Quick tip:

Agents,

I hope all the father’s out there had a great and relaxing day yesterday. The summer is finally here and I could certainly tell this weekend by the heat. The heat is certainly turning on for the bond market as well as interest rates are getting a little bit better today.

Quick tip: When applying for an FHA loan for a married couple you must run the spouses credit report and count total household debt even if they are not going on the loan. Call me with questions.

Make it a great week!
Oh by the way, I’m never too busy for any of your referrals.

Happy Father’s Day!

Happy Father’s Day!

If you like real-time updates follow me on my www.twitter.com/seanlarue. I’m constantly updating it and getting the latest information out to you. This week’s rate sheet is attached.

Quick Tip:
If you’re in escrow on a property, and the buyer is using an FHA loan advise your seller not to transfer title in any way, shape, or form during the escrow process. FHA has a 90 day flip rule in place that prevents a sale if the title is passed from one person to another… even changing it from a single owner to joint ownership. This does not apply for REO properties. If you don’t follow this rule it will stall your escrow. Call me with questions.

Mortgage Hotline:
Tune in to AM 970, 1140, or 1250 on Sunday 11:00am to 12:00pm to here me talk about your credit report. What you need to know about getting your score up or keeping your score up. Also, I’ll be talking about the 203k rehab construction loan and some of the details and opportunity that lies within. You can also listen online at www.knewsradio.com

I’m never too busy for any of your referrals and I’m looking forward to hearing from you.

States taking steps to turn $8,000 home-purchase tax credit into cash

NATION'S HOUSING
States taking steps to turn $8,000 home-purchase tax credit into cash

Instead of making buyers wait until they receive their tax refunds, some states have created bridge-loan programs that advance purchasers the money they need for their closings.
By Kenneth R. Harney
Los Angeles Times
Reporting from Washington -- For the housing market, it's the equivalent of financial alchemy, and it's hot: Turning the $8,000 federal home-purchase tax credit, which normally isn't spendable until after you've gotten your refund, into immediate, hard cash, available for your down payment and closing costs.

Congress' stimulus-bill tax credit for 2009 is generating efforts nationwide to find ways to "monetize" it -- providing money upfront to buyers who need dollars for down payments right now, not next year after they file their federal returns and get refunds. The credit is available only to qualified taxpayers who have not owned a house during the previous three years, and who close by Nov. 30, among other requirements. Buyers can amend their 2008 returns to claim the credit or claim it on returns for 2009.
In recent weeks, at least 10 states say they've come up with ways to work this monetary magic. They have created innovative bridge-loan programs that advance credit-eligible buyers the cash they need for their closings. Generally the advances take the form of second mortgages -- with or without interest charges -- that become due and payable whenever buyers receive their credits in the form of refunds from the Internal Revenue Service.

In Missouri, which was the first state to create such a program, buyers can get a no-cost "tax credit advance" of up to 6% of the home price. The advance is actually an interest-free second lien that is repayable no later than June 2010, once the buyers have received their $8,000 tax credit.

If buyers can't meet that repayment deadline, the advance morphs into a traditional second mortgage with a 10-year payback term and a fixed interest rate one-half a percentage point higher than their first mortgage rate. The underlying first loans are all fixed-rate 30-year mortgages issued by private lenders participating with the tax-exempt bond programs of the Missouri Housing Development Commission.

Colorado kicked off a similar program, known as JumpStart, on April 14. Delaware, New Jersey, Tennessee, Idaho, Washington state, Ohio, Pennsylvania and New Mexico have come out with their own versions, some with modest interest charges on the second mortgage from the beginning.

In Washington, where the state Housing Finance Commission already runs a tax credit bridge-loan program for buyers using its mortgages, state Treasurer James McIntire wants to make it much bigger. He has been pushing for creation of a "public-private" down-payment program that could reach far larger numbers of consumers than is possible under the housing commission's current funding constraints.

McIntire has proposed depositing $25 million of state funds into interest-earning accounts at an FDIC-insured bank. The bank would then provide revolving lines of credit to the state housing commission to greatly expand its down payment bridge-loan efforts. In a novel arrangement, the Washington Assn. of Realtors has pledged $400,000 as a backstop for McIntire's plan to cover any unexpected losses on the credit monetization transactions. The state Legislature has authorized the program in its new budget.

