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    Tuesday, September 21, 2010

    FHA Short Refinance Program

    Please pass along this info.
    Below is the criteria that a current homeowner must be able to meet to be able to qualify for The New Short Refinance program through FHA. This is a new program that HUD rolled out earlier this month to help homeowners who are under water to refinance their mortgages, and even get some principal reduction up to 10% of their first mortgage.

    BUT here’s the realty. As you can see by the requirements below, it ‘s most likely that very few people will be able to qualify for this program. If they can, or would like to find if they can, they would call the current servicer of their mortgage and start the approval process with them.

    This is a topic that a lot of homeowner’s are going to hearing about, and are naturally going to want to participate in. So you will need to have the knowledge and information to advise them when they ask.

    1. The homeowner must be in a negative equity position;

    2. The homeowner must be current on the existing mortgage to be refinanced;

    3. The homeowner must occupy the subject property (1-4 units) as their primary residence;

    4. The homeowner must qualify for the new loan under standard FHA underwriting requirements and possess a “FICO based” decision credit score greater than or equal to 500;

    5. The existing loan to be refinanced must not be a FHA-insured loan;

    6. The existing first lien holder must write off at least 10 percent of the unpaid principal

    7. The refinanced FHA-insured first mortgage must have a loan-to-value ratio of no more than 97.75 percent;

    8. Non-extinguished existing subordinate mortgages must be re-subordinated and the new loan may not have a combined loan-to-value ratio greater than 115 परसेंट

    Saturday, September 18, 2010

    9/18 California Department of Real Estate News Flash

    California Department of Real Estate News Flash

    "Cash for Keys" - Information for Consumers and DRE Licensees

    September 16, 2010 at 6:30 PM

    New consumer alert regarding "Cash for Keys" programs has been posted. (9/16/2010)


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    Posted via email from Sean LaRue's Posterous

    Monday, September 13, 2010

    Sean La Rue's Weekly Newsletter: Markets Labor On

    Happy Monday!

    I just wanted to follow up with you and let you know about this niche in the market that is making a splash.  That niche is flip financing.  There are many listings out there now which are not REO’s or Short Sales.  Make sure you are pulling the property profiles to verify the transfer date and if the transfer date is within 90 days of your offer you have a “flip transaction”  Click on the video below for more  information.  Have a great week and let me know if there are any clients I can help with mortgage financing.  I’m never too busy for any of your referrals.

    If you can't see the newsletter, or would like to view it online, use this link

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    Provided to you Exclusively by Sean K. La Rue
    “Your KEY to Moving Home”    

    For the week of Sep 13, 2010 | Vol. 8, Issue 37

    Sean K. La Rue

    Sean K. La Rue
    Senior Vice President
    Franklin Loan Center
    Office: 760-837-1488
    Cell: 760-835-5663
    Fax: 800-784-9089

    Franklin Loan Center

    In This Issue

    Last Week in Review: Home loan rates started to shift... but in which direction? Read on for details.

    Forecast for the Week: With double doses of manufacturing and inflation news, plus reports on retail sales and jobless claims, plenty of action is ahead.

    View: Wondering how much house you can afford? Read on for a simple formula that can help.

    Last Week in Review

    "ACTIONS SPEAK LOUDER THAN WORDS." Despite the markets being closed last Monday for Labor Day, there was plenty of market action... and plenty of words from the Fed. So what happened, and what was said? Read on for details.

    After the recent 4-month rally in the Bond markets, which has led to some of the best home loan rates in history, money has started shifting over to the Stock market. Why has this happened? Some economic reports have been better than expected in the past few weeks... such as the Jobs Report for August and Consumer Confidence. While that’s great news, it’s important to remember that good economic news - or as has happened recently, better than expected news - often causes investors to move their money out of the safe haven of Bonds to Stocks in the hopes of taking advantage of any gains.

    So why does this behavior impact home loan rates? When the economy appears strong or starts to improve, and investors move their money from the safe haven of Bonds to Stocks, a decreased demand for Bonds means that Bond prices move lower. And when Bond prices move lower, it means that Bond yields - and consequently home loan rates - move higher.

    In fact, given the recent better than expected economic news, St. Louis Federal Reserve Bank President James Bullard last week shifted away from previous comments he had made about deflation and said that while he sees a slowdown in the economy for the second half of this year, he predicts a pick up in 2011. He also said that the Unemployment Rate will likely fall next year, and business spending should start to rebound.

    While continued improvements to our economy are good news, one big impact is that home loan rates will start to increase. And when home loan rates start to increase, they tend to increase quickly. That being said, while home loan rates ended the week about .125-.25 percent worse than where they began, they are still near some of the best levels we have ever seen!

