Time is running out on the Home affordable programs: HARP and HASP. One recent change that may get some borrowers back in the game on this program is the effective date of your existing mortgage.
Until recently, your loan had to be PURCHASED by Fannie Mae or Freddie Mac before 6/1/2009. Freddie Mac announced recently that they changed this and now the NOTE DATE needs to be on or before 6/1/2009.
What this means is those of you who may may have closed on your loan before 6/1/2009 but it wasn't purchased by Fannie Mae or Feddie Mac until after 6/1/2009 (it takes some time to deliver a loan once it's closed to the secondary market and have them review and purchase the loan). I had two customers this year who called and were denied a Home Affordable Refinance and the wonderful benefits it offered. Their loans closed before that cut-off date, but weren't purchased until after 6/1/2009. One missed it by ONE DAY! The other by just a week or so.
If this happened to you, please contact your lender and try again. So, if your loan was closed prior to 6/1/2009, you may qualify for a Home Affordable Refinance. Check it out!
Monday, November 11, 2013
Here's another reason we all have to suffer with tougher regulations because of what some people did...
If you're wondering why lending guidelines have gotten so extreme -copy this link to read an article posted in MPA (Mortgage Professional America):
http://www.mpamag.com/mortgage-originator/father-and-son-admit-to-role-in-29m-mortgage-fraud-scheme-16156.aspx
I read articles like this every day and am amazed at the creative way people try and trick the system. I've always said you can't blame the lenders for making the guidelines that caused the mortgage melt-down (we don't make the guidelines), but you can blame people like this for committing the fraud that helped it along.
For those lenders who have been in the business since the late 70's early 80's you know we're almost back to the guidelines we had then. Back in the "olden days", you didn't get a loan unless you had 20% down, and it was pretty hard to get a 30 year fixed-rate loan. You were often stuck with loans from your bank -either loans that ballooned or adjustable rate loans.
Right now, acting head of the Federal Housing Finance Agency, Ed DeMarco, is trying to do away with Fannie Mae and Freddie Mac. Industry experts predict that if he does, that will be the end of 30-year fixed-rate mortgages. I agree - you'll be back to in-house loans from your banks - which will be balloon loans or adjustable rate mortgages (ARMS) that fluctuate with market rates. If this happens, what will happen to the already fragile housing industry? Wages haven't been increasing. The days of a "cost of living wage increase" are almost non-existent for the majority of the US. If we're stuck with ARM and balloon loans, the unpredictability of an interest rate increase on your mortgage will keep many borrowers from buying houses. If your rate can go up 6% from the start rate you may not be able to afford the house. On a $150,000 home, a 30 year adjustable rate mortgage at 4% could go up to 9 or 10%. That would be a payment increase of $600.24 a month. No more 30-year fixed rate mortgages would be devastating to the economy.
Why don't banks loan you their own funds for 30 years? Rates fluctuate. I've seen it myself in over 35 years in real estate and lending. I have seen 21% rates and rates below 3% for 30 year fixed-rate loans. A bank generally does not loan out their own funds where the rate is fixed for 30 years. They loan you money, but turn around and sell your fixed-rate mortgage to Fannie Mae, Freddie Mac, or Ginnie Mae, This allows them to keep loaning money at low, fixed interest rates. If a bank only had it's own money, once it's loaned out, they're out of money. Then if they've got their money loaned out at 4% for 30 years and rates go up to 10%, they're paying out a higher rate to their checking and savings customers than they are getting on that 4% loan they have for 30 years. Can't stay in business long doing that. Banks make it a point not to loan you their own money on 30-year fixed rate loans. If you don't believe me, ask your bank if they are selling that 30 year mortgage to the secondary market or if it's "in-house" funds.
If Fannie and Freddie go the way of the dinosaurs, as Mr. DeMarco wants, so may those affordable fixed-rate mortgages.
The industry needs regulation, but regulation won't stop all the fraudsters out there. Bad people will figure out a way to do bad things - it's just sad it hurts all of us.
http://www.mpamag.com/mortgage-originator/father-and-son-admit-to-role-in-29m-mortgage-fraud-scheme-16156.aspx
I read articles like this every day and am amazed at the creative way people try and trick the system. I've always said you can't blame the lenders for making the guidelines that caused the mortgage melt-down (we don't make the guidelines), but you can blame people like this for committing the fraud that helped it along.
For those lenders who have been in the business since the late 70's early 80's you know we're almost back to the guidelines we had then. Back in the "olden days", you didn't get a loan unless you had 20% down, and it was pretty hard to get a 30 year fixed-rate loan. You were often stuck with loans from your bank -either loans that ballooned or adjustable rate loans.
Right now, acting head of the Federal Housing Finance Agency, Ed DeMarco, is trying to do away with Fannie Mae and Freddie Mac. Industry experts predict that if he does, that will be the end of 30-year fixed-rate mortgages. I agree - you'll be back to in-house loans from your banks - which will be balloon loans or adjustable rate mortgages (ARMS) that fluctuate with market rates. If this happens, what will happen to the already fragile housing industry? Wages haven't been increasing. The days of a "cost of living wage increase" are almost non-existent for the majority of the US. If we're stuck with ARM and balloon loans, the unpredictability of an interest rate increase on your mortgage will keep many borrowers from buying houses. If your rate can go up 6% from the start rate you may not be able to afford the house. On a $150,000 home, a 30 year adjustable rate mortgage at 4% could go up to 9 or 10%. That would be a payment increase of $600.24 a month. No more 30-year fixed rate mortgages would be devastating to the economy.
Why don't banks loan you their own funds for 30 years? Rates fluctuate. I've seen it myself in over 35 years in real estate and lending. I have seen 21% rates and rates below 3% for 30 year fixed-rate loans. A bank generally does not loan out their own funds where the rate is fixed for 30 years. They loan you money, but turn around and sell your fixed-rate mortgage to Fannie Mae, Freddie Mac, or Ginnie Mae, This allows them to keep loaning money at low, fixed interest rates. If a bank only had it's own money, once it's loaned out, they're out of money. Then if they've got their money loaned out at 4% for 30 years and rates go up to 10%, they're paying out a higher rate to their checking and savings customers than they are getting on that 4% loan they have for 30 years. Can't stay in business long doing that. Banks make it a point not to loan you their own money on 30-year fixed rate loans. If you don't believe me, ask your bank if they are selling that 30 year mortgage to the secondary market or if it's "in-house" funds.
If Fannie and Freddie go the way of the dinosaurs, as Mr. DeMarco wants, so may those affordable fixed-rate mortgages.
The industry needs regulation, but regulation won't stop all the fraudsters out there. Bad people will figure out a way to do bad things - it's just sad it hurts all of us.
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