McIntire is also trying to persuade the Obama administration to allow the state to tap into bridge loan-assisted home buyers' amended 2008 tax returns and be directly assigned all or a portion of the tax credit refunds. Under current IRS rules, McIntire said, tax refund checks are sent only to the taxpayer's address. To ensure prompt repayment of bridge loans, the state would like to have refunds mailed to the housing finance commission in cases in which repayment of a bridge loan is due.

Bottom line: Since other state housing agencies reportedly are considering rolling out credit-monetization programs on their own, keep your eye on what's happening in your area. A no-cost advance tied to the $8,000 credit just might get you the down payment and closing cash you need.

FHA Financing Update:

There are continuing changes to the FHA programs. Please call your lender to verify the pre-approval before writing any offers.

FHA Financing Update:
New loan limits are supported and available to lock at $500K.
Down payment requirement is still only 3.5%.
Fico score is also the same, which is required to be a 620 Fico.
Call me regarding details for the two appraisal requirement.
Market Update

Mortgage Bonds are near unchanged, but off the best levels seen earlier in the day. Stocks are starting the week on an upbeat note with Bank of America receiving a very strong buy recommendation by being put on Goldman Sachs conviction buy list. Lowe’s Companies posted positive earnings, also adding to the boost in Stocks.

Oil prices are moving higher in advance of the summer driving season. Unleaded gasoline has risen every day for the past three weeks and is now at $2.31 a gallon.

There are no economic reports set for release today, however there are several key reports this week, which include Thursday’s Initial Jobless Claims, that will give us a better look at the condition of the economy.

With prices in a sideways trend near the 25-day Moving Average, I recommend carefully floating for now.

I am never to busy for any of your referrals!

$8000 Federal Tax Credit to be used with bridge loan with FHA financing

$8000 Federal Tax Credit to be used with bridge loan with FHA financing. Check out the posted article. http://tinyurl.com/petgxk

Major Update

Attached are several updates for rates, working with the tax assessor’s office, and the changes for FHA refi’s taking cash-out.

Updating Property Taxes
I’ve had many requests for information regarding the tax assessor’s office and lowering your clients property taxes. See the form attached, have your clients fill it out, and send it in. I recommend they send it certified mail so they know it was received. When I close a loan or estimate payments I estimate taxes based on the new purchase price It’s possible, that after closing, that based on the old tax basis the county could try to collect at the higher previous tax basis (ie previous owner). This is especially pertinent on foreclosed homes in Southern California. Use the attached forms for your clients benefit and get in the habit of completing them at closing so the changes will be nearly immediate.

FHA Financing Update:
New loan limits are supported and available to lock at $500K.
Down payment requirement is still only 3.5%.
Fico score is also the same, which is required to be a 620 Fico.

The biggest difference you all need to know about is the appraisal requirements. For all loan amounts above $417K, and have a LTV greater than 95%, will be required to have 2 appraisals. The best way to avoid a second appraisal we can have the buyers put 5% down. If they want to do the second appraisal this can be done too. This is a FHA requirement.

There is only 1 more week to pull a case number for anyone interested in doing a cash-out refinance to 95% loan to value using the FHA program. The loan to value changes to 85% after next week. See the attached mortgagee letter from HUD.

Conforming Loans – or High Balance Loan Amounts
Loan Amounts also extended in Riverside County to $500K.
Max cash out is $200K on all these loans.

I hope this information is helpful. Call me with questions and make it a great week!

I am never too busy for any of your referrals.

Conforming & FHA Loan limits have been increased to 500K

Market Update:
Rates continue to be volatile, but are still at historically low levels.
Check out my 4.125% - 5 year Fixed money – LOW!! The rate sheet is attached.

Conforming & FHA Loan limits have been increased to 500K for the rest of 2009. The bad news is that these agency jumbo loans are not yet available in the market place. So we don’t know the pricing or stipulations yet, but I will update you with more as it unravels.