    If you or anyone you know would like to learn more about taking advantage of historically low home loan rates while they remain so, please don’t hesitate to call or email me as soon as possible. Or forward this newsletter on to anyone you think may benefit and I’d be happy to talk to them free of charge.

    One of the most important actions we can take this time of year is to remember all those who were injured, lost their lives, or lost loved ones on September 11, 2001. May we never forget those we lost, and may we thank those who work everyday to keep our families safe and protected.


    Forecast for the Week

    This week’s full economic report calendar is sure to bring plenty of action, beginning with Tuesday’s Retail Sales Report. If the news is positive, this could benefit Stocks at the expense of Bonds and home loan rates, so I’ll be listening closely for the details.

    We’ll get a double dose of manufacturing news this week, with Wednesday’s Empire State Index, which looks at New York State’s manufacturing sector, and Thursday’s Philadelphia Fed Index, which is one of the most important regional manufacturing indices. Double the inflation information is also on tap this week, first with Thursday’s Producer Price Index, which measures inflation at the wholesale level, followed by the Consumer Price Index on Friday. Remember, inflation is the archenemy of Bonds and home loan rates, so any hint that inflation is increasing could cause home loan rates to worsen.

    Thursday also brings another weekly Initial Jobless Claims Report. Last week, initial claims came in at 451,000, better than the 470,000 expected, and representing the lowest number since the week of July 9th. This adds to the improving trend since the recent peak at 504,000, hit a few weeks ago. Meanwhile, Continuing Claims remained basically steady at 4.5 million - which is still a very high number.

    Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result.

    As you can see in the chart below, Bond prices and home loan rates have worsened since the end of August. I’ll be watching closely to see what happens next.


    Chart: Fannie Mae 3.5% Mortgage Bond (Friday, September 10, 2010)

    The Mortgage Market Guide View...

    Simple Formulas for Affordability and Saving

    When people decide to buy a home, the monthly payment is a crucial factor. Conservative underwriting state that borrowers should allocate no more than approximately 30% of their gross monthly income for a house payment. Looked at from another perspective, this means if your monthly income is $4,000, you should keep your house payment under $1,200 a month.

    How much home can you afford?

    Affordability is a function of home price, interest rate and down payment.

    The one key component in home affordability that is at greatest risk today is rates. The fact is that home loan rates are still at historically low levels. But they can’t stay this low forever. In fact, many experts have stated that home loan rates should really be higher than their current levels, due to some of the stimulus that has benefitted Mortgage Bonds. That means that right now homebuyers can get more for their money than they realize, but if rates go up even a little bit they could miss out.

    Here’s a simple formula that drives that point home...

    In simple terms, every 1% increase in home loan rates decreases the buying power of an individual by 10% in home price. This means that if you qualify for a home priced at $200,000 today and home loan rates increase 1%, the amount you could qualify for would be reduced to approximately $180,000 to maintain the same payment.

    If you could benefit from moving to a new home, don't let this time pass you by. Home prices are starting to stabilize and even increase in many markets, but homes are still at incredibly affordable levels. By making a move now before home prices or rates increase, homebuyers can get more for their money and still get the payment they’re comfortable with.

    And for those people who haven't refinanced in the last 18 months, today’s situation provides you with the opportunity to either cut your house payment... or save even more over the long run, by reducing the term of your mortgage to a 15 or 20 year fixed rate.

    As always, I’d be happy to answer any questions and help calculate any scenarios that would help with your decision-making. Just call or email me today.


    Economic Calendar for the Week of September 13-17, 2010

    Remember, as a general rule, weaker than expected economic data is good for rates, while positive data causes rates to rise.

    Economic Calendar for the Week of September 13 - September 17



    Economic Report






    Tue. September 14


    Retail Sales






    Tue. September 14


    Retail Sales ex-auto






    Wed. September 15


    Empire State Index






    Wed. September 15


    Industrial Production






    Wed. September 15


    Capacity Utilization



    Posted via email from Sean LaRue's Posterous

    Sunday, September 5, 2010

    Say hi to Charli. She's all dressed up and ready to go out.

    Going on the radio at 11am!

    Tune in to K-News or 94.3 FM to hear this weeks mortgage hour. We'll be talking about the differences of a loan modification and a refinance, FHA changes and FHA streamline refinance. Find out what you can do o lower your monthly payments now! Tune in and you ask questions live on the air!

    Sean La Rue

    Posted via email from Sean LaRue's Posterous

    Friday, September 3, 2010

    FHA Loan Articles: FHA Streamline Refinance NOW to lock in and SAVE!

