news. The release also noted that VA loans have had the lowest rates of foreclosure and serious delinquency for the past 14 quarters and 11 quarters, respectively, according to the Mortgage Bankers Association National Delinquency Survey.

Those figures are even more surprising considering that about 90 percent of VA loans come with no down payment.

“The continued strong performance and high volume of VA loans are a testament to the importance of VA’s home loan program and a tribute to the skilled VA professionals who help homeowners in financial trouble keep their homes,” Secretary of Veterans Affairs, Eric K. Shinseki said in the release.

The VA works closely with borrowers and their servicers to avoid foreclosure. Veterans in jeopardy should always contact their loan servicer first, but the VA provides services and staff to help borrowers pursue options like modifications, forbearances and repayment plans. Homeowners can call 877-827-3702 to talk with a VA specialist.

“We are committed to making even more veterans and service members aware of this important benefit and delivering the assistance they deserve when financial difficulties arise,” said VA Under Secretary for Benefits Allison A. Hickey.


HARP Refinance Program – Underwater Homeowner’s in Atlanta Get RELIEF!

 Atlanta HARP RefinanceUnderwater Homeowner’s in Atlanta Get Refinance Help from Obama Administration

Atlanta, GA (January 2012) – Originally launched in April 2009, the Home Affordable Refinance Program (HARP) was designed to help underwater homeowner’s take advantage of low mortgage rates even if they were low equity or slightly upside down.

By allowing underwater homeowner’s the ability to take advantage of today’s lower interest rates without have to pay down their equity the HARP program was intended to help homeowner’s save money which they would them use to purchase consumer goods or create new jobs.

Sounds like a good idea right?

It was. HARP 1.0 helped a lot of people refinance. It was limited though. There were restrictions, price adjustments and loan to value caps that prevented a lot of Atlanta homeowner’s from benefiting.

One of the biggest issues with HARP 1.0? It was limited to your current mortgage servicer, you had to deal with a big 4 bank. Welcome to your own personal hell.

90+ days turntimes? CHECK. Multiple requests for the same documents? CHECK. Days waiting for you loan officer to return your call? CHECK. Three weeks before an initial decision? CHECK.

Enter HARP 2.0

Limited to a big 4 bank? Not anymore! The new HARP program is opened to all participating mortgage lenders. You can now use the mortgage professional YOU want to use for your HARP refinance. No more 3 month turn times to get your HARP closed. Does 3 weeks sound better than 3 months?

Loan to value restrictions? Gone! No equity, no problem. It does not matter how upside down or underwater you are, HARP 2.0 has no restrictions on loan to value.

Not an Owner Occupant anymore? No problem! HARP 2.0 is available to all homeowners. Second homes, investors, people that have relocated can now take advantage of today’s low rates.

Sounds good right? How do I know if I am eligible for HARP?

HARP 2.0 Eligibility & Guidelines

HARP, sometimes referred to as DU REFI+ or the Obama Refi plan, has some basic eligibility guidelines that potential refinance homeowner’s must meet

In order to be eligible for the HARP refinance program :

  1. Your loan must be backed by Fannie Mae or Freddie Mac.
  2. Your current mortgage must have a securitization date prior to June 1, 2009
  3. You must be current on your mortgage with no late payments in the last 6 months.

If you currently have an FHA, VA, USDA or Jumbo loan you will not be eligible to participate in the HARP 2.0 refinance program. You may have other refinance options, but HARP is not one of them.

No LTV Restrictions for HARP 2.0? Really?

Yes, there are really no loan to value (LTV) restrictions! Even if you are ridiculously underwater, so long as you meet the HARP | DU Refi Plus eligibility requirements outlines above you should be eligible to participate.

Even if you are currently at 200+% LTV you can still benefit from Obama’s Home Affordable Refinance Program. Ready to see if you meet HARP Guidelines? Stop waiting, click below for a HARP 2.0 consultation and we will let you know your refinance options.

Get a HARP Rate Quote Now!