FHA & VA has also just raised its minimum fico score requirement to 620, yes that’s correct. Any loan’s currently in the system must be approved soon, to be grandfathered in.

***If I have given you a pre-qualification please get with me to verify FICO scores.***
If you have a loan in process and the interest rate was not been locked, they will need to be locked by March 7th to be eligible.
Please let your friends and clients know!

FEDERAL HOUSING FINANCE AGENCY

FEDERAL HOUSING FINANCE AGENCY

NEWS RELEASE
For Immediate Release
Contact: Corinne Russell (202) 414-6921
February 23, 2009 Stefanie Mullin (202) 414-6376

2009 CONFORMING LOAN LIMITS INCREASED BY
AMERICAN RECOVERY AND REINVESTMENT ACT

WASHINGTON, DC – The American Recovery and Reinvestment Act (ARRA), which was signed into law on Tuesday, increased the maximum conforming loan limit for
mortgages originated in 2009. The increase affects 250 counties across the United States. For these areas, identified in the attached table, Fannie Mae and Freddie Mac loan limits
will return to their late-2008 levels, which were up to $729,750 for one-unit properties in the continental United States. Loan limits in other areas are not changed by the
legislation.

Conforming loan limits for 2009 were originally announced in late 2008 and had been calculated under terms set forth in the Housing and Economic Recovery Act of 2008
(HERA), passed in July. The new ARRA legislation stipulates that, for loans originated in 2009, the loan limit is to be the higher of the 2008 limits and those originally calculated
for 2009 under HERA. Where the 2008 and 2009 limits differ, the 2008 limits tend to be higher and thus, in most cases, loan limits are reverting back to last year’s levels. For the
relatively few counties where 2009 limits actually increased (43 counties in Virginia, North Carolina, and California), the new limits will remain at the higher level.

Notable elements of the new legislation:
1. The Director of FHFA is given the authority to increase loan limits levels for “subareas” under provisions in ARRA. Given the implementation difficulties associated
with establishing multiple limits for any given county, FHFA’s Director currently has no plans to use this discretion.

2. The loan limits established under ARRA apply to all loans originated in 2009. For loans purchased in 2009 that were originated from July 1, 2007 through December
31, 2008, the same limits will apply. For loans purchased in 2009, but originated before July 1, 2007, the limits previously announced by FHFA on November 7 ,
2008 and updated in December will apply. For example, a $700,000 mortgage originated in 2006 would not be eligible for purchase this year, even if the
applicable local limit under ARRA is $729,750.

Several lookup tables are available at www.ofheo.gov/Regulations.aspx?Nav=128 that provide detailed information about local area loan limits. A full county listing is provided
showing loan limits for every U.S. county and county-equivalent. Also provided is a table showing those metropolitan areas where the new 2009 loan limits exceed the baseline
$417,000 level for one-unit properties.

Tax Credit for Homebuyers

Economic Stimulus Plan Benefits the Housing and Mortgage Industries
Revised February 17, 2009
Just signed and sealed…a $787 Billion Stimulus Plan made up of tax cuts and spending programs aims at reviving the US economy. Although the package was scaled down from nearly $1 Trillion, it still stands as the largest anti-recession effort since World War II.

Home owners and potential homebuyers stand to gain from key provisions in this stimulus plan. Here is what we know as of today...

The following discussions are intended for you to use directly with your client either in writing or verbally.

Tax Credit for Homebuyers
First-time homebuyers who purchase homes from the start of the year until the end of November 2009 may be eligible for the lower of an $8,000 or 10% of the value of the home tax credit. Remember a tax credit is very different than a tax deduction – a tax credit is equivalent to money in your hand, as opposed to a tax deduction which only reduces your taxable income.

The tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000. Buyers will have to repay the credit if they sell their homes within three years.

Additional Housing-Related Provisions
Tax Incentives to Spur Energy Savings and Green Jobs — This provision is designed to help promote energy-efficient investments in homes by extending and expanding tax credits through 2010 for purchases such as new furnaces, energy-efficient windows and doors, or insulation.

Landmark Energy Savings — This provision provides $5 Billion for energy efficient improvements for more than one million modest-income homes through weatherization. According to some estimates, this can help modest-income families save an average of $350 a year on heating and air conditioning bills.