    FHA Loan Articles

    News, updates, and explanations to keep you informed. per 
    FHA Streamline Loan Requirements
    FHA Streamline loans can help homeowners lower monthly mortgage payments and interest rates. But what do you need to qualify for an FHA Streamline loan? To begin, you need an existing FHA mortgage—if you don’t have an FHA loan but want to refinance, your options include conventional refinancing or applying for an FHA refinancing loan.

    If you have a conventional loan you wish to refinance with an FHA refinancing loan, you’ll need to apply with the usual credit check, employment verification, debt-to-income ratio requirements and other considerations. An FHA Refinancing loan can get you many of the same results—if you refinance from a conventional loan to an FHA-insured refinancing loan you may get better rates and lower payments.

    For those who do have an FHA home loan, the other requirements for FHA Streamline include:

    • Being current on the existing loan with all mortgage payments made on time for the last year.

  • You must own the original property for at least six months before you can qualify for refinancing.

  • To refinance you’ll need an FHA-approved lender. If you don’t want to use your current lender, any bank you choose must be FHA approved.
  • FHA Streamline loans do not require an appraisal, but a no-appraisal loan cannot exceed your current loan.

  • Closing costs must be paid up front or arranged for through a “no-cost” FHA Streamline loan. You may also choose to include the closing costs into your loan a “with appraisal” FHA Streamline loan. In these cases you must have enough equity in the home to cover the extra amount.
  • There is another Streamline product made for those who want a refinancing plan to help them modify or improve the home. This is known as an FHA Streamline 203(k) Loan. The 203(k) is similar to ordinary Streamline loans with a few exceptions.

    • The 203(k) has a minimum of $5,000. The maximum loan amount is $35,000. This amount is added to your mortgage for weatherizing your home, removing lead paint and many other home improvements that don’t involve major alterations of the home.

  • You are required to use at least one contractor to do the repair work. Self-help renovations are not allowed unless the borrower can prove they have proper expertise.

  • When choosing a contractor, FHA guidelines state you must get an estimate which is broken down into specifics regarding the costs of each project. Contractors must sign an agreement to do all the work included in the estimate for the amount and within the time specified.

  • You must obtain all permits required by law.
  • There are restrictions on 203(k) Streamline refinancing loans. You cannot use the 203(k) loan to do major structural repairs such as altering a load-bearing wall or work that needs architectural plans. If your home improvement work exceeds $15,000 the FHA requires you to have a third-party inspection after the job is done.
    You are permitted to make two payments to each contractor. If you do the work yourself as a qualified builder, the same rule applies.

    When borrowing under the FHA Streamline 203(k) program you must “close out” the loan when the work is complete. According to, you may be required to furnish “mortgagor’s acknowledgement of satisfactory completion…mortgagee’s inspection report(s), change orders, mortgagee accounting of the escrow funds, and record of disbursements.” It’s important to keep records of these items and more to prove the work was completed according to the agreement and in a timely manner.     

    FHA changes that will cost Central Ohioans in 30 days

    • September 3rd, 2010 2:40 pm ET

    The Federal Housing Administration (FHA) is giving homeowners and homebuyers until October 4 to lock in low monthly insurance premiums currently available. After October 4, the monthly insurance premiums on FHA loans will increase by over 63%. This increase will decrease a homebuyers purchasing power by increasing monthly payments. Homebuyer purchasing a $200,000 home with the minimum FHA down payment of 3.5% before October 4 would pay an insurance premium of $88.46 per month. If the same home buyer waits until after October 4, the insurance premium would jump to $144.75

    In this example the home buyer would lose $56.29 per month, or $6417.06 over the 114 months the insurance is typically required. The upfront mortgage insurance premium is going down after October 4 but the real impact to the homebuyer is a net increase in their out of pocket costs as the monthly premium goes up by 63%. Sellers can pay the upfront premium or it can be financed into the loan amount and homebuyers rarely pay the upfront premium out of pocket. In turn the increase in the monthly premiums will be paid directly from the homebuyers as a larger monthly payment.

    Although this change may be beneficial for homeowners who plan to keep the mortgage for less than 3 years the record low rates seem quite the risk. Another thing to keep in mind is the fact that FHA loans are assumable adding value to a sales transaction in the event that rates increase dramatically. The change takes effect for FHA case numbers issued before October 4th 2010 so this does not mean the transaction must be done before then just registered so there is still time. The Bottom line is if you are considering purchasing or refinancing an FHA mortgage in the next 30 days you should talk with a mortgage lending professional.

    Posted via email from Sean LaRue's Posterous