Florida HARP Refinance

Are you one of the 300,000 Atlanta homeowner’s underwater? Keep your house, explore a HARP Refinance, learn how Obama’s Home Affordable Refinance Program can help you!


Home Prices and Affordability – the Truth

Gaining a little perspective on what really drove home prices over the last few decades can be valuable to would be buyers. The state of the market now that values have come well off their peak in concert with record low interest rates should be hard to resist. Still persistant though is the uncertainty breeding fear in many and paralyzing what would be an otherwise typical reaction to more purchasing power. Keen observers know that the best opportunities are never obvious and that the truth is only uncovered by digging in. To that end, this video may help peel back a few layers of tarnish and provide a better view of where we’ve been, how we got there and where we are now.

Purchasing Power vs. Home Prices

How Do I Choose My FHA 203K Lender?

Choosing a FHA 203K Lender

Why Is 203K Lender Selection Important? What Should Potential FHA 203K Clients Look For? When I started specializing in 203K Renovation Loans there were very few people that offered the product. There was little to no training and you were mostly resigned to using a lender that would end up selling the loan to a certain big 4 bank that, quite frankly, sucked.

Times have changed, there are multiple 203K lender options these days and it seems that every loan officer now offers the product. Competition is good right? It is good, for the most part.

It is fantastic for the foreclosure market that lenders have finally joined the show and made the 203K loan widely available. After all, foreclosure renovation loans, like the 203K, the HomePath Renovation and the HomeStyle, are integral pieces to restoring the housing market.

However, the growth of the renovation loan market comes with a price. Lost earnest money, useless inspections, ridiculously long escrows, angry sellers and frustrated home-buyers. It doesn’t have to be that way though.

Those of you that have researched the 203K have seen and heard the horror stories. On the message boards, in the forums and from Real Estate Agents and even mortgage lenders. FHA 203K loans are too difficult, too much paperwork, too slow and too expensive.

Guess what, they are right. They are all of those things if you choose the wrong Loan Officer, the wrong HUD Consultant or the wrong Contractor. 203K loans are a specialty mortgage product, they require a SPECIALIST.

It’s Not the 203K Loan Product, It’s the 203K Loan OFFICER

I understand the bad rap that 203K loans get. I get between 5 – 10 calls a week from frustrated home-buyers working with the wrong loan officer, the wrong lender, the wrong consultant or the wrong contractor. For most of them it’s too late, I can give some advice, but I can’t save them or rescue their closing.

They didn’t do their research. They entered blindly into one of the largest transactions of their life. It’s not all the customers fault, many of them trusted their agent to get them to the right loan officer or that their loan officer was qualified.

I’ll probably ruffle some feathers, but 80%+ of agents and loan officers are not qualified to handle even a basic transaction, let alone a renovation loan. So how do you avoid the 80% and choose wisely? Research.

Choosing Your 203K Loan Officer

I think this is obvious, but clearly you start with Google. Educate yourself on the product FIRST. If you haven’t done the research then how will you know if you loan officer is answering your questions correctly?

As you peruse Google, Bing or Yahoo for 203K info you’ll see at a lot of the same folks showing up. These are you experts. They may not be in your area, but they can probably guide you to a 203K expert that is. Of course, the best bet is to find a national 203k lender (like myself) that can help nationwide so you know that you have a loan officer that can execute the renovation mortgage process.

Don’t forget about LinkedIN or Facebook Fan Page search, both will guide you to 203K experts, who is recommending them and their accomplishments.

Finally, you need to interview the candidates. They should, without hesitation, be able to answer some basic questions. Here are a few of the most important.

  1. What’s the Difference Between the 203K Streamline and the Consultant 203K?
  2. How Many Renovation Loans Have You Closed?
  3. How Are the Draws Disbursed?
  4. What Additional Fees Does the 203K Have?
  5. How Long to Close?
  6. Do You Offer ALL the Renovation Mortgage Products (HomeStyle, HomePath, EEM, Jumbo)
If they hesitate on any of those questions then you do not have a 203K specialist. Finally, if they offer up anything longer than 45 days to close then keep looking. There’s NO reason a 203K loan should take longer than 45 days assuming YOU hold up your end of the bargain and get your contractor bids in a timely manner.