Repairing Public Housing and Making Key Energy Efficiency Retrofits To HUD-Assisted Housing—This provision provides a total of $6.3 Billion for increasing energy efficiency in federally supported housing programs.Specifically, it establishes a new program to upgrade HUD-sponsored low-income housing (for elderly, disabled, and Section 8) to increase energy efficiency, including new insulation, windows, and frames.

Expanding Housing Assistance—This provision increases support for several critical housing programs. It includes $2 Billion for the Neighborhood Stabilization Program to help communities purchase and rehabilitate foreclosed, vacant properties.

More Help for Homeowners in the Future
Another thing to keep an eye on in the coming weeks is President Obama’s plan to help struggling borrowers before they are faced with a default on their mortgage.

According to reports, the Obama administration is discussing plans to help borrowers who are struggling to stay afloat, but who have not yet fallen behind on their payments. At this point, details are scarce; however, reports indicate that President Obama is looking to spend approximately $50 Billion to directly help homeowners before they face foreclosure and financial disaster.

While this is good news for individual homeowners, it will likely be good for the housing industry as a whole. That’s because, assisting struggling borrowers before they default should help stop the wave of foreclosures, which are estimated to top two million this year. That, in turn, will help stabilize home prices.

The Economic Stimulus Plan is huge, and impacts a number of industries. I’ve highlighted some of the major provisions that may impact you now and in the future.

As always, if you have any questions or would like to discuss how this may specifically impact you, I’d be happy to sit down with you. Just call or email me to set up an appointment.

Homestyle Loans- Rehab for Investment Homes

Please see the update below. There are some great programs for loan right now. I’d like to point out the Conventional – NOT FHA- Homestyle Loans. These loans are REHAB loans for Primary residences, Second Homes AND Investment properties! Call me for more information at 760-837-1488!! Talk soon! Homestyle Loan,

· FHA’s minimum down payment is being increased from 3% to 3.5% as of Jan 1, 2009. The only way to honor the 3% down payment option for your client, is to get their loan approved before the end of the year. So, if you don’t already have an approved offer and a loan submitted, then you should be notifying your clients about the change.

· FHA’s new Loan Limit for Riverside County is $355,350, not $500,000. This is also in effect on January 1, 2009, and under the same scenario as above.

· Conventional Loan limits have also been reduced back to $417,000, not $500,000 anymore. Any loan amount above 417K, is going to be considered a jumbo mortgage.

· Reverse Mortgages are going to be a great mortgage tool moving forward to help seniors over the age of 62 purchase a new home, with no income or credit qualification required. Yes, you heard that here first.

· Rates are great today, why not help you and your past clients out by sending them to us to do a cash out refinance on their primary residence at 5%, so they can get the down payment needed to buy a investment property from you today.

· USDA & VA Loan’s – both offer your clients 100% financing as long as they qualify for the program.

· 203(k) FHA remodel home loan – This program will allow your clients to include in the loan the cost of improvements the home will need to make it complete. This program requires only 3.5% down, and works on owner occupied properties only. Max loan $355,350.

· Fannie/Freddie’s Homestyle Loans – this program works very similar to the above program, which allows you to include the cost of the home improvements in the loan, except that it works for all occupancy types. Primary, Second Homes, and Inv. Properties. Loan amount goes to $417,000, and down payments vary based on occupancy.

Rates going to 4.5%?

There have been recent rumors of interest rates being brought down towards 4.5% by the Treasury. Rates are not going to 4.5% with the wave of a wand by Hank Paulson or Ben Bernanke. As a matter of fact, the massive borrowing to fund the TARP program has a negative effect on rates. This irresponsible release included no definitive plan, no indication of who might qualify, or what the restrictions would be. Remember, it may make sense for you to act now, and take advantage of current historically low rates...with the possibility of refinancing should rates decline further. Waiting for rates to fall to 4.5% may leave people sorely disappointed.

Mortgage bonds are trading low

Hope you had a safe and fun Halloween! Check out this week’s newsletter. I’d like you to focus on the bond graph below. Mortgage bonds are trading low right now, which means rates are higher than we want, I would recommend to float interest rates for the next few days. I’m thinking about 10 days into middle of next week. If you have deals in progress or offers just accepted advise your clients to hold off on locking until the bond market comes back after the elections next week. There’s lots of volatility right now; however, I will keep you up to date with the latest mortgage news!

A quick update on loan programs

Happy Halloween!

A quick update on loan programs. Please call with questions.

Agency Jumbo Loans : Loans that are between $417k -500k... your clients have 2 weeks to lock their loans in to get the benefit of conforming jumbo pricing which have lower interest rates than loan amount over $500,000. An agency jumbo loan was part of the economic stimulus program rolled out by the Government in February 2008 and is set to expire at the beginning of 2009. Loans must be locked by November 13th and closed by year end.

USDA:100% financing is still available for your listings in DHS and Coachella and selected areas of Indio through the USDA! No credit score? That’s ok. No mortgage insurance required either. Call me to find out more info.

Cal- HFA (Chaffa) still allows 100 percent financing with a 680 fico or better if you meet the low income requirements. USDA,

Calsters - teacher program. 3% down 80% 1st and 17% 2nd with no mortgage insurance and payments are deferred on the 2nd mortgage for 5 years!

FHA is still my favorite program because it has no income or property eligibility restrictions and is the most lenient for underwriting guidelines. Current down is 3%; however it will change January 1, 2009 to 3.5%. Get your buyers off the fence now!

Canadian/ Foreign Nationals: 30% down with a minimum loan amount of $200,000. Full Documentation with an International Credit Report and reserves with the servicing bank.

Franklin Loan Center provides me the platform to stay competitive for you in this market. In-house local approvals and 30 day fundings! I look forward to working with you soon.

I am NEVER too busy for any of your referrals! Make it a great day.

Happy Halloween Week!

Happy Halloween Week!

Franklin Loan Center has the competitive platform you need to navigate this lending environment. We are a mortgage bank which means we can approve your deals in-house with our own underwriters who want deals approved, closing quickly, drawing loan docs with my team members, and funding NOW!! We are NOT the average broker who doesn’t have control of underwriting or funding. Use us to stay competitive.

Take control of your deals and refer them to Franklin Loan Center today!

I’m NEVER too busy for any of your referrals. This week’s rate sheet is attached.

Be prepared to set your clocks back 1-hour this Saturday night as Daylight savings will kick in until the Spring!

STILL IN BUSINESS!

I am still cranking out loans and what a great week! Franklin Loan Center is continuing to expand their underwriting, processing, and funding departments to make your fundings quicker and make you look good! Use us and experience the difference! We are continuing to expand our platform to remain competitive for loan programs. Cal-HFA, USDA, FHA, VA, Reverse Mortgages and Hard Money, as well. Call me for all of your funding needs!!

GO TO www.DESERTFHA.com TO RSVP FOR MY FHA EVENT ON TUESDAY MORNING 8:30 TO 10:00AM AT CDAR. (See the attached flyer)

Market Update

Mortgage Bonds are attempting to build on the gains seen over the past two days, after being helped by some weak news in the Housing sector.

The lower-than-expected New Homes Sales for September were reported at their lowest level since January 1991. Additionally, building permits came in at a 27-year low. This weaker-than-expected news gave Mortgage Bonds a bit of a boost today.

Stocks continued their volatile ride yesterday as the Dow climbed a staggering 400 points after being down 400 on the day. This wild volatility demonstrates the need to work with a mortgage professional who is knowledgeable about the market in these crazy times. For now, I recommend floating to see if Bonds can continue to build on their momentum. I will be monitoring the situation carefully, and I will let you know if anything changes.

“Guideline Changes for the Mortgage Industry”

To continue with our theme for 2008 “Guideline Changes for the Mortgage Industry” we have another update!

FHA loan limits will be decreasing to $355,350 for the County of Riverside for all loans that have an approval dated after Jan 1, 2009.

There will no longer be a classification of Jumbo Gov 30, just Gov 30.

Yesterday was the last day to lock loans Agency or FHA Jumbo between $417,000 to $500,000.