FHA 203K loans are an amazing product. They will absolutely give you the best value on a home purchase. Don’t assume that anyone can execute one though, do your research.

203K Bathroom Renovation

What Is A 203k Loan

An FHA 203k Loan is a government insured mortgage program that allows borrowers to wrap the cost of property upgrades into a new 30 year fixed-rate home loan.Since many homebuyers are finding that most of the foreclosures and short sale listings they are interested in purchasing require a minimal amount of repairs in order to bring them up to personal or bank standards, a 203k loan provides a perfect financing program for borrowers who have a limited budget for downpayment + home improvement repairs.According To HUD’s Website:

When a homebuyer wants to purchase a house in need of repair or modernization, the homebuyer usually has to obtain financing first to purchase the dwelling; additional financing to do the rehabilitation construction; and a permanent mortgage when the work is completed to pay off the interim loans with a permanent mortgage.

Often the interim financing (the acquisition and construction loans) involves relatively high interest rates and short amortization periods.

The Section 203k program was designed to address this situation. The borrower can get just one mortgage loan, at a long-term fixed (or adjustable) rate, to finance both the acquisition and the rehabilitation of the property. To provide funds for the rehabilitation, the mortgage amount is based on the projected value of the property with the work completed, taking into account the cost of the work. To minimize the risk to the mortgage lender, the mortgage loan (the maximum allowable amount) is eligible for endorsement by HUD as soon as the mortgage proceeds are disbursed and a rehabilitation escrow account is established. At this point the lender has a fully-insured mortgage loan.

The FHA 203k Loan is one of a few popular Rehab Lending programs available that allow buyers to finance minor cosmetic or major structural upgrades at the time of purchase through one 30 year fixed, low interest rate home loan.

Most buyers think that a 203k loan is only for completely rehabilitating a distressed foreclosure or short sale that has been seriously destroyed, is in a bad area or requires a lot of work.

However, a 203k loan can be used to finance any property that fits within standard FHA guidelines, regardless of the amount of home improvement work needed or desired.

Best of all, the approval process for a 203k loan follows the same flexible credit score requirements, income documentation and low downpayment as a basic FHA loan.

203k Resources And Links

Riding a Refinance Wave, VA Loan Volume Up 14% in FY11

Riding a wave of new refinance loans, the VA home loan program experienced a huge year in Fiscal 2011, guaranteeing nearly 360,000 loans, according to data provided by the Department of Veterans Affairs.

VA refinance loans surged 40 percent from FY10, as military borrowers sought to capitalize on historically low interest rates. Refinance volume increased at least 40 percent in more than two dozen states, from Alaska to West Virginia.

Purchase loans fell slightly from FY10, but overall loan volume was up 14 percent.

Odds and Ends

Total loans guaranteed increased at least 20 percent in 11 states (Alaska, California, Colorado, Hawaii, Iowa, Massachusetts, Michigan, Oregon, Tennessee, Vermont and West Virginia) and the District of Columbia.

Four states saw VA refinance volume increase at least 70 percent, including a staggering 108-percent jump in Michigan.

With FY11 in the books, the VA has now helped more than 18.7 million borrowers secure a home purchase or refinance since 1944. The total loan amount now exceeds $1 trillion.

Looking Ahead

A tighter lending climate has spurred renewed interest in this long-cherished program. VA loans feature less stringent requirements and require no down payment for the vast majority of borrowers. In fact, 9 in 10 VA borrowers secured financing in FY10 without putting down a dime.

That flexibility, coupled with record-low interest rates, continues to spur military borrowers to explore the home loan benefits earned by their service.

With rates likely to remain low and thousands of service members set to return from Iraq and Afghanistan in the coming months, the VA loan program appears poised for continued growth.