Conventional loans will also be lowering their loan limits in Riverside County back to $417,000 down from $500,000. Call me with questions and make it a great weekend!

More inflation news will follow

"THOSE WHO CAN SOAR TO THE HIGHEST HEIGHTS CAN ALSO PLUNGE TO THE DEEPEST DEPTHS." Lucy Maud Montgomery. Despite all of the government's efforts, markets here and around the world plunged this week as the financial crisis continues to grow.

On Tuesday, the Fed and Treasury Department announced plans to purchase short-term commercial paper that many companies rely on to finance their day-to-day operations, to help businesses with their short-term credit and funding needs. The government hoped this announcement would help ease uncertainty, restore confidence, and give Stocks a boost. They hoped for a similar result on Wednesday when the Federal Reserve cut the Fed Funds Rate by 50 basis points, and coordinated an emergency global interest rate cut with the European Central Bank, Canada, the UK, Switzerland and Sweden. The Central Banks in Asia followed suit and cut their benchmark interest rates overnight as well.

However, on Thursday, Stocks plummeted nearly 700 points to a five-year low, and on Friday Stocks ended the day another 126 points lower (after plunging 500 points three times throughout the day). Bonds and home loan rates also worsened sharply in the second part of the week, as Bonds dropped below several important floors of support, and home loan rates ended the week .50% higher than where they began.

From a historical perspective, we are in the midst of a brutal bear market that began on October 9th 2007. Remember that a decline of 20% constitutes a bear market...and a 10% decline is a "correction." The last bear market occurred between March 24th of 2000 and October 9th 2002 saw a 49% drop. Overall, the average bear market lasts for 12.3 months, with the average decline being 32%. The current bear market is right in line with the average historical time frames, and the extent of the decline is worse than previous bear market averages, but still slightly better than the bottom made in 2002. So the historical data might suggest that we could be nearing a bottom. I will continue to monitor this situation closely, and let you know how this will impact home loan rates in the weeks and months ahead. One bright spot is that oil prices are also plunging, falling from a high of $147 per barrel last July to around $80 per barrel Friday morning...which at least makes a tr ip to fill up at the gas station slightly less painful.

PLUNGING PORTFOLIOS ARE SOMETHING WE NEVER WANT TO SEE HAPPEN, AND NEITHER ARE PLUNGING SAVINGS ACCOUNTS. CHECK OUT THIS WEEK'S MORTGAGE MARKET VIEW FOR SOME GREAT TIPS ON STAYING WITHIN YOUR BUDGET!

Forecast for the Week

Last week was a volatile one despite the lack of scheduled economic reports, and this week several big pending reports could add to the volatility...even with the markets being closed on Monday in observance of Columbus Day. Wednesday will bring the wholesale inflation measuring Producer Price Index and the Retail Sales report for September. The Retail Sales report is a measure of the total receipts of retail stores, and changes in these numbers are closely followed as a timely indicator of broad consumer spending patterns. It will be especially important to see what kind of impact the financial crisis has had on recent spending trends.

More inflation news will follow on Thursday, as September's Consumer Price Index (CPI) report, which gives a read on inflation at the consumer level, will be released. CPI tells us how much more expensive goods and services are this month over last month, and this widely watched inflation indicator will definitely make headlines. And given what's been happening in the markets, it will be important to note what's happening in the housing sector, which Friday's Housing Starts and Building Permits Report for September will reveal.

Remember when Bond prices move higher, home loan rates move lower...and vice versa. As you can see in the chart below, Bonds and home loan rates worsened this week, due to a variety of factors. I will be watching closely to see if Bonds and home loan rates can change direction.

It’s been another unbelievable week in the mortgage business.

It’s been another unbelievable week in the mortgage business. I am still getting your clients approved and deals are coming together! Yes, it’s true. Here are some tips that are helping as I am continuing to be creative.

1. Counting Rental Income if Converting a Primary to an Investment- If qualifying is a problem get a co-mortgagor to help offset the debt to income ratios if they are too high.
a. Conventional - 30% equity and 6 months PITI reserves to count rental income
b. FHA – 25% Equity and 6 months PITI reserves to count rental income
2. Source the down payment – getting a gift or having money in the bank makes getting approved easier. We can use gift down payments from relatives.
3. Zero Down? – I have USDA Zero down programs for rural housing, CALHFA for 100% financing with a 680+ fico, and VA loans with no mortgage insurance.
4. Low Down – 3% down until January 1, 2009 and 3.5% thereafter! We can use gift money from a relative it’s so easy!
5. Credit Problems? Talk to about a credit repair program. It’s easy and its low cost to turn your clients into approved buyers.
6. Think Full Documentation – 2 years tax returns, 2 months bank statements, current paystubs. Set realistic expectations.
7. Investors – 20% down with no more than 4 properties with loans on them – Per Fannie Mae Guidelines
8. Investors – 30% down with more than 4 properties with loans –

Hope this helps! Oh by the way, I am never too busy for referrals!

What is the expected impact of HOPE for Homeowners (H4H)?

What is the expected impact of HOPE for Homeowners (H4H)? Per HUD.gov

The Congressional Budget Office estimates that as many as 400,000 homeowners could avoid foreclosure through this program over the next three years.

What is the value of the HOPE for Homeowners program to lenders?

Only FHA approved mortgagees can originate H4H loans. H4H loans may benefit lenders by helping them avoid foreclosure expenses. Although the lender will likely have to write down their existing loan in order to originate an H4H loan, it is still less expensive than foreclosure and disposition of property.

Why should existing lien holders accept the short payoff that is required under the terms of the law?

HUD understands that it will be a challenge to encourage lien holders to accept short payoffs in order to participate in this program, especially when there are other loss mitigation tools available that may provide a more suitable solution. However, in instances where those tools are ineffective, we believe that the holders of these mortgages should accept the short payoffs in lieu of the tremendous losses associated with foreclosure. Similar challenges exist with subordinate lien holders but by offering them the opportunity to have an interest in FHA’s share of future appreciation in the property, we hope to entice these lien holders to participate as well.

What advice should loan servicers/lenders give borrowers who are facing difficulties fulfilling their obligations on their existing mortgage(s)?

The H4H program is another loss mitigation option to keep borrowers in their homes on sustainable and affordable terms. Lenders should provide information to borrowers on possible options include contacting a HUD approved counseling agency. Borrowers may call 1-800-569-4287 or visit www.hud.gov/offices/hsg/sfh/hcc/hccprof14.cfm

When can I start originating H4H loans?

The program is effective from October 1, 2008 to September 30, 2011.

Eligibility and Underwriting issues

How does the H4H program differ from FHA Secure?

Under H4H:

• Any type of first mortgage as long as it was originated on or before January 1, 2008.

• All existing lien holders must waive prepayment penalties and late charges, as well as extinguish all liens against the property.

• Existing first lien holders are required to accept the proceeds of the H4H mortgage as payment in full.

• Borrowers will be required to share both the initial equity created with the H4H loan, and future appreciation.

• The maximum loan amount is $550,440, nationwide.

How does the appreciation sharing piece work?

To entice subordinate lien holders to participate in the negotiation process and release their liens, FHA has the authority to share its future appreciation entitlement with them. At settlement, subordinate lien holders will receive a certificate that evidences their interest as an obligation backed by HUD, with payment conditional on the value of HUD’s appreciation share.

Are there special underwriting requirements for the H4H program?

Yes, in addition to standard underwriting procedures, the underwriter must:

• Determine that the borrowers existing total monthly mortgage payment is in excess of 31% of their gross monthly income in March of 2008.

• Determine the borrower’s total monthly mortgage payment on the new H4H loan is less than the borrower’s total monthly mortgage payment on existing loans.

• Determine that the DTI’s are at or below 31/43. However, if the borrower has successfully completed a 3 month trial modification, ratios can be expanded not to exceed 38/50.

• Review income as reported on the transcript or copy of the borrower’s income tax returns for the previous two years.

How is the total monthly mortgage payment on the existing loan(s) calculated for the purpose of qualifying the borrower for the H4H program?

The total monthly mortgage payment is defined as the fully indexed, fully-amortizing Principal, Interest, Taxes and Insurance (PITI) payment. This includes homeowner’s association dues, grounds rents, special assessments, and all subordinate liens as of March 1, 2008.

Can I add a non-occupying co-borrower to help qualify?

No, however you may add a non-occupying ,co-signer who does not have any ownership interest in the property.

What if there is currently a non-occupying co-borrower on the loan?

The non-occupying co-borrower will need to quit claim their interest in the property prior to the occupying co-borrowers applying for the H4H program.

What loans are eligible for refinance under the H4H program?

Any type of mortgage is eligible for refinancing under the H4H program, including conventional (prime, Alt-A, subprime), or government backed (FHA, VA, or Rural Development), fixed or adjustable rate mortgage.

The loan must have originated on or before January 1, 2008, the borrower must have made at least six (6) payments on the existing mortgage, and the total monthly mortgage payment exceeds 31% or the borrower’s March 2008 gross monthly income. The borrower may be current or delinquent at the time the new H4H mortgage is originated.

What properties are eligible?

The property to be refinanced must be the borrower’s primary and only residence in which the borrower has an ownership interest.

Only 1-unit properties are eligible, including condominiums, cooperative units and manufactured housing permanently affixed to realty.

Does the borrower have to be delinquent on their existing loans to be eligible for the H4H program?

No, the borrower may be current or delinquent at the time of application for the H4h mortgage.

What must the existing lienholders do?

Existing first mortgage lien holders must waive any and all prepayment penalties and late payment fees, agree to accept the proceeds from the H4H mortgage as payment in full, and release their outstanding mortgage liens.

Existing subordinate lien holders must waive all prepayment penalties and late payment fees as well as release their outstanding mortgage liens.

Will I have to get a new appraisal or can I use an AVM?

In all cases a new FHA appraisal must be ordered specifically for the H4H transaction and the appraisal should be no more than 3 months old at the time of closing.

What are the rates for the Upfront Mortgage and Annual Insurance Premiums (UFMIP)?

The Upfront Mortgage Insurance Premium (UFMIP) is 3% and the Annual is 1.5%

Can the UFMIP be financed?

Yes, however the maximum LTV under the H4H program is 90% regardless of whether or not the UFMIP is financed.

Will there be additional disclosure requirements?

Yes, the originating lender must provide the HOPE for Homeowners Consumer Disclosure and Certification form at the time of initial application for the Program.

Are there additional lender certifications?

Due to the statutory requirements and the unique nature of the program, lenders and underwriters will execute a certification assuring HUD that they have underwritten and closed the loan in accordance with the H4H program guidelines.

What is the maximum LTV for the H4H program?

The maximum LTV for the Program is 90%, including any financed UFMIP.

Who can pay closing costs?

Standard FHA policy regarding closing costs is applicable, including the 1% cap on origination fees.

• Borrowers may pay closing costs from their own assets,

• They may be financed into the mortgage provided the 90% LTV limit is not exceeded,

• The servicing lender, originating lender and/or a third party (e.g. a Federal, state or local Program) and/or

• The originating lender my pay the borrower’s closing costs and prepaid items through premium pricing.

Is subordinate financing allowed to pay closing costs, like under FHASecure?

No. Subordinate financing is not allowed in the first 5 years of the mortgage except in when necessary to ensure maintenance of property standards.

Will Wall Street be receptive to purchasing these new loans?

These loans can be securitized in Ginnie Mae FS Pools, making them attractive to Wall Street and other investors.

The Labor Department's Jobs Report

The Labor Department's Jobs Report came in much worse than analysts expected, with 240,000 jobs lost in October. In addition, the Unemployment Rate jumped to its highest level since 1994.

In market news, Stocks are coming off their worst back-to-back days since the 1987 Stock Market crash. Although Stocks opened higher this morning, they could be in for more of a decline as today's poor Jobs Report sinks in. This could create selling pressure on Stocks, which may help bonds improve.

Currently, prices are battling a strong ceiling of resistance. Should prices break out above current levels, it would be very bullish. Therefore, I recommend floating, even though prices are modestly weaker right now and may even worsen slightly before bouncing.